<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
___________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 33-0266089
___________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
___________________________________________________________________
(Address of principal executive offices) (Zip code)
(619) 552-2200
___________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
___________________________________________________________________
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31,1997
----- --------------------------------
Common Stock, $.001 par value 32,052,147
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AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
COVER PAGE .............................................................. 1
TABLE OF CONTENTS ....................................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 ............................... 3
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1997 and 1996 ................. 4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1997 and 1996 ................. 5
Notes to Condensed Consolidated Financial Statements ............... 6
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations ...................... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings .......................................... 15
ITEM 2. Changes in Securities ...................................... *
ITEM 3. Defaults upon Senior Securities ............................ *
ITEM 4. Submission of Matters to a Vote of
Security Holders ........................................... *
ITEM 5. Other Information .......................................... *
ITEM 6. Exhibits and Reports on Form 8-K ........................... 16
SIGNATURE ............................................................... 17
</TABLE>
* No information provided due to inapplicability of item.
<PAGE> 3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(unaudited) (Note)
------------- -------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 40,134,000 $ 42,654,000
Short-term investments 19,431,000 19,469,000
Receivable from related party 555,000 2,089,000
Other current assets 1,241,000 1,142,000
------------- -------------
Total current assets 61,361,000 65,354,000
Property and equipment, at cost:
Equipment 12,711,000 11,480,000
Leasehold Improvements 4,192,000 3,349,000
------------- -------------
16,903,000 14,829,000
Less accumulated depreciation and amortization (8,769,000) (8,075,000)
------------- -------------
8,134,000 6,754,000
Patents and other assets, net 1,495,000 1,425,000
------------- -------------
$ 70,990,000 $ 73,533,000
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,990,000 $ 4,829,000
Accrued liabilities 4,780,000 4,628,000
Deferred revenue from related party 12,860,000 7,954,000
Current portion of obligation under capital
leases and equipment notes payable 1,444,000 1,253,000
------------- -------------
Total current liabilities 21,074,000 18,664,000
Obligation under capital leases and
equipment notes payable 2,355,000 1,990,000
Note payable to related party 5,084,000 4,345,000
Stockholders' equity:
Common stock, $.001 par value, 50,000,000 shares authorized,
32,052,147 and 31,977,186 issued and outstanding at
March 31, 1997 and December 31, 1996, respectively 32,000 32,000
Additional paid-in capital 205,497,000 204,800,000
Accumulated deficit (161,755,000) (155,105,000)
Deferred compensation (1,255,000) (1,177,000)
Unrealized losses on short-term investments (42,000) (16,000)
------------- -------------
Total stockholders' equity 42,477,000 48,534,000
------------- -------------
$ 70,990,000 $ 73,533,000
============= =============
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes.
<PAGE> 4
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues under collaborative agreements
from related party $ 12,358,000 $ 3,347,000
Expenses:
Research and development 16,530,000 8,640,000
General and administrative 2,847,000 1,878,000
------------ ------------
19,377,000 10,518,000
------------ ------------
Loss from operations (7,019,000) (7,171,000)
Interest and other income 686,000 639,000
Interest and other expense (316,000) (88,000)
------------ ------------
Net loss $ (6,649,000) $ (6,620,000)
============ ============
Net loss per share $ (0.21) $ (0.24)
============ ============
Shares used in computing net loss per share 32,023,493 28,044,250
============ ============
</TABLE>
See accompanying notes.
<PAGE> 5
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Operating Activities:
Net Loss ($ 6,649,000) ($ 6,620,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 713,000 532,000
Deferred revenue from related party 4,906,000 3,374,000
Deferred rent and other expense (6,000) (6,000)
Amortization of deferred compensation 130,000 --
Changes in assets and liabilities:
Receivable from related party 1,534,000 79,000
Other current assets (99,000) 40,000
Accounts payable (2,839,000) (464,000)
Accrued liabilities 158,000 (374,000)
------------ ------------
Net cash flows used for operating activities (2,152,000) (3,439,000)
Investing activities:
Decrease in short-term investments 11,000 16,440,000
Purchase of equipment and leasehold improvements (2,074,000) (670,000)
Increase in deposits, patents and other assets (89,000) (88,000)
------------ ------------
Net cash flows (used for) provided by investing activities (2,152,000) 15,682,000
Financing activities:
Issuance of notes payable 1,625,000 660,000
Principal payments on capital leases and
equipment notes payable (330,000) (200,000)
Issuance of common stock, net 489,000 169,000
------------ ------------
Cash flows provided by financing activities 1,784,000 629,000
------------ ------------
(Decrease) increase in cash and cash equivalents (2,520,000) 12,872,000
Cash and cash equivalents at beginning of period 42,654,000 16,709,000
------------ ------------
Cash and cash equivalents at end of period $ 40,134,000 $ 29,581,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 89,000 $ 57,000
</TABLE>
See accompanying notes.
<PAGE> 6
AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
March 31, 1997, and for the three months ended March 31, 1997 and 1996, is
unaudited. In the opinion of management, the information reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature. Interim results are not necessarily indicative of results for
a full year. For a presentation including all disclosures required by generally
accepted accounting principles, these financial statements should be read in
conjunction with the audited financial statements included in the Company's
Annual Report to Shareholders for the year ended December 31, 1996.
Per Share Data
Net loss per share is computed using the weighted average number of shares
outstanding during the periods.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary earnings per share for the quarters presented is not expected to be
material.
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany
transactions and balances have been eliminated.
2. Contingency
The Company has received letters from the University of Minnesota (the
"University") asserting that pramlintide is covered by a patent (the "University
Patent") which was licensed to the Company pursuant to a License Agreement dated
November 11, 1991
<PAGE> 7
among the Company, the University and Per Westermark ("Westermark") (the
"University License Agreement"). In its letters, the University claims that they
and Westermark are entitled to 50% of any sublicense fees received by the
Company from sublicensing the University Patent to Johnson & Johnson pursuant to
the Company's Collaboration Agreement with Johnson & Johnson, as well as future
royalties as specified in the University License Agreement. The Company has
informed the University and Westermark that no such sublicensing moneys have
been received by the Company from Johnson & Johnson, who is not a sublicensee
under the University Patent. On December 5, 1996, the Company filed a complaint
against the University and Westermark in the U.S. District Court for the
Southern District of California seeking a declaratory judgment that pramlintide
is not covered by the University Patent and that no moneys are owed to the
University or Westermark. Although discussions were underway with the University
and Westermark, they did not result in any agreement regarding the litigation.
The Company's complaint was served on the University and Westermark in April
1997. The Company believes the University's assertions are without merit and
intends to defend vigorously against any claims that may be brought by the
University against the Company related to the foregoing.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion
in this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, without limitation, those discussed in the section entitled
"Liquidity and Capital Resources" herein as well as those discussed in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 under
the heading "Risk Factors."
Since its inception in September 1987, Amylin Pharmaceuticals, Inc.
("Amylin Pharmaceuticals" or the "Company") has devoted substantially all of its
resources to its research and development programs. Substantially all of the
Company's revenues to date have been derived from fees and expense
reimbursements under collaborative agreements and from interest income. Amylin
Pharmaceuticals has not received any revenues from the sale of products. The
Company has been unprofitable since its inception and expects to incur
additional operating losses for the next several years. As of March 31, 1997,
the Company's accumulated deficit was approximately $161.8 million.
RESULTS OF OPERATIONS
Revenue
The Company had $12.4 million of revenue for the three month period
ended March 31, 1997 as compared to $3.3 million for the same period in 1996.
The revenues recognized in 1997 and 1996 were related to the Company's
Collaboration Agreement with LifeScan, Inc., a wholly owned subsidiary of
Johnson & Johnson, hereinafter referred to as Johnson & Johnson. Revenues in
1997 were comprised of Johnson & Johnson's one-half share of collaboration
development expenses incurred by Amylin in the first quarter and $6.0 million in
license fee payments made by Johnson & Johnson related to the exercise of their
option to broaden the scope of the collaboration with the Company to include all
amylin agonists for the treatment of fuel metabolism disorders, including
diabetes. Revenues in 1996 were comprised of Johnson & Johnson's one-half share
of collaboration development expenses incurred by Amylin in the first quarter of
1996. (Please see the "Liquidity and Capital Resources" section for further
discussion of payments expected to be received by the Company in the future.)
Operating Expenses
The Company's total operating expenses for the quarter ended March 31,
1997 increased to $19.4 million from $10.5 million for the same period in 1996.
Research and development expenses increased to $16.5 million for the
three months ended March 31, 1997 as compared to $8.6
<PAGE> 9
million for the same period in 1996. The increase in these expenditures was
primarily due to the costs of expanding pramlintide clinical development
efforts. Several other factors also contributed to this increase, including
increased staffing and expanded product development efforts.
General and administrative expenses increased to $2.8 million for the
three months ended March 31, 1997 as compared to $1.9 million for the same
period in 1996. The increase was primarily related to expanded pramlintide
market development efforts in connection with the Company's collaboration with
Johnson & Johnson.
Other Income and Expense
Interest and other income is principally comprised of interest income
from investment of the Company's cash reserves. Interest and other income was
$0.7 million for the quarter ended March 31, 1997 as compared to $0.6 million
for the same period in 1996.
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment and to fund tenant
improvements to the Company's facilities. In addition, in accordance with the
terms of the Company's Collaboration Agreement with Johnson & Johnson, Johnson &
Johnson has advanced Amylin's share of pramlintide pre-launch marketing expenses
incurred since the date of the collaboration, to be repaid with interest over
time out of Amylin's share of future pramlintide profits if any. Interest and
other expense increased to $0.3 million for the three months ended March 31,
1997 from $0.1 million for the same period in 1996. The increase in interest and
other expense reflects the overall higher long-term debt balance during the
first three months of 1997 as compared to 1996 as well as a provision of
approximately 0.1 million made for the disposal of certain pieces of equipment.
Net Loss
The net loss for the quarter ended March 31, 1997 was $6.6 million
compared to a net loss for the first quarter of 1996 of $6.6 million. Although
the net loss remained virtually unchanged between the years, operating expenses
did increase significantly in 1997 as compared to 1996, but they were partially
offset by the $6.0 million license fee payment received in the quarter along
with payments received for Johnson & Johnson's one-half share of collaboration
development expenses incurred by Amylin. The increase in operating expenses for
the quarter was primarily the result of expanded clinical, product development
and pre-marketing activities on pramlintide.
Amylin expects to incur substantial operating losses over the next
several years due to continuing and increasing expenses associated with its
research and development programs, including preclinical and potential clinical
testing of multiple product candidates, and related general and administrative
support.
<PAGE> 10
Operating losses may fluctuate from quarter to quarter as a result of
differences in the timing of expenses incurred and revenues recognized.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of preferred stock, sales of common stock, its
collaboration with Johnson & Johnson, and operating and capital lease
obligations.
In June 1995, the Company entered into a worldwide Collaboration
Agreement with Johnson & Johnson for the development and commercialization of
pramlintide, a diabetes drug candidate currently in Phase III clinical trials.
In conjunction with the Collaboration Agreement, the Company also entered into a
Stock Purchase Agreement with Johnson & Johnson Development Corporation (a
wholly owned subsidiary of Johnson & Johnson referred to herein as Johnson &
Johnson) and a Loan Agreement with Johnson & Johnson.
In March 1997, Johnson & Johnson exercised an option to
broaden the scope of the existing collaboration on pramlintide and paid the
Company $6.0 million to obtain additional rights for all amylin agonists for
treatment or prevention of fuel metabolism disorders, including diabetes. The
Company will lead the research and development while Johnson & Johnson will lead
commercialization of any future product candidates.
In addition to the above mentioned milestone-related payments and
investment, Johnson & Johnson's financial commitment to the Company now includes
the funding of 50% of development costs and 100% of pre-launch marketing costs
(Amylin Pharmaceutical's one-half share to be repaid over time from future
profits), as well as milestone payments, license fees, equity investments, and a
development loan facility for use in certain circumstances. The Company will
apply all of the license fees, any cash milestone payments, 50% of the proceeds
from Johnson & Johnson's equity investments and proceeds from draw downs under
the development loan facility towards its share of pramlintide development
expenses.
Funding available to the Company from Johnson & Johnson as of March 31,
1997 under the development loan facility (the "Development Loan Facility") was
$57.1 million. The aggregate amount of the Development Loan Facility is subject
to adjustment for certain events, e.g. increased by 50% of any increases in the
pramlintide development budget as of December 31, 1996 and decreased by 50% of
the Company's net proceeds received from future debt or equity offerings to
investors other than Johnson & Johnson or other corporate partners. The Company
is required to issue a warrant to Johnson & Johnson to purchase 50,000 shares of
the Company's common stock at an exercise price of $12.00 per share for every $1
million of proceeds borrowed by the Company under the Development Loan Facility.
Under the terms of the Loan Agreement, the Company is eligible in certain
circumstances to make quarterly draw downs on the then available Development
Loan Facility based on
<PAGE> 11
pramlintide development expenses during specified periods. The projected
aggregate amount available to be borrowed by the Company under the Development
Loan Facility during 1997 is $42.3 million, which is subject to adjustment based
on changes to the pramlintide development budget and on certain corporate
financing activities. As of March 31, 1997 the Company has not drawn down any
proceeds available to it under the Development Loan Facility.
The Company is dependent on the future payments from Johnson & Johnson
to continue development and commercialization of pramlintide. Johnson & Johnson
may terminate the Collaboration Agreement subject to a notice period of six
months. Johnson & Johnson's financial and other obligations under the
Collaboration Agreement would continue during any such termination notice
period. In addition, Johnson & Johnson has the right to terminate the
Collaboration Agreement at any time based on material safety or tolerability
issues. Without Johnson & Johnson's continued collaborative support, the Company
might not be able to continue the pramlintide development program, and the
Company's financial condition would be materially adversely affected.
As of March 31, 1997, Johnson & Johnson entities have made various
financial payments to the Company totaling approximately $109 million. These
payments primarily include funding of one half of the pramlintide development
costs, the purchase of $30 million of the Company's common stock, milestone and
option fee payments and license fees.
At March 31, 1997, the Company had $59.6 million in cash, cash
equivalents and short-term investments as compared to $62.1 million at December
31, 1996. The Company invests its cash in U.S. government and other highly rated
liquid debt instruments.
The Company intends to use its financial resources for the ongoing
development of pramlintide, including the Phase III efficacy studies, for
expansion of its other research, drug discovery and development programs, and
for other general corporate purposes. To the extent that clinical trials of the
Company's compounds progress as planned, research and development expenses will
include costs of supplying materials for and conducting pramlintide clinical
trials, research activities to further explore amylin biology, and research and
development of other compounds targeted at metabolic diseases. The amounts
actually expended for each purpose may vary significantly depending upon
numerous factors, including the progress of the Company's research and
development programs, the results of preclinical and clinical studies, the
timing of regulatory submissions and approvals, if any, technological advances,
determinations as to commercial potential of the Company's compounds, and the
status of competitive products. Expenditures will also depend upon the continued
participation of Johnson & Johnson in the collaboration, the availability of
additional sources of funds, the establishment of collaborative arrangements
with other companies, and other factors.
The Company currently leases or sub-leases approximately 99,000 square
feet of space. At this time, the Company expects to
<PAGE> 12
incur approximately $5.9 million of capital expenditures in 1997. These
expenditures will primarily be directed toward the purchase of new equipment to
support research and development efforts and for tenant improvements for newly
sub-leased space. In addition, some capital expenditures will be directed toward
the purchase of equipment coming off of lease lines which will expire during the
year. The Company has entered into a loan agreement for the financing of the
majority of its equipment needs and intends to use this financing source during
1997. The Company anticipates that it will utilize approximately $3.4 million of
debt financing and $2.5 million of its own cash reserves for capital
expenditures in 1997. The terms of the Company's loan agreement call for amounts
drawn down under the loan to be repaid monthly over a four year period.
The Company does not expect to generate a positive internal cash flow
for several years due to substantial additional research and development costs,
including costs related to drug discovery, preclinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. In addition to the 1997 and 1998 funding of 50% of the
six pivotal studies and other ancillary studies in the pramlintide clinical
program, the Company plans to expand its research and development pipeline by
licensing new technologies and product candidates. The Company anticipates that
its existing cash, including interest income from cash investments, and
financial payments and loan facilities from Johnson & Johnson, will be adequate
to satisfy the Company's capital requirements through 1998. As an alternative to
the additional funding available through the Johnson & Johnson Development Loan
Facility (as described above), the Company may also consider additional equity
offerings. Assuming continued participation by Johnson & Johnson, the Company
believes it has reasonable alternatives to meet the financial needs of its
programs. However, there can be no assurance that additional financial resources
will be raised in the necessary time frame or on terms favorable to the Company.
The Company cannot assure that any of its drug candidates will
successfully meet all of their development goals. Important technical milestones
remain to be achieved before Amylin Pharmaceuticals can commercialize any of its
products, and failure to achieve these milestones could seriously jeopardize the
Company's chances of success and its financial condition would be adversely
affected. The Company's future capital requirements will depend on many factors,
including continued scientific progress in its research and development
programs, the magnitude of these programs, progress with preclinical and
clinical trials, the time and costs involved in preparing regulatory submissions
and seeking regulatory approvals, the costs involved in preparing, filing,
prosecuting, maintaining, and enforcing patents, competing technological and
market developments, changes in the Johnson & Johnson collaboration, the ability
of the Company to establish collaborative arrangements for its other research
and development programs, and the cost of manufacturing scale-up.
Prior to marketing, any drug developed by the Company must undergo
rigorous preclinical and clinical testing and an
<PAGE> 13
extensive regulatory approval process mandated by the Food and Drug
Administration (FDA) and equivalent foreign authorities. Human clinical testing
is now underway on the Company's first product candidate, pramlintide. Subject
to compliance with FDA regulations, the Company plans to undertake extensive
clinical testing to demonstrate optimal dose, safety, and efficacy for its
product candidates in humans. Although preliminary clinical data about
pramlintide's possible clinical value warrants continuing Phase III trials,
there can be no assurance that these larger and longer studies will confirm the
results of the Phase I and Phase II studies to date. Further testing of
pramlintide and the Company's other product candidates in research or
development may reveal undesirable and unintended side effects or other
characteristics that may prevent or limit their commercial use. The Company or
the FDA may suspend clinical trials at any time if the subjects or patients
participating in such trials are being exposed to unacceptable health risks.
There can be no assurance that the Company will not encounter problems in
clinical trials which will cause the Company or the FDA to delay or suspend
clinical trials. In addition, there can be no assurance that any of the
Company's products will obtain FDA approval for any indication. Products, if
any, resulting from Amylin Pharmaceuticals' research and development programs
are not expected to be commercially available for a number of years.
The Company believes that patent and other proprietary rights
are important to its business, and in this regard intends to file applications
as appropriate for patents covering both its products and processes. Litigation,
which could result in substantial cost to the Company, may also be necessary to
enforce any patents issued to the Company or to determine the scope and validity
of third-party proprietary rights. The Company has received letters from the
University of Minnesota (the "University") asserting that pramlintide is covered
by a patent (the "University Patent") which was licensed to the Company pursuant
to a License Agreement dated November 11, 1991 among the Company, the University
and Per Westermark ("Westermark") (the "University License Agreement"). In its
letters, the University claims that they and Westermark are entitled to 50% of
any sublicense fees received by the Company from sublicensing the University
Patent to Johnson & Johnson pursuant to the Company's Collaboration Agreement
with Johnson & Johnson, as well as future royalties as specified in the
University License Agreement. The Company has informed the University and
Westermark that no such sublicensing moneys have been received by the Company
from Johnson & Johnson, who is not a sublicensee under the University Patent. On
December 5, 1996, the Company filed a complaint against the University and
Westermark in the U.S. District Court for the Southern District of California
seeking a declaratory judgment that pramlintide is not covered by the University
Patent and that no moneys are owed to the University or Westermark. Although
discussions were underway with the University and Westermark, they did not
result in any agreement regarding the litigation. The Company's complaint was
served on the University and Westermark in April 1997. The Company believes the
University's assertions are without merit and intends to defend
<PAGE> 14
vigorously against any claims that may be brought by the University against the
Company related to the foregoing. In addition, should any of the Company's
competitors have prepared and filed patent applications in the United States
which claim technology also invented by the Company, Amylin Pharmaceuticals may
have to participate in interference proceedings declared by the U.S. Patent and
Trademark Office in order to determine priority of invention and, thus, the
right to a patent for the technology, all of which could result in substantial
cost to the Company to determine its rights. It is uncertain whether any
third-party patents will require the Company to alter its products or processes,
obtain licenses, or cease certain activities. If any licenses are required,
there can be no assurances that the Company will be able to obtain any such
license on commercially favorable terms, if at all. Failure by the Company to
obtain a license to any technology that it may require to commercialize its
products may have a material adverse impact on the Company.
Material Agreement
In March 1997, the Company entered into a Technology License Agreement
(the "License Agreement") with Hoechst Marion Roussel, pursuant to which the
Company was granted exclusive worldwide rights to a series of orally active
compounds which will be evaluated for their ability to improve cardiovascular
risk factors associated with the development of atherosclerosis.
Under the terms of the License Agreement, the Company is responsible
for conducting the preclinical evaluation and clinical development of candidate
compounds. Upon completion of Phase II clinical trials, Hoechst Marion Roussel
will have a one-time right to elect to collaborate with the Company in the
continuing development and commercialization of these compounds in a 50:50
cost-and-profit sharing arrangement. If Hoechst Marion Roussel exercises this
option, the Company will continue to be responsible for developing and
registering the product candidates, and Hoechst Marion Roussel will be
responsible for manufacturing and marketing. The Company and Hoechst Marion
Roussel will assume equal responsibility for all past and future research and
development, manufacturing, and commercialization expenses and will share
equally in any operating profits from commercialization. If Hoechst Marion
Roussel does not exercise its option, the Company will retain all development
and commercialization rights, and Hoechst Marion Roussel will be entitled to a
royalty based on any future net sales. In such case, the Company will be free to
collaborate with other companies on the development, manufacture, and
commercialization of these compounds.
<PAGE> 15
ITEM 1. LEGAL PROCEEDINGS
The Company has received letters from the University of Minnesota (the
"University") asserting that pramlintide is covered by a patent (the "University
Patent") which was licensed to the Company pursuant to a License Agreement dated
November 11, 1991 among the Company, the University and Per Westermark
("Westermark") (the "University License Agreement"). In its letters, the
University claims that they and Westermark are entitled to 50% of any sublicense
fees received by the Company from sublicensing the University Patent to Johnson
& Johnson pursuant to the Company's Collaboration Agreement with Johnson &
Johnson, as well as future royalties as specified in the University License
Agreement. The Company has informed the University and Westermark that no such
sublicensing moneys have been received by the Company from Johnson & Johnson,
who is not a sublicensee under the University Patent. On December 5, 1996, the
Company filed a complaint against the University and Westermark in the U.S.
District Court for the Southern District of California seeking a declaratory
judgment that pramlintide is not covered by the University Patent and that no
moneys are owed to the University or Westermark. Although discussions were
underway with the University and Westermark, they did not result in any
agreement regarding the litigation. The Company's complaint was served on the
University and Westermark in April 1997. The Company believes the University's
assertions are without merit and intends to defend vigorously against any claims
that may be brought by the University against the Company related to the
foregoing.
<PAGE> 16
ITEM 6
Exhibits and Reports Submitted on Form 8-K
(a) EXHIBITS. The exhibits listed below are filed with this report.
10.32 Collaboration Agreement between the Registrant and Hoechst
Marion Roussel dated March 31, 1997.+
10.33 License and Option Agreement between the Registrant and Hoechst
Marion Roussel dated March 31, 1997.+
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the quarter
for which this report is filed.
+ Confidential treatment has been requested with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE> 17
AMYLIN PHARMACEUTICALS, INC.
March 31, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: May 13, 1997 By: /s/Marjorie T. Sennett
------------------------------
Marjorie T. Sennett
Vice President and Chief
Financial Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
<PAGE> 1
EXHIBIT 10.32
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(b)(4), 200.83
AND 230.406. * INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST THAT IS FILED SEPARATELY WITH THE COMMISSION.
================================================================================
COLLABORATION AGREEMENT
BY AND BETWEEN
HOECHST MARION ROUSSEL, INC.
AND
AMYLIN PHARMACEUTICALS, INC.
DATED AS OF MARCH 31, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I - DEFINITIONS.....................................................................1
1.1 "Allowable Expenses"..........................................................1
1.2 "Average Net Selling Price"...................................................2
1.3 "Breaching Party".............................................................2
1.4 "Collaboration Compound"......................................................2
1.5 "Collaboration Patent Expenses"...............................................2
1.6 "Collaboration Product".......................................................2
1.7 "Commercialization"...........................................................2
1.8 "Commercialization Budget"....................................................2
1.9 "Commercialization Liaison Officer"...........................................2
1.10 "Commercialization Plan"......................................................2
1.11 "Competitive Product Infringement"............................................2
1.12 "Core Dossier Countries"......................................................2
1.13 "Cost of Goods Sold"..........................................................3
1.14 "Currency Gains or Losses"....................................................3
1.15 "Development".................................................................3
1.16 "Distribution Expenses".......................................................3
1.17 "Effective Date"..............................................................3
1.18 "Equalization Payment"........................................................3
1.19 "Ex-Manufacturer Selling Price"...............................................3
1.20 "Excepted Commercialization Matters"..........................................3
1.21 "Excepted Development Matters"................................................3
1.22 "Financial Statement Format"..................................................4
1.23 "Independent Product".........................................................4
1.24 "Initial Research and Development Plan and Budget"............................4
1.25 "Joint Commercialization Committee" or "JCC"..................................4
1.26 "Joint Development Committee" or "JDC"........................................4
1.27 "Launch Budget"...............................................................4
1.28 "Launch Plan".................................................................4
1.29 "Liaison Officer".............................................................4
1.30 "Manufacturing Attributes"....................................................4
1.31 "Marketing Expenses"..........................................................4
1.32 "Material Breach".............................................................4
1.33 "Net Sales"...................................................................4
1.34 "Net Sublicense Revenues".....................................................5
1.35 "Nominal Price"...............................................................5
1.36 "Non-Breaching Party".........................................................5
1.37 "Operating Profits or Losses".................................................5
</TABLE>
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<TABLE>
<S> <C> <C>
1.38 "Phase I Clinical Trials".....................................................5
1.39 "Phase IIIB Clinical Trials"..................................................5
1.40 "Phase IV Clinical Trials"....................................................5
1.41 "Post-Launch Product R&D Expenses"............................................5
1.42 "Pre-Marketing"...............................................................6
1.43 "Pre-Marketing Expenses"......................................................6
1.44 "Products"....................................................................6
1.45 "Profit Sharing Territory"....................................................6
1.46 "Regulatory Filings"..........................................................6
1.47 "Research"....................................................................6
1.48 "Research and Development Budget".............................................6
1.49 "Research and Development Expenses"...........................................6
1.50 "Research and Development Liaison Officer"....................................7
1.51 "Research and Development Plan"..............................................7
1.52 "Research Expenses"...........................................................7
1.53 "Royalty-Bearing Country".....................................................7
1.54 "Royalty-Bearing Product".....................................................7
1.55 "Royalty-Bearing Sales".......................................................7
1.56 "Simultaneous Filings"........................................................8
1.57 "Steering Committee"..........................................................8
ARTICLE II - PRE-COLLABORATION EXPENSES ....................................................8
2.1 Allocation of Pre-Collaboration Research and Development Expenses.............8
2.2 Pre-Collaboration Allocation Payment..........................................8
ARTICLE III - MANAGEMENT OF PROGRAM .........................................................9
3.1 Steering Committee............................................................9
3.2 Meetings of the Steering Committee............................................9
3.3 Functions and Powers of the Steering Committee................................9
3.4 Steering Committee Actions...................................................10
3.5 Access to Records............................................................11
3.6 Limitations on the Powers of the Steering Committee.........................11
3.7 Formation of the JDC and the JCC and Appointments............................11
3.8 Meetings of the JDC and the JCC..............................................11
3.9 Agendas......................................................................12
3.10 Liaison Officers.............................................................12
3.11 Accounting...................................................................13
ARTICLE IV - JOINT RESEARCH AND DEVELOPMENT.................................................13
4.1 Responsibilities of the JDC..................................................14
4.2 Lead Research and Development Party..........................................15
</TABLE>
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<TABLE>
<S> <C> <C>
4.3 Right to Engage Third Parties................................................15
4.4 Research and Development Plan and Research and Development Budget............15
4.5 Development Efforts..........................................................16
4.6 Drug Approval Applications...................................................16
4.7 Costs of Development.........................................................17
4.8 Election by a Party to Terminate Its Participation in the Development
of a Collaboration Compound or Collaboration Product for Safety or
Tolerability Reasons.........................................................18
4.9 Insurance....................................................................19
ARTICLE V - COMMERCIALIZATION...............................................................19
5.1 Responsibilities of the JCC..................................................19
5.2 HMR as Lead Marketing Party..................................................20
5.3 Right to Engage Third Parties................................................21
5.4 Commercialization Efforts....................................................22
5.5 Commercialization Plan and Commercialization Budget..........................22
5.6 Launch Plan..................................................................23
5.7 Election by Amylin of Royalty-Bearing Countries..............................24
5.8 Advertising and Education....................................................24
5.9 Pre-Marketing Expenses.......................................................24
5.10 Training Program.............................................................25
5.11 Pricing, Pricing Approvals and Product Distribution.........................25
5.12 Product Recalls..............................................................26
5.13 Tax Consideration............................................................26
5.14 Discounted Sales.............................................................26
ARTICLE VI - PROFIT SHARING AND ROYALTIES .................................................27
6.1 Share of Operating Profits or Losses.........................................27
6.2 Payment......................................................................27
6.3 Term.........................................................................28
6.4 Royalty-Bearing Products.....................................................28
6.5 Sales By Sublicensees........................................................29
6.6 Royalty Payments and Reports.................................................29
6.7 Taxes........................................................................29
6.8 Blocked Currency.............................................................29
6.9 Payments to or Reports by Affiliates.........................................29
6.10 No Overlapping Royalties.....................................................30
ARTICLE VII - LICENSES......................................................................30
7.1 Licenses to HMR to Conduct Research and Development..........................30
7.2 Licenses to HMR to Conduct Commercialization.................................30
</TABLE>
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<TABLE>
<S> <C> <C>
7.3 License to Amylin to Conduct Commercialization...............................31
7.4 Sublicensing.................................................................31
7.5 Third Party Technology.......................................................31
ARTICLE VIII - MANUFACTURE AND SUPPLY......................................................32
8.1 Manufacture and Supply During Development....................................32
8.2 Manufacture and Supply During Commercialization..............................32
8.3 Quality Control, Quality Assurance, Etc......................................33
8.4 Provisions for the Manufacture of Collaboration Products.....................33
8.5 Technology Transfer in Event of Termination by HMR...........................33
ARTICLE IX - ENFORCEMENT OF INTELLECTUAL PROPERTY AND PATENT RIGHTS.........................34
9.1 General Enforcement Rights...................................................34
9.2 Defense and Settlement of Third Party Claims Against Collaboration Products..35
9.3 Allocation of Expenses.......................................................36
9.4 Settlement of Third Party Claims for Royalty-Bearing Products and
Independent Products; Royalty Reduction......................................36
9.5 Infringement by Third Parties with Respect to Royalty-Bearing
Products or Independent Products.............................................36
9.6 Collaboration Patent Expenses................................................38
9.7 Assignment of Joint Patents..................................................38
9.8 Trademarks...................................................................38
ARTICLE XI - INFORMATION AND REPORTS.......................................................39
11.1 Information and Reports During Development and Commercialization.............39
11.2 Complaints...................................................................40
11.3 Adverse Drug Experiences.....................................................40
11.4 Records of Revenues and Expenses.............................................41
ARTICLE XII - TERM AND TERMINATION..........................................................41
12.1 Term.........................................................................41
12.2 Termination for Material Breach..............................................41
12.3 Termination Without a Material Breach........................................44
12.4 Surviving Rights.............................................................45
12.5 Accrued Rights, Surviving Obligations........................................46
ARTICLE XIII - INDEMNIFICATION..............................................................46
13.1 Indemnification for Royalty-Bearing Products.................................46
13.2 Indemnification For Collaboration Products...................................46
13.3 Indemnification For Independent Products.....................................47
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE XIV - DISPUTE RESOLUTION............................................................47
ARTICLE XV - MISCELLANEOUS..................................................................47
15.1 Assignment...................................................................47
15.2 Research and Development and/or Commercialization Entities...................48
15.3 Consents Not Unreasonably Withheld...........................................48
15.4 Force Majeure................................................................48
15.5 Incorporation of License Agreement Provisions; Conflicting Provisions........48
15.6 Further Actions..............................................................49
15.7 No Trademark Rights..........................................................49
15.8 Notices......................................................................49
15.9 Waiver.......................................................................49
15.10 Severability.................................................................50
15.11 Ambiguities..................................................................50
15.12 Governing Law................................................................50
15.13 Headings.....................................................................50
15.14 Counterparts.................................................................50
15.15 Entire Agreement.............................................................50
EXHIBITS
Exhibit A - Determination of Certain Accounting Terms
Exhibit B - Financial Statement Format
Exhibit C - List of Amylin Patents
</TABLE>
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<PAGE> 7
COLLABORATION AGREEMENT
COLLABORATION AGREEMENT (the "Agreement") entered into as of the 31st
day of March, 1997 by and between AMYLIN PHARMACEUTICALS, INC., a Delaware
corporation ("Amylin"), and HOECHST MARION ROUSSEL, INC., a Delaware corporation
("HMR"), effective only upon HMR's exercise of the HMR Option as provided for in
Section 4.1 of the License Agreement (as defined below) (the "Effective Date").
