<PAGE>
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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 SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ______________________ to ____________________
Commission file number 0-28150
NEUROCRINE BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0525145
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10555 SCIENCE CENTER DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices)
(858) 658-7600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
The number of outstanding shares of the registrant's Common Stock, par value
of $0.001, was 19,081,984 as of October 31, 1999.
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<PAGE>
NEUROCRINE BIOSCIENCES, INC
FORM 10-Q INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1: Financial Statements........................................... 3
Condensed Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998......................................... 3
Condensed Consolidated Statements of Operations for the three
and nine months ended September 30, 1999 and 1998............. 4
Condensed Consolidated Statements of Cash Flows for nine months
ended September 30, 1999 and 1998............................. 5
Notes to the Condensed Consolidated Financial Statements....... 6
ITEM 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 7
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk.... 11
PART II. OTHER INFORMATION
ITEM 5: Other Information............................................. 12
ITEM 6: Exhibits and Reports on Form 8-K.............................. 12
SIGNATURES............................................................. 12
INDEX TO EXHIBITS...................................................... 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sep 30, Dec 31,
1999 1998
---------- ----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 7,591 $ 11,708
Short-term investments, available-for-sale ......... 40,946 50,962
Receivables under collaborative agreements ......... 3,591 863
Receivables from related parties ................... 1,045 544
Other current assets ............................... 1,059 1,556
-------- --------
Total current assets ............................ 54,232 65,633
Property and equipment, net ........................ 11,521 10,899
Other assets ....................................... 2,534 3,997
-------- --------
Total assets .................................... $ 68,287 $ 80,529
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 811 $ 2,481
Accrued liabilities ................................ 2,532 2,077
Deferred revenues .................................. 736 169
Current portion of long-term debt .................. 149 149
Current portion of capital lease obligations ....... 772 693
-------- --------
Total current liabilities ....................... 5,000 5,569
Long-term debt ..................................... 349 461
Capital lease obligations .......................... 1,882 1,786
Deferred rent ...................................... 834 257
Other liabilities .................................. 929 498
-------- --------
Total liabilities ............................... 8,994 8,571
Stockholders' equity:
Preferred Stock, $0.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding .... -- --
Common Stock, $0.001 par value; 100,000,000 shares
authorized; issued and outstanding shares were
19,080,853 in 1999 and 18,930,865 in 1998 ....... 19 19
Additional paid in capital ......................... 97,864 97,064
Deferred compensation and shareholder notes ........ (496) (306)
Accumulated other comprehensive (loss) income ...... (111) 31
Accumulated deficit ................................ (37,983) (24,850)
-------- --------
Total stockholders' equity ...................... 59,293 71,958
-------- --------
Total liabilities and stockholders' equity ...... $ 68,287 $ 80,529
======== ========
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands except loss per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
--------------------- ---------------------
<S> <C> <C> <C> <C>
Revenues:
Sponsored research and development ... $ 4,209 $ 2,112 $ 9,760 $ 6,749
Sponsored research and development
from related party .................. -- 2,066 501 2,066
Milestones ........................... 750 750 1,500 2,000
Grant income and other revenues ...... 272 126 831 666
-------- -------- -------- --------
Total revenues .................... 5,231 5,054 12,592 11,481
Operating expenses:
Research and development ............. 8,331 6,393 21,893 15,457
General and administrative ........... 1,882 1,814 5,587 4,681
Write-off of acquired in-process
research and development and licenses -- -- -- 4,910
-------- -------- -------- --------
Total operating expenses .......... 10,213 8,207 27,480 25,048
Loss from operations ..................... (4,982) (3,153) (14,888) (13,567)
Other income and (expenses):
Interest income ...................... 623 1,174 2,209 3,293
Interest expense ..................... (59) (23) (169) (87)