Amylin and HMR are sometimes referred to herein individually as a "Party" and
together as the "Parties".
W I T N E S S E T H:
WHEREAS, HMR is a leading multinational health care company with a broad
product portfolio of drugs for the treatment of human diseases;
WHEREAS, Amylin is a leading biotechnology company that has expertise
and experience in the research and development of compounds for use in treating
metabolic and other disorders;
WHEREAS, Amylin and HMR have entered into that certain License and
Option Agreement effective as of March 31, 1997 (the "License Agreement"), with
respect to the HMR Compounds (as defined in the License Agreement); and
WHEREAS, the Parties desire to collaborate with respect to the Research,
Development and Commercialization (as such terms are defined below) of one or
more HMR Compounds on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the following premises and the
mutual covenants and agreements contained herein, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the License Agreement. For purposes of this Agreement,
the following terms shall have the meanings specified below:
1.1 "ALLOWABLE EXPENSES" means those expenses incurred after the
first commercial launch of a Collaboration Product which are generally
consistent with a Commercialization Plan and Commercialization Budget and are
specifically attributable to Collaboration Products in the Profit Sharing
Territory, and shall consist of (i) Cost of Goods Sold, (ii) Marketing Expenses,
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<PAGE> 8
(iii) Distribution Expenses, (iv) Post-Launch Product R&D Expenses, (v)
Collaboration Patent Expenses, and (vi) Currency Gains or Losses. Allowable
Expenses shall exclude Development Expenses and Research Expenses, even if
incurred after the first commercial launch of a Collaboration Product.
1.2 "AVERAGE NET SELLING PRICE" means total Net Sales of a
Collaboration Product divided by the total units sold of such Collaboration
Product, in both cases excluding sales and units involving government mandated
or conceded discounts or bearing a Nominal Price.
1.3 "BREACHING PARTY" shall have the meaning set forth in Section
12.2(a).
1.4 "COLLABORATION COMPOUND" means any HMR Compound which is, as of
the Effective Date, or thereafter becomes, the subject of Research, Development
or Commercialization under this Agreement.
1.5 "COLLABORATION PATENT EXPENSES" means the fees and expenses of
outside counsel and payments to Third Parties incurred in connection with the
preparation, filing, prosecution and maintenance of Amylin Patents, Joint
Patents and HMR Patents after the Effective Date, including the costs of patent
interference and opposition proceedings.
1.6 "COLLABORATION PRODUCT" means a product including or
incorporating any form or dosage of a Collaboration Compound for use in the
Field and as to which each Party has paid, is paying or is obligated to pay
hereunder one-half of the Research and Development Expenses.
1.7 "COMMERCIALIZATION" shall mean all activities relating to the
manufacture, marketing, distribution and sale of a Product, including, without
limitations, Pre-Marketing, advertising, education, planning, marketing,
distribution, market and product support pre-clinical studies, Phase IIIB
Clinical Trials and Phase IV Clinical Trials and, subject to Section 9.7,
sub-licensing of Collaboration Products.
1.8 "COMMERCIALIZATION BUDGET" shall have the meaning set forth in
Section 5.5(a).
1.9 "COMMERCIALIZATION LIAISON OFFICER" shall have the meaning set
forth in Section 3.10(b)
1.10 "COMMERCIALIZATION PLAN" shall have the meaning set forth in
Section 5.5(a).
1.11 "COMPETITIVE PRODUCT INFRINGEMENT" shall have the meaning set
forth in Section 9.1(a).
1.12 "CORE DOSSIER COUNTRIES" means the United States, Canada, Japan
and the countries included in the European Union as of the Effective Date.
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<PAGE> 9
1.13 "COST OF GOODS SOLD" means the cost of Collaboration Product
inventory sold and other manufacturing related costs incurred with respect to
Collaboration Products in the Profit Sharing Territory during any relevant
period, in each case excluding administration expenses. These costs shall be
defined as the sum of the applicable expenditures incurred directly in bringing
goods acquired and/or manufactured to their existing condition or location. Cost
of Goods Sold shall be calculated in the manner set forth in Exhibit A.
1.14 "CURRENCY GAINS OR LOSSES" means gains or losses resulting from
a change in exchange rates (in the case of unhedged transactions) and/or the
gains or losses of related hedging transactions, in either case as associated
with Net Sales of Collaboration Products, calculated in the manner set forth in
Exhibit A.
1.15 "DEVELOPMENT" means all activities relating to obtaining
Regulatory Approval of a Product, Product line extensions, alternative delivery
systems and new indications therefor and all activities relating to developing
the ability to manufacture the same. This includes preclinical testing,
toxicology, formulation, bulk production, fill/finish, manufacturing process
development, manufacturing and quality assurance technical support, clinical
studies, regulatory affairs and outside counsel regulatory legal services.
1.16 "DISTRIBUTION EXPENSES" means the costs, excluding
administration costs, incurred by a Party or for its account, specifically
attributable to the distribution of a Collaboration Product in the Profit
Sharing Territory, to be calculated in the manner set forth in Exhibit A.
1.17 "EFFECTIVE DATE" shall have the meaning set forth in the
introduction to this Agreement.
1.18 "EQUALIZATION PAYMENT" shall mean the amount payable by one
Party to the other to equalize the Operating Profit or Losses between the
Parties as shown on Exhibit B. By way of example, in a total Operating Profits
situation, if HMR has an Operating Profit of 40 and Amylin has an Operating Loss
of 10, then the Equalization Payment made by HMR to Amylin will be 25. In a
total Operating Losses situation, if HMR has an Operating Loss of 40 and Amylin
has an Operating Loss of 10, the Equalization Payment made by Amylin to HMR will
be 15.
1.19 "EX-MANUFACTURER SELLING PRICE" means the invoice price to
wholesalers (or their equivalent) less all cash discounts taken for prompt cash
payment for a Collaboration Product.
1.20 "EXCEPTED COMMERCIALIZATION MATTERS" shall have the meaning set
forth in Section 5.1(b).
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1.21 "EXCEPTED DEVELOPMENT MATTERS" shall have the meaning set forth
in Section 4.1(b).
1.22 "FINANCIAL STATEMENT FORMAT" means the form of Financial
Statement shown and described in Exhibit B.
1.23 "INDEPENDENT PRODUCT" means a product including or incorporating
any form or dosage of an HMR Compound which is developed by a Party under
Section 4.8(b) without the other Party paying one-half of all Research and
Development Expenses.
1.24 "INITIAL RESEARCH AND DEVELOPMENT PLAN AND BUDGET" shall have
the meaning set forth in Section 4.4(a).
1.25 "JOINT COMMERCIALIZATION COMMITTEE" OR "JCC" means the committee
established pursuant to Section 3.7.
1.26 "JOINT DEVELOPMENT COMMITTEE" OR "JDC" means the committee
established pursuant to Section 3.7.
1.27 "LAUNCH BUDGET" shall have the meaning set forth in Section
5.6(a).
1.28 "LAUNCH PLAN" shall have the meaning set forth in Section
5.6(a).
1.29 "LIAISON OFFICER" shall have the meaning set forth in Section
3.10(c).
1.30 "MANUFACTURING ATTRIBUTES" shall have the meaning set forth in
Section 8.1.1(a).
1.31 "MARKETING EXPENSES" means the costs, excluding administration
costs, which are generally consistent with a Commercialization Budget and
Commercialization Plan and (i) are incurred after the first commercial launch of
a Collaboration Product and are specifically attributable to the sale,
promotion, and marketing of such Collaboration Product in the Profit Sharing
Territory or (ii) are incurred after the first commercial launch of a
Collaboration Product in a Major Market Country and are specifically
attributable to preparation of the launch of such Collaboration Product in
additional countries of the Profit Sharing Territory. Marketing Expenses shall
be calculated in the manner set forth on Exhibit A.
1.32 "MATERIAL BREACH" shall have the meaning set forth in Section
12.2(g).
1.33 "NET SALES" means the amount invoiced by a Party or an Affiliate
for sales of Products to a Third Party in the Profit Sharing Territory less: (i)
discounts, including cash discounts, rebates and retroactive price reductions or
allowances actually allowed or granted from the invoiced amount (as adjusted
pursuant to Section 5.14), (ii) credits or allowances actually granted upon
claims, rejections or returns of such sales of Products, including recalls,
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<PAGE> 11
(iii) taxes (other than income taxes), duties or other governmental charges
levied on or measured by the invoiced amount when included in billing, as
adjusted for rebates and refunds, and (iv) provisions for uncollectible accounts
determined in accordance with such Party's normal accounting procedures
consistently applied within and across its pharmaceutical operating units.
1.34 "NET SUBLICENSE REVENUES" means all revenues or other
consideration received from Third Parties as consideration for sublicensing of
the manufacture, distribution, use or sale of Collaboration Products in the
Profit Sharing Territory, less the expenses directly attributable to supplying
goods and services to such sublicensees to enable their performance of the
sublicenses.
1.35 "NOMINAL PRICE" means ***************************************
********************************************************************************
*****************************.
1.36 "NON-BREACHING PARTY" shall have the meaning set forth in
Section 12.2(a).
1.37 "OPERATING PROFITS OR LOSSES" means the profits ("Operating
Profits") or losses ("Operating Losses") resulting from the Commercialization of
Collaboration Products in the Profit Sharing Territory and shall be equal to (i)
Net Sales less Allowable Expenses plus (ii) Net Sublicense Revenues. A separate
determination of Operating Profits or Losses shall be made for each
Collaboration Product on a worldwide basis as outlined in Exhibit B. In the
event multiple Collaboration Products are being marketed under this Agreement,
the individual statements of Operating Profits or Losses shall also then be
consolidated into a single statement of Operating Profits or Losses for purposes
of overall accounting between the Parties.
1.38 "PHASE I CLINICAL TRIALS" shall have the meaning set forth in 21
CFR ss. 312.21(a).
1.39 "PHASE IIIB CLINICAL TRIALS" means product support clinical
trials of a Collaboration Product (i.e., a clinical trial which the JDC
determines is not required for receipt of Regulatory Approval but which may be
useful in providing additional drug profile data) commenced before receipt of
Regulatory Approval in the country where such trial is being conducted.
1.40 "PHASE IV CLINICAL TRIALS" means product support trials of a
Collaboration Product commenced after receipt of Regulatory Approval in the
country where such trial is being conducted.
1.41 "POST-LAUNCH PRODUCT R&D EXPENSES" means the costs of Phase IV
Clinical Trials and ongoing product support (including manufacturing and quality
assurance technical support, and laboratory and clinical efforts directed toward
the further understanding of product
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
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<PAGE> 12
safety and efficacy) and medical affairs (including regulatory support necessary
for product maintenance) which are specifically attributable to a Collaboration
Product in the countries of the Profit Sharing Territory where such
Collaboration Product has been launched, excluding administrative expenses and
costs that are included within Costs of Goods Sold or Development Expenses.
Post-Launch Product R&D Expenses shall be calculated in the manner set forth on
Exhibit A.
1.42 "PRE-MARKETING" means all Commercialization activities
undertaken prior to and in preparation for the launch of a Collaboration Product
in the Profit Sharing Territory, consistent with a Commercialization Plan and
prior to the first commercial launch of a Collaboration Product in a Major
Market Country. Pre-Marketing shall include advertising, education, sales force
training, Phase IIIB Clinical Trials, trademark selection, filing, prosecution
and enforcement, and other activities included within the Commercialization Plan
prior to the first commercial launch of a Collaboration Product in a Major
Market Country. If a Collaboration Product is first launched in a country other
than a Major Market Country, the expenses of marketing incurred in those
countries where such Collaboration Product has been launched shall be included
in Marketing Expenses, while the expenses of Pre-Marketing elsewhere in the
world shall still be included in Pre-Marketing Expenses.
1.43 "PRE-MARKETING EXPENSES" means the costs, excluding Development
Expenses, specifically attributable to the Pre-Marketing of a Collaboration
Product. Pre-Marketing Expenses shall exclude administrative expenses.
1.44 "PRODUCTS" shall mean Collaboration Products, Royalty-Bearing
Products and Independent Products, collectively.
1.45 "PROFIT SHARING TERRITORY" means the world except for those
countries as to which Amylin has elected to withdraw from the sharing of
expenses, profits and losses with respect to Collaboration Products pursuant to
Section 5.7. The Profit Sharing Territory may be different for each
Collaboration Product, based on the elections made by Amylin with respect to
each such product in each country.
1.46 "REGULATORY FILINGS" shall have the meaning set forth in Section
4.6
1.47 "RESEARCH" means the scientific, technical and clinical
activities undertaken to evaluate an HMR Compound for Development, including
pharmacology, pharmacokinetics, toxicology, formulation, process development,
manufacture of HMR Compounds (including manufacture of bulk drug substance and
fill/finish) for preclinical studies and clinical trials, and clinical
pharmacology.
1.48 "RESEARCH AND DEVELOPMENT BUDGET" shall have the meaning set
forth in Section 4.4(a).
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1.49 "RESEARCH AND DEVELOPMENT EXPENSES" means the expenses incurred
by a Party or for its account which are generally consistent with a Research and
Development Plan and Research and Development Budget and are specifically
attributable to the Research and Development of a Collaboration Product
(including royalties paid to a Third Party not otherwise recovered as a Cost of
Goods Sold). Research and Development Expenses shall exclude administrative
expenses.
1.50 "RESEARCH AND DEVELOPMENT LIAISON OFFICER" shall have the
meaning set forth in Section 3.10(a).
1.51 "RESEARCH AND DEVELOPMENT PLAN" shall mean the Research and
Development Plans referred to in Section 4.4(a).
1.52 "RESEARCH EXPENSES" means the expenses incurred by a Party or
for its account specifically attributable to Research for a Collaboration
Compound. Research Expenses shall exclude administrative expenses.
1.53 "ROYALTY-BEARING COUNTRY" shall have the meaning set forth in
Section 5.7.
1.54 "ROYALTY-BEARING PRODUCT" means a Collaboration Product marketed
directly or indirectly by HMR in a Royalty-Bearing Country under a royalty
arrangement pursuant to Section 5.7.
1.55 "ROYALTY-BEARING SALES" means the amount invoiced for sales of a
Royalty-Bearing Product, or (pursuant to Section 12.2) a Collaboration Product
or (pursuant to Section 4.8(b)) an Independent Product by a Party or its
permitted sublicensees to a Third Party, less (i) discounts, including cash
discounts, or rebates, retroactive price reductions or allowances actually
allowed or granted from the invoiced amount, (ii) credits or allowances actually
granted upon claims, rejections or returns of such Products, including recalls,
(iii) freight, postage, shipping and insurance charges paid for delivery of such
Products, to the extent invoiced, (iv) taxes (other than income taxes), duties
or other governmental charges levied on or measured by the invoiced amount when
included in billing, as adjusted for rebates and refunds, and (v) provisions for
uncollectible accounts determined in accordance with such Party's normal
accounting procedures consistently applied within and across its pharmaceutical
operating units.
In the event a Party is receiving royalties under this Agreement
from any Product sold in the form of a combination product containing one or
more active ingredients in addition to a Collaboration Compound, and if said
combination product is not covered by a Patent owned or Controlled by the Party
receiving royalties, Royalty-Bearing Sales for such combination product will be
calculated by multiplying actual Royalty-Bearing Sales of such combination
product by the fraction A/(A+B) where A is the invoice price of the Product if
sold separately,
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and B is the total invoice price of any other active component or components in
the combination product, if sold separately. If, on a country-by-country basis,
the other active component or components in the combination are not sold
separately in said country, Royalty-Bearing Sales for the purpose of determining
royalties of the combination product shall be calculated by multiplying actual
Royalty-Bearing Sales of such combination product by the fraction A/C where A is
the invoice price of the Product if sold separately, and C is the invoice price
of the combination product. If, on a country-by-country basis, neither the
Product nor the other active component or components of the combination product
is sold separately in said country, Royalty-Bearing Sales for the purposes of
determining royalties of the combination product shall be determined by the
Parties in good faith. If the manufacture, use or sale of the combination
product is itself covered by a Patent owned or Controlled by the Party receiving
royalties (other than a Patent covering the manufacture, use or sale of said
Collaboration Compound), the provisions of this paragraph shall not apply to
sales of said combination product.
1.56 "SIMULTANEOUS FILINGS" shall have the meaning set forth below in
Section 4.6.
1.57 "STEERING COMMITTEE" means the committee described in Section
3.1.
ARTICLE II
PRE-COLLABORATION EXPENSES
2.1 ALLOCATION OF PRE-COLLABORATION RESEARCH AND DEVELOPMENT EXPENSES.
Within thirty (30) days after the Effective Date, the Parties shall apportion
amongst themselves the Amylin Research and Development Expenses, HMR's
Additional Research and Development Expenses and HMR's costs and expenses of
developing the HMR Compounds prior to the effective date of the License
Agreement, taking into account any reimbursements of the foregoing made by one
Party to the other, so that such costs and expenses are borne equally by the
Parties, as follows:
(a) The Amylin Research and Development Expenses (whether or not
reimbursed), minus any amount actually paid by HMR to reimburse Amylin on
account of Amylin's Research and Development Expenses (collectively, the "Net
Amylin Expenses"); shall be compared with
(b) The sum of (i) any HMR Additional Research and Development
Expenses plus (ii) ************ (representing a portion of the total costs
incurred by HMR prior to the effective date of the License Agreement with
respect to Research and Development of the HMR Compounds, the other portion to
be reimbursed pursuant to Section 6.2 (b) of this Agreement) (collectively, the
"Net HMR Expenses").
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2.2 PRE-COLLABORATION ALLOCATION PAYMENT. Within thirty (30) days
following the thirty-day period referred to in Section 2.1, in the event the Net
Amylin Expenses exceed the Net HMR Expenses, then HMR shall pay to Amylin
one-half of the difference between the Net Amylin Expenses and the Net HMR
Expenses. In the event the Net HMR Expenses exceed the Net Amylin Expenses, then
Amylin shall pay to HMR one-half of the difference between the Net HMR Expenses
and the Net Amylin Expenses.
ARTICLE III
MANAGEMENT OF PROGRAM
3.1 STEERING COMMITTEE. Within thirty (30) days after the Effective
Date, the Parties shall form an executive committee for the management of their
collaborative efforts (the "Steering Committee"). The Steering Committee shall
be comprised of up to six members, with an equal number of members appointed by
each Party. Each Party shall appoint and replace its own representatives on the
Steering Committee. Members of the Steering Committee shall be composed of
executive personnel of the Parties. One member of the Steering Committee
selected by each party shall have substantial experience in pharmaceutical
product research and development. One member of the Steering Committee selected
by each party shall have substantial executive experience. Steering Committee
members shall serve on such terms and conditions as shall be determined by the
Party selecting such member, and may be removed or replaced at any time by such
Party. An alternate member may serve temporarily in the absence of a permanent
member.
3.2 MEETINGS OF THE STEERING COMMITTEE. The Steering Committee:
(a) shall hold meetings at such times and places as shall be
determined by a majority vote of the entire membership of the Steering
Committee, but in no event shall such meetings be held less frequently than once
every six (6) months;
(b) may conduct meetings in person or by telephone
conference, provided that any decision made during a telephone conference
meeting shall be evidenced by minutes signed by one of the members of the
Steering Committee from each of the Parties;
(c) shall keep minutes reflecting actions taken at meetings;
(d) may act without a meeting if prior to such action a
written consent thereto is signed by all members of the Steering Committee then
in office; and
(e) may amend or expand upon the foregoing procedures for
its internal operation by unanimous written consent of all members of the
Steering Committee then in office.
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3.3 FUNCTIONS AND POWERS OF THE STEERING COMMITTEE. The activities
of the Parties under this Agreement shall be managed by the Steering Committee
only to the extent set forth in this Agreement, including:
(a) manage and coordinate the long-range strategy and
planning for the Research, Development and Commercialization of HMR Compounds,
including facilitation of the flow of Information with respect to Research,
Development and Commercialization work being conducted for each Collaboration
Product;
(b) coordinate the activities of the Parties hereunder,
including long-range strategy and oversight of the Joint Development Committee
(the "JDC") and the Joint Commercialization Committee (the "JCC") (as described
below);
(c) attempt to settle disputes or disagreements that are
unresolved as referenced herein;
(d) review and approve the Research and Development Budgets
submitted to it by the JDC;
(e) review and approve the Commercialization Budgets and
Launch Budgets submitted to it by the JCC;
(f) review planned pricing and manufacturing decisions of
the JCC, as provided herein;
(g) review and approve a proposal by either Party (i) to
stop a Phase I Clinical Trial or Phase II Clinical Trial of a Collaboration
Product because of Safety, (ii) to stop a Phase III Clinical Trial of a
Collaboration Product for any reason, or (iii) to terminate such Party's
participation in Research and Development of a Collaboration Product under
Section 4.8; and
(h) perform such other functions as appropriate to further
the purposes of this Agreement as mutually determined by the Parties.
3.4 STEERING COMMITTEE ACTIONS. Except as otherwise provided in this
Agreement, actions to be taken by the Steering Committee pursuant to the terms
of this Agreement shall require the unanimous vote of the members of the
Steering Committee. The following procedures will be followed by the Steering
Committee with respect to Research, Development and Commercialization matters
referred to it:
(a) If the Steering Committee cannot reach a unanimous
decision with respect to any Research and/or Development matters referred to it
for approval within sixty (60) days following receipt of such referral, the
final decision on such matters shall be made by Amylin,
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except as to Excepted Development Matters. If the Steering Committee cannot
reach a unanimous decision with respect to any of the Excepted Development
Matters referred to it by the JDC pursuant to Section 4.1(b), (1) the status quo
shall be maintained with respect to Excepted Development Matters items (i) and
(ii) in Section 4.1(b) and (2) as to Excepted Development Matter item (iii) in
Section 4.1(b), the Phase III Clinical Trial shall be terminated if the Steering
Committee does not reach a unanimous decision within ten (10) days.
(b) If the Steering Committee cannot reach a unanimous
decision with respect to approval of the Commercialization Budget or Launch
Budget of a Collaboration Product pursuant to Article V, or any other
Commercialization matters referred to it for approval, within sixty (60) days
following receipt of such referral, the final decision on such matters shall be
made by HMR, except as to Excepted Commercialization Matters, which shall be
resolved as provided for in Section 5.1(b).
(c) Except as provided for above in this Section 3.4, if the
Steering Committee fails to reach unanimous agreement on a matter before it for
decision within sixty (60) days following its receipt of the referral of the
matter, such matter shall be referred to executive officers of the Parties
pursuant to the dispute resolution procedures set forth in Section 12.2 of the
License Agreement. The manner described in this Section 3.4 to resolve disputes
regarding Excepted Development Matters and Excepted Commercialization Matters
shall be the sole mechanism for resolving such matters under this Agreement. If
either Amylin or HMR wishes to seek a non-binding opinion from a Third Party
with respect to any issue before the Steering Committee for decision, it may do
so at its own expense; provided, however, that if both Parties agree to seek
such opinion, such expense shall be shared equally by the Parties.
3.5 ACCESS TO RECORDS. The Parties shall provide the Steering
Committee and its authorized representatives with reasonable access during
regular business hours to all records and documents in their possession relating
to the Collaboration Compounds and the Collaboration Products which the Steering
Committee may reasonably require in order to perform its obligations hereunder.
3.6 LIMITATIONS ON THE POWERS OF THE STEERING COMMITTEE. The
Steering Committee shall have only such powers as are specifically delegated to
it hereunder or as are specifically agreed to in writing by the Parties. Except
as set forth in Section 3.3, the Steering Committee shall not be involved with
the day-to-day management of the collaboration activities contemplated by this
Agreement.
3.7 FORMATION OF THE JDC AND THE JCC AND APPOINTMENTS. The Parties
shall form the JDC and the JCC within thirty (30) days after the Effective Date.
For each of the JDC and the JCC, each Party shall appoint and replace its own
representatives on such committees. Each such committee shall be comprised of
equal numbers of members appointed by each Party (up to four (4) members for
each Party per committee) of appropriately expert and experienced
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individuals. Members of the Steering Committee shall not serve as members of the
JDC or JCC, and the Parties shall use their best efforts to not appoint a person
as a member of both the JDC and JCC. One of the members of the JDC appointed by
Amylin will serve as the chairperson of the JDC. One of the members of the JCC
appointed by HMR will serve as the chairperson of the JCC. Either Party may
designate an alternate for a committee member to participate in the event one of
that Party's regular committee members is unable to be present at a meeting.
3.8 MEETINGS OF THE JDC AND THE JCC. Meetings of the JDC or the JCC
may be called by either Party on ten (10) working days prior written notice,
unless such notice is waived by the Parties. Such committees may be convened,
polled or consulted from time to time by means of telecommunication, video
communication, or correspondence. Each of the JDC and the JCC will meet at least
once every four (4) month period following the Effective Date, at sites to be
designated by the chairpersons of such committees.
3.9 AGENDAS. Each Party will provide proposed agenda items to the
committee chairpersons, together with appropriate information, at least five (5)
working days in advance of each meeting of the Steering Committee, JDC or JCC.
The committee chairpersons will then deliver an agenda for the meeting to each
member of the committee at least three (3) working days in advance of the
committee meeting.
3.10 LIAISON OFFICERS.
(a) HMR will assign an appropriately expert and experienced
individual as Research and Development Liaison Officer, who will facilitate
communication and coordination of activities relating to Research and
Development between the Parties and provide support and guidance to the JDC and
the Research and Development teams. Amylin will make available an office and
secretarial services to the Research and Development Liaison Officer, and will
provide reasonable access to Amylin technical staff, management, and
documentation relevant to Collaboration Products. The Research and Development
Liaison Officer is expected to attend project team meetings and JDC meetings.
The Research and Development Liaison Officer also will have reasonable access to
Steering Committee members from each Party.
(b) Amylin will assign an appropriately expert and
experienced individual as Commercialization Liaison Officer, who will facilitate
communication and coordination of Commercialization activities between the
Parties. HMR will make available to the Commercialization Liaison Officer an
office and secretarial services and will provide reasonable access to marketing,
sales, planning and other relevant HMR personnel assigned to work on
Collaboration Products and to plans, market research, and other documentation
relevant to Commercialization of Collaboration Products. The Commercialization
Liaison Officer is expected to attend relevant product team meetings and JCC
meetings. The Commercialization Liaison Officer also will have reasonable access
to Steering Committee members from each Party.
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(c) The Research and Development Liaison Officer will remain
an employee of HMR and the Commercialization Liaison Officer will remain an
employee of Amylin (the Research and Development Liaison Officer and the
Commercialization Liaison Officer are referred to collectively herein as the
"Liaison Officers"). Each Liaison Officer is expected to spend between
one-quarter and three-quarters of his or her working time at the premises of the
Party who is not his or her employer in order to perform his or her liaison
function effectively.
(d) HMR and Amylin will propose, within thirty (30) days
after formation of the JDC and JCC, respectively, candidates to serve as Liaison
Officers to the chairpersons of the JDC and JCC, respectively, who shall approve
the respective Liaison Officers within thirty (30) days following receipt of
each such proposed candidate. Such Liaison Officers may be replaced from time to
time by the Party employing them. Any such replacement must be approved by the
chairperson of the JDC or JCC, as the case may be.
3.11 ACCOUNTING.
(a) For the purposes of determining all costs and expenses
hereunder, any cost or expense allocated by either Party to a particular
category for a particular Collaboration Product shall not also be allocated to
another category for such Collaboration Product, and any cost or expense
allocated to a particular Collaboration Product in a particular country shall
not be allocated to another Collaboration Product of such Party or the same
Collaboration Product in a different country.
(b) Except as specifically provided in this Agreement, each
Party agrees to determine Net Sales, Royalty-Bearing Sales, Allowable Expenses,
Research and Development Expenses, Pre-Marketing Expenses and all other costs
and expenses hereunder with respect to the Products using its standard
accounting procedures, consistent with United States Generally Accepted
Accounting Principles, to the extent practical, as if such Products were solely
owned products of the Party. The Parties also recognize that such procedures may
change from time to time and that any such changes may affect the definition of
Net Sales, Royalty-Bearing Sales, Allowable Expenses, Research and Development
Expenses, Pre-Marketing Expenses and such other costs and expenses. The Parties
agree that, where such changes are economically material to either Party,
adjustments shall be made to compensate the affected Party in order to preserve
the same economics as reflected under this Agreement under such Party's
accounting procedures in effect as of the date on which the activity in question
(for example, Research, Development, marketing or manufacturing) first commences
under this Agreement. Where the change is or would be economically material to
one Party, the other Party shall provide an explanation of the proposed change
and an accounting of the effect of the change on the relevant revenue, cost or
expense category. For purposes of this Section 3.11, "economically material"
shall mean, before the first commercial launch of a Collaboration Product, a
change which affects Research Expenses, Research and Development Expenses and/or
Pre-Marketing Expenses by five percent
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(5%) or more, and after the first commercial launch of a Collaboration Product,
a change which affects Operating Profits or Losses by five percent (5%) or more.
ARTICLE IV
JOINT RESEARCH AND DEVELOPMENT
4.1 RESPONSIBILITIES OF THE JDC.
(a) Following the Effective Date, the JDC shall oversee the
Research and Development of Collaboration Compounds in order to obtain
Regulatory Approvals, as set forth in this Article IV. The JDC will also (i)
oversee the preparation of Research and Development Plans and Research and
Development Budgets and submit such plans and budgets to the Steering Committee
for review and budget approval, (ii) evaluate and designate Collaboration
Compounds for Research and Development and (iii) facilitate the flow of
Information with respect to Research and Development being conducted for each
Collaboration Product. In addition, in connection with an approved
Commercialization Budget and/or an approved Launch Budget, the JDC will oversee
Phase IIIB Clinical Trials, and shall provide such support with respect to Phase
IV Clinical Trials as may be reasonably requested by the JCC.
(b) Decisions of the JDC shall be approved by a majority
vote of the members of the JDC. If the JDC is unable to obtain a majority
affirmative vote as to any matter involving Research or Development, except for
(i) increasing the Research and Development Budget (other than as provided for
in the Initial Research and Development Plan and Budget in Section 4.4(a)), (ii)
altering the Research and Development Plan in a manner which would (1) change
indications for which a Collaboration Product is being developed, (2) conduct
Development for less than North America and the European Union or (3) change or
add a route of delivery or line extension of a Collaboration Product in
Development or (iii) terminating a Phase III Clinical Trial prior to completion
in accordance with its protocol (collectively, the "Excepted Development
Matters"), the decision of Amylin will be final and determinative so long as
such decision does not contradict or modify the terms of this Agreement. Such
Excepted Development Matters shall be referred to the Steering Committee for
consideration pursuant to Section 3.4 of this Agreement.
(c) The JDC will have the power to form subcommittees with
appropriate representation from Amylin, HMR and appropriate Third Parties;
provided, however, that any Third Party member of a subcommittee must be
approved by HMR.
(d) During clinical trials for any Collaboration Products,
the JDC and JCC shall work together to assure a smooth transition from
Development of such Collaboration Products to Commercialization of such
Collaboration Products, including, without limitation,
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product claims, product positioning, pre-launch medical education and
communications programs. In addition, the JDC shall keep the JCC informed of
proposed changes in the dosage form of Collaboration Products and the countries
in which Phase III Clinical Trials are being conducted.
4.2 LEAD RESEARCH AND DEVELOPMENT PARTY. Amylin will be the lead
Research and Development Party with respect to all Collaboration Products and,
as a result, shall be obligated and responsible for carrying out Research and
Development pursuant to each Research and Development Plan. Amylin will commence
reporting to the JDC within sixty (60) days following the Effective Date. Amylin
will report to the JDC at such times and in such manner as is reasonably
determined by the JDC from time to time. HMR agrees to carry out such Research
and Development tasks as are reasonably requested by Amylin and accepted by HMR.
In addition, consideration shall be given to HMR to participate in other
Research and Development activities, as mutually agreed upon by the Parties. All
HMR Research and Development Expenses will be included in Research and
Development Expenses to the account of HMR .
4.3 RIGHT TO ENGAGE THIRD PARTIES. In the course of its business,
Amylin regularly uses Third Parties to perform certain Research and Development
activities. Amylin will continue to do so during the course of this Agreement,
and expenses relating to such Third Party Development will be included in
Amylin's Research and Development Expenses.
4.4 RESEARCH AND DEVELOPMENT PLAN AND RESEARCH AND DEVELOPMENT
BUDGET.
(a) The Research and Development of each Collaboration
Product shall be governed by a Research and Development Plan and a Research and
Development Budget, which shall provide for Development in at least all Core
Dossier Countries and, together with updates, shall be prepared by Amylin, after
taking into consideration HMR's comments, for budget approval by the Steering
Committee. The Parties shall agree upon and approve an Initial Research and
Development Plan and Budget within sixty (60) days after the Effective Date. If
the Parties are unable to agree on the Initial Research and Development Plan and
Budget within such sixty (60) day period, then the Initial Research and
Development Plan and Budget shall be referred to the Steering Committee for
resolution by the Steering Committee.
(b) Each Research and Development Plan shall describe the
proposed overall program of Research and Development for the subject
Collaboration Product in each applicable country, including preclinical studies,
toxicology, formulation, process development, clinical studies and regulatory
plans and other elements of obtaining Regulatory Approval in each applicable
country. HMR shall provide such guidance as Amylin reasonably requests regarding
local Drug Approval Application submission requirements. The Research and
Development Plan shall include a summary of estimated Research and Development
Expenses of the program expected during the Research and Development process
through obtaining Regulatory Approval
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for each proposed indication and route of delivery, and shall also include a
detailed Research and Development Budget for all Research and Development
activities proposed for the following twelve (12) months.
(c) Each Research and Development Plan and Research and
Development Budget shall be updated annually by Amylin, after taking into
account HMR's comments, and shall be submitted by October 1 of each calendar
year to the Steering Committee for review and for Research and Development
Budget approval. The Steering Committee shall provide comments on each such
updated Research and Development Plan and Research and Development Budget within
thirty (30) days following its receipt of such plan and budget. Within ninety
(90) days following its receipt of such plan and budget, the Steering Committee
shall either approve the Research and Development Budget submitted by the JDC or
approve a modified Research and Development Budget prepared by the Steering
Committee consistent with the objectives for the Collaboration Products and the
aims of the collaboration contemplated by this Agreement. If the Steering
Committee fails to approve any budget increase in the Research and Development
Budget or a material change of the type described in Section 4.1(b)(ii) in the
Research and Development Plan, the Research and Development Budget and the
Research and Development Plan shall remain at its previously approved level or
previous unmodified form.
4.5 DEVELOPMENT EFFORTS. Each Party agrees to exert the efforts
necessary and reasonable to execute and substantially carry out the Research and
Development Plan within the Research and Development Budget and to cooperate
with the other Party in carrying out the Research and Development Plan.
4.6 DRUG APPROVAL APPLICATIONS. Consistent with the Research and
Development Plan, Amylin shall be responsible for preparing and filing all
filings with the regulatory authorities with respect to HMR Compounds in each
country in the Profit Sharing Territory ("Regulatory Filings"), including, but
not limited to, Drug Approval Applications, and seeking Regulatory Approvals for
Collaboration Products in the Profit Sharing Territory, including preparation of
all reports necessary as part of a Drug Approval Application. All such Drug
Approval Applications shall be filed jointly in the names of Amylin and HMR if
permitted by the regulatory agency. If a joint filing is not permitted,
simultaneous filings of identical Drug Approval Applications, one in Amylin's
name and one in HMR's name, shall be made ("Simultaneous Filings"). If neither
of the preceding filing scenarios is permitted by a regulatory agency, the Drug
Approval Application in such case shall be filed in the name of Amylin, and a
copy of such Drug Approval Application shall be simultaneously provided to HMR
together with written notice from the regulatory agency that neither joint
filings nor Simultaneous Filings are permitted in such jurisdiction. Amylin
shall be responsible for prosecuting all such Drug Approval Applications,
including any such Drug Approval Applications filed in HMR's name. In the event
a Drug Approval Application is filed in the name of a single Party, the other
Party shall have the right of cross reference. The Parties shall consult and
cooperate in the preparation of each Drug Approval Application and in obtaining
Regulatory Approvals. Upon receipt of
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each Regulatory Approval, Amylin shall promptly transfer ownership of the
corresponding Drug Approval Application and Regulatory Approval to HMR, provided
HMR is the marketing Party in the country wherein Regulatory Approval is
obtained, and shall promptly notify the appropriate regulatory agency of such
transfer of ownership. Transfer of sole ownership shall occur earlier in time if
necessary for negotiating pricing approvals pursuant to Section 5.11. In the
event HMR's right to market any Collaboration Products under this Agreement
terminates for any reason, HMR shall promptly transfer any and all of its
ownership rights in the corresponding Drug Approval Application and Regulatory
Approvals to Amylin. In connection with all Drug Approval Applications being
prosecuted by Amylin hereunder, each Party agrees to provide the other Party
with a copy (which may be wholly or partly in electronic form) of all filings to
regulatory agencies it makes on its behalf or on the other Party's behalf
hereunder.
4.7 COSTS OF DEVELOPMENT.
(a) All Research and Development Expenses of Collaboration
Products under this Agreement shall be shared equally by the Parties.
(b) HMR shall advance to Amylin, on the next to last
business day of each calendar quarter ending subsequent to the Effective Date,
HMR's share of the budgeted Research and Development Expenses for the following
quarter, based on the most recently approved Research and Development Budget.
(c) Each Party shall maintain records of Research and
Development Expenses incurred by it in accordance with procedures to be agreed
upon between the Parties. Subsequent to the Effective Date, Amylin and HMR shall
report quarterly to each other on their Research and Development Expenses, with
such reports to be submitted within twenty (20) days after the end of each
calendar quarter and within thirty (30) days after the end of each calendar
year. The Parties shall seek to resolve any questions related to such accounting
reports within sixty (60) days following receipt of such reports. If the Parties
are unable to resolve any disputes regarding such accounting reports within such
sixty (60) day period, such dispute will be referred to the Steering Committee
for resolution pursuant to Section 3.4.
(d) Any differences between the actual expenses incurred in
a particular quarter and the budgeted expenses for such quarter upon which HMR's
advance payment was made to Amylin shall be applied as an adjustment to the
following quarter's payment due from HMR as follows:
(i) in the event actual expenses exceed budgeted
expenses for a particular quarter, the amount of the difference shall be
added to the amount due under HMR's next quarterly advance payment of
budgeted Research and Development Expenses; and
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(ii) in the event actual expenses are less than
budgeted expenses for a particular quarter, the amount of the difference
shall be subtracted from the amount due under HMR's next quarterly
advance payment of budgeted Research and Development Expenses.
(e) Notwithstanding the provisions of Section 4.7(d), Amylin
shall be solely responsible for any Research and Development Expenses exceeding,
during a calendar year, one hundred five percent (105%) of the most recently
approved Research and Development Budget for such year, and such overage, if
any, shall be paid by Amylin to HMR within ten (10) days after the amount of
such overage is determined, unless the overage is (i) the result of actions of
HMR (in which case HMR shall bear the expense), (ii) is approved by the Steering
Committee or (iii) is the result of the requirements of regulatory authorities
(in which cases the Parties shall share the expense equally). If actual costs
and expenses for a given calendar year are less than or equal to 5% below
budgeted costs and expenses for such year, then such amount will be carried
forward into the next calendar year's budget. If actual costs and expenses for a
given calendar year are more than 5% below budgeted costs and expenses for such
year, then the Parties will mutually determine the portion of such amount in
excess of 5%, if any, that will be carried forward into the next calendar year's
budget.
4.8 ELECTION BY A PARTY TO TERMINATE ITS PARTICIPATION IN THE
DEVELOPMENT OF A COLLABORATION COMPOUND OR COLLABORATION PRODUCT FOR SAFETY OR
TOLERABILITY REASONS.
(a) In the event material issues regarding the Safety or
Tolerability of a Collaboration Compound or Collaboration Product arise during
the Development thereof, each Party shall have the right to terminate its
participation in worldwide Development of such Collaboration Compound or
Collaboration Product as provided below in Section 4.8(b). A Party's decision to
terminate its participation in Development of a particular Collaboration
Compound or Collaboration Product shall be in its own discretion.
(b) In the event one Party's participation in Development of
a Collaboration Compound or Collaboration Product is terminated pursuant to this
Section 4.8, then (i) such termination shall be effective thirty (30) days
following the date of receipt of written notice by the non-terminating Party of
the terminating Party's decision to terminate its participation, (ii) the
terminating Party shall not be responsible for any Research and Development
Expenses related to such Collaboration Compound or Collaboration Product after
the date the termination is effective, (iii) the non-terminating Party may
thereafter proceed independently with research, development and/or
commercialization of the
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compound or product in question as an Independent Product, either alone or in
conjunction with Third Parties and (iv) the terminating Party shall, to the
extent not previously granted under this Agreement or the License Agreement, (1)
grant exclusive licenses (even as to the granting Party) under Amylin Patents or
HMR Patents, as applicable, Joint Patents and know-how Controlled by such Party
to the non-terminating Party for continued research, development and/or
commercialization of the compound or product in question, (2) shall transfer any
related Drug Approval Applications or Regulatory Approvals (including transfer
of all relevant data and information relevant to Regulatory Authorities) to the
non-terminating party, and (3) otherwise cooperate to enable the non-terminating
Party under this Section 4.8 to continue said research, development and/or
commercialization. In the event a termination of participation in Development of
a Collaboration Compound or Collaboration Product occurs under this Section 4.8,
such Independent Product shall thereafter bear a royalty of ******************
of Royalty-Bearing Sales on a country-by-country basis for the later to occur of
(i) ten (10) years from the first commercial sale of such Independent Product in
such country and (ii) the expiration of the last to expire of any issued patents
covering such Independent Product in any relevant country; provided, however,
that such Collaboration Compound or Collaboration Product may not be so
independently developed or commercialized for any indication for which a
Collaboration Product or Royalty-Bearing Product is being (i) Developed, (ii)
Commercialized, or (iii) Developed and/or Commercialized, in all cases in at
least two Major Market Countries at the time the termination under this Section
4.8(b) became effective for any Collaboration Compound or Collaboration Product.
Royalty payments, if any, due under this Section 4.8(b) shall be paid in
accordance with the provisions of Section 6.6.
(c) The rights set forth in this Section 4.8 to terminate
participation in Development of a particular Collaboration Compound or
Collaboration Product for Safety or Tolerability reasons shall be separate from,
and in addition to, the right to terminate this Agreement pursuant to Article
XII.
4.9 INSURANCE. Throughout the Research and Development of a
Collaboration Product, Amylin agrees to have in place comprehensive general
liability insurance, including, but not limited to, product liability insurance
(which shall include coverage for clinical trials) of at least **********
combined single limit with an aggregate limit of at least **********, which
insurance shall include HMR as an additional insured. Amylin agrees to provide
HMR with thirty (30) days prior written notice in the event it elects to
voluntarily terminate such insurance. When insurance is obtained as required
under this Section 4.9, Amylin agrees to provide HMR with a certificate of
insurance evidencing its retention of such insurance coverage and any updates
thereto.
ARTICLE V
COMMERCIALIZATION
5.1 RESPONSIBILITIES OF THE JCC.
(a) The purpose of the JCC shall be to (i) oversee the
Commercialization of Collaboration Products in the Profit-Sharing Territory,
including the planning, annual budgeting, commercial manufacturing, marketing,
sales and distribution and sublicensing of Collaboration
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Products, (ii) monitor, review and comment on costs incurred by the Parties in
the commercial manufacture, marketing, sale and distribution of Collaboration
Products, (iii) review and comment on the Commercialization Plans and Launch
Plans and the selection of trademarks for Collaboration Products, (iv) receive
and provide to the Parties all sales, pricing, and financial reports pertaining
to Pre-Marketing and Commercialization of Collaboration Products, (v) recommend
to the JDC the principal indications and delivery routes for all Collaboration
Products, (vi) review and comment on HMR's pricing recommendations prior to
submission of such to the Steering Committee pursuant to Section 5.11, (vii)
review and comment on HMR's manufacturing recommendations prior to submission of
such to the Steering Committee pursuant to Section 8.1, and (viii) facilitate
the flow of Information with respect to the Commercialization of each
Collaboration Product. Subject to the provisions of Section 5.1(b) regarding
Excepted Commercialization Matters, HMR shall make the final decision on all
matters relating to the Commercialization of any Collaboration Product,
including all day to day decisions.
(b) Decisions of the JCC shall require a majority vote of
all members of the JCC. If the JCC is unable to obtain a majority affirmative
vote as to any matter involving Commercialization, the decision of HMR will be
final and determinative, so long as such decision does not contradict or modify
the terms of this Agreement, except with regard to (i) a decision to recall a
Collaboration Product, which shall be decided pursuant to Section 5.12, (ii) a
dispute related to pricing of a Collaboration Product, which shall be referred
to the executive officers of the Parties pursuant to Section 5.11, (iii) a
dispute related to manufacturing of a Collaboration Product, which shall be
referred to the executive officers of the Parties pursuant to Article XII of the
License Agreement, or (iv) a Third Party promotion support arrangement for a
Collaboration Product which also involves the promotion support of a
non-Collaboration Product(s), which must be approved by the Steering Committee
pursuant to Section 5.3(a) (collectively, the "Excepted Commercialization
Matters").
(c) The JCC will have the power to form subcommittees with
appropriate representation from Amylin, HMR and appropriate Third Parties;
provided, however, that any Third Party members of such a subcommittee must be
approved by Amylin.
(d) During clinical trials for any Collaboration Products,
the JCC shall coordinate with the JDC to assure a smooth transition from
Development to Commercialization.
(e) The JCC shall not be involved with the commercialization
of (i) Independent Products or (ii) Royalty-Bearing Products in any
Royalty-Bearing Countries.
5.2 HMR AS LEAD MARKETING PARTY.
(a) HMR will be the lead marketing party with respect to all
Collaboration Products and, as a result, shall be obligated and responsible for
carrying out Commercialization pursuant to each Commercialization Plan. HMR will
assemble its product team and commence
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reporting to the JCC within sixty (60) days following the Effective Date. Amylin
agrees to carry out the Commercialization tasks referred to in Section 5.2(b)
and such other Commercialization tasks as are reasonably requested by HMR and
accepted by Amylin.
(b) It is recognized that the Parties bring particular
strengths to the ongoing Commercialization of Collaboration Products. HMR will
assign to Amylin a role in Commercialization functions and activities, both
during Development and following Collaboration Product launch, as follows:
(i) it is anticipated by the Parties that from the
Effective Date throughout the marketing of Collaboration Products,
Amylin will provide members for the HMR product teams, participating in
the development of all strategies and performing activities relating to
the following marketing functions as part of the Commercialization Plans
and Launch Plans in the Core Dossier Countries:
- Medical Symposia
- Scientific Exhibits
- Opinion Leader Program Development
- Medical Education Program Development;
(ii) furthermore, in preparation for, but at least
twelve (12) months prior to, product launch of the first Collaboration
Product hereunder in the first Core Dossier Country, Amylin will provide
a small (not to exceed one hundred (100) persons) dedicated field force
of experienced, scientifically competent "Medical Liaison Officers"; and
(iii) Amylin's activities will be performed in
accordance with each approved Commercialization Plan and
Commercialization Budget and each approved Launch Plan and Launch
Budget. All other marketing activities that have not been assigned to
Amylin will be the responsibility of HMR, unless determined otherwise by
the JCC.
5.3 RIGHT TO ENGAGE THIRD PARTIES.
(a) If HMR determines that it needs promotion support in the
Profit Sharing Territory and Amylin does not provide it, or HMR determines
Amylin is not reasonably capable of providing it, then HMR may contract for
additional promotion support from a Third Party. In such event, the Parties will
consult prior to the engagement of a Third Party. The costs of engaging such
Third Party will be a Royalty Expense (as defined in Exhibit A). Any other use
of a Third Party, such as the sublicensing of a Third Party with respect to
co-marketing and/or co-promotion in the Profit Sharing Territory, must be
approved by the Steering Committee as described in Section 3.4, except to the
extent such arrangements either directly or indirectly also
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involve the marketing, promotion, co-marketing and/or co-promotion of
non-Collaboration Products. To the extent any non-cash consideration is conveyed
to either Party as part of any arrangement under this Section 5.3, the other
Party shall be made whole.
(b) In the event that HMR decides not to market a
Collaboration Product in a country, the Parties will consider whether it is
desirable to license a Third Party to market in such country, and only if both
Parties so agree, the Parties, through HMR with full participation by Amylin,
shall attempt to license such rights to a Third Party. Royalties received under
this provision, if any, shall be included in Net Sublicense Revenues.
5.4 COMMERCIALIZATION EFFORTS. Each Party agrees to exert the
efforts necessary and reasonable to execute and substantially carry out the
Commercialization Plans and Launch Plans within the Commercialization Budgets
and Launch Budgets and to cooperate with each other in carrying out the
Commercialization Plans. In addition, with regard to the determination of all
pricing, sampling and discount strategies for Collaboration Products, HMR shall
use a similar and no less rigorous approach as that used by it in determining
such strategies for its own pharmaceutical products of comparable market
potential.
5.5 COMMERCIALIZATION PLAN AND COMMERCIALIZATION BUDGET.
(a) HMR shall develop a commercialization plan (the
"Commercialization Plan") for each Collaboration Product, which shall include
but not be limited to (i) global demographics and market dynamics, Major Market
Country market strategies, estimated country launch dates, a worldwide sales and
expense forecast (including at least three (3) years of estimated sales and
expenses), manufacturing plans and expected product profile based upon the
Research and Development Plan, (ii) a market plan (including pricing strategies
pertaining to discounts, samples and Nominal Price sales) for the United States,
which will serve as a strategic reference for other market plans for countries
such as Germany, the United Kingdom, France and Japan (it being understood that
such market plans will evolve over time and shall be similar to existing market
plans developed at such time by HMR for pharmaceutical products with comparable
market potential), and (iii) a commercialization budget ("Commercialization
Budget") for each Collaboration Product for all applicable countries so
determined by HMR (but at a minimum, the countries covered by the then current
Research and Development Plan), including the Third Parties to be utilized and
the arrangements with them that have been or are proposed to be agreed upon.
Each Commercialization Budget shall include a budget of the expenses expected to
be incurred in connection with performing the Commercialization Plan, including
Pre-Marketing Expenses and Allowable Expenses in each applicable country.
(b) The first Commercialization Plan shall be in the form of
an initial outline and the first Commercialization Budget shall be in the form
of an estimated budget. The JCC shall submit such outline of the first
Commercialization Plan and such estimated Commercialization Budget to the
Steering Committee for review and approval no later than six
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(6) months following the Effective Date. It is understood that such outline and
estimate may contain open issues and identify areas wherein more information is
needed to complete the outline and estimated budget and to prepare a more
complete Commercialization Plan and Commercialization Budget. Thereafter, by
October 1 of each subsequent year, HMR, after taking into consideration Amylin's
comments, will prepare a Commercialization Plan for submission by the JCC to the
Steering Committee for review and a Commercialization Budget for submission by
the JCC to the Steering Committee for review and approval. Notwithstanding
anything in this Agreement to the contrary, the Commercialization Budget shall
be approved by the Steering Committee no later than October 31 of each year. For
any subsequent Collaboration Products, HMR shall prepare and the JCC shall
submit an outline of an initial Commercialization Plan for each such
Collaboration Product to the Steering Committee for review and an estimated
Commercialization Budget for review and approval no later than six (6) months
after any Collaboration Compound is designated a Collaboration Product. Each
such Commercialization Plan and Commercialization Budget shall be updated and
refined on each subsequent October 1 as described above in connection with
Collaboration Compounds. Any significant change in any Commercialization Plan or
Commercialization Budget during the course of the year will be communicated
promptly to the JCC. In addition, HMR shall provide an update of each
Commercialization Plan and Commercialization Budget to the JCC in a manner
consistent (with respect to timing and content) with such updates as are
reported internally by HMR on its existing pharmaceutical products of comparable
market potential.
5.6 LAUNCH PLAN.
(a) Each Commercialization Plan shall be updated, in advance
of the launch of the applicable Collaboration Product in each country as the JCC
determines is appropriate, to include a Launch Plan and Launch Budget for such
launch and the twelve (12) month period following the launch date for such
Collaboration Product. Each such Launch Plan and Launch Budget shall be
developed by HMR, after taking into consideration Amylin's comments, and
presented to the JCC for Launch Plan and Launch Budget review and approval and
to the Steering Committee for Launch Budget approval, with HMR having the final
decision at the JCC and Steering Committee as described in Section 3.4. The
Steering Committee shall have sixty (60) days to review and approve such Launch
Budget. If the Steering Committee is unable to approve the Launch Budget within
such sixty (60) day period, the Launch Budget shall be submitted to the Parties'
executives as provided for in Article XII of the License Agreement.
(b) It is understood by the Parties that determining a date
for Regulatory Approval and thus a launch date is difficult. The failure to
accurately estimate the launch date shall not constitute a breach hereunder. As
a result of this uncertainty, the JDC shall estimate for each country a
realistic date for Regulatory Approval, and the JCC will use this estimated date
to submit its Launch Plan and Launch Budget at least twelve (12) months prior to
the estimated Regulatory Approval date, to the Steering Committee. By October 1
of each calendar year thereafter, if not yet executed, each Launch Plan and
Launch Budget for each Collaboration
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Product shall be updated by HMR and the updated Launch Budget shall be submitted
by the JCC for approval by the Steering Committee.
(c) Each Launch Plan shall include (i) updated market and
sales forecasts in units and estimated revenues of Collaboration Product, (ii)
estimated resource requirements and (iii) such other matters deemed appropriate
by HMR.
(d) Each Launch Budget shall include a breakdown of
individual Allowable Expense items expected to be incurred in connection with
performing the applicable Launch Plan. It is understood that there will not
necessarily be a separate Launch Plan and Launch Budget for each country in
which a Collaboration Product launch is planned, but that estimated launch
dates, Launch Budgets and Launch Plans for each country in which a launch is
planned may be incorporated into one or more comprehensive Launch Plans and
Launch Budgets.
5.7 ELECTION BY AMYLIN OF ROYALTY-BEARING COUNTRIES.
(a) With respect to all countries other than the Core
Dossier Countries, within sixty (60) days after the Steering Committee approves
a Launch Budget for each Collaboration Product, Amylin may make a one-time,
irrevocable election on a country-by-country basis to withdraw from
expense-sharing with respect to such Collaboration Product in the applicable
country, in which case such country shall become a Royalty-Bearing Country and
Amylin shall receive a royalty of ****************** on Royalty-Bearing Sales in
such Royalty-Bearing Country with respect to such Royalty-Bearing Product, in
accordance with Section 6.4(a) and Section 6.4(b). Amylin's election to withdraw
with respect to a Collaboration Product pursuant to this Section 5.7(a) shall be
effective thirty (30) days after receipt by HMR of written notice from Amylin of
its election to withdraw, which written notice shall specify the Collaboration
Product and the country(ies) subject to such withdrawal. Withdrawal under this
Section 5.7(a) by Amylin shall relieve it from its obligation to carry out and
complete the Research and Development Plan as it relates to countries from which
it withdraws hereunder.
(b) Subject to Sections 7.3, 11.2 and 11.3, the
Commercialization of Royalty- Bearing Products shall be conducted independently
by HMR.
5.8 ADVERTISING AND EDUCATION. HMR, after consultation with the JCC,
will assign to the Parties, their Affiliates or any Third Party the preparation
of advertising and education materials. Such materials shall be subject to prior
review and comment by Amylin and HMR, which review and comment by Amylin and HMR
shall be completed within thirty (30) days after receipt of such materials by
Amylin and HMR. With respect to written and visual promotional or educational
materials, to the extent such materials identify or otherwise make reference to
either of the Parties, Amylin and HMR shall both be presented and described with
equal prominence, as permitted by the applicable laws and regulations of each
country in which such materials are to be presented. All product labeling,
documentary information, promotional
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material and oral presentations (where practical) regarding the detailing and
promoting of Collaboration Products shall display the names and logos of Amylin
and HMR with equal prominence. All advertising and education and training
materials for use in a country must also be approved in advance by the Party
holding the relevant Drug Approval Application or responsible for the Regulatory
Approval for such country, as necessary to ensure such Party's compliance with
all applicable Regulatory Approvals. Such approval or disapproval shall be given
by the Party within thirty (30) days after receipt of such advertising and
education and training materials.
5.9 PRE-MARKETING EXPENSES. Amylin and HMR shall share equally in
Pre-Marketing Expenses; provided, however, that HMR will fund all Pre-Marketing
Expenses for the first Collaboration Product. Amylin's 50% share of such
Pre-Marketing Expenses for the first Collaboration Product shall be reimbursed
by Amylin to HMR from its share of Operating Profits as provided in Section
6.2(b). In this regard, a written accounting of Pre-Marketing Expenses incurred
by Amylin within a Commercialization Plan and Budget shall be submitted by
Amylin to HMR within twenty (20) days of the end of each calendar quarter and
within thirty (30) days of the end of each calendar year in which such expenses
were incurred. HMR will repay Amylin within thirty (30) days of its receipt of
such written accounting. Notwithstanding anything in this Agreement to the
contrary, in the event that greater than 50% of the voting stock or
substantially all of the assets of Amylin are acquired by (i) an entity with a
market capitalization equal to or in excess of $2.5 billion in publicly traded
stock or (ii) a privately held entity with annual sales in excess of $1 billion,
then HMR's obligation to fund all Pre-Marketing expenses for the first
Collaboration Product pursuant to this Section 5.9 shall terminate and be of no
further effect.
5.10 TRAINING PROGRAM. HMR will develop adequate training programs
for personnel involved in the Commercialization of Collaboration Products and/or
Royalty-Bearing Products. Amylin shall play an appropriate role, as determined
by the JCC, in the preparation of such training materials and conduct of
training; provided, however, that Amylin shall not be involved in the
preparation of training materials or the conduct of training with respect to
Royalty-Bearing Products in a Royalty-Bearing Country or HMR's Independent
Products. HMR shall submit to Amylin for its review all training materials,
which review shall be completed within thirty (30) days of receipt of such
materials by Amylin. The Parties agree to utilize such training programs on an
ongoing basis to assure a consistent, focused promotional strategy. Training
shall be carried out at a time which is determined by HMR, and which is prior to
but reasonably near the date on which Regulatory Approval is expected. The costs
of transporting, housing and maintaining personnel to be trained, and the
preparation of materials, shall be deemed to be Pre-Marketing Expenses or
Marketing Expenses, as the case may be.
5.11 PRICING, PRICING APPROVALS AND PRODUCT DISTRIBUTION. If Amylin
does not agree with the recommended price proposed by HMR with respect to a
Collaboration Product, it may, within ninety (90) days following receipt of such
recommended price from HMR, prepare
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its own analysis of the market potential and recommended price for such
Collaboration Product and present such analysis and recommendation to the
Steering Committee. If the Steering Committee is unable to agree on the prices
for such Collaboration Product within sixty (60) days after receipt of the HMR,
and, if applicable, Amylin pricing recommendations, whichever is later, the
analyses and recommendations of both Parties will be referred to a joint
executive review panel composed of the Chief Executive Officer of Amylin and
HMR's Chief Operating Officer. If this joint executive review panel is unable to
agree on a price after reviewing the submissions from Amylin and HMR within
thirty (30) days following receipt of such recommendations, then HMR shall set
the applicable prices, which shall be somewhere between the prices proposed by
each Party. The above described mechanism shall be the sole method for resolving
disputes as to price(s) and shall not be subject to dispute resolution pursuant
to Article XII of the License Agreement. HMR shall obtain for Collaboration
Products such pricing approvals as may be required by, and arrange for
distribution of each Collaboration Product in, each applicable country of the
Profit Sharing Territory.
5.12 PRODUCT RECALLS. As an exception to the general authority of HMR
under this Article V, if HMR commences an internal product quality
investigation, it shall promptly notify and consult with Amylin regarding such
investigation. Further, if either Party believes that a recall of a
Collaboration Product is necessary, such Party shall notify and consult with the
other Party within two (2) working days of its determination, and both Parties
shall cooperate to allow such recall to occur under the direction of the
Steering Committee. In the event of a dispute about whether to recall a
Collaboration Product, such recall shall occur.
5.13 TAX CONSIDERATION. Either Party may take advantage of tax
considerations which benefit it and not the other Party. In the event that a
Party takes advantage of a tax consideration which benefits it and not the other
Party, no compensation to the other Party is required unless such affects the
other Party's Operating Profits or Losses negatively, in which case compensation
shall be provided to the other Party to make it whole. To the extent such
negative impact on one Party's Operating Profits or Losses results from the
manufacture of a Collaboration Product, such impact shall be addressed in the
manner described in Section 8.1.
5.14 DISCOUNTED SALES. It is possible that Collaboration Products
could be included as part of a multiple product offering to customers by HMR,
and, at times, discounts may be offered independently. In the event that any
Collaboration Products are offered along with other HMR products, the effect of
the potential discounts may not impact the Average Net Selling Price below ****
of the Ex-Manufacturer Selling Price in any given country. In the event that
planned or executed discounting activities related to any Collaboration Product
(pursuant to which such Collaboration Product is sold by HMR in combination with
one or more non-Collaboration Products in any given country) as measured on a
quarterly basis will reduce the Average Net Selling Price below **** of the
Ex-Manufacturer Selling Price in any given country, HMR shall present an
analysis of such discounting forecasts and activities to the JCC for review and
comment. Such analysis will include all appropriate information for such
Collaboration Product
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reasonably available to HMR, such as discounts given or forecasted, profit
and/or loss analysis of discounting activities, Average Net Selling Price of
planned or granted discounts for major customers (to be defined by HMR) and a
price versus volume analysis. If the Average Net Selling Price discount with
respect to such Collaboration Products exceeds ***, HMR shall make Amylin whole
with respect to Net Sales of such Collaboration Product (whole equals *** of the
Ex-Manufacturer Selling Price). All sales of such Collaboration Product at a
Nominal Price as well as all sales involving governmental mandated or conceded
discounts are exempt from the Average Net Selling Price calculations. If Amylin
determines that the discounting activities as presented by HMR unfairly
disadvantage Amylin's interest, Amylin may prepare an analysis and present it to
the Steering Committee for review and concurrence. In the absence of agreement
at the Steering Committee, HMR shall have the final determination in this
matter. If market dynamics change (for example, if a directly competing product
were to enter the market, and it were to become in the best interest of both
Parties to discount more than *** below Ex-Manufacturer Selling Price in a
particular country), HMR and Amylin may agree to discount beyond the stated ***
discount to Ex-Manufacturer Selling Price, and in this situation HMR will no
longer be required to keep Amylin whole (whole equals *** of the Ex-Manufacturer
Selling Price). This Section 5.14 regarding "discounted sales? will only be in
effect while any Collaboration Compound is covered by a Patent.
ARTICLE VI
PROFIT SHARING AND ROYALTIES
6.1 SHARE OF OPERATING PROFITS OR LOSSES.
(a) Subject to the terms of this Agreement, Amylin and HMR
shall share equally in Operating Profits or Losses.
(b) Notwithstanding the foregoing Section 6.1(a) to the
contrary, HMR shall fund Amylin's one-half share of any Operating Losses
incurred during any quarter during the first two years following commercial
launch of a Collaboration Product, which funding by HMR shall be reimbursed by
Amylin pursuant to Section 6.2(b); provided, however, that in the event that
greater than 50% of the voting stock or substantially all of the assets of
Amylin are acquired by (i) an entity with a market capitalization equal to or in
excess of $2.5 billion in publicly traded stock or (ii) a privately held entity
with annual sales in excess of $1 billion, then HMR's obligation to fund
Amylin's one-half share of any Operating Losses pursuant to this Section 6.1(b)
shall terminate and be of no further effect.