Equity in NPI loss and
other adjustments ................... (284) (2,299) (1,174) (3,742)
Other income ......................... 295 264 889 905
-------- -------- -------- --------
Loss before taxes ........................ (4,407) (4,037) (13,133) (13,198)
Income taxes ............................. -- -- -- --
-------- -------- -------- --------
Net loss ................................. $ (4,407) $ (4,037) $(13,133) $(13,198)
======== ======== ======== ========
Loss per common share:
Basic & Diluted $ (0.23) $ (0.22) $ (0.69) $ (0.74)
Shares used in the calculation
of loss per common share:
Basic & Diluted 19,006 18,189 18,975 17,925
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
Nine Months Ended
September 30,
-----------------------
1999 1998
---------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss .............................................. $(13,133) $(13,198)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Acquisition of NNL .............................. -- 4,200
Equity in NPI losses and other adjustments ...... 1,175 1,281
Depreciation and amortization ................... 1,532 1,261
Deferred revenues ............................... 567 (875)
Deferred expenses ............................... 1,260 185
Change in operating assets and liabilities,
net of acquired business:
Accounts receivable and other current assets (2,732) (522)
Other non-current assets ................... 124 924
Accounts payable and accrued liabilities ... (1,215) (1,249)
-------- --------
Net cash flows used in operating activities ........... (12,422) (7,993)
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of short-term investments ................... (26,763) (31,144)
Sales/maturities of short-term investments ............ 36,637 42,961
Purchases of property and equipment ................... (1,990) (3,069)
-------- --------
Net cash flows provided by investing activities ....... 7,884 8,748
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Common Stock .............................. 358 477
Proceeds from capital lease financing ................. 771 2,334
Principal payments on long-term obligations ........... (708) (776)
Payments received on notes receivable from stockholders -- 1
-------- --------
Net cash flows provided by financing activities ....... 421 2,036
-------- --------
Net (decrease) increase in cash and cash equivalents .. (4,117) 2,791
Cash and cash equivalents at beginning of the period .. 11,708 15,771
-------- --------
Cash and cash equivalents at end of the period ........ $ 7,591 $ 18,562
======== ========
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
NEUROCRINE BIOSCIENCES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein are
unaudited. These financial statements include the accounts of Neurocrine
Biosciences, Inc. ("Neurocrine" or the "Company") and its wholly owned
subsidiary, Northwest NeuroLogic, Inc. ("NNL"). All significant intercompany
transactions have been eliminated in consolidation. The Company's minority
ownership interest in Neuroscience Pharma, Inc. ("NPI") has been accounted for
under the equity method. Certain reclassifications have been made to prior year
amounts to conform to the presentation for the three and nine months ended
September 30, 1999.
The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of the Securities and Exchange Commission
on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
these financial statements include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the financial
position, results of operations, and cash flows for the periods presented.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results expected for the full year. The financial
statements should be read in conjunction with the audited financial statements
and notes for the year ended December 31, 1998, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
2. NET INCOME PER SHARE
In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share", basic earnings per share is calculated by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of securities
that could share in the earnings of the Company such as common stock which may
be issuable upon exercise of outstanding common stock options, warrants and
preferred stock. These shares are excluded when their effects are antidilutive.
For the three and nine months ended September 30, 1999 and 1998, potentially
dilutive securities were excluded from the diluted earnings per share
calculation.
3. COMPREHENSIVE INCOME
Financial Accounting Standards Board Statement No. 130, "Comprehensive
Income", requires the disclosure of all components of comprehensive income,
including net income and changes in equity during a period from transactions and
other events and circumstances generated from non-owner sources. Other
comprehensive income consisted of gains (losses) on short-term investments of
$8,000 and ($142,000) for the three and nine months ended September 30, 1999;
and $16,000 and $21,000 for the same periods in 1998, respectively.