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6.2 PAYMENT.
(a) Subject to Section 6.2(b), within twenty (20) days of
the end of each of the first three calendar quarters and within thirty (30) days
of the end of the fourth calendar quarter of each year following the launch of
each Collaboration Product in a country, Amylin shall report to HMR and the JCC
as outlined in Exhibit B, its revenues and individual Allowable Expense items
(with appropriate supporting information) involved in the computation of
Operating Profits or Losses and recognized during such quarter with respect to
each such Collaboration Product. Within ten (10) days after receipt of such
report, HMR shall provide for each Collaboration Product one worldwide
consolidated Financial Statement and individual Financial Statements for each
country in the Profit Sharing Territory to the JCC, and the JCC shall promptly
direct the remittance between the Parties of an Equalization Payment with
respect to each Collaboration Product. The reports and Equalization Payments for
the fourth quarter of the fiscal year may include reconciliations and year-end
adjustments with respect to previous quarters. The payment required by this
Section 6.2(a), together with interest accrued from the end of each calendar
quarter (to be paid at the commercial paper rate for high grade unsecured notes
sold through dealers, as quoted in the Wall Street Journal on the last day of
each such quarter), shall be made in any event within thirty (30) days of the
due date of the receipt of reports described in the first sentence of this
Section 6.2(a).
(b) Notwithstanding anything to the contrary provided for in
Section 6.2(a), twelve (12) months after the approval of a United States Drug
Approval Application for a Collaboration Product, HMR may withhold from payment
to Amylin an amount equal to ******************* of any Equalization Payment
owed to Amylin pursuant to Section 6.2(a), until such time as HMR has received
from such withheld payments an aggregate amount equal to the sum of (i)
************ (representing ******************* of the remaining ********** of
the agreed upon ************ in costs and expenses incurred by HMR prior to the
effective date of the License Agreement) plus (ii) the aggregate amount of
Amylin's fifty percent (50%) share of Pre-Marketing Expenses for the first
Collaboration Product advanced by HMR pursuant to Section 5.9 plus (iii) the
aggregate amount of Amylin's fifty percent (50%) share of Operating Losses
funded by HMR pursuant to Section 6.1(b).
6.3 TERM. The Parties shall share Operating Profits or Losses
hereunder with respect to each Collaboration Product in each Profit Sharing
Territory until each such Collaboration Product is permanently withdrawn from
and is no longer being sold anywhere in the relevant Profit-Sharing Territory.
6.4 ROYALTY-BEARING PRODUCTS.
(a) HMR shall pay to Amylin the applicable running royalty,
as set forth in Section 5.7(a), on Royalty-Bearing Sales for Royalty-Bearing
Products, if any.
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(b) Except as expressly provided in this Agreement, all
royalties to be paid to Amylin on Royalty-Bearing Sales for Royalty-Bearing
Products shall be paid in accordance with the provisions of Section 6.6, on a
country-by-country basis, from the date of the first commercial sale of each
Royalty-Bearing Product in a particular country until the later of (i) ten (10)
years from the first commercial sale in such country or (ii) the last to expire
of any (1) Amylin Patents or (2) HMR Patents or Joint Patents, as applicable,
which covers use or sale of the Royalty-Bearing Product in such country, subject
to the following:
(i) if a generic form of a Royalty-Bearing Product
is introduced by a Third Party in any country in which neither Amylin
nor HMR has patent coverage preventing sale or use and such Third Party
has sales in such country equal to at least ********************* of
unit sales of the Royalty-Bearing Product in such country, the royalty
obligation set forth above shall be reduced by ******************* until
such time, and from time to time, that either Amylin or HMR is granted
such patent coverage of the Royalty-Bearing Product in such country or
the generically equivalent product sales in any full calendar quarter
are reduced to less than ********************* of the Royalty-Bearing
Product unit sales; and
(ii) the royalty amount to be paid under this
Agreement with respect to a Royalty-Bearing Product shall be reduced by
an amount equal to ******************* of any royalties payable to Third
Parties in respect of the manufacture, use or sale of Royalty-Bearing
Products.
Notwithstanding anything in this Section 6.4 to the contrary,
the aggregate reduction of royalties set forth in Subsections (i) and (ii) of
this Section 6.4(b) and in Section 9.4 of this Agreement shall not reduce the
net royalty amount payable under this Section 6.4 by more than
*******************.
(c) HMR may discontinue Commercialization of a
Royalty-Bearing Product at any time in its sole discretion.
6.5 SALES BY SUBLICENSEES. In the event HMR grants licenses or
sublicenses to others to make or sell Royalty-Bearing Products, or in the event
either Party grants licences or sublicenses to others to make or sell
Independent Products, such licenses or sublicenses shall include an obligation
for the licensee or sublicensee to account for and report its Royalty-Bearing
Sales of such Royalty-Bearing Products and/or Independent Products on the same
basis as if such sales were Royalty-Bearing Sales by the Party, and such Party
shall pay royalties to the other Party as if the Royalty-Bearing Sales of the
sublicensee were Royalty-Bearing Sales of the Party granting the license or
sublicense.
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6.6 ROYALTY PAYMENTS AND REPORTS. A report summarizing the
Royalty-Bearing Sales of any Royalty-Bearing Products and/or Independent
Products during the relevant quarter shall be delivered to the receiving Party
within twenty (20) days following the end of each calendar quarter and within
thirty (30) days following the end of each calendar year for which royalties are
due from the selling Party. Royalty payments under this Agreement shall be made
to the receiving Party or its designee quarterly within thirty (30) days
following the due date for the report as set forth in the first sentence of this
Section 6.6.
6.7 TAXES. The Party receiving royalties shall pay any and all taxes
levied on account of royalties it receives under this Agreement. If laws or
regulations require that taxes be withheld, the Party paying royalties will (i)
deduct those taxes from the remittable royalty, (ii) timely pay the taxes to the
proper taxing authority, and (iii) send proof of payment to the other Party
within thirty (30) days following such payment.
6.8 BLOCKED CURRENCY. In each country where the local currency is
blocked and cannot be removed from the country, at the election of the selling
Party, royalties or the other Party's share of Operating Profits or Losses
accrued in that country shall be paid to the appropriate Party in the country in
local currency by deposit in a local bank designated by the receiving Party.
6.9 PAYMENTS TO OR REPORTS BY AFFILIATES. Any payment required under
any provision of this Agreement to be made to either Party or any report
required to be made by any Party shall be made to or by an Affiliate of that
Party if designated by that Party as the appropriate recipient or reporting
entity.
6.10 NO OVERLAPPING ROYALTIES. Notwithstanding any other provision of
this Agreement to the contrary, in no event shall any royalty payment provided
for under any Section of this Agreement be paid with respect to any sale of an
Independent Product or Royalty-Bearing Product to the extent a royalty payment
has been paid pursuant to any other Section of this Agreement with respect to
such sale; provided, however, that in the event of such overlapping royalty
provisions, the highest royalty rate provided for such sale in this Agreement
shall be the applicable royalty rate for such sale.
ARTICLE VII
LICENSES
7.1 LICENSES TO HMR TO CONDUCT RESEARCH AND DEVELOPMENT.
(a) Subject to the terms of this Article VII, Amylin grants
to HMR an exclusive (except as to Amylin) paid-up, worldwide license under the
Amylin Patents, Amylin
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Data and Amylin Know-how to conduct Research and Development with respect to
Collaboration Products and Royalty-Bearing Products in accordance with the terms
of this Agreement and an exclusive (even as to Amylin) paid-up, worldwide
license to conduct Research and Development with respect to Independent Products
in accordance with the terms of this Agreement.
(b) A list of the Amylin Patents identified as of the
Effective Date is attached hereto as Exhibit C. Amylin shall promptly notify
HMR, and such Exhibit C shall be expanded from time to time, to reflect any
changes to Amylin Patents, any Amylin Patents hereafter identified and/or to
include any other Amylin Patents.
7.2 LICENSES TO HMR TO CONDUCT COMMERCIALIZATION. Subject to the
terms of this Article VII, Amylin grants to HMR an exclusive (except as to
Amylin) worldwide license under the Amylin Patents, Amylin Data and Amylin
Know-how to conduct Commercialization (including the right to make, have made,
use, import, sell, offer for sale and have sold) with respect to Collaboration
Products and Royalty-Bearing Products in accordance with the terms of this
Agreement and an exclusive (even as to Amylin) worldwide license under the
Amylin Patents, Amylin Data and Amylin know-how to conduct Commercialization
(including the right to make, have made, use, import, sell, offer for sale and
have sold) with respect to Independent Products in accordance with the terms of
this Agreement. Such licenses with respect to Royalty-Bearing Products and
Independent Products shall be subject to royalty payments as provided in
Sections 5.7 and 4.8, respectively.
7.3 LICENSE TO AMYLIN TO CONDUCT COMMERCIALIZATION. Subject to the
terms of this Article VII, HMR grants to Amylin an exclusive (even as to HMR)
worldwide license under the HMR Patents, HMR Data and HMR Know-how to conduct
Commercialization (including the right to make, have made, use, import, sell,
offer for sale and have sold) with respect to Independent Products in accordance
with the terms of this Agreement. Such license shall be subject to royalty
payments as provided in Section 4.8.
7.4 SUBLICENSING. During the term of this Agreement, neither Party
may grant sublicenses of Joint Patents or Patents owned or Controlled by the
other Party except with the express prior written approval of the other Party;
provided, however, that (i) either Party may proceed with distribution and sale
of a Collaboration Product through its usual and customary distributors
performing their usual and customary distribution activities for such Party in
accordance with this Agreement without the other Party's prior written approval
of any necessary sublicenses in connection therewith, and (ii) in the case of
Royalty-Bearing Products or Independent Products, the Party having a license
with respect to such Products shall have a right to sublicense under such
license with respect to such Products without approval of the other Party.
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7.5 THIRD PARTY TECHNOLOGY.
(a) The licenses granted under Sections 7.1, 7.2 and 7.3 may
include sublicenses of Third Party technology. Any royalty amounts payable to
Third Parties in connection with sales of Products shall be considered a Royalty
Expense (as defined in Exhibit A) with respect to the sale of Collaboration
Products and in any event shall be offset against any royalty amount owed with
respect to the sale of Royalty-Bearing Products and Independent Products, as
provided under Section 6.4(b)(ii).
(b) The licenses granted under Sections 7.1, 7.2 and 7.3, to
the extent they include sublicenses of Third Party technology, shall be subject
to the terms and conditions of the license agreement pursuant to which the
sublicense is granted.
(c) During the term of this Agreement, if either Party
becomes aware of technology of a Third Party that would be valuable to the
Development or Commercialization of Collaboration Products, the JDC will
determine whether such technology should be brought into the collaboration
contemplated by this Agreement and the cost of acquiring such technology shall
be borne equally by the Parties. In the event that such acquired technology
results in the payment of Third Party royalties, such royalties shall be a
Royalty Expense with respect to the sale of Collaboration Products, and offset
against any royalty owed with respect to the sale of Royalty-Bearing Products
and Independent Products, as provided under Section 6.4(b)(ii).
ARTICLE VIII
MANUFACTURE AND SUPPLY
8.1 MANUFACTURE AND SUPPLY DURING DEVELOPMENT. Amylin will be
responsible for manufacture of Collaboration Products for use during the
Development of Collaboration Products. Payments to Third Party manufacturers for
such manufacture of Collaboration Products and related costs will be included in
Research and Development Expenses for purposes of Article IV. As used in this
Article VIII, "manufacture" shall mean manufacture of Collaboration Products in
bulk form or finished form.
8.2 MANUFACTURE AND SUPPLY DURING COMMERCIALIZATION. HMR shall be
responsible for arranging for the commercial manufacture of Collaboration
Products in such a manner as to achieve and maintain a substantially competitive
Cost of Goods Sold and to assure quality control and quality assurance as
stringent as such quality control and quality assurance standards used by HMR in
the manufacture of its other pharmaceutical products of comparable market
potential, continuity and security of supply, compliance with cGMP, compliance
with all applicable regulatory requirements, and other terms and conditions of
supply which best serve the interests of the collaboration contemplated by this
Agreement. Such manufacturer(s) may
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include either or both of the Parties as well as Third Parties. To enable the
transfer of manufacturing to Amylin in situations under this Agreement where HMR
is obligated to do so, with respect to all contracts entered into by HMR with a
Third Party relating to the manufacture of Collaboration Products, HMR shall use
commercially reasonable efforts to include a provision permitting the assignment
of such contract to Amylin on the same terms for at least three (3) years. In
selecting one or more manufacturers, the goals set forth in the first sentence
of this paragraph shall take precedence over the consideration of whether one
Party or the other then has unused or excess manufacturing capacity. Any
selection of manufacturers for Commercialization shall be subject to the rights
of any Third Parties existing at the time such determination is made.
(a) Before selecting a manufacturer for a Collaboration
Product under this Section 8.2, a "make versus buy" analysis and proposed
recommendations shall be presented by HMR to the JCC and then the Steering
Committee for review and approval within sixty (60) days after its receipt of
such recommendation. In addition to the quality control and quality assurance
assessments noted above in this Section 8.2, each such analysis will compare
various potential manufacturers with respect to the following attributes
(collectively, the "Manufacturing Attributes"): *****************************
******************************************************************************
*************************************************************
(b) To the extent the Steering Committee decides that HMR or
Amylin, as the case may be, should manufacture such Collaboration Product and
the "make versus buy" analysis described in Section 8.2(a) shows one or more of
the alternative manufacturers with quality control and quality assurance
standards and Manufacturing Attributes reasonably acceptable to both Parties to
be less expensive, the Steering Committee shall determine whether HMR or Amylin,
as the case may be, should increase the Equalization Payment due to the other
Party or decrease the Equalization Payment due from the other Party, as the case
may be, each quarter by half the amount of such difference to make the other
Party whole.
(c) To the extent HMR or Amylin, as the case may be,
manufactures such Collaboration Product pursuant to this Section 8.2, then at
least once every three (3) years, the Party performing the manufacturing shall
present to the JCC a review and analysis of the manufacturing cost elements
identified in Section 8.2(a) to determine if the then current manufacturing
arrangements are substantially competitive with other manufacturing alternatives
at such time. Following such review and analysis, no change will be made to the
Equalization Payment adjustment as described in Section 8.2(b).
8.3 QUALITY CONTROL, QUALITY ASSURANCE, ETC. During the term of this
Agreement, HMR shall have day to day responsibility for commercial manufacturing
and formulation issues related to product safety and regulatory compliance.
Amylin shall provide technical support reasonably required by HMR or Third
Parties for such manufacture of Collaboration Products.
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* CONFIDENTIAL TREATMENT REQUESTED
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The costs of providing on-going post-launch technical support shall be an
Allowable Expense under Post-Launch Product R & D Expenses (as defined in
Exhibit A). Regardless of the parties selected to manufacture the Collaboration
Products, each of the Parties shall have rights of inspection and audit as
necessary or reasonable to enable it to comply with its internal quality control
and quality assurance and reporting obligations, including those imposed by
regulatory authorities. In addition, before a final commitment is made to any
Party or Parties or to any Third Party regarding manufacturing plant decisions,
both Parties shall have the right to perform plant quality assurance audits.
8.4 PROVISIONS FOR THE MANUFACTURE OF COLLABORATION PRODUCTS. If a
Party is manufacturing and supplying the Collaboration Products pursuant to
Section 8.2, such Party shall be entitled to recover as an Allowable Expense
such Party's Cost of Goods Sold for Collaboration Products so supplied, upon the
sale of such Collaboration Products according to its standard accounting
procedures consistently applied within and across its pharmaceutical operating
units for matching revenues with costs of products sold for pharmaceutical
products with a comparable market potential. In the event a Party would obtain a
tax benefit from such manufacture of Collaboration Products in a particular
jurisdiction, such tax benefit shall be treated as described in Section 5.13.
8.5 TECHNOLOGY TRANSFER IN EVENT OF TERMINATION BY HMR. In the event
that, upon termination by HMR of this Agreement, HMR is manufacturing in whole
or in part one or more Collaboration Products or Royalty-Bearing Products under
this Article VIII, then HMR shall continue to provide for such manufacture of
such Collaboration Products and Royalty-Bearing Products to the extent provided
prior to notice of such termination, from the time notice of such termination is
provided until such time as Amylin is able to secure an equivalent alternative
manufacturing source, in the event that Amylin is unable to secure such an
alternative source during the notice period. To this end, as of the effective
date of such termination, all Third Party manufacturing contracts that are
assignable shall be assigned to Amylin, and the cost charged to Amylin by HMR
for any of the internal manufacturing activities to be continued by HMR pursuant
to this Section 8.5 for the production of Collaboration Products and
Royalty-Bearing Products shall be the same as HMR's cost during the time that
the Agreement was in effect; provided, however, that HMR may receive a profit
for its internal manufacturing activities relating to such Products at a rate of
********************************************************************************
********************************************************************************
Further, upon Amylin's request, HMR shall provide such technical assistance and
know-how licenses on a royalty free basis as may reasonably be requested to
transfer such technology needed by Amylin to commence or continue manufacture of
Collaboration Products and Royalty-Bearing Products.
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* CONFIDENTIAL TREATMENT REQUESTED
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Such technical assistance shall be provided at HMR's cost, which cost shall be
reimbursed by Amylin within thirty (30) days after receipt of an invoice for
such cost by Amylin.
ARTICLE IX
ENFORCEMENT OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
9.1 GENERAL ENFORCEMENT RIGHTS.
(a) With respect to infringement of any of the Amylin
Patents or any of the Joint Patents by a Third Party through the manufacture,
import, use, sale or offer for sale of a product competitive with a
Collaboration Product being Developed or Commercialized under this Agreement,
except as provided in Section 9.5(a) ("Competitive Product Infringement"),
Amylin shall have the right to institute, prosecute and control any action or
proceeding with respect to such infringement (with HMR having the right to
participate in such action and be represented if it so desires by counsel of its
own selection) and, if necessary, HMR agrees to be joined as a party plaintiff
and to give Amylin reasonable assistance and any needed authority to control,
file and prosecute such action. Amylin's and, if any, HMR's costs related to
patent enforcement (including internal costs and expenses specifically
attributable to said patent enforcement) and related recoveries with respect to
Competitive Product Infringement shall be treated as Allowable Expenses and Net
Sublicense Revenues, respectively. With respect to infringement of any of the
HMR Patents by a Third Party through Competitive Product Infringement, HMR shall
have the right to institute, prosecute and control any action or proceeding with
respect to such infringement (with Amylin having the right to participate in
such action and be represented if it so desires by counsel of its own selection)
and, if necessary, Amylin agrees to be joined as a party plaintiff and to give
HMR reasonable assistance and any needed authority to control, file and
prosecute such action. The Parties shall consult with each other regarding the
institution, prosecution and control of any action or proceeding with respect to
any infringement of any of the HMR Patents, other than Competitive Product
Infringement. In the absence of agreement with respect to such infringement,
each Party may proceed in such manner as the law permits. HMR's and, if any,
Amylin's costs related to patent enforcement (including internal costs and
expenses specifically attributable to said patent enforcement) and related
recoveries with respect to Competitive Product Infringement shall be treated as
Allowable Expenses and Net Sublicense Revenues, respectively. In this regard, if
it is believed in good faith that any Amylin Patents, HMR Patents, or Joint
Patents are infringed by a Third Party through the manufacture, import, use,
sale or offer for sale of a product competitive with a Collaboration Product,
the Party first having knowledge of such infringement shall promptly notify the
other Party in writing thereof, which notice shall set forth the facts of such
infringement in reasonable detail. If Amylin or HMR, as the case may be, fails
to institute and prosecute an action or proceeding to abate the infringement
within a period of ninety (90) days after receiving written notice or otherwise
having knowledge of the infringement, then the other
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Party shall have the right, but not the obligation, to bring and prosecute any
such action and the Party which failed to bring such action agrees to be joined
as a party plaintiff and to give the Party bringing such action reasonable
assistance and all authority to control, file and prosecute the suit as may be
necessary; provided, however, that the Party which failed to bring such action
shall have the right to participate in such action and to be represented in any
such action by counsel of its choice. The Parties' costs of patent enforcement
(including internal costs and expenses specifically attributable to said patent
enforcement) and related recoveries with respect to actions brought under this
paragraph shall be treated as Allowable Expenses and Net Sublicense Revenues,
respectively. Any recovery of damages and costs in such action referred to in
this Section 9.1(a) shall be apportioned between the Parties as follows: (i) the
Party bringing suit shall first recover from any such award an amount equal to
the cost and expense incurred by such Party and (ii) the remainder, if any,
shall be divided equally by the Parties.
(b) No settlement or consent judgment or other voluntary final
disposition of suit under this Section 9.1 may be entered into without the joint
consent of Amylin and HMR.
9.2 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS AGAINST
COLLABORATION PRODUCTS. If a Third Party asserts that a patent or other right
owned by it is infringed by the manufacture, import, use, sale or offer for sale
of any Collaboration Product, the Party first obtaining knowledge of such a
claim shall immediately provide the other Party notice of such claim and the
related facts in reasonable detail. In such event, the Steering Committee shall
determine how best to control the defense of any such claim. In the event the
Parties cannot agree on the defense of any such claim, such defense shall be
controlled by HMR; provided, however that Amylin shall have the right to
participate in such defense and to be represented in any such action by counsel
of its selection at its sole discretion. The entity (whether Amylin and HMR, or
HMR only) that controls the defense of a given claim with respect to a
Collaboration Product, shall also have the right to control settlement of such
claim; provided further, however, that no settlement shall be entered into
without the written consent of the other Party. If there is no agreement between
the Parties as to any proposed settlement, then the dispute shall be decided by
the Steering Committee and if the Steering Committee is unable to decide the
dispute, the matter will be resolved pursuant to the dispute resolution
provisions of Article XII of the License Agreement. If the dispute is not
resolved pursuant to Article XII of the License Agreement, then the case may not
be settled.
9.3 ALLOCATION OF EXPENSES. The expenses of patent defense,
settlement and judgments pursuant to Section 9.2 with respect to Collaboration
Products shall be a shared expense of the Parties, except as otherwise expressly
provided for in Section 9.2. Such costs which are incurred after the designation
of a Collaboration Product for Development but prior to Regulatory Approval
shall be borne in the same manner as if such costs were Development Expenses.
Such costs which are incurred following launch of the subject Collaboration
Product in a Major Market Country shall be an Allowable Expense, reimbursed to
the Party incurring such expense.
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9.4 SETTLEMENT OF THIRD PARTY CLAIMS FOR ROYALTY-BEARING PRODUCTS
AND INDEPENDENT PRODUCTS; ROYALTY REDUCTION.
(a) If a Third Party asserts that a patent or other right
owned by it is infringed by any Royalty-Bearing Product, and as a result of
settlement procedures or litigation under this Section 9.4, HMR is required to
pay the Third Party a royalty or make any payment of any kind for the right to
sell a Royalty-Bearing Product in a particular country, the royalty rate for
such Royalty-Bearing Product shall be adjusted as recited in Section 6.4(b).
(b) If a Third Party asserts that a patent or other right
owned by it is infringed by any Independent Product, and as a result of
settlement procedures or litigation under this Section 9.4), either Party is
required to pay the Third Party a royalty or make any payment of any kind for
the right to sell an Independent Product in a particular country, the royalty
rate for such Independent Product shall be adjusted as recited in Section
6.4(b).
9.5 INFRINGEMENT BY THIRD PARTIES WITH RESPECT TO ROYALTY-BEARING
PRODUCTS OR INDEPENDENT PRODUCTS.
(a) If any Amylin Patent is infringed by a Third Party in
any country in connection with the manufacture, import, use, sale or offer for
sale of a product competitive with one or more Royalty-Bearing Products or
Independent Products being marketed by HMR in such country, the Party to this
Agreement first having knowledge of such infringement shall promptly notify the
other in writing. The notice shall set forth the facts of that infringement in
reasonable detail. Amylin 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 Amylin Patent, by counsel of its own choice, and HMR
shall have the right to participate in such action and to be represented by
counsel of its own choice. If Amylin fails to bring an action or proceeding
within a period of ninety (90) days after having knowledge of that infringement,
HMR shall have the right to bring and control any such action by counsel of its
own choice, and Amylin shall have the right to participate in such action and to
be represented by counsel of its own choice. 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 control, file and
prosecute the suit as necessary. The costs and expenses of the Party bringing
suit under this Section 9.5(a) (including the internal costs and expenses
specifically attributable to said suit) shall be reimbursed first out of any
damages or other monetary awards recovered in favor of the Parties. Any
remaining damages shall be split ******************* to Amylin and
******************* to HMR if Amylin institutes and controls such suit. However,
if HMR institutes and controls such suit, any damage recovery shall be treated
as Royalty-Bearing Sales and Amylin shall receive a portion of such damages
equal to the applicable royalty rate (expressed as a percentage) payable to
Amylin on said Royalty-Bearing Sales and all remaining damages shall be
distributed to HMR.
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* CONFIDENTIAL TREATMENT REQUESTED
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(b) If any HMR Patent or Joint Patent is infringed by a
Third Party in any country in connection with the manufacture, import, use, sale
or offer for sale of a product competitive with one or more Royalty-Bearing
Products being marketed by HMR, or with one or more Independent Products being
marketed by Amylin in such country, the Party to this Agreement first having
knowledge of such infringement shall promptly notify the other in writing. The
notice shall set forth the facts of that infringement in reasonable detail. HMR
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
HMR Patent or Joint Patent, by counsel of its own choice, and Amylin shall have
the right to be represented in that action by counsel of its own choice. If HMR
fails to bring an action or proceeding within a period of ninety (90) days after
having knowledge of that infringement, Amylin shall have the right to bring and
control any such action by counsel of its own choice, and HMR shall have the
right to participate in such action and be represented by counsel of its own
choice. 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 all authority to file and prosecute the suit as may be necessary.
The costs and expenses of the Party bringing suit under this Section 9.5(b)
(including the internal costs and expenses specifically attributable to said
suit) shall be reimbursed first out of any damages or other monetary awards
recovered in favor of the Parties. Any remaining damages shall be split
******************* to HMR and ******************* to Amylin if HMR institutes
and controls such suit. However, if Amylin institutes and controls such suit,
any damage recovery shall be treated as Royalty-Bearing Sales and HMR shall
receive a portion of such damages equal to the applicable royalty rate
(expressed as a percentage) payable to HMR on said Royalty-Bearing Sales and all
remaining damages shall be distributed to Amylin.
(c) No settlement or consent judgment or other voluntary
final disposition of a suit under this Section 9.5 may be entered into without
the joint consent of Amylin and HMR.
(d) Notwithstanding the provisions of Section 9.1 and this
Section 9.5, neither Party shall file and prosecute an action for infringement
of a Patent for which the other Party has the primary responsibility to file and
prosecute such action, and pursuant to which that other Party having primary
responsibility has commenced and is prosecuting at least one such action for
infringement of said Patent, without the agreement of that other Party.
9.6 COLLABORATION PATENT EXPENSES. Prior to the first commercial
sale of a Collaboration Product, Collaboration Patent Expenses shall be borne
equally by the Parties. Within thirty (30) days following the end of each
calendar quarter, each Party shall deliver a report outlining its Collaboration
Patent Expenses for such quarter. Within forty-five (45) days following the end
of each such quarter, the Party incurring less than one-half of the aggregate
combined total of such reported Collaboration Patent Expense during the quarter
shall reimburse the other Party an amount sufficient to equalize each Party's
one-half share of such combined
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* CONFIDENTIAL TREATMENT REQUESTED
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Collaboration Patent Expenses. Following the first commercial sale of a
Collaboration Product, Collaboration Patent Expenses will be treated as an
Allowable Expense.
9.7 ASSIGNMENT OF JOINT PATENTS. Neither Party may assign its rights
under any Joint Patent except with the prior written consent of the other Party;
provided, however, that either Party may assign such rights without consent to
an Affiliate or other permitted assignee under this Agreement in connection with
a merger or similar reorganization or the sale of all or substantially all of
its assets, as provided in Section 15.1(b).
9.8 TRADEMARKS.
9.8.1 PRODUCT TRADEMARKS. The JCC shall oversee the selection,
prosecution of applications for, and maintenance of, trademarks in the
applicable country for each Collaboration Product and shall designate which of
the Parties shall be responsible for the related work. Under the supervision of
the JCC, the Parties shall work together and seek to agree on the selection of
trademarks for Collaboration Products for use in those countries where the
subject trademarked product is to be marketed, whether as a Collaboration
Product or as a Royalty-Bearing Product. In the event that the Parties cannot
agree on a trademark for any Collaboration Product as a result of said joint
selection efforts, HMR shall have the right to present three qualified
trademarks that have been identified by the Parties to Amylin, and Amylin shall
have the right to refuse any two such trademarks. The remaining trademark shall
be the selected trademark for the subject Collaboration Product and shall be
owned jointly by Amylin and HMR. To the extent expenses are incurred hereunder
prior to the first commercial sale of the applicable Collaboration Product, such
expense shall be treated as a Pre-Marketing Expense and thereafter, such
expenses shall be treated as Allowable Expenses. Collaboration Products shall be
sold under at least one trademark owned jointly by HMR and Amylin. All uses of a
jointly owned trademark(s) to identify a Collaboration Product, whether sold as
a Collaboration Product or as a Royalty-Bearing Product, shall comply with all
applicable laws and regulations, and those laws and regulations particularly
applying to the proper use and designation of trademarks in the countries of the
Profit Sharing Territory or in Royalty-Bearing Countries, as applicable. Jointly
owned trademark(s) shall be used only pursuant to the terms of this Agreement to
identify Collaboration Products or Royalty-Bearing Products, and shall not be
used by either Party to identify any other products. All jointly-owned
trademarks shall be registered by HMR in the names of Amylin and HMR as joint
owners in all countries where said marks will be used.
9.8.2 INFRINGEMENT OF TRADEMARKS. HMR shall take all
reasonable and appropriate steps to protect, defend and maintain each jointly
owned trademark for use by the Parties in connection with a Collaboration
Product or Royalty-Bearing Product, and all registrations therefor, and each
Party shall notify the other Party promptly upon learning of any actual, alleged
or threatened infringement of a jointly-owned trademark or of any unfair trade
practices, trade dress imitation, passing off of counterfeit goods or like
offenses. Upon learning of such offenses HMR shall have the right but not the
obligation to, in consultation with Amylin,
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institute and control an appropriate action or proceeding to halt the offense.
Amylin shall have the right to participate fully in all such actions or
proceedings.
9.8.3 COSTS OF DEFENSE. All of the unrecovered costs, expenses
and legal fees (including internal costs, expenses and legal fees) in bringing,
maintaining and prosecuting any action to maintain, protect or defend a
trademark (or registration therefor) covering (i) a Collaboration Product shall
be an Allowable Expense in the applicable country or (ii) a Royalty-Bearing
Product shall be a deduction from Royalty-Bearing Sales, and any recovery shall
be Net Sublicense Revenue in that country.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
Each of the Parties hereby represents and warrants to the other
Party as follows:
(a) This Agreement is a legal and valid obligation binding
upon such Party and enforceable in accordance with its terms. The execution,
delivery and performance of the Agreement by such Party does not conflict with
any agreement, instrument or understanding, oral or written, to which it is a
Party or by which it is bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
(b) Such Party has not, and during the term of the Agreement
will not, grant any right to any Third Party relating to its respective Patents
and know-how in the Field which would conflict with the rights granted to the
other Party hereunder.
ARTICLE XI
INFORMATION AND REPORTS
11.1 INFORMATION AND REPORTS DURING DEVELOPMENT AND
COMMERCIALIZATION. HMR and Amylin will disclose and make available to each other
all preclinical, clinical, regulatory, commercial marketing, promotion, pricing,
sales and other Information, including copies of all preclinical and clinical
reports, known by HMR or Amylin directly concerning Collaboration Compounds or
Collaboration Products at any time during the term of this Agreement. All
significant Information will be disclosed to the other Party promptly after it
is learned or its significance is appreciated. Each Party shall own and maintain
its own database of clinical trial data accumulated from all clinical trials of
Collaboration Products for which it was responsible and of adverse drug event
information for all Collaboration Products. At the option of the requesting
Party, such data shall be provided in a computer readable format by the
providing Party, to the extent available, which shall also assist in the
transfer and validation of such data to the receiving Party. Without limitation
of the foregoing, each Party shall supply to
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the other the Information required by the other Party and requested by it
(either as a routine practice or as a specific request) for purposes of
compliance with regulatory requirements.