4. SEGMENT INFORMATION
Financial Accounting Standards Board Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information", establishes standards for
reporting financial and descriptive information about an enterprise's operating
segments in its annual financial statements and selected segment information in
interim financial reports. The Company is engaged in the discovery and
development of prescription drugs and considers its operations to be a single
reportable segment. Financial results of this reportable segment are presented
in the accompanying financial statements. The Company has no foreign operations.
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company contain forward-looking statements
which involve risks and uncertainties, pertaining generally to the expected
continuation of the Company's collaborative agreements, the receipt of research
payments thereunder, the future achievement of various milestones in product
development and the receipt of payments related thereto, the potential receipt
of royalty payments, pre-clinical testing and clinical trials of potential
products, the period of time the Company's existing capital resources will meet
its funding requirements, and financial results and operations. Actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth below and
those outlined in the Company's 1998 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
OVERVIEW
Since the founding of the Company in January 1992, Neurocrine has been
engaged in the discovery and development of novel pharmaceutical products for
diseases and disorders of the central nervous and immune systems. To date,
Neurocrine has not generated any revenues from the sale of products, and does
not expect to generate any product revenues in the foreseeable future. The
Company has funded its operations primarily through public offering and payments
under research and development agreements. The Company is developing a number of
products with corporate collaborators and will rely on those collaborators and
new collaborators to meet funding requirements. Revenues are expected to come
from the Company's strategic alliances. The Company expects to generate future
net losses in anticipation of significant increases in operating expenses as
products are advanced through the various stages of clinical development. As of
September 30, 1999, Neurocrine has incurred a cumulative deficit of $38.0
million and expects to incur operating losses in the future, which may be
greater than losses in prior years.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
----------------------------------------------
Revenues for the third quarter of 1999 were $5.2 million compared to $5.1
million for the respective period in 1998. The increase in revenues primarily
resulted from the 1999 collaborations with Wyeth-Ayerst and Janssen
Pharmaceutica, a subsidiary of Johnson & Johnson. The Wyeth-Ayerst agreement
included a number of milestone payments, one of which was achieved during the
third quarter earning a $750,000 payment in addition to quarterly sponsored
research payments of $750,000. The Janssen agreement contributed sponsored
research and development revenues of $1.7 million to third quarter revenues.
Revenues in 1998 included $2.1 million in sponsored development from NPI and a
$750,000 milestone payment from Novartis.
Research and development expenses increased to $8.3 million for the third
quarter of 1999 compared to $6.4 million for the same period in 1998. The
increase reflects higher costs associated with increased scientific personnel
and related expenditures as the Company advances its drug candidates through
clinical testing. Currently, the Company has five compounds in clinical
development.
General and administrative expenses increased to $1.9 million during the
third quarter of 1999 compared to $1.8 million for the same period in 1998. The
increase resulted primarily from additional administrative personnel, business
development and professional service expenses to support the expanded clinical
development efforts.
<PAGE>
Interest income decreased to $623,000 during the third quarter of 1999
compared to $1.2 million for the same period last year. The decrease was
primarily due to a decline in investment balances. The Company anticipates
further decline in interest income as cash reserves are used to fund progressive
clinical trials.
Net loss for the third quarter of 1999 was $4.4 million or $0.23 per share
compared to $4.0 million or $0.22 per share for the same period in 1998.
Increased revenues of $177,000 were used to finance the $2.0 million increase in
operating expenses primarily related to clinical development costs. Interest
income declined by $551,000 and non-cash charges relating to NPI equity
transactions decreased by $2.0 million.
To date, the Company's revenues have come from funded research and
achievements of milestones under corporate collaborations. The nature and amount
of these revenues from period to period may lead to substantial fluctuations in
the results of quarterly revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
---------------------------------------------
Revenues for the nine months ended September 30, 1999 were $12.6 million
compared to $11.5 million for the same period in 1998. The increase in revenues
primarily resulted from the 1999 collaborations with Wyeth-Ayerst and Janssen
Pharmaceutica, a subsidiary of Johnson & Johnson. The Wyeth-Ayerst agreement
included a number of milestone payments, two of which were achieved earning a
$1.5 million payment in addition to quarterly sponsored research payments of
$750,000. The Janssen agreement contributed sponsored research and development
revenues of $1.7 million to third quarter 1999 revenues. Revenues in 1998
included $2.1 million in sponsored development from NPI and a $750,000 milestone
payment from Novartis.