11.2 COMPLAINTS. Each Party shall maintain a record of all complaints
it receives with respect to any Collaboration Product or Royalty-Bearing Product
in accordance with its own established record keeping procedures for
pharmaceutical products of comparable market potential. Each Party shall notify
the other of any such complaint received by it in sufficient detail and within
five (5) business days after receipt, and in any event in sufficient time to
allow the responsible Party to comply with any and all regulatory requirements
imposed upon it in any country.
11.3 ADVERSE DRUG EXPERIENCES. The Parties recognize that the holder
of a Drug Approval Application may be required to submit information and file
reports to various governmental agencies on (i) Collaboration Products and
Royalty-Bearing Products under clinical investigation, (ii) Collaboration
Products and Royalty-Bearing Products proposed for marketing or (iii) marketed
Collaboration Products and Royalty-Bearing Products. 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 and
Royalty-Bearing Product. In addition, supplemental information must be provided
on Collaboration Products and Royalty-Bearing Products at periodic intervals and
adverse drug experiences must be reported at more frequent intervals depending
on the severity of the experience. Consequently, each Party agrees to:
(a) provide to the other Party for initial and/or periodic
submission to government agencies significant information on the Collaboration
Product and Royalty-Bearing Product 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
and Royalty-Bearing Product;
(b) in connection with investigational Collaboration
Products and Royalty-Bearing Products, report to the other Party within
twenty-four (24) days of the initial receipt of a report of any unexpected or
serious experience with the drug, if required for either Party to comply with
regulatory requirements; and
(c) in connection with marketed Collaboration Products and
Royalty-Bearing Products, report to the other Party within five (5) working days
of the initial receipt of a report of any adverse experience with the drug that
is serious and unexpected or sooner if required for either Party to comply with
regulatory requirements. "Serious" adverse experience means 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. "Unexpected" adverse experience means an adverse experience
not identified in nature, specificity, severity or
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frequency in the current investigator brochure or the U.S. labeling for the
drug. Each Party also agrees that if it contracts with a Third Party for
research to be performed by such Third Party on a Product, that Party agrees to
require such Third Party to report to the contracting Party the information set
forth in subsections (a), (b), and (c) of this Section 11.3
11.4 RECORDS OF REVENUES AND EXPENSES. Each Party will maintain
complete and accurate records which are relevant to revenues, costs, expenses
and payments under this Agreement, and such records shall be open during
reasonable business hours for a period of five (5) years from creation of
individual records for examination at the other Party's expense and not more
often than once each year by a certified public accountant selected by the other
Party for the sole purpose of verifying for the inspecting Party the correctness
of calculations and classifications of such revenues, costs, expenses or
payments made under this Agreement. In the absence of material discrepancies
(in excess of 5%) in any request for reimbursement resulting from such audit,
the accounting expense shall be paid by the Party requesting the audit. If
material discrepancies do result, the audited Party shall bear the accounting
expense. Any records or accounting information received from the other Party
shall be confidential information.
ARTICLE XII
TERM AND TERMINATION
12.1 TERM. This Agreement shall commence as of the Effective Date
and, unless sooner terminated as provided herein, shall continue in effect until
the date on which the Parties are no longer developing, marketing or selling in
any country (i) a Royalty-Bearing Product or an Independent Product for which,
in either case, royalties are or may be owed by one Party to the other Party, or
(ii) a Collaboration Product.
12.2 TERMINATION FOR MATERIAL BREACH.
(a) Subject to the provisions of this Section 12.2, if
either Party (the "Breaching Party?) shall have committed a Material Breach (as
defined below) and such Material Breach shall remain uncured and shall be
continuing for a period of ninety (90) days following receipt of written notice
thereof by the other Party (the "Non-Breaching Party"), then, in addition to any
and all other rights and remedies that may be available, the Non-Breaching Party
shall have the right to terminate this Agreement effective upon the expiration
of such ninety (90) day period. Any such written notice of alleged Material
Breach by the Non-Breaching Party shall include a reasonably detailed
description of all relevant facts and circumstances demonstrating, supporting
and/or relating to each such alleged Material Breach by the Breaching Party.
(b) If the Breaching Party, upon written notice delivered to
the Non-Breaching Party prior to the expiration of such ninety (90) day period,
shall assert in good faith that any
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such alleged Material Breach described in the Non-Breaching Party's notice,
whether in payment of moneys or otherwise, was not a Material Breach, or was
excused by reason of material failure of performance by the other Party or Third
Parties or by reason of Force Majeure (as defined in Section 15.4), or shall
otherwise in good faith dispute such alleged Material Breach, then the Parties
shall continue to perform under this Agreement, subject to all of its terms and
conditions, and the matter shall be resolved pursuant to the dispute resolution
provisions of Article XII of the License Agreement. In such event, the
Non-Breaching Party shall not be entitled to terminate this Agreement pursuant
to this Section 12.2 unless and until (i) it shall be determined pursuant to the
dispute resolution provisions of Article XII of the License Agreement that the
Breaching Party has committed a Material Breach and (ii) such Material Breach
has not been cured prior to such determination. To the extent that it is
determined pursuant to a final and non-appealable decision under the dispute
resolution provisions of Article XII of the License Agreement that the Breaching
Party did commit a Material Breach and failed to cure the same within the period
provided for in clause (ii) of this Section 12.2(b), then the Non-Breaching
Party may immediately terminate this Agreement and, in addition to all damages
determined pursuant to the dispute resolution provisions of Article XII of the
License Agreement to be due and owing from the Breaching Party to the
Non-Breaching Party under this Agreement, the Breaching Party shall be liable
for the Non-Breaching Party's reasonable attorney's fees incurred in connection
with resolving such matter.
(c) If the Non-Breaching Party terminates this Agreement
pursuant to the provisions of Sections 12.2(a) and (b), then the following
provisions shall apply:
(i) the Non-Breaching Party shall receive, to the
extent not already granted in this Agreement or the License Agreement,
an exclusive (even as to the Breaching Party but subject to rights of
Third Parties that are not Affiliates of the Breaching Party that
pre-existed or accrued prior to such termination) worldwide right and
license, with the right to grant sublicenses, to all HMR Patents or
Amylin Patents, as applicable, of the Breaching Party and all of the
Breaching Party's interest in jointly owned trademarks pursuant to
Section 9.8.1, to make, have made, import, use, sell, offer for sale and
have sold Collaboration Products, Royalty-Bearing Products and
Independent Products, subject to the royalty obligations set forth below
in Section 12.2(c)(ii), and shall have the exclusive right (but not the
obligation) to enforce the Patents against Competitive Product
Infringement and the exclusive right (but not the obligation) to enforce
the trademark rights against infringers;
(ii) the Breaching Party shall be entitled to receive
royalties with respect to Collaboration Products at royalty rates of
***********************************************************************
********************************************************************,
and shall be entitled to receive royalties with respect to Independent
Products and Royalty-Bearing Products at ******** the royalty rates
provided for in Section 4.8(b) and Section 5.7(a) of this Agreement,
respectively; and
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
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(iii) the provisions of Sections 6.4(b) and 6.5
through 6.10 shall apply with respect to royalties payable under this
Section 12.2.
(d) In the event of termination of this Agreement pursuant
to this Section 12.2, the Breaching Party shall use its best efforts to cause
the transfer of all INDs, Drug Approval Applications and Regulatory Approvals
related to Collaboration Compounds, Collaboration Products, Royalty-Bearing
Products and Independent Products to the Non-Breaching Party, and take such
other actions and execute such other instruments, assignments and documents as
may be necessary to effect the transfer of rights hereunder to the Non-Breaching
Party.
(e) In the event of termination of this Agreement pursuant
to this Section 12.2 where HMR is the Breaching Party and HMR is manufacturing
in whole or in part one or more Collaboration Compounds, Collaboration Products
or Royalty-Bearing Products hereunder, HMR shall continue to provide for
manufacture of such Collaboration Compounds, Collaboration Products and
Royalty-Bearing Products to the extent provided prior to notice of such
termination, from the effective date of such termination until such time as
Amylin is able to secure an equivalent alternative commercial manufacturing
source, as requested by Amylin. To this end, as of the effective date of such
termination, all Third Party manufacturing contracts that are assignable shall
be assigned to Amylin, and the cost charged to Amylin by HMR for any of the
internal manufacturing activities to be continued by HMR pursuant to this
Section 12.2 for the production of Collaboration Products and Royalty-Bearing
Products shall be the same as HMR's direct cost was while the Agreement was in
effect; provided, however, that HMR may receive a profit for its internal
manufacturing activities relating to such Products at a rate of ***************
*******************************************************************************
********************************************************************************
Further, upon Amylin's request, HMR shall provide such technical assistance and
know-how licenses on a royalty free basis as may reasonably be requested to
transfer such technology as is needed by Amylin to commence or continue
commercial manufacture of Collaboration Products and Royalty-Bearing Products.
Such technical assistance shall be provided at HMR's direct cost, which cost
shall be reimbursed within thirty (30) days upon receipt of an invoice from HMR
by Amylin or its designee. In the event that any technology needed by Amylin to
commence or continue commercial manufacture of Collaboration Products and
Royalty-Bearing Products is covered by one or more HMR Patents, Amylin shall
receive a fully paid-up, royalty-free, non-exclusive worldwide license to
practice any and all such HMR Patents for the purposes contemplated in this
Section 12.2(e) together with the right to grant sublicenses.
(f) Except where expressly provided for otherwise in this
Agreement, termination of this Agreement shall not relieve the Parties hereto of
any liability, including any obligation to make payments hereunder, which
accrued hereunder prior to the effective date of such termination, nor preclude
any Party from pursuing all rights and remedies it may have
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
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hereunder or at law or in equity with respect to any breach of this Agreement,
nor prejudice any Party's right to obtain performance of any obligation.
(g) For purposes of this Section 12.2, "Material Breach"
shall mean the breach or failure to perform, in a material respect, a Party's
material obligations under this Agreement. Without limiting the foregoing and by
way of example only, the term "Material Breach" shall be deemed to include the
failure of any Party in a material respect to meet such Party's payment or
non-compete obligations. In no event shall a failure to gain Regulatory Approval
for a Collaboration Product or to meet timelines or budgets specified in any
Research and Development Plan, Research and Development Budget,
Commercialization Plan, Commercialization Budget, Launch Plan or Launch Budget,
in and of itself, be deemed to constitute a Material Breach, unless such failure
is a result of acts and events or conduct that is otherwise a Material Breach.
(h) The provisions of this Section 12.2 shall survive
termination of this Agreement.
12.3 TERMINATION WITHOUT A MATERIAL BREACH.
(a) Each Party shall have a continuing right to terminate
this Agreement for any reason, effective upon six (6) month advance written
notice to the other Party, subject to this Section 12.3.
(b) If either Party terminates pursuant to this Section
12.3, it shall continue to be obligated during the termination notice period to
perform all of its obligations under this Agreement. In addition, as a result of
such termination:
(i) all licenses and rights granted by the
non-terminating Party to the terminating Party hereunder shall
terminate;
(ii) to the extent not already granted in this
Agreement or the License Agreement, the non-terminating Party shall
receive an exclusive (even as to the terminating Party but subject to
rights of Third Parties that are not Affiliates of the terminating Party
that pre-existed or accrued prior to such termination) worldwide right
and license, with the right to grant sublicenses, to all Patents of the
terminating Party to import, use, sell, offer for sale and have sold
Products for use in the Field, subject to the applicable royalty
obligations set forth in Section 12.3(c) below, and shall have the right
(but not the obligation) to enforce the Patents against Competitive
Product Infringement (in the manner contemplated under and pursuant to
the terms of Section 9.5(a) applicable to the terminating Party's
Patents in the event that the terminating Party does not or will not so
enforce the Patents) and the exclusive right (but not the obligation) to
enforce the trademark rights against infringers;
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(iii) all Confidential Information supplied by the
non-terminating Party to the terminating Party shall be destroyed by the
terminating Party; provided, however, the terminating Party may retain
one copy of such information solely for legal archive purposes;
(iv) if HMR is the terminating Party, HMR shall be
obligated under Section 8.5 to the extent provided therein;
(v) the terminating Party shall cooperate in the
transfer of all INDs, Drug Approval Applications and Regulatory
Approvals related to Collaboration Compounds and the Products, to the
non-terminating Party, and shall take such other actions and execute
such other instruments, assignments and documents as may be necessary to
effect the transfer of rights hereunder to the non-terminating Party;
and
(vi) the terminating Party shall not exploit or
commercialize Joint Patents or jointly-owned trademarks in competition
with the non-terminating Party's commercialization of the HMR Compounds.
(c) The terminating Party under this Section 12.3 shall be
entitled to a royalty of 6% of worldwide Royalty-Bearing Sales of products
incorporating HMR Compounds, which royalty shall be paid in accordance with the
provisions of Sections 6.5 through 6.10 of this Agreement.
12.4 SURVIVING RIGHTS. The rights and obligations set forth in this
Agreement shall extend beyond the term or termination of the Agreement only to
the extent expressly provided for herein, or the extent that the survival of
such rights or obligations are necessary to permit their complete fulfillment or
discharge. Without limiting the foregoing, the Parties have identified various
rights and obligations which are understood to survive, as follows:
12.4.1 In the event of expiration of this Agreement pursuant to
Section 12.1, the following provisions shall survive: Article I (to the extent
applicable to the interpretation of other surviving clauses), Sections 11.4,
12.4 and 12.5, and Articles XIII, XIV and XV.
12.4.2 In the event of termination of this Agreement pursuant
to Section 12.2, the following provisions shall survive: Article I (to the
extent applicable to the interpretation of other surviving clauses), Sections
4.8(b), 5.7(a), 6.4(b), 6.5 - 6.10, 7.4(a) and (b), 9.7, 11.2 - 11.4, 12.2,
12.4, 12.5, 13.1, 13.2 (solely with respect to acts or events occurring prior to
such termination for which indemnity may be sought thereunder) and 13.3, and
Articles XIV and XV.
12.4.3 In the event of termination of this Agreement pursuant
to Section 12.3 the following provisions shall survive: Article I (to the extent
applicable to the interpretation of
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other surviving clauses), Sections 6.4(b), 6.5-6.10, 8.4, 9.7, 11.2 - 11.4, 12.3
- - 12.5, 13.1, 13.2 (solely with respect to acts or events occurring prior to
such termination for which indemnity may be sought thereunder) and 13.3, and
Articles XIV and XV.
12.5 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. 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, relinquishment or expiration, including damages
arising from any breach hereunder. Such termination, relinquishment or
expiration shall not relieve either Party from obligations which are expressly
indicated to survive termination or expiration of the Agreement.
ARTICLE XIII
INDEMNIFICATION
13.1 INDEMNIFICATION FOR ROYALTY-BEARING PRODUCTS. With respect to
Royalty-Bearing Products (determined on a country-by-country basis):
(a) HMR hereby agrees to save, defend and hold Amylin and
its agents and employees harmless from and against any and all suits, claims,
actions, demands, liabilities, expenses and/or losses, including reasonable
legal expenses and attorneys' fees (collectively, "Losses"), resulting directly
from the manufacture, use, handling, storage, sale or other disposition of
Royalty-Bearing Products by HMR, its agents or sublicensees except to the extent
such Losses result from the negligence or willful misconduct of Amylin, its
agents or sublicenses.
(b) In the event that Amylin is seeking indemnification
under Section 13.1(a), it shall inform HMR of a claim for Losses as soon as
reasonably practicable after it receives notice of such claim, shall permit HMR
to assume direction and control of the defense of such claim (including the
right to settle the claim solely for monetary consideration), and shall
cooperate as requested (at the expense of HMR) in the defense of the claim.
13.2 INDEMNIFICATION FOR COLLABORATION PRODUCTS. With respect to
Collaboration Products:
(a) Each Party hereby agrees to save, defend and hold the
other Party and its agents and employees harmless from and against any and all
Losses resulting directly or indirectly from the manufacture, use, handling,
storage, sale or other disposition of Collaboration Products by the indemnifying
Party, its agents or sublicensees, but only to the extent such Losses result
from the negligence or willful misconduct of the indemnifying Party or its
employees and agents and do not also result from the negligence or willful
misconduct of the Party seeking indemnification. Any other Losses from claims
resulting directly or indirectly from the
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manufacture, use, handling, storage, sale or other disposition of Collaboration
Products shall be included as an Allowable Expense of either Party at the time
such claim is finally determined, whether by judgment, award, decree or
settlement.
(b) In the event that either Party receives notice of a
claim with respect to a Collaboration Product, such Party shall inform the other
Party as soon as reasonably practicable. The Parties shall confer how to respond
to the claim and how to handle the claim in an efficient manner.
13.3 INDEMNIFICATION FOR INDEPENDENT PRODUCTS. With respect to
Independent Products:
(a) Each Party hereby agrees to save, defend and hold the
other Party and its agents and employees harmless from and against any and all
Losses resulting directly or indirectly from the manufacture, use, handling,
storage, sale or other disposition of Independent Products by the indemnifying
Party, its agents or sublicensees, but only to the extent such Losses result
from the negligence or willful misconduct of the indemnifying Party or its
employees and agents and do not also result from the negligence or willful
misconduct of the Party seeking indemnification.
(b) In the event that either Party receives notice of a
claim with respect to an Independent Product, such Party shall inform the other
Party as soon as reasonably practicable. The Parties shall confer how to respond
to the claim and how to handle the claim in an efficient manner.
ARTICLE XIV
DISPUTE RESOLUTION
The dispute resolution procedures of Article XII of the License
Agreement shall be applicable to any dispute, controversy or claim arising out
of or related to this Agreement, including, without limitation, the validity,
construction, enforceability or performance hereof, and such procedures are
incorporated herein by this reference.
ARTICLE XV
MISCELLANEOUS
15.1 ASSIGNMENT.
(a) Either Party may assign any of its rights or obligations
under this Agreement in any country to any Affiliates; provided, however, that
such assignment shall not
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relieve the assigning Party of its responsibilities for performance of its
obligations under this Agreement.
(b) Either Party may assign its rights or obligations under
this Agreement or its ownership interest in Joint Patents to a non-Affiliate
only as provided in Section 9.7, or in connection with a merger or similar
reorganization or the sale of all or substantially all of its assets, or
otherwise with the prior written consent of the other Party. This Agreement
shall survive any such merger or reorganization of either Party with or into, or
such sale of assets to, another party and no consent for such merger,
reorganization or sale shall be required hereunder; provided, however, that in
the event of such merger, reorganization or sale, no intellectual property
rights of the acquiring corporation shall be included in the technology licensed
hereunder.
(c) This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties. Any assignment
not in accordance with this Agreement shall be void.
15.2 RESEARCH AND DEVELOPMENT AND/OR COMMERCIALIZATION ENTITIES.
Either Party may assign its rights and obligations under this Agreement to an
entity or entities (e.g., partnership or corporation) that are specifically
formed for financial purposes and that finance Research, Development or
Commercialization performed by such Party pursuant to this Agreement; provided,
however, that such assignment shall not relieve the assigning Party of
responsibility for performance of its obligations under this Agreement.
15.3 CONSENTS NOT UNREASONABLY WITHHELD. Whenever provision is made
in this Agreement for either Party to secure the consent or approval of the
other, that consent or approval shall not unreasonably be withheld, and whenever
in this Agreement provision is made for one Party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
15.4 FORCE MAJEURE. Neither Party shall lose any rights hereunder or
be liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or
any other similar cause beyond the control of the defaulting Party, provided
that the Party claiming force majeure has exerted all reasonable efforts to
avoid or remedy such force majeure; provided, however, that in no event shall a
Party be required to settle any labor dispute or disturbance.
15.5 INCORPORATION OF LICENSE AGREEMENT PROVISIONS; CONFLICTING
PROVISIONS. Upon the Effective Date of this Agreement, the terms and conditions
of the License Agreement are hereby incorporated by reference into this
Agreement, except the provisions of the License Agreement that are superseded by
the provisions of this Agreement, as set forth in Section 4.2 of
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the License Agreement. Further, in the event that any term or provision of this
Agreement is in conflict with a term or provision of the License Agreement, the
term or provision of this Agreement shall prevail and shall be the operative
term or provision.
15.6 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
15.7 NO TRADEMARK RIGHTS. Except as otherwise provided herein or
otherwise agreed to in writing by the Parties, no right, express or implied, is
granted by this Agreement to use in any manner the name "Amylin," "HMR" or any
other trade name or trademark of the other Party or its Affiliates in connection
with the performance of this Agreement.
15.8 NOTICES. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice; provided, however, that notices of a change of address
shall be effective only upon receipt thereof):
IF TO AMYLIN, ADDRESSED TO: AMYLIN PHARMACEUTICALS, INC.
9373 Towne Centre Drive
San Diego, CA 92121
Attention: Office of the General Counsel
Telephone:(619) 552-2200
Telecopy:(619) 552-2212
IF TO HMR,
ADDRESSED TO: HOECHST MARION ROUSSEL, INC.
Building B, Route 202-206
P.O. Box 6800
Bridgewater, New Jersey 08807-0800
Attention: Vice President, General Counsel,
Global Development
Telephone: (908) 231-2000
Telecopy: (908) 231-2243
15.9 WAIVER. Except as specifically provided for herein, the waiver
from time to time by either of the Parties of any of their rights, or their
failure to exercise any remedy, shall not operate or be construed as a
continuing waiver of same or of any other of such Party's rights or remedies
provided in this Agreement.
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15.10 SEVERABILITY. If any term, covenant or condition of this
Agreement or the application thereof to any Party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (i) the remainder of this
Agreement, or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the Parties that the basic purposes of this Agreement are to be effectuated.
15.11 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
15.12 GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the State of Delaware as applied to contracts
entered into and performed entirely in Delaware by Delaware residents.
15.13 HEADINGS. The section and paragraph headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of said sections or paragraphs.
15.14 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.15 ENTIRE AGREEMENT. This Agreement, including all Exhibits
attached hereto and all documents delivered concurrently herewith, together with
the License Agreement, set forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersede and terminate all prior agreements and understanding
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as set forth herein. No subsequent alteration, amendment,
change or addition to this Agreement shall be binding upon the Parties hereto
unless reduced to writing and signed by the respective authorized officers of
the Parties.
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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.
AMYLIN PHARMACEUTICALS, INC. HOECHST MARION ROUSSEL, INC.
By: /s/ Maurizio Denaro By: /s/ Thomas Hofstaetter
------------------------------- -------------------------------
Name: Maurizio Denaro Name: Thomas Hofstaetter
Title: Executive Vice President, Title: Senior Vice President,
Chief Technical Officer Business Development
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EXHIBIT A
DETERMINATION OF CERTAIN ACCOUNTING TERMS
<PAGE> 60
EXHIBIT A
DETERMINATION OF CERTAIN ACCOUNTING TERMS
As a supplement to the definitions provided in Article 1 of this
Agreement, the following accounting terms shall be further specified as follows.
As used herein, the term "operating unit" shall mean the smallest operating unit
in which an operating profit and loss statement is prepared for management
accounting purposes in the Party's normal accounting procedures, consistently
applied within and across its operating units.
1. COST OF GOODS SOLD
Cost of Goods Sold shall be equal to the Standard Cost of each unit of
Collaboration Product sold plus Other Costs Not In Standard incurred during the
period, subject to limitation as provided in Item C below.
A. "STANDARD 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
as well as any freight and duty where applicable.
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 costed Quality Assurance sample quantity which is included
in the Bill of Materials. Raw Material prices shall be adjusted on an annual
basis by Purchasing.
2) Direct Labor Costs shall mean the standard labor hours
required for an operation according to the Standard Operating Procedures for
such Collaboration Product multiplied by the Direct Labor Rate for work centers
within the relevant manufacturing operating unit.
3) Overhead Costs shall mean other costs associated with the
operating unit(s) manufacturing a 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 (except
as specifically provided in Item C below).
1
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4) 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 Cost
for the relevant manufacturing operating unit.
(c) Absorption volume variances shall mean the difference
between actual product hours earned (or units produced) and the hours budgeted
for the period (or projected production units used) in the development of
Standard 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.
B. "OTHER COSTS NOT IN STANDARD" shall include:
1) Scrap Expense shall mean the total standard cost of inventory
which is physically destroyed or transferred to Rejected Inventory awaiting
disposition. Total Cost means total inventory value which includes material,
labor and overhead.
2) Inventory revaluation shall mean under FIFO Inventory
Valuation the difference between the prior year's ending inventory at the prior
year's standard cost plus or minus the year-end full absorption adjustment (see
below) versus the same inventory at the new year's standard cost.
3) Full Absorption Adjustment -- Under FIFO Inventory Valuation
the monthly adjustment which is made to adjust inventories from standard to
actual cost. This involves reserving a period of the Manufacturing Variances,
beginning with the current month and going back according to the number of
month's supply of inventory on hand at the end of each month or annually as the
case may be.
4) Excess and Obsolete Inventory Adjustments -- The P&L impact of
adjusting the reserves for excess and obsolete inventory up and down based upon
a quarterly analysis or
2.
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annually as the case may be.
5) Loss on Returns Expense -- These are expenses (similar to
sales returns and allowances) which are incurred as a result of issuing
reasonable sales credits to customers at standard cost. This is the offset to
reversing the standard cost of sales when the sale is negated.
6) No Charge Shipments -- Those expenses associated with shipping
replacement product to customers at no charge. This is the offset to relieving
inventory at standard cost when the product is shipped.
C. EXCLUDED COSTS. Notwithstanding the foregoing, Cost of Goods
Sold shall exclude administrative costs other than indirect manufacturing labor
specifically attributable to the Collaboration Product being manufactured and
shall exclude allocation of unused capacity costs.
2. MARKETING EXPENSES
Marketing Expenses shall be the sum of Selling Expenses, Marketing
Management, Market and Consumer Research, Advertising, Trade Promotion, Consumer
Promotion, and Education Expenses, each of which is specified below.
A. "SELLING EXPENSES" shall include the following costs directly
associated with the efforts of field sales representatives with respect to
Collaboration Products: field sales force; field sales offices; home offices
staffs directly involved in the management of and the performance of the selling
functions; payments to Third Parties under co-promotion agreements approved by
the Steering Committee. Reasonable field samples shall normally be charged to
Trade Promotion, but if sales management has direct decision making authority
for the distribution of field sales samples, it may be appropriate to charge
these costs to Selling Expenses. The costs of detailing sales calls shall be
allocated on a weighted average basis based on what detail position the involved
Collaboration Product is assigned at an accounting charge rate consistently
applied within and across its operating units and which is no less favorable to
the collaboration than the internal charge rate used by HMR for its own internal
cost accounting purposes for products other than Collaboration Products
(excluding internal profit margins and markups).
B. "MARKETING MANAGEMENT" shall include Product Management and
Sales Promotion Management direct expenses. This shall include costs associated
with developing overall sales and marketing strategies and planning for
Collaboration Products. In addition, payments to Third Parties in connection
with trademark selection, filing, prosecution and enforcement shall be included
in this category.
C. "MARKET AND CONSUMER RESEARCH" shall include direct expenses for
Market and Consumer Research personnel and payments to Third Parties related to
conducting and monitoring professional and consumer appraisals of existing, new
or proposed Collaboration Products such as market share services (e.g., IMS
data), special research testing and focus groups.
3.
<PAGE> 63
D. "ADVERTISING" shall include all direct media costs associated
with Collaboration Product advertising as follows: production expense/artwork
including set up; design and art work for an advertisement; the cost of securing
print space, air time, etc. in newspapers, magazines, trade journals,
television, radio, billboards, etc.
E. "TRADE PROMOTION" shall include reasonable allowances given to
retailers, brokers, distributors, hospital buying groups, etc. for purchasing,
promoting, and distribution of Collaboration Products. This shall include
purchasing, advertising, new distribution, and display allowances as well as
free goods, wholesale allowances and reasonable field sales samples. To the
extent multiple products are involved and some of such products are not
Collaboration Products then such allowances shall be allocated on a pro rata
basis based upon net sales of each respective product by such operating unit
during the most recent quarter.
F. "CONSUMER PROMOTION" shall include the direct expenses
associated with programs to promote Collaboration Products directly to the end
user. This category shall include direct expenses associated with promoting
products directly to the professional community such as professional samples,
professional literature, promotional material costs, patient aids and detailing
aids. To the extent multiple products are involved and some of such products are
not Collaboration Products then such allowances shall be allocated on a pro rata
basis based upon net sales of each respective product by such operating unit
during the most recent quarter.
G. "EDUCATION" shall include direct expenses associated with
professional education with respect to Collaboration Products through any means
not covered above, including articles appearing in journals, newspapers,
magazines or other media; seminars, scientific exhibits, and conventions; and
symposia, advisory boards and opinion leader development activities.
H. "ROYALTY EXPENSES" shall mean royalties or other compensation
payable to a Third Party under patents and/or technology rights of such Third
Party to conduct Commercialization pursuant to the Collaboration Agreement.
3. DISTRIBUTION EXPENSES
Distribution Expenses shall be the sum of Stock and Shipping Expenses
and Transportation Expenses, each as specified below.
A. "STOCK AND SHIPPING" shall include the portion of distribution
costs for the warehousing of Collaboration Product finished goods from the point
of completion of production to the time the goods are turned over to a carrier
for delivery as follows: order filling/assembly functions; reasonable order
billing and customer service functions; reasonable portion of company
owned/leased facilities relating to warehousing of finished products; storage of
products at public warehouses.
B. "TRANSPORTATION" shall include the portion of distribution costs
relating to moving Collaboration Product goods from a warehouse to the customer
as follows: outbound
4.
<PAGE> 64
transportation costs; costs of moving goods from a manufacturing point to a
warehouse at another location from which it is ultimately to be distributed to a
customer.
4. POST-LAUNCH PRODUCT R&D EXPENSES
Post-Launch Product R&D Expenses shall include certain research and
development costs incurred by a Party in relation to a Collaboration Product
after the first commercial launch and shall exclude administrative expenses.
Such post-launch research and development costs shall include:
A. Phase IV Clinical Trials.
B. Ongoing product support (as defined in Section 1.45 of the
Collaboration Agreement).
C. Ongoing medical affairs (as defined in Section 1.45 of the
Collaboration Agreement).
D. Preclinical research.
E. Contract R&D costs performed by others for a particular project
that have no alternative future uses in other R&D projects or otherwise.
F. Fees and expenses of outside counsel in respect of regulatory
affairs unrelated to obtaining Regulatory Approvals.
5. CURRENCY GAINS OR LOSSES
Currency Gains or Losses shall include the following:
A. UNHEDGED TRANSACTIONS. Transaction gains or losses resulting
from a change in exchange rates between the functional currency and the currency
in which the transaction is denominated. The transaction gain or loss is
determined by measuring the increase or decrease in the functional currency cash
flow due to the changes in the exchange rate from the date of the transaction to
the settlement date. The difference between the functional currency amount
calculated using the current exchange rate at the transaction date and the
amount calculated using the currency exchange rate at the settlement date is the
transaction gain or loss. Transaction gains or losses on unsettled foreign
currency transactions are also reported in this manner. When there is a balance
sheet date between the transaction date and settlement date, the gain or loss on
the unsettled balance shall be measured using the current exchange rate at the
balance sheet date.
B. HEDGED TRANSACTIONS. For purposes of this collaboration, neither
Party shall buy or sell forward, directly or indirectly, foreign currencies in
amounts greater than those which can reasonably be expected to be received or
paid, as the case may be, over the relevant time period.
5.
<PAGE> 65
If a Party enters into a hedged transaction, the gain or loss realized from the
hedge must be included in the underlying transaction. If the currency
transaction gain or loss has been included in Net Sales, Costs of Goods Sold,
etc., it shall not be included in this category.
6.
<PAGE> 66
EXHIBIT B
FINANCIAL STATEMENT FORMAT
<PAGE> 67
EXHIBIT B
FINANCIAL STATEMENT FORMAT
(CASE A - OPERATING PROFIT)
<TABLE>
<CAPTION>
HMR Amylin Total % Net Sales
--- ------ ----- -----------
<S> <C> <C> <C> <C>
Gross Sales **** **** **** ****
Less:
Discounts **** **** **** ****
Credits & Allowances **** **** **** ****
Taxes & Duties **** **** **** ****
Provisions for Uncollectible Accounts **** **** **** ****
Net Sales **** **** **** ****
Cost of Goods Sold:
Standard Material Cost **** **** **** ****
Standard Direct Labor Costs **** **** **** ****
Standard Overhead Costs **** **** **** ****
Standard Manufacturing Variances **** **** **** ****
Scrap Expense **** **** **** ****
Inventory Revaluation **** **** **** ****
Full Absorption Adjustment **** **** **** ****
Excess & Obsolete Inventory Adjustments **** **** **** ****
Loss on Returns Expense **** **** **** ****
No Charge Shipments **** **** **** ****
Total Cost of Goods Sold **** **** **** ****
Gross Profit **** **** **** ****
Marketing Expenses:
Selling Expenses **** **** **** ****
Marketing Management **** **** **** ****
Market & Consumer Research **** **** **** ****
Advertising **** **** **** ****
Trade Promotion **** **** **** ****
Consumer Promotion **** **** **** ****
Education **** **** **** ****
Royalty Expense **** **** **** ****
Total Marketing Expenses **** **** **** ****
Distribution Expenses:
Stock & Shipping **** **** **** ****
Transportation **** **** **** ****
Total Distribution Expenses **** **** **** ****
</TABLE>
The numbers set forth above on this Exhibit B are provided only as examples of
how to calculate financials under this Agreement and shall not be considered as
projections or for any other purpose.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 68
EXHIBIT B (CONT.)
FINANCIAL STATEMENT FORMAT
(CASE A- OPERATING PROFIT)
<TABLE>
<CAPTION>
HMR Amylin Total % Net Sales
--- ------ ----- -----------
<S> <C> <C> <C> <C>
Post-Launch Product R&D Expenses:
Phase IV Clinical Trials **** **** **** ****
Product Support **** **** **** ****
Medical Affairs **** **** **** ****
Preclinical Research **** **** **** ****
Other Contract R&D **** **** **** ****
Total Post-Launch Product R&D Expenses **** **** **** ****
Patent Expenses **** **** **** ****
Currency Gains (Losses):
Unhedged Transactions **** **** **** ****
Hedged Transactions **** **** **** ****
Total Currency Gains (Losses) **** **** **** ****
Net Sublicense Revenues **** **** **** ****
Operating Profits (Losses) **** **** **** ****
Equalization Receipt (Payment) **** **** **** ****
Balance After Equalization **** **** **** ****
</TABLE>
The numbers set forth above on this Exhibit B are provided only as examples of
how to calculate financials under this Agreement and shall not be considered as
projections or for any other purpose.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 69
EXHIBIT B
FINANCIAL STATEMENT FORMAT
(CASE B - OPERATING LOSSES)
<TABLE>
<CAPTION>
HMR Amylin Total % Net Sales
--- ------ ----- -----------
<S> <C> <C> <C> <C>
Gross Sales **** **** ****
Less: **** **** ****
Discounts **** **** ****
Credits & Allowances **** **** ****
Taxes & Duties **** **** ****
Provisions for Uncollectible Accounts **** **** ****
Net Sales **** **** **** ****
Cost of Goods Sold:
Standard Material Cost **** **** **** ****
Standard Direct Labor Costs **** **** **** ****
Standard Overhead Costs **** **** **** ****
Standard Manufacturing Variances **** **** **** ****
Scrap Expense **** **** **** ****
Inventory Revaluation **** **** **** ****
Full Absorption Adjustment **** **** **** ****
Excess & Obsolete Inventory Adjustments **** **** **** ****
Loss on Returns Expense **** **** **** ****
No Charge Shipments **** **** **** ****
Total Cost of Goods Sold **** **** **** ****
Gross Profit **** **** **** ****
Marketing Expenses:
Selling Expenses **** **** **** ****
Marketing Management **** **** **** ****
Market & Consumer Research **** **** **** ****
Advertising **** **** **** ****
Trade Promotion **** **** **** ****
Consumer Promotion **** **** **** ****
Education **** **** **** ****
Royalty Expense **** **** **** ****
Total Marketing Expenses **** **** **** ****
Distribution Expenses:
Stock & Shipping **** **** **** ****
Transportation **** **** **** ****
Total Distribution Expenses **** **** **** ****
</TABLE>
The numbers set forth above on this Exhibit B are provided only as examples of
how to calculate financials under this Agreement and shall not be considered as
projections or for any other purpose.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 70
EXHIBIT B (CONT.)
FINANCIAL STATEMENT FORMAT
(CASE B- OPERATING LOSSES)
<TABLE>
<CAPTION>
HMR Amylin Total % Net Sales
--- ------ ----- -----------
<S> <C> <C> <C> <C>
Post-Launch Product R&D Expenses:
Phase IV Clinical Trials **** **** **** ****
Product Support **** **** **** ****
Medical Affairs **** **** **** ****
Preclinical Research **** **** **** ****
Other Contract R&D **** **** **** ****
Total Post-Launch Product R&D Expenses **** **** **** ****
Patent Expenses **** **** **** ****
Currency Gains (Losses):
Unhedged Transactions **** **** **** ****
Hedged Transactions **** **** **** ****
Total Currency Gains (Losses) **** **** **** ****
Net Sublicense Revenues **** **** **** ****
Operating Profits (Losses) **** **** **** ****
Equalization Receipt (Payment) **** **** **** ****
Balance After Equalization **** **** **** ****
</TABLE>
The numbers set forth above on this Exhibit B are provided only as examples of
how to calculate financials under this Agreement and shall not be considered as
projections or for any other purpose.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 71
EXHIBIT C
LIST OF AMYLIN PATENTS
NONE.
<PAGE> 1
Exhibit 10.33
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(b)(4), 200.83
AND 230.406. * INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL
TREATMENT REQUEST THAT IS FILED SEPARATELY WITH THE COMMISSION.
================================================================================
LICENSE AND OPTION AGREEMENT
BY AND BETWEEN
HOECHST MARION ROUSSEL, INC.
AND
AMYLIN PHARMACEUTICALS, INC.
EFFECTIVE AS OF MARCH 31, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I - DEFINITIONS......................................................................1
1.1 "Affiliate"...................................................................1
1.2 "Amylin Data".................................................................2
1.3 "Amylin Know-how".............................................................2
1.4 "Amylin Patent"...............................................................2
1.5 "Amylin Research and Development Expenses"....................................2
1.6 "Collaboration Agreement".....................................................2
1.7 "Competitive Product Infringement"............................................2
1.8 "Confidential Information"....................................................2
1.9 "Control".....................................................................2
1.10 "Development".................................................................2
1.11 "Drug Approval Application"...................................................2
1.12 "Drug Master File"............................................................3
1.13 "EU"..........................................................................3
1.14 "FDA".........................................................................3
1.15 "Field".......................................................................3
1.16 "HMR Additional Research and Development Expenses"............................3
1.17 "HMR Compound"................................................................3
1.18 "HMR Data"....................................................................3
1.19 "HMR Know-how"................................................................3
1.20 "HMR Option"..................................................................3
1.21 "HMR Option Exercise Date"....................................................3
1.22 "HMR Patent"..................................................................3
1.24 "HMR Replacement Compound"....................................................4
1.25 "HMR Series"..................................................................4
1.26 "Information".................................................................4
1.27 "Joint Patent"................................................................4
1.28 "Losses"......................................................................4
1.29 "Major Market Country"........................................................4
1.30 "Net Sales"...................................................................4
1.31 "Patents".....................................................................4
1.32 "Patent Expenses".............................................................5
1.33 "Phase II Clinical Trials"....................................................5
1.34 "Phase III Clinical Trials"...................................................5
1.35 "Pivotal Phase II Clinical Trials"............................................5
1.36 "Product".....................................................................5
1.37 "Regulatory Approval".........................................................5
1.38 "Regulatory Filings"..........................................................5
1.39 "Research"....................................................................5
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C> <C>
1.40 "Research and Development Expenses"...........................................5
1.41 "Research and Development Plans"..............................................5
1.42 "Safety"......................................................................5
1.43 "Terminated Compound".........................................................5
1.44 "Territory"...................................................................6
1.45 "Third Party".................................................................6
1.46 "Tolerability"................................................................6
1.47 "Written Disclosure"..........................................................6
ARTICLE II - LICENSE GRANTS..................................................................6
2.1 Patent License to Amylin to Conduct Research and Development..................6
2.2 Patent License to Amylin for Commercialization................................6
2.3 Nonexclusive HMR Know-how License To Amylin...................................6
2.4 Nonexclusive Amylin Know-how License To HMR...................................6
2.5 Sublicenses...................................................................7
2.6 Third Party Technology........................................................7
ARTICLE III - RESEARCH AND DEVELOPMENT.......................................................7
3.1 Scope.........................................................................7
3.2 Conduct of Research and Development...........................................8
3.3 Research and Development Plans................................................8
3.4 Status Meetings...............................................................8
3.5 Obligations of the Parties....................................................8
3.6 Selection of HMR Compounds; HMR Replacement Compounds........................11
3.7 Regulatory Matters...........................................................12
ARTICLE IV - HMR'S OPTION TO PARTICIPATE IN RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION........................................................13
4.1 HMR Option...................................................................13
4.2 Limitations of Further Rights................................................14
ARTICLE V- ROYALTIES........................................................................14
5.1 Royalties and Royalty Payments...............................................14
5.2 Duration of Royalty Obligations..............................................15
5.3 Royalty Rate if Generics Introduced..........................................15
5.4 Sales by Sublicensees........................................................15
5.5 Royalty Payments and Reports.................................................15
5.6 Taxes........................................................................15
5.7 Blocked Currency.............................................................15
5.8 Payments to or Reports by Affiliates.........................................16
5.9 No Overlapping Royalties.....................................................16
</TABLE>
ii.
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VI - CONFIDENTIALITY................................................................16
6.1 Confidentiality; Exceptions..................................................16
6.2 Receipt of Third Party Information...........................................17
6.3 Authorized Disclosure........................................................17
6.4 Survival.....................................................................17
6.5 Termination of Prior Agreement...............................................17
6.6 Scientific Publications and Presentations....................................17
ARTICLE VII - OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS..........................18
7.1 Ownership....................................................................18
7.2 Disclosure of Patentable Inventions..........................................18
7.3 Patent Filings...............................................................18
7.4 Third Party Patent Rights....................................................19
7.5 Enforcement Rights...........................................................20
7.6 Assignment of Joint Patents..................................................21
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES...............................................22
ARTICLE IX - INFORMATION & REPORTS..........................................................22
9.1 Records of Revenues and Expenses.............................................22
9.2 Publicity Review.............................................................22
ARTICLE X - TERM AND TERMINATION............................................................23
10.1 Term.........................................................................23
10.2 Termination by HMR For Amylin's Failure to Meet Milestones or
Discontinuing Research and Development.......................................23
10.3 Termination by HMR For Amylin's Failure to Commercialize or Market
Products in the Territory....................................................24
10.4 Termination for Material Breach..............................................26
10.5 Termination Without Cause....................................................28
10.6 Accrued Rights, Surviving Obligations........................................29
ARTICLE XI - INDEMNIFICATION................................................................30
11.1 Indemnification by HMR.......................................................30
11.2 Indemnification by Amylin....................................................30
ARTICLE XII - DISPUTE RESOLUTION............................................................31
12.1 General......................................................................31
12.2 Negotiation..................................................................31
</TABLE>
iii.
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE XIII - MISCELLANEOUS
13.1 Assignment; Binding Effect....................................................31
13.2 Research and Development Entities.............................................32
13.3 Consents Not Unreasonably Withheld............................................32
13.4 Force Majeure.................................................................32
13.5 Further Actions...............................................................32
13.6 No Trademark Rights...........................................................32
13.7 Notices.......................................................................33
13.8 Waiver........................................................................33
13.9 Severability..................................................................33
13.10 Ambiguities...................................................................33
13.11 Governing Law.................................................................34
13.12 Headings......................................................................34
13.13 Counterparts..................................................................34
13.14 Entire Agreement..............................................................34
EXHIBITS
Exhibit A - List of HMR Patents
Exhibit B - List of HMR Series
Exhibit C - Initial Outline of Research and Development Plan
</TABLE>
iv.
<PAGE> 6
LICENSE AND OPTION AGREEMENT
LICENSE AND OPTION AGREEMENT (the "Agreement") effective as of March 31,
1997 (the "Effective Date"), by and between AMYLIN PHARMACEUTICALS, INC., a
Delaware corporation ("Amylin"), and HOECHST MARION ROUSSEL, INC., a Delaware
corporation ("HMR"). Amylin and HMR are sometimes referred to herein
individually as a "Party" and together as the "Parties."
W I T N E S E T H:
WHEREAS, HMR is a leading multinational health care company with a broad
product portfolio of drugs for the treatment of human diseases;
WHEREAS, Amylin is a leading biotechnology company that has expertise
and experience in the research and development of compounds for use in treating
metabolic and other disorders;
WHEREAS, Amylin desires to obtain a license from HMR for the right to
research, develop and commercialize the HMR Compounds (as defined in Section
1.17 herein) on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, Amylin and HMR are entering into a collaboration agreement of
even date herewith (the "Collaboration Agreement") which is effective only upon
HMR's exercise of the HMR Option (as defined in Section 4.1 herein) and which
sets forth the Parties' rights and obligations with respect to the collaboration
thereunder in the event such option is exercised by HMR.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article I
shall have the meanings specified below:
1.1 "AFFILIATE" with respect to a Party means an entity that, directly
or indirectly, controls, is controlled by or is under common control with such
Party, and with respect to HMR, or any entity that HMR controls directly or
indirectly or is under common control with HMR, such control shall be measured
by the ability to exercise day to day management of such entity.
1.
<PAGE> 7
1.2 "AMYLIN DATA" means all Information arising out of all pre-clinical
and clinical Research (as defined in Section 1.39) and Development (as defined
in Section 1.10) conducted by or on behalf of Amylin or its sublicensees, or
disclosed to Amylin by its licensors and other collaborators necessary to obtain
Regulatory Approval (as defined in Section 1.37) for marketing of Products in
the Territory.
1.3 "AMYLIN KNOW-HOW" means Information which (i) Amylin discloses, or
is required to disclose, to HMR under this Agreement and (ii) is within the
Control (as defined in Section 1.9) of Amylin, including, without limitation,
all Information developed by or on behalf of Amylin relating to the HMR
Compounds. Notwithstanding anything herein to the contrary, Amylin Know-how
shall exclude any Amylin Patents.
1.4 "AMYLIN PATENT" means a Patent which covers the discovery,
evaluation, manufacture, use, importation, offer for sale and/or sale of an HMR
Compound selected for research and development by Amylin within the Field or a
Product, which Patent is owned or Controlled by Amylin or its Affiliates,
including Amylin's interest in any Joint Patent. Amylin shall promptly notify
HMR of any Amylin Patents which are issued hereafter.
1.5 "AMYLIN RESEARCH AND DEVELOPMENT EXPENSES" shall have the meaning
set forth in Section 4.1.1.
1.6 "COLLABORATION AGREEMENT" shall have the meaning set forth in the
fourth "WHEREAS" of this Agreement.
1.7 "COMPETITIVE PRODUCT INFRINGEMENT" shall have the meaning set forth
in Section 7.5.1(a).
1.8 "CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 6.1.
1.9 "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 arrangement with or proprietary rights of any Third Party.
1.10 "DEVELOPMENT" shall mean all activities relating to obtaining
Regulatory Approval of a Product, Product line extensions, alternative delivery
systems and new indications therefor and all activities relating to developing
the ability to manufacture the same. This includes preclinical testing,
toxicology, formulation, bulk production, fill/finish, manufacturing process
development, manufacturing and quality assurance technical support, clinical
studies, regulatory affairs and outside counsel regulatory legal services.
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
country in the Territory.
2.
<PAGE> 8
1.12 "DRUG MASTER FILE" means a submission of information to the FDA as
defined in 21 C.F.R. ss. 314.420.
1.13 "EU" shall mean those countries which are member states of the
European Union, including countries which become member states after the date
hereof.
1.14 "FDA" means the United States Food and Drug Administration.
1.15 "FIELD" means all fields, including but not limited to, the
prevention, treatment and/or diagnosis of cardiovascular or metabolic diseases
and disorders.
1.16 "HMR ADDITIONAL RESEARCH AND DEVELOPMENT EXPENSES" shall have the
meaning set forth in Section 4.1.2.
1.17 "HMR COMPOUND" means any HMR Primary Compound and/or any HMR
Replacement Compound; provided, however, that if, at any time or from time to
time Amylin selects an HMR Replacement Compound to replace an HMR Primary
Compound pursuant to Section 3.6.2, then such replaced HMR Primary Compound
shall no longer be deemed to be an HMR Compound for purposes of this Agreement.
1.18 "HMR DATA" means all Information arising out of all pre-clinical
and clinical Research and Development conducted by or on behalf of HMR or
disclosed to HMR by its licensors and other collaborators and not subject to a
restrictive confidentiality arrangement, necessary or useful to obtain
Regulatory Approvals for marketing of Products in the countries in the
Territory.
1.19 "HMR KNOW-HOW" means Information which (i) HMR discloses, or is
required to disclose, to Amylin under this Agreement and (ii) is within the
Control of HMR. Notwithstanding anything herein to the contrary, HMR Know-how
shall exclude any HMR Patent.
1.20 "HMR OPTION" shall have the meaning set forth in Section 4.1.
1.21 "HMR OPTION EXERCISE DATE" means the effective date of HMR's
exercise of the HMR Option as set forth in Section 4.1.2.
1.22 "HMR PATENT" means a Patent which covers the discovery, evaluation,
manufacture, use or importation, offer for sale and/or sale of any HMR Compound
in the Field or Product, which Patent is owned or Controlled by HMR, including
HMR's interest in any Joint Patents, including those as of the date hereof
identified on Exhibit A hereof. HMR shall promptly notify Amylin, and such
Exhibit shall be modified from time to time, to reflect any changes to HMR
Patents. Patents relating to HMR Compounds for use in the Field or Products
which issue during the term of this Agreement in any country in the Territory
shall automatically be deemed as of the date of such issuance to be included in
the definition of HMR Patents.
3.
<PAGE> 9
1.23 "HMR PRIMARY COMPOUND" means any of HMR's compounds numbered
*******************************************************************************,
and prodrugs of any of the foregoing.
1.24 "HMR REPLACEMENT COMPOUND" shall have the meaning set forth in
Section 3.6.2(a).
1.25 "HMR SERIES" means all compounds included in HMR's Series of
Phenolic Anti-Oxidant MDL Compounds, and any compound hereafter added to such
series by HMR. The initial HMR Series are set forth in Exhibit B, as the same
may be modified from time to time. HMR agrees to promptly inform Amylin in
writing as any such compounds are hereafter added to the HMR Series.
1.26 "INFORMATION" means techniques and data relating to the HMR Series,
including inventions, practices, methods, assays, knowledge, know-how, skill,
experience, marketing, pricing, distribution, cost, sales and manufacturing
information and test data including pharmacological, pharmacokinetic,
toxicological and clinical data, analytical and quality control data, stability
and integrity data, formulation data, quality control data, and safety and
efficacy data.
1.27 "JOINT PATENT" shall have the meaning set forth in Section 7.3.1.
1.28 "LOSSES" shall have the meaning set forth in Section 11.1.1.
1.29 "MAJOR MARKET COUNTRY" means each of France, Germany, Great
Britain, Italy, Spain, Canada, Japan and the United States.
1.30 "NET SALES" means the amount invoiced for sales of Products to a
Third Party in the Territory, less the following reasonable and customary
deductions to the extent applicable to such invoiced amounts: (i) discounts,
including cash discounts, rebates and retroactive price reductions or allowances
actually allowed or granted from the billed amount; (ii) credits or allowances
actually granted upon claims, rejections or returns of such sales of Products,
including recalls; (iii) taxes, duties or other governmental charges (but
excluding what is commonly known as income taxes) levied on or measured by the
billing amount when included in billing, as adjusted for rebates and refunds;
and (iv) provisions for uncollectible accounts determined in accordance with
such Party's normal accounting procedures.
1.31 "PATENTS" means (i) valid and enforceable United States patents,
including reexaminations, reissues, extensions, term restorations and foreign
counterparts thereof, including supplementary protection certificates and other
administrative protections, and (ii) pending applications for United States
patents, including continuation applications, continuation-in-part applications,
divisional applications and foreign counterparts thereof.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 10
1.32 "PATENT EXPENSES" means the fees and expenses of outside counsel
and payments to Third Parties incurred in connection with the preparation,
filing, prosecution and maintenance of Amylin Patents, Joint Patents and HMR
Patents after ******************, including the costs of patent interference and
opposition proceedings.
1.33 "PHASE II CLINICAL TRIALS" has the meaning set forth in 21
CFRss.312.21(b).
1.34 "PHASE III CLINICAL TRIALS" has the meaning set forth in 21
CFRss.312.21(c).
1.35 "PIVOTAL PHASE II CLINICAL TRIALs" means those Phase II Clinical
Trials sufficient for Amylin to design and initiate Phase III Clinical Trials.
1.36 "PRODUCT" shall mean any bulk drug product or finished
pharmaceutical composition containing an HMR Compound as a pharmaceutically
active ingredient (either alone or in combination with one or more other
pharmaceutically active ingredients).
1.37 "REGULATORY APPROVAL" means any approval (including pricing and
reimbursement approvals), product and/or establishment license, registration or
authorization of any federal, state or local regulatory agency, department,
bureau or other governmental entity necessary for the manufacture, use, storage,
import, export, transport or sale of a Product.
1.38 "REGULATORY FILINGS" shall have the meaning set forth in Section
3.7.2.
1.39 "RESEARCH" shall mean the scientific, technical and clinical
activities undertaken to evaluate an HMR Compound for Development, including
pharmacology, pharmacokinetics, toxicology, formulation, process development,
manufacture of HMR Compounds (including manufacture of bulk drug substance and
fill/finish) for clinical trials, and clinical pharmacology.
1.40 "RESEARCH AND DEVELOPMENT EXPENSES" shall mean Patent Expenses,
costs and expenses incurred in obtaining Regulatory Approval for HMR Compounds
and the expenses incurred by a Party or for its account which are generally
consistent with a Research and Development Plan, which expenses are specifically
attributable to the research and development of the HMR Compounds for use in the
Field.
1.41 "RESEARCH AND DEVELOPMENT PLANS" shall mean the Research and
Development Plans referred to in Section 3.3.
1.42 "SAFETY" means adverse experiences which are significant, serious
or life threatening, having a toxicological effect on one or more body tissues.
1.43 "TERMINATED COMPOUND" shall have the meaning set forth in Section
3.6.2(a).
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<PAGE> 11
1.44 "TERRITORY" means initially the world, subject to the termination
of Amylin's rights with respect to certain countries within the Territory
pursuant to the terms hereof, whereupon, "Territory" shall mean the remaining
countries of the world.
1.45 "THIRD PARTY" means any entity other than Amylin or HMR or their
respective Affiliates.
1.46 "TOLERABILITY" means adverse drug experiences which are unpleasant
to such an extent that they can affect, in the Parties' mutual judgment (which
judgment shall be based on information available at that time and on the
Parties' mutual experience), market potential or market penetration but which do
not necessarily require discontinuation of drug therapy.
1.47 "WRITTEN DISCLOSURE" shall have the meaning set forth in Section
9.2.
ARTICLE II
LICENSE GRANTS
2.1 PATENT LICENSE TO AMYLIN TO CONDUCT RESEARCH AND DEVELOPMENT. Upon
the terms and subject to the conditions of this Agreement, HMR grants to Amylin
an exclusive (except as to HMR and its Affiliates) paid-up license under the HMR
Patents in the Territory to conduct Research and Development with respect to the
HMR Compounds for use in the Field.
2.2 PATENT LICENSE TO AMYLIN FOR COMMERCIALIZATION. Upon the terms and
subject to the conditions of this Agreement, including, without limitation, the
royalty payment obligations herein, HMR grants to Amylin an exclusive (even as
to HMR and its Affiliates) license under the HMR Patents in the Territory to
make, have made, use, import, sell, offer for sale and have sold Products in the
Field.
2.3 NONEXCLUSIVE HMR KNOW-HOW LICENSE TO AMYLIN. Upon the terms and
subject to the conditions of this Agreement including, without limitation,
Article VI, HMR grants to Amylin a paid-up, non-exclusive, royalty-free,
worldwide license to use HMR Know-how for purposes consistent with and in
furtherance of the terms of this Agreement.
2.4 NONEXCLUSIVE AMYLIN KNOW-HOW LICENSE TO HMR. Upon the terms and
subject to the conditions of this Agreement including, without limitation,
Article VI, Amylin grants to HMR a paid-up, non-exclusive, royalty-free,
worldwide license to use Amylin Know-how for purposes consistent with and in
furtherance of the terms of this Agreement.
6.
<PAGE> 12
2.5 SUBLICENSES.
2.5.1 APPROVAL REQUIRED. Neither Party may grant sublicenses
under Sections 2.1, 2.2, 2.3 or 2.4 except with the express prior written
approval of the Party that owns or Controls the subject Patents and Know-how;
provided, however, if HMR does not exercise the HMR Option (as defined in
Section 4.1), Amylin shall have the exclusive right to grant sublicenses
pursuant to Sections 2.1 and 2.2, and Amylin may grant sublicenses with respect
to the licenses granted to Amylin pursuant to Sections 2.1, 2.2 and 2.3, without
HMR's consent.
2.5.2 SUBLICENSE FEES AND PAYMENTS. Any time that Amylin grants
any such sublicenses (i) prior to the delivery of the HMR Option Reply (as
defined in Section 4.1.2) and (ii) after the time specified for delivery of the
HMR Option Reply if HMR does not exercise the HMR Option, Amylin shall pay to
HMR ******************* of any up-front sublicense fees or milestone payments
received by Amylin from any such sublicensees, until such time as HMR has
received an aggregate of ************ (such amount representing a portion of the
************ expended by HMR with respect to the HMR Compounds prior to the
Effective Date and the cost of bulk drug supply and cardiotoxicity studies to be
supplied by HMR to Amylin under Section 3.5.2(c) herein) pursuant to this
Section 2.5.2. Such payments shall be made by Amylin within thirty (30) days of
Amylin's receipt of the corresponding payment from the applicable sublicensee.
For purposes of the foregoing, "up-front license fees or milestone payments"
shall exclude amounts attributable to *******************
******************************************* and shall be net of amounts
attributable to license fees and milestone payments payable by Amylin to such
Third Parties in connection with Research, Development or commercialization of
HMR Compounds or Products. The division of any amounts received pursuant to the
grant of any sublicenses granted after HMR exercises the HMR Option shall be
subject to the Collaboration Agreement. In the event that the total aggregate
amount of ************ has not been repaid to HMR by Amylin pursuant to this
Section 2.5.2 on or prior to the date that is three (3) years after the first
commercial launch of a Product by Amylin in a Major Market Country, then Amylin
shall pay to HMR on such date an amount equal to ************ minus the total
aggregate amount of all fees and payments made to HMR by Amylin pursuant to this
Section 2.5.2 prior to such date.
2.6 THIRD PARTY TECHNOLOGY. The licenses granted under Sections 2.1
through 2.4, to the extent they include sublicenses of Third Party technology,
shall be subject to the terms and conditions of the license agreement pursuant
to which the sublicense is granted.
ARTICLE III
RESEARCH AND DEVELOPMENT
3.1 SCOPE. Amylin shall conduct a research and development program with
respect to ************************ and/or, in its sole discretion, one or more
additional HMR Compounds, with the objective of obtaining Regulatory Approval
and commercializing one or
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<PAGE> 13
more HMR Compounds in at least the Major Market Countries (with the exception of
Japan) in a timely manner, as set forth in this Agreement. Not later than one
year prior to the anticipated first launch of a Product in a Major Market
Country, Amylin will formulate and commence implementation of a plan for the
development and commercialization of such Product in Japan.
3.2 CONDUCT OF RESEARCH AND DEVELOPMENT. Amylin will be solely
responsible for carrying out Research and Development of
************************ and other HMR Compounds. Throughout the term hereof,
Amylin shall have the right to engage Third Parties to perform its Research,
Development and commercialization activities pursuant to this Agreement,
provided such Third Party agrees to be bound by Section VI hereof.
Notwithstanding any other provision hereof, prior to the delivery of the HMR
Option Reply, and thereafter if HMR does not exercise the HMR Option or the HMR
Option expires unexercised, Amylin shall have sole control and authority over
all aspects of Research, Development and commercialization of the HMR Compounds,
and HMR shall not have any liability with respect thereto.
3.3 RESEARCH AND DEVELOPMENT PLANS. Research and Development of
************************* and each other HMR Compound pursuant to this Article
III shall be governed by a separate written plan, an initial outline of which is
attached as Exhibit C hereto ("Research and Development Plan"), updates of which
shall be prepared by Amylin and submitted to HMR for its information. Each
Research and Development Plan will describe the proposed overall program of
Research and Development for the HMR Compound, including preclinical studies,
toxicology, formulation, process development, clinical studies and regulatory
plans and other elements of obtaining Regulatory Approval. Each Research and
Development Plan will set forth key objectives. Each Research and Development
Plan will be updated annually by Amylin and, together with any additional
updates thereto, be provided to HMR for its information.
3.4 STATUS MEETINGS. Representatives from HMR and Amylin will meet at
least two (2) times annually to discuss research, development and
commercialization of HMR Compounds for purposes of HMR's information and to
monitor Amylin's compliance with the provisions of this Agreement. The location
of such meetings will alternate between Amylin's facilities and HMR's
facilities. Each Party will bear its own travel and related costs. Amylin shall
provide HMR Information reasonably requested by HMR during the term hereof
relating to the Research, Development and commercialization of the HMR Compounds
for use in the Field and Products. HMR will promptly advise Amylin in writing of
any concerns and/or issues it has regarding Amylin's Research, Development and
commercialization of the HMR Compounds and the Products.
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8.
<PAGE> 14
3.5 OBLIGATIONS OF THE PARTIES.
3.5.1 AMYLIN'S OBLIGATIONS.
(a) Amylin shall use reasonable commercial diligence, consistent
with accepted business practices and legal requirements relating to
pharmaceutical drug development, to continue the Research and Development of
************ or other HMR Compounds selected by Amylin pursuant to Section 3.6
herein, devoting the same degree of attention and diligence to such Research and
Development efforts as similar biotechnology companies devote to Research and
Development activities for potential drug products of comparable market
potential.
(b) To meet the commercial diligence obligations of Section
3.5.1(a), Amylin must meet the following milestones: (i) conducting studies on
at least one HMR Compound sufficient to permit application for an
Investigational New Drug ("IND") with the FDA (or equivalent application with a
regulatory authority in a Major Market Country other than the United States) on
at least one HMR Compound, and filing such an application for an IND (or
equivalent), within *************** after the Effective Date; and (ii)
completing Pivotal Phase II Clinical Trials on at least one HMR Compound within
************* after the Effective Date. In the event of material changes in
regulatory requirements, or other unforeseen circumstances beyond the reasonable
control of Amylin, which HMR reasonably determines prevents Amylin from meeting
the obligations set forth above, the Parties agree to discuss such changed
circumstances and determine appropriate mechanisms to address them.
(c) In addition to the requirements of Section 3.5.1(b), Amylin
will be deemed not to have met the commercial diligence milestones if there is a
discontinuance of work on all of the HMR Compounds for a continuous
************** period prior to the completion of Pivotal Phase II Clinical
Trials.
(d) In the event Amylin fails to meet the commercial diligence
requirements of Section 3.5.1(b) or Section 3.5.1(c), HMR may in its discretion
terminate this Agreement as provided in Section 10.2 herein.
(e) Amylin shall submit semi-annual written summary reports which
describe the progress of Research and Development efforts undertaken by it, if
any, under this Agreement. Summary reports shall include, without limitation, a
description and statement of purpose of each study in progress, with respect to
clinical trials, the number of patients which enrolled in, dropped from, or
completed the study, as well as any side effect or unexpected data, and the
progress towards the diligence obligations set forth in Section 3.5.1(b) and
(c).
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9.
<PAGE> 15
(f) In carrying out commercialization of HMR Compounds, Amylin
will use reasonable commercial efforts to promote the sale, marketing and
distribution of HMR Compounds or the Products that have received the Regulatory
Approval in each country in the Territory.
3.5.2 HMR'S OBLIGATIONS
(a) Promptly upon execution of this Agreement, HMR shall deliver
to Amylin all applicable HMR Data with respect to HMR Compounds, in order to
facilitate commencement of Research and Development hereunder, and periodically
thereafter shall provide such additional HMR Data reasonably requested by
Amylin.
(b) Within a reasonable time after execution of this Agreement,
HMR shall deliver to Amylin (i) existing and available information and data in
HMR's Control pertaining to marketing of ******** and HMR Compounds, and (ii)
existing and available information and data in HMR's Control reasonably
requested by Amylin pertaining to clinical trials of ********.