Research and development expenses increased to $21.9 million for the
nine months ended September 30, 1999 compared to $15.5 million for the same
period in 1998. The increase reflects higher costs associated with increased
scientific personnel and development costs as the Company advances its drug
candidates through the clinical testing. The Company currently has five
compounds in clinical development.
General and administrative expenses increased to $5.6 million during the
nine months ended September 30, 1999 compared to $4.7 million for the same
period last year. The increase is attributable to additional administrative
personnel, business development and professional service expenses to support the
expanded clinical development efforts.
During 1998, the Company wrote-off acquired in-process research and
development fees of $4.9 million. Of that total, $4.2 million were non-cash
charges relating to the acquisition of NNL. The balance is attributable to the
in-licensing of compounds for insomnia and glioblastoma. Both compounds are
currently in clinical development programs.
Interest income decreased to $2.2 million during the nine months ended
September 30, 1999 compared to $3.3 million for the same period last year. The
decline in interest income resulted from lower investment balances. The Company
anticipates further decline in interest income as cash reserves are used to fund
progressive clinical trials.
Net loss for the nine months ended September 30, 1999 was $13.1 million or
$0.69 per share compared to $13.2 million or $0.74 per share for the same period
in 1998. During 1999, increased revenues of $1.1 million were used to finance
the $7.3 million increase in operating expenses related to clinical development
and administration. Write-off of acquired in-process research and development
costs and equity transactions related to NPI decreased by $7.5 million. In
addition, the Company experienced a decline of $1.1 million in interest income.
To date, the Company's revenues have come from funded research and
achievements of milestones under corporate collaborations. The nature and amount
of these revenues from period to period may lead to substantial fluctuations in
the results of year-to-date revenues and earnings. Accordingly, results and
earnings of one period are not predictive of future periods.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company's cash, cash equivalents, and short-term
investments totaled $48.5 million compared with $62.7 million at December 31,
1998. The decline in cash balances during 1999 reflects the increased losses
associated with the progressive clinical development programs and the addition
of scientific personnel.
Net cash used in operating activities during the first nine months of 1999
was $12.4 million compared with $8.0 million for the same period last year. Net
cash used during 1999 and 1998 reflects the payment of clinical development
expenses and other accrued liabilities. The Company anticipates continued
funding of clinical trials to use cash in future periods.
Net cash provided by investing activities during 1999 was $7.9 million
compared with $8.7 million during 1998. The increase in cash provided was
primarily the result of timing differences in the investment purchases and
sales/maturities and the fluctuations in the Company's portfolio mix between
cash equivalents and short-term investment holdings, net of capital asset
purchases of $2.0 and $3.1 million during 1999 and 1998, respectively.
Net cash provided by financing activities during 1999 was $421,000 compared
to $2.0 million in 1998. Cash provided by proceeds from Common Stock issuances
and capital lease financing, net of payments on long-term obligations, resulted
in net cash provided during 1999 and 1998.
The Company believes that its existing capital resources, together with
interest income and future payments due under the strategic alliances, will be
sufficient to satisfy its current and projected funding requirements at least
through the year 2001. However, no assurance can be given that such capital
resources and payments will be sufficient to conduct its research and
development programs as planned. The amount and timing of expenditures will vary
depending upon a number of factors, including progress of the Company's research
and development programs. Failure of a corporate collaborator to meet its
contractual obligations could have a material adverse effect on the Company's
financial position and results of operations.