(c) HMR shall deliver to Amylin twelve (12) kilograms of
*********** and twelve (12) kilograms of *********** by May 31, 1997. HMR shall
deliver to Amylin an additional eight (8) kilograms of either *********** or
***********, at Amylin's option. HMR shall use its best efforts to deliver such
eight (8) kilograms within four (4) months after receipt of Amylin's written
notice specifying whether it wishes to receive eight (8) kilograms of
*********** or eight (8) kilograms of ***********. HMR shall perform initial
cardiotoxicity studies in dogs and monkeys on the HMR Primary Compounds. The
costs of this thirty-two (32) kilograms of material and the initial
cardiotoxicity studies are included in the ************ amount referenced in
Section 2.5.2.
(d) Upon agreement of the Parties, HMR will provide or arrange
for the additional bulk drug supply of *********** or *********** (at Amylin's
sole discretion), in sufficient quantities for completion of preclinical and
toxicology studies and initial Phase I and Phase II Clinical Trials. Amylin will
reimburse HMR for the cost of such bulk drug supply (at HMR's direct cost for
such bulk drugs) within thirty (30) days after receipt of an invoice for such
bulk drugs from HMR. If and only if HMR exercises the HMR Option, HMR's direct
cost of providing additional quantities of bulk drug supply after the effective
date of the Collaboration Agreement shall be treated as an HMR "Allowable
Expense" (as defined in the Collaboration Agreement) under the Collaboration
Agreement. If HMR does not exercise the HMR Option or the HMR Option expires
unexercised, HMR's direct costs for providing such additional quantities of bulk
drugs shall be reimbursed by Amylin to HMR pursuant to Section 3.5.3(b)(iii).
Throughout the term hereof, HMR shall have the right to engage Third Parties to
provide bulk materials pursuant to this Agreement , provided such Third Party
agrees to be bound by Section VI hereof.
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10.
<PAGE> 16
(e) From the Effective Date hereof until the time specified for
the delivery by HMR of the HMR Option Reply, HMR agrees to provide as an
independent third party such Research and Development services as are reasonably
requested by Amylin and accepted by HMR, pursuant to the criteria, procedures
and specifications requested by Amylin. The costs for such Research and
Development services performed by HMR shall be reimbursed by Amylin to HMR
within thirty (30) days after receipt of an invoice from HMR for such costs as
set forth in Section 3.5.3 herein. If the HMR Option is exercised, then the
parties shall be bound by the Collaboration Agreement with respect to their
respective roles in connection with Research, Development and commercialization
activities thereafter.
(f) HMR shall use reasonable commercial diligence, consistent
with accepted business practices and legal requirements relating to
pharmaceutical drug development, to perform any and all research and development
services pursuant to the foregoing, devoting the same degree of attention and
diligence to such research and development efforts as similar pharmaceutical
companies devote to research and development activities for potential drug
products of comparable market potential.
3.5.3 RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EXPENSES.
(a) In the event the HMR Option is exercised, the Research and
Development Expenses incurred by each Party in connection with the HMR Compounds
shall be allocated as provided in the Collaboration Agreement.
(b) In the event the HMR Option expires unexercised, (i) Amylin
shall bear its own costs and expenses incurred in connection with any Research,
Development and commercialization conducted by it pursuant to this Agreement
(ii) HMR shall bear its own costs and expenses incurred in connection with
Research and Development of the HMR Compounds prior to the Effective Date and
the costs of any HMR Compound delivered to Amylin and the costs of the initial
cardiotoxicity studies performed pursuant to Section 3.5.2(c) hereof (such costs
being included in the agreed upon ************ referred to in Section 2.5.2) and
(iii) Amylin will reimburse HMR for Research and Development services and
commercialization assistance which HMR performs pursuant to Section 3.5.2(e) and
the costs of any bulk drug supplies delivered to Amylin pursuant to Section
3.5.2(d) and, in such event, within twenty (20) days of the end of each calendar
quarter and within thirty (30) days of the end of each calendar year, HMR shall
submit a written statement to Amylin setting forth such expenses incurred by HMR
for such quarter, and Amylin shall reimburse HMR for such services and drug
supplies within thirty (30) days after receipt of an invoice from HMR.
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<PAGE> 17
3.6 SELECTION OF HMR COMPOUNDS; HMR REPLACEMENT COMPOUNDS.
3.6.1 SELECTION OF HMR PRIMARY COMPOUNDS FOR RESEARCH AND
DEVELOPMENT. Promptly after the Effective Date, Amylin will commence Research
and Development on *********** and ***********. Thereafter, from time to time in
Amylin's sole discretion, Amylin shall be entitled to initiate Research and
Development with respect to one or more additional HMR Compounds pursuant to
this Agreement and/or to discontinue Research or Development with respect to one
or more HMR Compounds, including but not limited to *********** and ***********.
3.6.2 HMR REPLACEMENT COMPOUNDS.
(a) If Amylin determines at any time or from time to time,
whether prior to or subsequent to the HMR Option Exercise Date, in its
sole discretion, that ************************ or any other HMR Primary
Compound is not suitable for Research, Development and/or
commercialization pursuant to this Agreement, upon written notification
of the same to HMR, Amylin shall thereupon be entitled to select an
additional compound ("HMR Replacement Compound") from the HMR Series for
Research, Development and/or commercialization pursuant to this
Agreement to replace such HMR Primary Compound; provided, however, that
(i) Amylin shall not be entitled to select more than ********* such HMR
Replacement Compounds during the term of this Agreement and (ii) Amylin
shall not be entitled to select any compound from the HMR Series with
respect to which HMR or any of its licensees has initiated human
clinical trials or is in active research as a clinical candidate prior
to such notification by Amylin. HMR agrees to provide all information
reasonably requested by Amylin from time to time with regard to
compounds included in the HMR Series in order to allow Amylin to
reasonably evaluate its rights under this Section 3.6.2 and the
desirability of selecting an HMR Replacement Compound pursuant to this
Section 3.6.2, including without limitation, all applicable HMR Data. At
any time an HMR Replacement Compound is so selected by Amylin as a
replacement for an HMR Primary Compound, the HMR Primary Compound so
replaced (such compound hereinafter referred to as a "Terminated
Compound") shall thereafter be excluded from the meaning of "HMR
Compound" for all purposes of this Agreement.
(b) In the event Amylin begins and then discontinues
Research and Development with respect to one or more HMR Compounds and
does not select an HMR Replacement Compound pursuant to this Section
3.6.2, then Amylin shall notify HMR in writing, and thereafter such HMR
Compound shall be deemed a "Terminated Compound" and be excluded from
the meaning of "HMR Compound" for all purposes of this Agreement.
3.6.3 OTHER COMPOUNDS IN THE HMR SERIES. HMR shall be free to
develop or commercialize, or to license Third Parties to develop or
commercialize, the compounds in the HMR Series other than HMR Compounds;
provided, however, that HMR or its licensee(s) shall
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<PAGE> 18
not be entitled to develop or commercialize such other compounds in the HMR
Series for the prevention, treatment and/or diagnosis of cardiovascular or
metabolic diseases or disorders.
3.7 REGULATORY MATTERS.
3.7.1 COMPLIANCE WITH REGULATIONS. Amylin, and HMR to the extent
it is providing services pursuant to Sections 3.5.2(c), (d) and (e), will
conduct their efforts hereunder in compliance with all applicable regulatory
requirements, including without limitation, the FDA's Good Clinical Practice,
Good Laboratory Practice and Good Manufacturing Practice regulations and the
guidelines of the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use.
3.7.2 REGULATORY FILINGS. Unless and until the HMR Option is
exercised, Amylin shall, at its own expense, prepare and submit all filings with
the regulatory authorities with respect to HMR Compounds in each country in the
Territory (the "Regulatory Filings"), and Amylin shall be responsible for
causing such applications to progress through the approval process on a timely
basis. In the event that the HMR Option is exercised, Regulatory Filings shall
be prepared and submitted in accordance with the provisions of the Collaboration
Agreement. HMR will provide the Drug Master File or appropriate reference to the
Drug Master File directly to the regulatory authorities in the countries in the
Territory, if applicable, and as may be required by law or regulation in such
country in the Territory. HMR shall reasonably cooperate with Amylin in such
manner as Amylin may reasonably request to assist in obtaining Regulatory
Approval for Products. The Research and Development Expenses incurred in
obtaining Regulatory Approval for HMR Compounds shall be allocated between the
Parties pursuant to the provisions of Section 3.5.3. Amylin shall, promptly
after filing, deliver to HMR copies of all Regulatory Filings and
correspondence, which shall be held by HMR subject to the provisions of Article
VI.
3.7.3 MAINTENANCE OF RECORDS. Each Party shall maintain records
with respect to activities conducted in connection with Research and Development
of HMR Compounds in sufficient detail and in the manner appropriate for
Regulatory Approval purposes and in a manner which will reflect all studies
conducted, results achieved and data obtained by such Party in the course of
such Research and Development.
3.7.4 SAFETY REPORTING. During the term of this Agreement
(regardless of whether the HMR Option has been exercised or expires
unexercised), the Parties shall, on a quarterly basis, exchange toxicological
and other similar reports relevant to the use, indications, Tolerability or
Safety of HMR Compounds.
13.
<PAGE> 19
ARTICLE IV
HMR'S OPTION TO PARTICIPATE IN RESEARCH, DEVELOPMENT AND
COMMERCIALIZATION
4.1 HMR OPTION. HMR shall have a one-time right to elect to form a joint
venture with Amylin (in such legal form as the Parties may mutually agree) to
jointly research, develop and commercialize, and share profits and losses
associated with, the HMR Compounds (the "HMR Option") as follows:
4.1.1 HMR OPTION NOTICE. Within thirty (30) days after the date
that the first HMR Compound has completed Pivotal Phase II Clinical Trials,
Amylin shall provide a written notice to HMR (the "Option Notice") which sets
forth in reasonable detail (i) the results of such Pivotal Phase II Clinical
Trials and (ii) all Research and Development Expenses incurred by Amylin with
respect to all HMR Compounds through the date of such notice and estimated for
the immediately subsequent thirty (30) day period (such Research and Development
Expenses being subject to verification by HMR and being referred to herein as
the "Amylin Research and Development Expenses").
4.1.2 HMR OPTION REPLY. HMR shall exercise, or indicate its
decision not to exercise, the HMR Option by providing written notice of its
decision to Amylin within sixty (60) days following receipt by HMR of the Option
Notice (the "HMR Option Reply"). If no HMR Option Reply is received by Amylin
within sixty (60) days following receipt by HMR of the Option Notice, the HMR
Option will be deemed to have expired unexercised. If HMR determines to exercise
the HMR Option, then the date on which HMR delivers the HMR Option Reply is
referred to as the "HMR Option Exercise Date". If HMR exercises the HMR Option,
HMR shall set forth in reasonable detail in the HMR Option Reply all Research
and Development Expenses previously agreed to by the Parties and incurred by HMR
pursuant to this Agreement subsequent to the Effective Date and through the HMR
Option Exercise Date with respect to all HMR Compounds which have not been
reimbursed by Amylin or its Affiliates as provided in Section 3.5.3(b)(iii) (the
"HMR Additional Research and Development Expenses").
4.1.3 In the event the HMR Option is exercised, HMR will pay to
Amylin, or Amylin will pay to HMR, as the case may be, the "Pre-Collaboration
Allocation Payment" (as defined in Section 2.2 of the Collaboration Agreement).
4.2 LIMITATIONS OF FURTHER RIGHTS. HMR shall be entitled to only one HMR
Option. In the event HMR exercises the HMR Option, then on the HMR Option
Exercise Date, the Collaboration Agreement will become effective and the
provisions of such Collaboration Agreement will supersede, to the extent
applicable, the provisions of Sections 2.2-2.4, 3.1-3.5, 3.7.2, 4.1, 7.3.3, 7.5,
7.6 and 10.2-10.5 and Article V of this Agreement.
14.
<PAGE> 20
ARTICLE V
ROYALTIES
5.1 ROYALTIES AND ROYALTY PAYMENTS. Subject to Section 5.2, Amylin shall
pay HMR a royalty equal to ****************** of Net Sales of Products with
respect to Net Sales up to U.S. ************ in any calendar year, and
******************** of Net Sales of Products with respect to Net Sales in
excess of U.S. ************ in any calendar year, sold by Amylin, its Affiliates
or permitted sublicensees pursuant to Section 5.4.
5.2 DURATION OF ROYALTY OBLIGATIONS. Amylin's royalty obligation as to
each Product shall commence as of the date hereof and shall expire on a
country-by-country basis concurrently with the later to occur of (i) the
expiration of the last to expire of any issued patents within the HMR Patents or
Joint Patents in the country, or (ii) if no such Patent should issue in a
country, the tenth anniversary of the first commercial sale of the relevant
Product in such country.
5.3 ROYALTY RATE IF GENERICS INTRODUCED. In the event that a generic
version of a Product is marketed in any country where no Patents within the HMR
Patents or Joint Patents have issued which would prevent the sale of such
generic version and the sales of such generic version of a Product in such
country is equal to at least ********************* of unit sales of the Product
being marketed by Amylin in such country, the royalty rate in that country will
be reduced to ******************* of the applicable royalty rate provided in
Section 5.1 until such time, and from time to time, that a Patent within the HMR
Patents or Joint Patents has issued which would prevent the sale of such generic
version or sales of the generic version of the Product in any calendar quarter
are reduced to less than ********************* of the unit sales of the Product
in such calendar quarter.
5.4 SALES BY SUBLICENSEES. In the event Amylin grants licenses or
sublicenses to others to make or sell Products, such licenses or sublicenses
shall include an obligation for the licensee or sublicensee to account for and
report its Net Sales of such Products on the same basis as if such Net Sales
were sales by Amylin, and Amylin shall pay royalties to HMR as if the Net Sales
of the sublicensee were sales of Amylin. Amounts payable by the sublicensee to
Amylin on account of the sublicense shall not be included in amounts deducted
from gross sales in arriving at Net Sales.
5.5 ROYALTY PAYMENTS AND REPORTS. A report summarizing the sales of any
Products during the relevant quarter shall be delivered to HMR within thirty
(30) days following the end of each calendar quarter and sixty (60) days
following the end of each calendar year for which royalties are due from Amylin.
Royalty payments under this Agreement shall be made to HMR or its designee
quarterly within thirty (30) days following the due date for the report in the
first sentence of this Section 5.5.
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<PAGE> 21
5.6 TAXES. HMR shall pay any and all taxes levied on account of
royalties it receives under this Agreement. If laws or regulations require that
taxes be withheld, then Amylin will (i) deduct those taxes from the remittance
royalty, (ii) timely pay the taxes to the proper taxing authority and (iii) send
proof of payment to HMR within thirty (30) days following such payment.
5.7 BLOCKED CURRENCY. In each country where the local currency is
blocked or cannot be removed from such country, at the election of HMR,
royalties shall accrue in that country or shall be paid to HMR in the country in
local currency by deposit in a local bank designated in writing by HMR.
5.8 PAYMENTS TO OR REPORTS BY AFFILIATES. Any payment required under any
provision of this Agreement to be made to either Party or any report required to
be made by either Party shall be made to or by an Affiliate of that Party if
designated by that Party as the appropriate recipient or reporting entity.
5.9 NO OVERLAPPING ROYALTIES. Notwithstanding any other provisions of
this Agreement, in no event shall any royalty provided for under any section of
this Agreement be paid with respect to any sale of a Product to the extent a
royalty has been paid pursuant to any other section of this Agreement with
respect to such sale.
ARTICLE VI
CONFIDENTIALITY
6.1 CONFIDENTIALITY; EXCEPTIONS. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing or permitted by
Section 6.3. herein, the Parties agree that, the receiving Party shall keep
confidential and shall not publish or otherwise disclose or use for any purpose
other than as provided for in this Agreement any Information related to the HMR
Compounds or the Products and other information and materials furnished to it by
the other Party pursuant to this Agreement or any Information related to the HMR
Compounds or the Products developed during the term of this Agreement hereunder,
or any provisions of this Agreement that are the subject of an effective order
of the Securities and Exchange Commission granting confidential treatment
pursuant to the Securities Exchange Act of 1934, as amended (collectively,
"Confidential Information"), except to the extent that it can be established by
the receiving Party that such Confidential Information:
(1) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;
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(2) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;
(3) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(4) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others; or
(5) was independently developed by the receiving Party without
breach of the provisions of this Agreement (and can be verified by the
disclosing Party as such).
6.2 RECEIPT OF THIRD PARTY INFORMATION. Neither Party shall knowingly
receive documents containing Information related to the use of the HMR Compounds
in the Field under an obligation of confidentiality to Third Parties which
requires the Party receiving such documents to withhold access to the other
Party, without such Party's written consent.
6.3 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is reasonably necessary in
(i) filing or prosecuting patent applications, (ii) prosecuting or defending
litigation, (iii) complying with applicable laws or regulations or (iv)
conducting preclinical or clinical trials, provided that if a Party is required
by law or regulation to make any such disclosure of the other Party's
Confidential Information it will, except where impracticable for necessary
disclosures (e.g., in the event of medical emergency), give reasonable advance
notice to the other Party of such disclosure requirement and, except to the
extent inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Confidential Information
required to be disclosed. In addition, and with prior notice to the other Party
of each Third Party with whom a confidential disclosure agreement is being
entered into, each Party shall be entitled to disclose, under a binder of
confidentiality containing provisions as protective as those of this Article VI,
Confidential Information to any Third Party for the purpose of carrying out the
purposes of this Agreement. Nothing in this Article VI shall restrict any Party
from using for any purpose consistent with the terms of this Agreement any
Information developed by it during the term of this Agreement. When a Party
makes a disclosure of the other Party's Confidential Information to any of its
employees, the Party making such disclosure shall ensure that such employees are
bound by written confidentiality agreements having substantially the same terms
as this Article VI.
6.4 SURVIVAL. This Article VI (other than Section 6.2) shall survive the
termination or expiration of this Agreement for a period of the greater of (i)
seven (7) years and (ii) until the termination of the Collaboration Agreement.
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6.5 TERMINATION OF PRIOR AGREEMENT. This Agreement supersedes the
Confidentiality Agreement between Amylin and HMR dated April 5, 1996. All
Information exchanged between the Parties under that Agreement shall be deemed
Confidential Information and shall be subject to the terms of this Article VI,
and shall be included within the definitions of Amylin Know-how and HMR
Know-how.
6.6 SCIENTIFIC PUBLICATIONS AND PRESENTATIONS. Unless or until the HMR
Option expires unexercised, each Party agrees that it shall not publish or
present Information or Confidential Information without the opportunity for
prior review by the other Party. Except as required by law, each Party shall
provide to the other the opportunity to review and approve any proposed
scientific publications and scientific presentations (including information to
be presented orally) which relate to the HMR Compounds or otherwise constitutes
Confidential Information as early as reasonably practical, but at least three
(3) weeks prior to their intended submission for publication (one (1) week for
abstracts) except, where applicable, with the written consent of an appropriate
employee of the other Party. Such submitting Party agrees, upon written request
from the other Party, not to submit such proposed publication for publication or
to make such presentation unless or until the other Party consents.
ARTICLE VII
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
7.1 OWNERSHIP. Each Party shall solely own, and it alone shall have the
right to apply for Patents within and outside of the United States for any
inventions made solely by that Party's personnel or consultants in the course of
performing work under this Agreement. Inventions made jointly by personnel or
consultants of Amylin and HMR shall be owned jointly by Amylin and HMR. The law
of joint ownership of inventions of the United States shall apply to any joint
ownership of patents outside the United States claiming joint inventions of the
Parties.
7.2 DISCLOSURE OF PATENTABLE INVENTIONS. In addition to the disclosures
required under Article IX, each Party shall provide to the other any invention
disclosure submitted in the normal course of performing its obligations
hereunder which discloses an invention related to the HMR Compounds in the Field
or the Products. 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, provided,
however, that no disclosure is required that would constitute publication prior
to the time a patent issues.
7.3 PATENT FILINGS.
7.3.1 AMYLIN AND JOINT PATENTS. Amylin shall prepare, file, and
prosecute Patents for (i) inventions relating to HMR Compounds that are made
solely by Amylin personnel and consultants (all of which shall be issued in
Amylin's name and shall be Amylin Patents), and
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(ii) inventions relating to HMR Compounds that are made jointly by personnel and
consultants of Amylin and HMR in the course of the performance of the Parties'
obligations under this Agreement or the Collaboration Agreement (which shall be
issued in HMR's and Amylin's joint name and shall be "Joint Patents"), and will
use reasonable efforts to file initially all such applications in the United
States. With respect to (i) Joint Patents only (prior to and after the delivery
of the HMR Option Reply, regardless of whether HMR exercises the HMR Option) and
(ii) both Joint Patents and Amylin Patents (only if HMR exercises the HMR
Option): (A) the determination of the countries outside of the United States in
which to file such patent applications shall be made by mutual agreement of the
Parties (if, however, there is a dispute as to where to file, the more
comprehensive filing will be made); (B) Amylin shall keep HMR informed of the
status of such Patents and shall seek the advice of HMR with respect to such
Patent strategy and draft applications and shall give reasonable consideration
to any suggestions or recommendation of HMR concerning the preparation, filing,
prosecution and maintenance thereof; (C) the Parties shall cooperate in good
faith in the prosecution of such Patents and shall share all material
Information relating thereto promptly after receipt of such Information; and (D)
if, during the term of this Agreement, Amylin intends to allow any Amylin
Patents under which HMR has a right to a license under this Agreement, to lapse
or become abandoned without having first filed a substitute, Amylin shall,
whenever practicable, notify HMR of such intention at least sixty (60) days
prior to the date upon which such Amylin Patent shall lapse or become abandoned,
and HMR shall thereupon have the right, but not the obligation, to assume
responsibility for the prosecution and maintenance thereof.
7.3.2 HMR PATENTS. HMR shall file, prosecute and be entitled to
be issued in its name Patents to cover inventions relating to HMR Compounds that
are made solely by HMR personnel and consultants (all of which will be HMR
Patents), and will use reasonable efforts to file initially all such
applications in the United States. The determination of the countries outside of
the U.S. in which to file shall be made by mutual agreement of the Parties. If,
however, there is a dispute as to where to file, the more comprehensive filing
shall be made. In the case where Amylin requests worldwide filing, HMR shall at
least file in the following countries: United States, Canada, Japan and all
European Patent Office countries. HMR shall keep Amylin informed of the status
of each HMR Patent and shall seek the advice of Amylin with respect to HMR
Patent strategy and draft applications and shall give reasonable consideration
to any suggestions or recommendations of Amylin concerning the preparation,
filing, prosecution and maintenance thereof. The Parties shall cooperate
reasonably in the prosecution of all applications for HMR Patents and shall
share all material Information relating thereto promptly after receipt of such
Information. If, during the term of this Agreement, HMR intends to allow any HMR
Patent under which Amylin has a license under this Agreement, to lapse or become
abandoned without having first filed a substitute, HMR shall, whenever
practicable, notify Amylin of such intention at least sixty (60) days prior to
the date upon which such HMR Patent shall lapse or become abandoned, and Amylin
shall thereupon have the right, but not the obligation, to assume responsibility
for the prosecution and maintenance thereof.
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7.3.3 PATENT EXPENSES. Unless or until HMR exercises the HMR
Option, Amylin shall bear all Patent Expenses for Amylin Patents and HMR shall
bear all Patent Expenses for HMR Patents. The Parties shall share equally all
Patent Expenses for Joint Patents. Upon exercise of the HMR Option, all Patent
Expenses shall be handled as Collaboration Patent Expenses (as defined in the
Collaboration Agreement) under the provisions of the Collaboration Agreement.
7.4 THIRD PARTY PATENT RIGHTS. Neither Party makes any representation or
warranty to the other with respect to the validity, enforceability, perfection
or dominance of any Patent or other proprietary right or with respect to the
absence of rights of Third Parties which may be infringed by the manufacture or
sale of any Product, the use of any Patent, Know-how or any other activity
contemplated by this Agreement. Each Party agrees to bring to the attention of
the other Party any patent or patent application it discovers, or has
discovered, and which relates to the subject matter of this Agreement.
7.5 ENFORCEMENT RIGHTS.
7.5.1 GENERAL.
(a) In the event a Third Party, through the actual or
proposed manufacture, import, use, sale or offer for sale of a product
competitive with a Product being developed or commercialized under this
Agreement infringes or is reasonably likely to infringe ("Competitive
Product Infringement") any Amylin Patent or Joint Patents, Amylin shall
have the right to institute, prosecute and control any action or
proceeding with respect to such infringement. HMR has the right to
participate and be represented in such action by counsel of its own
selection at its own expense. HMR agrees to be joined as a party
plaintiff, if necessary in any such action, and to give Amylin
reasonable assistance and any needed authority to control, file and to
prosecute such action.
(b) In the event of the Competitive Product Infringement
of any of the HMR Patents by a Third Party, HMR shall have the right to
institute, prosecute and control any action or proceeding with respect
to such infringement. Amylin shall have the right to participate and be
represented in such action by counsel of its own selection at its own
expense. Amylin agrees to be joined as a party plaintiff, if necessary
in any such action, and to give HMR reasonable assistance and any needed
authority to control, file and prosecute such action.
(c) If either Party learns or determines in good faith
that there is or is a reasonable likelihood of Competitive Product
Infringement of any Amylin Patents, HMR Patents, or Joint Patents by a
Third Party, the Party first having knowledge shall promptly notify the
other Party in writing thereof, which notice shall set forth the facts
of such actual or potential infringement in reasonable detail. If Amylin
or HMR, as the case may be, fails to institute and prosecute an action
or proceeding to abate any actual
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infringement within a period of ninety (90) days after receiving written
notice of actual infringement or otherwise having knowledge of the
actual infringement, then the other Party shall have the right, but not
the obligation, to bring and prosecute any action and the Party which
failed to bring such action agrees to be joined as a party plaintiff in
such action and to give the Party bringing such action reasonable
assistance and all authority to control, file and prosecute the action
as may be necessary; provided, however, that the Party which failed to
bring the action shall have the right to participate and to be
represented in any such action by counsel of its choice at its own
expense.
(d) Each Party's costs of patent enforcement (including
internal costs and expenses specifically attributable to said patent
enforcement) and related recoveries with respect to actions brought
under this Section 7.5.1 shall be the responsibility of such Party. Any
amounts recovered in such action referred to in this Section 7.5.1 shall
be apportioned between the Parties as follows: the Party bringing and
controlling the action shall first recover from any such award an amount
equal to the cost and expense incurred by such Party and the remainder
shall be divided equally by the Parties.
(e) No settlement or consent judgment or other voluntary
final disposition of suit under this Section 7.5.1 may be entered into
without the joint consent of Amylin and HMR, which consents shall not be
withheld unreasonably.
7.5.2 SETTLEMENT OF THIRD PARTY CLAIMS FOR PRODUCTS; ROYALTY
REDUCTION. If a Third Party asserts that a patent or other right owned by it is
infringed by any Product and if following the conclusion of proceedings brought
as a result of such alleged infringement, Amylin is required to pay the Third
Party any payment of any kind for the right to sell a Product in a particular
country, the royalty rate then payable to HMR attributable only to sales in such
country shall be reduced ******* (but in no event shall the royalty rate payable
to HMR be less than ******************. The royalty rate shall return to its
previous level once Amylin has paid one-half of the payment due to the Third
Party. In the event Amylin is required to pay to the Third Party a royalty due
to an alleged infringement, then the royalty rate payable to HMR attributable
only to sales in such country shall be reduced by ******** of the royalty rate
payable to the Third Party (but no event shall the royalty rate payable to HMR
be less than *****************). Such royalty rate shall return to its previous
level once the royalty obligations to the Third Party have been satisfied. No
settlement or consent judgment or other voluntary final disposition of a suit
under this Section 7.5.2 may be entered into without the mutual consent of
Amylin and HMR.
7.5.3 PATENT PROSECUTION RIGHTS. Notwithstanding the provisions
of Section 7.5.1, a Party shall not file or prosecute any action for
infringement of a Patent for which the other Party has the primary
responsibility if the other Party having primary responsibility is prosecuting
at least one such action for infringement of such Patent, without the agreement
of the other Party, which agreement shall not be unreasonably withheld.
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* CONFIDENTIAL TREATMENT REQUESTED
21.
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7.6 ASSIGNMENT OF JOINT PATENTS. Neither Party may assign its rights
under any Joint Patent except with the prior written consent of the other Party;
provided, however, that either party may assign such rights without consent to
an Affiliate or other permitted assignee under this Agreement in connection with
a merger or similar reorganization or sale of all or substantially all of its
assets, as provided in Section 13.1.2.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Each Party hereby represents and warrants to the other Party that
this Agreement is a legal and valid obligation binding on such Party and
enforceable in accordance with its terms, subject to laws regarding bankruptcy
or insolvency generally. 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. Such Party
represents and warrants that it has not, and covenants that during the term of
the Agreement it will not, grant to any Third Party any rights which would
conflict with the rights granted to the other Party hereunder.
ARTICLE IX
INFORMATION & REPORTS
9.1 RECORDS OF REVENUES AND EXPENSES. Each Party will maintain complete
and accurate accounts and records of revenues, costs, expenses and payments
earned or made in connection with this Agreement and such records shall be
available for examination at the other Party's expense during such Party's
reasonable business hours for a period of five (5) years from creation of the
individual records. In addition, not more often than once each year, the other
Party may designate a firm of certified public accountant to verify the
correctness of calculations and classifications of such revenues, costs,
expenses or payments earned or made in connection with this Agreement. Any
variances in revenues, costs, expenses or payments earned or made in connection
with this Agreement discovered during such audit shall be paid within thirty
(30) days of the conclusion of the audit by the audited Party (subject to
Article XII hereof). If the audit results in a variance of more than 5% in favor
of the auditing Party, the reasonable audit expenses of the auditing Party shall
be paid by the other Party. Any records or accounting information received from
the other Party shall be included within the definition of Confidential
Information for purposes of Article VI.
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9.2 PUBLICITY REVIEW. Subject to the provisions of this Section 9.2, no
Party shall originate any news release or Form 8-K's filed pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, relating to this Agreement or the performance hereunder
or the existence of an arrangement between the Parties (collectively, "Written
Disclosure"), without the prior prompt review and written approval of the other
Party, which approval shall not be unreasonably withheld. With regard to any
proposed Written Disclosure by Amylin, HMR shall take into consideration that
Amylin is a specialized publicly held company and as such will find it important
to provide ongoing information about Products, this Agreement and the status of
the Collaboration Agreement to investors or potential investors. The Parties
agree that should either Party make an oral disclosure and the other Party has a
concern or issue with respect to such oral disclosure, the Parties will promptly
discuss such concerns and/or issues and reasonably attempt to agree on a
modification to such oral disclosure that is mutually agreeable to the Parties.
Notwithstanding the foregoing provisions of this Section 9.2, any Party may make
any public Written Disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities based upon the written advice of counsel, provided
that prior to making such Written Disclosure, the disclosing Party shall provide
the other Party with an opportunity to promptly review the proposed Written
Disclosure. To the extent that the reviewing Party reasonably requests that any
information in the proposed Written Disclosure be deleted, the disclosing Party
shall take reasonable action to avoid disclosure, where possible, including
requesting confidential treatment of such information pursuant to Rule 406 of
the Securities Act of 1933 or Rule 26b-2 of the Securities Exchange Act of 1934,
as applicable (or any other applicable regulation relating to the confidential
treatment of information).
ARTICLE X
TERM AND TERMINATION
10.1 TERM. This Agreement shall commence as of the Effective Date and,
unless terminated as provided herein in its entirety or with respect to certain
HMR Compounds or countries in the Territory as set forth herein, shall continue
in effect (i) if HMR does not exercise the HMR Option or the HMR Option expires
unexercised, until the date on which Amylin is no longer conducting Research and
Development with respect to an HMR Compound or marketing or selling in any
country an HMR Compound or a Product, or (ii) if HMR exercises the HMR Option,
until the date on which the Collaboration Agreement is terminated or expires
according to its terms.
10.2 TERMINATION BY HMR FOR AMYLIN'S FAILURE TO MEET MILESTONES OR
DISCONTINUING RESEARCH AND DEVELOPMENT.