INTEREST RATE RISK
The Company is exposed to changes in interest rates primarily from its
long-term debt. The Company believes that a hypothetical 100 basis point adverse
move in interest rates along the entire interest rate yield curve would not
materially effect the fair value of interest sensitive financial instruments nor
the costs associated with the long-term debt.
Interest risk exposure on long-term debt relates to the Company's note
payable which bears a floating interest rate of prime plus one quarter percent
(8.50% at September 30, 1999 and 8.00% at December 31, 1998). At September 30,
1999 and December 31, 1998, the note balance was $498,000 and $610,000,
respectively. This note is payable in equal monthly installments through January
2003.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
<PAGE>
In the normal course of business over the past two years, the Company has
made incremental modifications and improvements to all of its operational and
financial software. An integral part of this process has been to ensure that all
newly purchased software and hardware are Year 2000 compliant. The Company has
completed an evaluation of all of the existing software and hardware used in its
internal systems and operations and is now Year 2000 compliant. The Company has
also evaluated and replaced or remediated various hardware components used in
its laboratory operations and now believes it is Year 2000 compliant in this
area as well. In general, the Company management is satisfied with its efforts
to be Year2000 prepared, however, it will continue to monitor and reassess
systems through the end of the year.
Because third party failures could have a material adverse impact on the
Company's ability to conduct business, the Company has requested written
assurances from all material customers and vendors that their systems are or
will be Year 2000 compliant. The Company has received such assurances from many
of its domestic material customers and vendors as well as many of its
international customers and vendors; however, this is an on-going process. The
business interruption of any of the Company's significant customers, materials
suppliers and service providers resulting from their Year 2000 issues, could
have a material adverse impact on the Company's revenues and results of
operations.
Based on information obtained from third parties and on-going evaluations
of the Company's own systems, management believes it has identified the most
reasonably likely worst case scenario with respect to possible losses in
connection with Year 2000 related problems. Based on this scenario, the Company
has developed contingency plans for restoration of financial and scientific
data, replacement of material suppliers and service providers and the building
of safety stocks of critical materials in the event that current vendors
experience Year 2000 compliance issues.
The incremental cost to the Company of Year 2000 compliance was
approximately $175,000. The expensed costs do not include internal costs, as the
Company does not separately track the internal costs of Year 2000 compliance.
Such internal costs are principally the related payroll costs for the Company's
information technology group.
There are many factors outside the Company's control that could cause the
Year 2000 problem to seriously disrupt its operations. However, the Company has
identified certain risks and has developed contingency plans in order to reduce
its exposure in these areas. The scope of the Company's efforts regarding each
risk is limited to the Company's key products, key compounds, subsidiaries,
critical suppliers, and major customers. The most critical of these risks are: a
disruption in the supply of product with particular emphasis on failures of raw
material suppliers, commercial partners, and external distribution channels;
internal infrastructure failures such as utilities, communications, internal
information technology services and integrated information technology systems.
The information above contains forward-looking statements including,
without limitation, statements relating to the Company's plans, strategies,
objectives, expectations, intentions, and adequate resources that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned that forward-looking statements about
the Year 2000 should be read in conjunction with the Company's disclosures under
the heading: "Caution on forward-looking statements".
CAUTION ON FORWARD-LOOKING STATEMENTS
The Company's business is subject to significant risks, including but not
limited to, the risks inherent in its research and development activities,
including the successful continuation of the Company's strategic collaborations,
the successful completion of clinical trials, the lengthy, expensive and
uncertain process of seeking regulatory approvals, uncertainties associated both
with the potential infringement of patents and other intellectual property
rights of third parties, and with obtaining and enforcing its own patents and
patent rights, uncertainties regarding government reforms and of product pricing
and reimbursement levels, technological change and competition, manufacturing
uncertainties and dependence on third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
product will be ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
<PAGE>
Neurocrine will require additional funding for the continuation of its
research and product development programs, for progress with preclinical testing
and clinical trials, for operating expenses, for the pursuit of regulatory
approvals for its product candidates, for the costs involved in filing and
prosecuting patent applications and enforcing or defending patent claims, if
any, for the cost of product in-licensing and any possible acquisitions, and may
require additional funding for establishing manufacturing and marketing
capabilities in the future. The Company may seek to access the public or private
equity markets whenever conditions are favorable. The Company may also seek
additional funding through strategic alliances and other financing mechanisms,
potentially including off-balance sheet financing. There can be no assurance
that adequate funding will be available on terms acceptable to the Company, if
at all. If adequate funds are not available, the Company may be required to
curtail significantly one or more of its research or development programs or
obtain funds through arrangements with collaborative partners or others. This
may require the Company to relinquish rights to certain of its technologies or
product candidates.
The Company believes that its existing capital resources will be adequate
to satisfy its current and planned operations through the year 2000. Neurocrine
expects to incur additional operating expenses over the next several years as
its research, development, preclinical testing and clinical trial activities
increase. To the extent that the Company is unable to obtain third party funding
for such expenses, the Company expects that increased expenses will result in
increased losses from operations. There can be no assurance that the Company's
products under development will be successfully developed or that its products,
if successfully developed, will generate revenues sufficient to enable the
Company to earn a profit.
For a further discussion of the risks associated with an investment in the
Company, please see the section entitled "Risk Factors" in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
A discussion of the Company's exposure to, and management of, market risk
appears in Part 1, Item 2 of this Quarterly Report on Form 10-Q under the
heading "Interest Rate Risk".
<PAGE>
PART II: OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company has been advised, that due to personal commitments, Harry F.
Hixson, Jr. will be resigning from the Board of Directors effective December 31,
1999. The Company has not identified a replacement director as of the date of
this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits. The following exhibits are filed as part of this report:
*10.1 Agreement by and among Dupont Pharmaceuticals Company, Janssen
Pharmaceutica, N.V. and Neurocrine Biosciences, Inc.
*10.2 Amendment Number One to the Agreement between Neurocrine Biosciences,
Inc. and Janssen Pharmaceutica, N.V.
27 Financial Data Schedule.
---------------
*Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission. The omitted portions
have been filed separately with the Commission.
Reports on Form 8-K. During the quarter ended September 30, 1999, the
Company filed no current reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: 11/12/99 /s/ Paul W. Hawran
Paul W. Hawran
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
*10.1 Agreement by and among Dupont Pharmaceuticals Company, Janssen
Pharmaceutica, N.V. and Neurocrine Biosciences, Inc.
*10.2 Amendment Number One to the Agreement between Neurocrine Biosciences, Inc.
and Janssen Pharmaceutica, N.V.
27 Financial Data Schedule.
---------------
*Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Commission. The omitted portions
have been filed separately with the Commission.
***REDACTED FOR CONFIDENTIALITY***
AGREEMENT
BY AND AMONG
DUPONT PHARMACEUTICALS COMPANY
JANSSEN PHARMACEUTICA, N.V.
AND
NEUROCRINE BIOSCIENCES, INC.