10.2.1 TERMINATION. HMR shall have the right to terminate this
Agreement in its entirety if Amylin shall either (i) fail to meet the milestones
set forth in Section 3.5.1(b) by the expiration of the time periods set forth
therein or (ii) discontinue Research and/or Development
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on all of the HMR Compounds as set forth in Section 3.5.1(c) prior to meeting
such milestones. Termination of this Agreement pursuant to this Section 10.2.1
shall be made pursuant to a written notice delivered by HMR to Amylin within
ninety (90) days after the expiration of the time period with respect to which
such notice is being delivered. Upon receipt of such written notice from HMR,
Amylin shall have a sixty (60) day period in which to cure the failure to meet
the milestone for which such notice is delivered or to continue Research and/or
Development of the HMR compounds, as the case may be. Termination pursuant to
this Section 10.2.1 shall be effective as of the sixtieth (60th) day following
delivery of the written notice to Amylin unless Amylin has cured such failure to
meet milestones or continue Research and Development, as the case may be, on or
prior to such 60th day (the "Termination Effective Date"). The termination
rights set forth in this Section 10.2.1 shall constitute HMR's sole remedy with
respect to Amylin's discontinuance of Research and/or Development on the HMR
Compounds or failure to meet any required milestones within their applicable
time periods.
10.2.2 EFFECTS OF TERMINATION. If HMR terminates this Agreement
pursuant to this Section 10.2, the Parties shall continue to perform their
obligations under this Agreement pending the winding down of operations on the
Termination Effective Date. Upon the Termination Effective Date:
(a) all licenses and rights of Amylin to HMR Patents and
HMR Know-how hereunder shall terminate in their entirety with respect to
the HMR Compound(s);
(b) HMR shall receive an exclusive (even as to Amylin but
subject to Third Party rights in existence prior to such termination)
worldwide right and license, with the right to grant sublicenses, to all
Amylin Patents and Amylin Know-how and Amylin's rights in any Joint
Patents to make, have made, import, use, sell, offer for sale and have
sold Products subject to the applicable royalty obligations set forth in
this Agreement, and shall have the right (but not the obligation) to
enforce the Amylin Patents and Joint Patents (in the manner contemplated
in this Agreement in the event that Amylin does not or will not so
enforce the Amylin Patents or the Joint Patents);
(c) all Confidential Information supplied by HMR to Amylin
shall be returned to HMR, except Amylin may retain one copy of such
Confidential Information solely for legal archive purposes; and
(d) Amylin shall use its best efforts to cause transfer to
HMR of all INDs, Drug Approval Applications and Regulatory Approvals, or
equivalent foreign filings, if any, related to the HMR Compound(s), and
shall take such other actions and execute such other instruments,
assignments and documents as may be necessary to effect the transfer of
such rights hereunder to HMR.
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10.3 TERMINATION BY HMR FOR AMYLIN'S FAILURE TO COMMERCIALIZE OR MARKET
PRODUCTS IN THE TERRITORY.
10.3.1 FAILURE TO COMMERCIALIZE IN MAJOR MARKET COUNTRIES. If
Amylin (or a sublicense of Amylin) does not commercialize a Product in a Major
Market Country within one (1) year after Regulatory Approval is obtained in such
Major Market Country, then HMR shall have the right to terminate this Agreement
with respect to such Major Market County (any such countries shall be referred
to as "Terminated Countries") and the definition of the Territory shall
thenceforth exclude such Terminated Countries. HMR shall provide written
notification to Amylin of its intent to deem a particular Major Market Country a
Terminated Country, and Amylin shall have ninety (90) days following receipt of
such written notice in which to respond to such proposed action or to cure such
failure to commercialize. If Amylin shall in good faith dispute such intention
to deem a particular country a Terminated Country, the Parties shall submit such
matter to dispute resolution as set forth in Article XII hereof.
10.3.2 FAILURE TO MARKET. In the event Amylin fails to maintain
support of a Product in a commercially reasonable manner in a Major Market
Country, then HMR shall have the right to terminate this Agreement with respect
to such Major Market Country (and any such countries shall also be referred to
as "Terminated Countries") and the definition of Territory shall thenceforth
exclude such Terminated Countries. HMR shall provide written notification to
Amylin of its intent to deem a particular Major Market Country a Terminated
Country, and Amylin shall have ninety (90) days following receipt of such
written notice in which to respond to such proposed action or to cure such
failure to support a Product. If Amylin shall in good faith dispute such
intention to deem a particular country a Terminated Country, the Parties shall
submit such matter to dispute resolution as set forth in Article XII hereof.
10.3.3 EFFECT OF TERMINATED COUNTRIES. If HMR terminates this
Agreement with respect to a Terminated Country, then the following provisions
shall apply:
(a) HMR shall receive an exclusive (even as to Amylin but
subject to the existing rights of Third Parties) right and license in
the Terminated Countries with the right to grant sublicenses, to all
Amylin Patents, Amylin Know-how, Amylin's rights in any Joint Patents
and all of Amylin's interest in trademarks in the Terminated Countries
related to the Products, to make, have made, import, use, sell, offer
for sale and have sold Products in the Terminated Countries, subject to
the royalty obligations set forth below in Section 10.3.3(c), and shall
have the exclusive right (but not the obligation) to enforce the Patents
against Competitive Product Infringement in the Terminated Countries and
the exclusive right (but not the obligation) to enforce the trademark
rights related to the Products against infringers in the Terminated
Countries.
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(b) Amylin shall use its best efforts to cause transfer of
all INDs, Drug Approval Applications and Regulatory Approvals, or
equivalent foreign filings, if any, related to Products in the
Terminated Countries to HMR, and take such other actions and execute
such other instruments, assignments and documents as may be necessary to
transfer the rights hereunder in the Terminated Countries to HMR.
(c) Amylin shall be entitled to receive royalties with
respect to the Net Sales by HMR of Products in those Terminated
Countries under Section 10.3.2 at a rate of ***.
10.4 TERMINATION FOR MATERIAL BREACH.
10.4.1 GENERAL
(a) Subject to the provisions of this Section 10.4, if
either Party (the "Breaching Party") shall have committed a Material
Breach (as defined below) and such Material Breach shall remain uncured
and shall be continuing for a period of ninety (90) days following
receipt of written notice thereof from the other Party (the
"Non-Breaching Party"), then, in addition to any and all other rights
and remedies that may be available, the Non-Breaching Party shall have
the right to terminate this Agreement effective upon the expiration of
such ninety (90) day period. Any such written notice of alleged Material
Breach from the Non-Breaching Party shall include a reasonably detailed
description of all relevant facts and circumstances demonstrating,
supporting and/or relating to each such alleged Material Breach by the
Breaching Party.
(b) If the Breaching Party, upon written notice delivered
to the Non-Breaching Party prior to the expiration of such ninety (90)
day period, shall assert in good faith that any such alleged Material
Breach described in the Non-Breaching Party's notice, whether in payment
or moneys or otherwise, was not a Material Breach, or was excused by
reason of material failure of performance by the other Party or third
Parties or by reason of Force Majeure (as defined in Section 13.4), or
shall otherwise in good faith dispute such alleged Material Breach, then
the Parties shall continue to perform under this Agreement, subject to
all of its terms and conditions, and the matter shall be resolved
pursuant to the provisions of Section 12.2. In such event, the
Non-Breaching Party shall not be entitled to terminate this Agreement
pursuant to this Section 10.4 unless and until (i) it shall be
determined pursuant to Section 12.2 that the Breaching Party has
committed a Material Breach and (ii) such Material Breach has not been
cured prior to such determination pursuant to Section 12.2. To the
extent that it is determined pursuant to Section 12.2 that the Breaching
Party did commit a Material Breach and failed to cure the same within
the period provided for in clause (ii) above, then the Non-Breaching
Party may immediately terminate this Agreement and, in addition to all
damages determined pursuant to be due and owing from the Breaching Party
to the Non-Breaching Party under this Agreement, the Breaching Party
shall be liable for the Non-Breaching Party's reasonable attorney's fees
incurred in connection with resolving such matter.
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* CONFIDENTIAL TREATMENT REQUESTED
26.
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(c) Termination of this Agreement pursuant to this Section
10.4 shall not relieve the Breaching Party of any liability, including
any obligation to make payments hereunder, which accrued hereunder prior
to the effective date of such termination, nor preclude the
Non-Breaching Party from pursuing all rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this
Agreement nor prejudice the Non-Breaching Party's right to obtain
performance of any obligation.
(d) For purposes of this Section 10.4, "Material Breach"
shall mean the breach or failure to perform, in a material respect, a
material obligation under this Agreement. Without limiting the foregoing
and by way of example only, the term "Material Breach" shall be deemed
to include the failure of either Party in a material respect to meet its
payment or non-compete obligations. In no event shall a failure to meet
timelines or budgets specified in any Research and Development Plan, in
and of itself, be deemed to constitute a Material Breach, unless such
failure is a result of acts and events or conduct that is otherwise a
Material Breach.
10.4.2 TERMINATION BY HMR FOR MATERIAL BREACH. If HMR terminates
this Agreement pursuant to the provisions of this Section 10.4 as a
Non-Breaching Party, then the following provisions shall apply:
(a) all rights to the HMR Compounds as well as the Amylin
Data and Amylin Know-how developed with respect to the HMR Compounds
shall be transferred to and become the property of HMR;
(b) all licenses and rights granted by HMR to Amylin
hereunder shall terminate;
(c) HMR shall receive an exclusive (even as to Amylin, but
subject to any Third Party's then-existing rights) worldwide right and
license, with the exclusive right to grant sublicenses, to all Amylin
Patents and Amylin Know-how and Amylin's rights to any Joint Patents
related to the HMR Compounds to make, have made, import, use, sell,
offer for sale and have sold Products, and shall have the right (but not
the obligation) to enforce the Amylin Patents and the Joint Patents
against Competitive Product Infringement;
(d) all Confidential Information supplied by HMR to Amylin
shall be returned to HMR, except Amylin may retain one copy of such
Confidential Information solely for legal archive purposes;
27.
<PAGE> 33
(e) Amylin shall use its best efforts to cause the
transfer of all INDs, Drug Approval Applications and Regulatory
Approvals, or equivalent foreign filings, if any, related to HMR
Compounds to HMR, and shall take such other actions and execute such
other instruments, assignments and documents as may be necessary to
effect the transfer of rights hereunder to HMR; and
(f) Amylin shall not exploit or commercialize the Joint
Patents in competition with HMR's commercialization of the HMR
Compounds.
10.4.3 TERMINATION BY AMYLIN FOR MATERIAL BREACH. If Amylin
terminates this Agreement pursuant to the provisions of this Section 10.4 as a
Non-Breaching Party, then the following provisions shall apply:
(a) all licenses and rights granted by Amylin to HMR
hereunder shall terminate;
(b) Amylin shall receive an exclusive (even as to HMR, but
subject to any Third Party's then existing rights) worldwide right and
license, with the exclusive right to grant sublicenses, to all HMR
Patents and HMR know-how and HMR's rights in any Joint Patents related
to the HMR Compounds to make, have made, import, use, sell, offer for
sale and have sold Products and shall have the right (but not the
obligation) to enforce the HMR Patents and the Joint Patents against
Competitive Product Infringement;
(c) all Confidential Information supplied by Amylin to HMR
shall be returned to Amylin, except HMR may retain one copy of such
Confidential Information solely for legal archive purposes;
(d) HMR shall use its best efforts to cause the transfer
of any INDs, Drug Approval Applications and Regulatory Applications, or
equivalent foreign filings, if any, related to the HMR Compounds to
Amylin, and shall take such other actions and execute such other
instruments, assignments and documents as may be necessary to effect the
transfer of rights hereunder to Amylin; and
(e) HMR shall not exploit or commercialize Joint Patents
in competition with Amylin's commercialization of the HMR Compounds.
10.4.4 ROYALTIES UPON TERMINATION FOR MATERIAL BREACH. The
Breaching Party shall be entitled to receive royalties on Net Sales of Products
sold by the Non-Breaching Party at a royalty rate equal to ********************
of the applicable royalty rate provided for under this Agreement.
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
28.
<PAGE> 34
10.5 TERMINATION WITHOUT CAUSE.
10.5.1 TERMINATION WITHOUT CAUSE. Amylin shall have a continuing
right to terminate this Agreement without cause, effective upon six (6) month
advance written notice to HMR, subject to this Section 10.5 ("Termination
Without Cause").
10.5.2 EFFECT OF TERMINATION WITHOUT CAUSE. If Amylin terminates
pursuant to this Section 10.5, then:
(a) all rights to the HMR Compounds as well as the Amylin
Data and Amylin Know-how developed with respect to the HMR Compounds
shall be transferred to and become the property of HMR;
(b) all licenses and rights granted by HMR to Amylin
hereunder shall terminate;
(c) HMR shall receive an exclusive (even as to Amylin, but
subject to any Third Party's then existing rights) worldwide right and
license, with the right to grant sublicenses, to all Amylin Patents and
Amylin Know-how and Amylin's rights to any Joint Patents related to the
HMR Compounds to make, have made, import, use, sell, offer for sale and
have sold Products, subject to any applicable royalty obligations set
forth in Section 10.5.3, and shall have the right (but not the
obligation) to enforce the Amylin Patents against Competitive Product
Infringement;
(d) all Confidential Information supplied by HMR to Amylin
shall be returned to HMR, except Amylin may retain one copy of such
Confidential Information solely for legal archive purposes;
(e) Amylin shall use its best efforts to cause the
transfer of all INDs, Drug Approval Applications and Regulatory
Approvals, or equivalent foreign filings, if any, related to HMR
Compounds to HMR, and shall take such other actions and execute such
other instruments, assignments and documents as may be necessary to
effect the transfer of rights hereunder to HMR; and
(f) Amylin shall not exploit or commercialize the Joint
Patents in competition with HMR's commercialization of the HMR
Compounds.
10.5.3 ROYALTY UPON TERMINATION WITHOUT CAUSE. Notwithstanding
anything in this Section 10.5 to the contrary, if, and only if, (i) Amylin
terminates this Agreement pursuant to this Section 10.5 subsequent to the filing
by Amylin of an IND covering the use of an HMR Compound but prior to the
completion of Amylin's due diligence obligations set forth in Section
3.5.1(b)(ii) of this Agreement and (ii) HMR (or a sublicensee of HMR) completes
the development and commercialization of such HMR Compound, then Amylin shall be
entitled to a
29.
<PAGE> 35
royalty of *** of Net Sales by HMR and/or a sublicensee of HMR of any Product
incorporating such HMR Compound.
10.6 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination, relinquishment
or expiration of the Agreement or any portion hereof 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 arising from any breach hereunder. Such termination, relinquishment or
expiration shall not relieve either Party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION BY HMR.
11.1.1 AMYLIN INDEMNIFIED PARTIES. HMR hereby agrees to save,
defend and hold Amylin and its agents and employees (the "Amylin Indemnified
Parties") harmless from an against any and all suits, claims, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expense and
attorneys' fees (collectively, "Losses"), incurred by or against any Amylin
Indemnified Parties, which arise out of the breach of this Agreement by HMR, or
any negligence or willful misconduct by HMR, except to the extent such Losses
are attributable to the breach of this Agreement by Amylin or any Amylin
Indemnified Parties or any negligence or willful misconduct by Amylin, its
agents or employees or such Amylin Indemnified Parties; provided, however, that
in no event shall HMR be liable for any products liability losses whatsoever if
HMR has not exercised the HMR Option.
11.1.2 NOTICE OF CLAIM. In the event that an Amylin Indemnified
Party seeks indemnification under Section 11.1.1, it shall inform HMR of such
claim as soon as reasonably practicable after it receives notice of the claim
and shall permit HMR 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 reasonably requested (at the expense of HMR) in the defense
of the claim.
11.2 INDEMNIFICATION BY AMYLIN.
11.2.1 HMR INDEMNIFIED PARTIES. Amylin hereby agrees to save,
defend and hold HMR and its agents and employees (the "HMR Indemnified Parties")
harmless from an against any and all Losses incurred by or against such HMR
Indemnified Parties which (i) arise out of the breach of this Agreement by
Amylin, or any negligence or willful misconduct by Amylin, except to the extent
such Losses are attributable to the breach of this Agreement by any HMR
Indemnified Parties or any negligence or willful misconduct by any HMR
Indemnified Parties (other than with respect to products liability losses if HMR
has not exercised the HMR
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
30.
<PAGE> 36
Option), or (ii) arise out of the manufacture, use, handling, storage, sale or
other disposition of Products by Amylin, its agents or sublicensees, except to
the extent such Losses also result from the negligence or willful misconduct of
any HMR Indemnified Parties (other than with respect to products liability
losses if HMR has not exercised the HMR Option).
11.2.2 NOTICE OF CLAIM. In the event that any HMR Indemnified
Party seeks indemnification under Section 11.2.1, it shall inform Amylin of a
claim as soon as reasonably practicable after it receives notice of the claim
and shall permit Amylin 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 reasonably requested (at the expense of
Amylin) in the defense of the claim.
ARTICLE XII
DISPUTE RESOLUTION
12.1 GENERAL. 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. It is the objective of the
Parties to establish procedures to facilitate the resolution of disputes rising
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 XII if and when a dispute arises under
this Agreement.
12.2 NEGOTIATION. Either Party may, by written notice to the other, have
such dispute referred to their respective executive officers designated below or
their successors, for attempted resolution by good faith negotiations within
fourteen (14) days after such notice is received. Said designated officers are
as follows:
FOR HMR: Head of Development and Strategic Planning
FOR AMYLIN: Chief Executive Officer
31.
<PAGE> 37
ARTICLE XIII
MISCELLANEOUS
13.1 ASSIGNMENT; BINDING EFFECT.
13.1.1 ASSIGNMENT TO AFFILIATES. Either Party may assign any of
its rights or obligations under this Agreement in any country in the Territory
to any Affiliates; provided, however, that such assignment shall not relieve the
assigning Party of its responsibilities for performance of its obligations under
this Agreement.
13.1.2 ASSIGNMENT TO NON-AFFILIATES. Either Party may assign any
of its rights or obligations under this Agreement or its ownership interest in
Joint Patents to a non-Affiliate only as provided in Section 7.6, in connection
with a merger or similar reorganization or the sale of all or substantially all
of its assets, or otherwise with the prior written consent of the other Party.
This Agreement shall survive any such merger or reorganization of either Party
with or into, or such sale of assets to, a Third Party and no consent for such
merger, reorganization or sale shall be required hereunder; provided, that in
the event of such merger, reorganization or sale, no intellectual property
rights of the acquiring corporation shall be included in the Patents licensed.
13.1.3 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns of the Parties. Any assignment not in accordance with this
Agreement shall be void and of no effect.
13.2 RESEARCH AND DEVELOPMENT ENTITIES. Either Party may assign its
rights and obligations under this Agreement to an entity or entities (e.g.,
partnership or corporation) that are specifically formed for financial purposes
and that finance research and development performed by such Party; provided,
however, that such assignment shall not relieve the assigning Party of
responsibility for performance of its obligations under this Agreement.
13.3 CONSENTS NOT UNREASONABLY WITHHELD. Whenever provision is made in
this Agreement for either Party to secure the consent or approval of the other,
such consent or approval shall not unreasonably be withheld. Whenever provision
is made in this Agreement for one Party to object or to disapprove a matter,
such objection or disapproval shall not be unreasonably exercised.
13.4 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or
any other similar cause beyond the control of the defaulting Party, provided
that the Party claiming force majeure has exerted all reasonable efforts to
avoid or remedy such force majeure; provided, however, that in no event shall a
Party be required to settle any labor dispute or disturbance. The foregoing
shall not affect either Party's rights hereunder to
32.
<PAGE> 38
terminate this Agreement in its entirety or with respect to certain HMR
Compounds or certain countries in the Territory pursuant to the terms hereof.
13.5 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments and do all such other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement.
13.6 NO TRADEMARK RIGHTS. Except as otherwise provided herein or
otherwise agreed to in writing by the Parties, no right, express or implied is
granted by the Agreement to use in any manner the name "Amylin," "HMR" or any
other trade name or trademark of the other Party or its Affiliates in connection
with the performance of the Agreement.
13.7 NOTICES. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), mailed by registered or certified mail (return receipt requested),
postage prepaid, or sent by a nationally recognized express courier service, to
the Parties at the following address (or at such other address for a Party as
shall be specified by like notice; provided, that notices of a change of address
shall be effective only upon receipt thereof).
IF TO AMYLIN, ADDRESSED TO: AMYLIN PHARMACEUTICALS, INC.
9373 Towne Centre Drive
San Diego, CA 92121
Attention: Office of the General Counsel
Telephone: (619) 552-2200
Telecopy: (619) 555-2212
IF TO HMR, ADDRESSED TO: HOECHST MARION ROUSSEL, INC.
Route 202-206, P.O. Box 6800
Bridgewater, NJ 08807-0800
Attention: Vice President, General Counsel-
Global Development
Telephone: (908) 231- 2000
Telecopy: (908) 231- 2243
13.8 WAIVER. Except as specifically provided for herein, the waiver from
time to time by either Party of any of their rights or their failure to exercise
any remedy shall not operate or be construed as a continuing waiver of same or
of any other of such Party's rights or remedies provided in this Agreement. All
such waivers shall be in writing.
13.9 SEVERABILITY. If any term, covenant or condition of this Agreement
or the application thereof to any party or circumstance shall, to any extent, be
held to be invalid or unenforceable, (i) the remainder of this Agreement, or the
application of such term, covenant or condition to the Parties or circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby and each term, covenant or condition of this
33.
<PAGE> 39
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, convent or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the Parties that the basic purposes of this Agreement are to be effectuated.
13.10 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against either Party, irrespective of which Party may be deemed to
have authored the ambiguous provision.
13.11 GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of Delaware, without regard to principles of
conflicts of law.
13.12 HEADINGS. The section and paragraph headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs and do not form a part of this
Agreement.
13.13 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but together shall constitute one and
the same instrument.
13.14 ENTIRE AGREEMENT. This Agreement, including all Exhibits attached
hereto and thereto, and all documents delivered concurrently herewith, set forth
all the covenants, promises, agreements, warranties, representations, conditions
and understandings between the Parties hereto and supersede and terminate all
prior agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as specifically set forth
herein and therein. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by the respective authorized officers of the Parties. Any
provisions of the Collaboration Agreement inconsistent with the terms hereof
shall take precedence clearly over the terms hereof if, and when, the
Collaboration Agreement is effective.
34.
<PAGE> 40
IN WITNESS WHEREOF, the Parties have executed this Agreement in
duplicate originals by their duly authorized officers as of the date and year
first above written.
AMYLIN PHARMACEUTICALS, INC. HOECHST MARION ROUSSEL, INC.
/s/ MAURIZIO DENARO /s/ THOMAS HOFSTAETTER
By: ________________________________ By: ________________________________
Name: Maurizio Denaro Name: Thomas Hofstaetter
Title: Executive Vice President, Title: Senior Vice President,
Chief Technical Officer Business Development
35.
<PAGE> 41
EXHIBIT A
LIST OF HMR PATENTS
<PAGE> 42
EXHIBIT A
M01508, M01562, M01724, M01842, M01845 AND [*] CASE SERIES
<TABLE>
<CAPTION>
DOCKET NO. CTRY SERIAL NO. FILS DATE PATENT NO. GRANT DATE STATUS
---------- ---- ---------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
M01508 AR 320057 06/28/1991 249524 05/21/1996 GRANTED
M01508 AT 0464852 07/05/1991 E135705 03/20/1996 GRANTED
M01508 AU 80116/91 07/03/1991 639576 11/23/1993 GRANTED
MO1508 BE 07/05/1991 0464852 03/20/1996 GRANTED
[*] [*] [*] [*] [*]
M01508 CH 07/05/1991 0464852 03/20/1996 GRANTED
M01508 CN 91104475 07/04/1991 91104475 06/11/1995 GRANTED
M01508 DE 0464852 07/05/1991 69118028T2 03/20/1996 GRANTED
M01508 DK 07/05/1991 0164852 03/20/1996 GRANTED
M01508 EP 91111252.2 07/05/1991 0464852 03/20/1996 INACTIVE
M01508 BS 07/05/1991 0464852 03/20/1996 GRANTED
[*] [*] [*] [*] [*]
M01508 FR 07/05/1991 0464852 03/20/1996 GRANTED
M01508 GB 07/05/1991 0464852 03/20/1996 GRANTED
M01508 GR 0464852 07/05/1991 3019393 03/20/1996 GRANTED
M01508 MU 2272/91 07/04/1991 211074 07/11/1995 GRANTED
[*] [*] [*] [*] [*]
M01508 IL 98712 07/02/1991 98712 02/28/1996 GRANTED
M01508 IT 07/05/1991 0464852 03/20/1996 GRANTED
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
M01508 LU 07/05/1991 0464852 03/20/1996 GRANTED
M01508 NL 07/05/1991 0464852 03/20/1996 GRANTED
[*] [*] [*] [*] [*]
M01508 NZ 238808 07/01/1991 238808 10/19/1994 GRANTED
M01508 PH 42733 07/04/1991 28236 05/12/1994 GRANTED
[*] [*] [*] [*] [*]
M01508 SE 91111252.2 07/05/1991 0464852 03/20/1996 GRANTED
M01508 TW 80105147 07/02/1991 58036 12/10/1992 GRANTED
M01508 US 548052 07/05/1990 5155250 10/13/1992 GRANTED
MO1508 ZA 91/5074 07/01/1991 91/5074 04/29/1992 GRANTED
M01508A US 811395 12/20/1991 INACTIVE
M01508B US 940774 09/01/1992 INACTIVE
M01508C US 72347 06/04/1993 INACTIVE
M01508D US 219230 03/29/1994 INACTIVE
M01508E US 353736 12/12/1994 5532400 07/02/1996 GRANTED
M01562 US 548051 07/05/1990 INACTIVE
[*] [*] [*] [*] [*]
M01562A AT 07/05/1991 0464844 12/27/1995 GRANTED
M01562A AU 80114/91 07/03/1991 639807 11/30/1993 GRANTED
M01562A BE 07/05/1991 0464844 12/27/1995 GRANTED
[*] [*] [*] [*] [*]
MD1562A CH 07/05/1991 0464844 12/27/1995 GRANTED
MD1562A CN 91104474 07/04/1991 91104474 06/11/1995 GRANTED
M01562A DE 07/05/1991 0464844 12/27/1995 GRANTED
</TABLE>
[*CONFIDENTIAL TREATMENT REQUESTED]
<PAGE> 43
Page 2
<TABLE>
<CAPTION>
DOCKET NO. CTRY SERIAL NO. FILE DATE PATENT NO. GRANT DATE STATUS
- --------- ---- --------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
M01562A DK 07/05/1991 0464844 12/27/1995 GRANTED
M01562A EP 91111220.9 07/05/1991 0464844 12/27/1995 INACTIVE
M01562A ES 07/05/1991 0464844 12/27/1995 GRANTED
[*] [*] [*] [*] [*]
M01562A FR 07/05/1991 0464844 12/27/1995 GRANTED
M01562A GB 07/05/1991 0464844 12/27/1995 GRANTED
M01562A GR 0464844 07/05/1991 3018926 12/27/1995 GRANTED
M01562A HU 2271/91 07/04/1991 210695 01/24/1995 GRANTED
[*] [*] [*] [*] [*]
M01562A IL 98711 07/02/1991 98711 10/24/1996 GRANTED
W01562A IT 07/05/1991 0464844 12/27/1995 GRANTED
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
M01562A LU 07/05/1991 0464844 12/27/1995 GRANTED
M01562A NL 07/05/1991 0464844 12/27/1995 GRANTED
M01562A NO 912629 07/04/1991 179914 01/08/1997 GRANTED
M01562A NZ 238807 07/01/1991 238807 08/02/1994 GRANTED
M01562A PH 42734 07/04/1991 28569 11/07/1994 GRANTED
[*] [*] [*] [*] [*]
M01562A SE 91111220.9 07/05/1991 0464844 12/27/1995 GRANTED
M01562A TW 80105145 07/02/1991 63878 01/28/1994 GRANTED
M01562A US 696684 05/07/1991 INACTIVE
M01562A ZA 91/5075 07/01/1991 91/5075 04/29/1992 GRANTED
M01562B US 939561 09/02/1992 5281738 01/25/1994 GRANTED
M01562C US 77619 06/15/1993 5304668 04/19/1994 GRANTED
M01724 US 165281 12/10/1993 5405876 04/11/1995 INACTIVE
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*]
M01724A FI INACTIVE
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
</TABLE>
[* CONFIDENTIAL TREATMENT REQUESTED]
<PAGE> 44
<TABLE>
<CAPTION>
DOCKET NO. CTRY SERIAL NO. FILE DATE PATENT NO. GRANT DATE STATUS
---------- ---- ---------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*]
M01724A DW INACTIVE
[*] [*] [*]
M01724A WO 94/12702 11/03/1994 INACTIVE
M01724A ZA 94/9663 12/05/1994 94/9663 01/25/1995 GRANTED
M01724B US 409104 03/27/1995 INACTIVE
[*] [*]
M01842 US 641474 04/30/1996 INACTIVE
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
[ CONFIDENTIAL TREATMENT REQUESTED]
<PAGE> 45
<TABLE>
<CAPTION>
DOCKET NO. CTRY SERIAL NO. FILE DATE PATENT NO. GRANT DATE STATUS
---------- ---- ---------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
M01845 US 637968 04/30/1996 5608095 03/04/1997 GRANTED
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*]
[*] [*] [*] [*] [*]
</TABLE>
[* CONFIDENTIAL TREATMENT REQUESTED]
<PAGE> 46
EXHIBIT B
LIST OF HMR SERIES
<PAGE> 47
EXHIBIT B
The compounds encompassed by the term "HMR Series" are covered by the following
generic claims:
(1) U.S. Pat. No. 5,155,250, issued Oct. 13, 1992 (M01508 US)
1. A compound of the formula
[Diagram of Formula]
wherein
R1, R2, R3 and R4 are each independently a C1-C6 alkyl group;
Z is a thio or oxy group;
A is a C1-C4 alkylene group;
R5 is a C1-C6 alkyl or -(CH2)n-(Ar)
wherein n is an integer 0, 1, 2 or 3; and Ar is phenyl, or naphthyl
unsubstituted or substituted with one to three substituents selected
from the group consisting of hydroxy, methoxy, ethoxy, chloro, fluoro
or C1-C6 alkyl.
(2) U.S. Pat. No. 5,532,400, issued Jul. 2, 1996 (M01508E US)
1. A compound of the formula
[Diagram of Formula]
wherein
R1, R2, R3 and R4 are each independently a C1-C6 alkyl group;
Z is a methylene group;
A is a C1-C4 alkylene group;
R5 is a C1-C6 alkyl or -(CH2)n-(Ar)
wherein n is an integer 0 or 1; and Ar is phenyl, or naphthyl
unsubstituted or substituted with one to three substituents selected
from the group consisting of hydroxy, methoxy, ethoxy, chloro, fluoro
or C1-C6 alkyl.
<PAGE> 48
EXHIBIT B (cont.)
(3) U.S. Pat. No. 5,281,738, issued Jan. 25, 1994 (M01562B US)
1. A compound of the formula
[Diagram of Formula]
wherein
R1, R2, R3 and R4 are each independently a C1-C6 alkyl group;
Z is a thio or oxy group; and
A is a C1-C4 alkylene group.
(4) U.S. Pat. No. 5,304,668, issued Apr. 19, 1994 (M01562C US)
1. A compound of the formula
[Diagram of Formula]
wherein
R1, R2, R3 and R4 are each independently a C1-C6 alkyl group;
Z is a methylene group; and
A is a C1-C4 alkylene group.
<PAGE> 49
EXHIBIT B (cont.)
(5) U.S. Pat. No. 5,608,095, issued Mar. 4, 1997 (M01845 US)
1. A compound of the formula
[Diagram of Formula]
wherein
R1 and R6 are each independently C1-C6 alkyl;
R2, R3 and R4 are each independently hydrogen or C1-C6 alkyl;
R is hydrogen or -C(O)-(CH2)m-Q wherein Q is hydrogen or -COOH and m is
an integer 1, 2, 3 or 4;
Z is a thio, oxy or methylene group;
A is a C1-C4 alkylene group;
R5 and R7 are each independently a C1-C6 alkyl or -(CH2)n-(Ar) wherein
n is an integer 0, 1, 2 or 3; and Ar is phenyl or naphthyl
unsubstituted or substituted with one to three substituents selected
from the group consisting of hydroxy, methoxy, ethoxy, halogen,
trifluoromethyl, C1-C6 alkyl or -NRgR9, wherein Rg and R9 are each
independently hydrogen or C1-C6 alkyl; with the proviso that when R2 and
at least one of R5 or R7 is C1-C6 alkyl, and Ar is not substituted with
trifluoromethyl or -NRgR9, then R is -C(O)-(CH2)m-Q; or a
pharmaceutically acceptable salt thereof.
**
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 50
EXHIBIT C
INITIAL OUTLINE OF RESEARCH AND DEVELOPMENT PLAN
******
* Confidential Treatment Requested
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