<PAGE>
i
[***] CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS .....................................................2-8
ARTICLE II - LICENSE GRANTS ...................................................8
2.1 Common Interest Patent Cross License....................................8
2.2 Special Interest Patent Cross License...................................9
2.3 Other Patent Licenses..................................................11
2.4 Initial Payments License...............................................12
ARTICLE III - PRODUCT DEVELOPMENT AND COMMERCIALIZATION.......................13
3.1 Independent Programs...................................................13
3.2 No Diligence...........................................................13
*** ****************************...........................................**
ARTICLE IV - PAYMENTS ........................................................14
4.1 License Fees Payable to DPC...........................................14
4.2 Milestone Payments to DPC.............................................15
4.3 Milestone Payments to Janssen.........................................16
4.4 Milestone Payment Timing..............................................17
4.5 DPC Earned Royalties for X-Products...................................18
4.6 Janssen and Neurocrine Earned Royalties For Products..................19
4.7 Term For Royalty Payment..............................................20
4.8 Third Party Patents...................................................20
4.9 Compulsory License....................................................21
4.10 Currency Restrictions.................................................21
4.11 Royalty Reports and Records...........................................21
4.12 Taxes ................................................................23
4.13 Neurocrine Receptor License Payment...................................23
4.14 Janssen or Neurocine Obligation of Payment............................23
************************** ...................................................**
*** ****************************..........................................**
*** ****************************..........................................**
*** ****************************..........................................**
*** ****************************..........................................**
*** ****************************..........................................**
*** ****************************..........................................**
ARTICLE VI - RELEASE .........................................................27
6.1 Release ...............................................................27
6.2 General Release........................................................28
6.3 No Admission...........................................................28
6.4 Remedies ..............................................................29
<PAGE>
iii
ARTICLE VII - CONFIDENTIALITY ................................................30
7.1 Confidentiality; Exceptions.............................................30
7.2 Authorized Disclosure...................................................31
7.3 Survival ...............................................................31
7.4 Public Announcements....................................................31
ARTICLE VIII - INTELLECTUAL PROPERTY .........................................32
8.1 Ownership of Patents....................................................32
8.2 Patent Filings on N-Compounds or N-Products.............................32
8.3 Patent Filings..........................................................32
8.4 Infringement by Third Parties...........................................34
8.5 Defense and Settlement of Third Party Claims............................35
8.6 Patent Assignment.......................................................36
8.7 Notices Relating to the Act.............................................36
8.8 Authorization Relating to Patent Term Extension.........................36
ARTICLE IX - INDEMNIFICATION .................................................37
9.1 Indemnification.........................................................37
9.2 Procedure...............................................................38
ARTICLE X - TERM AND TERMINATION .............................................38
10.1 Term ..................................................................38
10.2 Material Breach .......................................................38
10.3 Bankruptcy.............................................................39
10.4 Survival ..............................................................40
ARTICLE XI - DISPUTE RESOLUTION ..............................................41
11.1 Dispute Resolution and Arbitration.....................................41
11.2 Arbitration............................................................41
ARTICLE XII - REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY.....................41
12.1 Representations and Warranties.........................................41
12.2 Patent Warranties......................................................42
12.3 Exclusivity............................................................42
ARTICLE XIII MISCELLANEOUS ...................................................43
13.1 Relationship of Parties................................................43
13.2 Counterparts...........................................................43
13.3 Headings ..............................................................43
13.4 Binding Effects........................................................43
13.5 Assignment.............................................................43
13.6 Amendment and Waiver...................................................43
13.7 Governing Law..........................................................44
13.8 Severability...........................................................44
13.9 Entire Agreement.......................................................44
<PAGE>
13.10 Advise of Counsel.....................................................44
13.11 Consents Not Unreasonably withheld....................................44
13.12 Retained Rights.......................................................44
13.13 Force Majeure.........................................................45
13.14 Further Actions.......................................................45
13.15 No trademark Rights...................................................45
13.16 Notices ..............................................................45
13.17 Waiver ...............................................................47
13.18 Compliance with Laws..................................................47
EXHIBIT A - DISPUTE RESOLUTION
<PAGE>
1
AGREEMENT
This Agreement is made effective as of the 28th day of September, 1999 by and
among DuPont Pharmaceuticals Company, a Delaware general partnership having a
principal place of business at 974 Centre Road, Wilmington, Delaware ("DPC"),
Neurocrine Biosciences, Inc., a Delaware corporation having its principal place
of business at 10555 Science Center Drive, San Diego, CA 92121 ("Neurocrine")
and Janssen Pharmaceutica, N. V., a Belgium corporation having its principal
place of business at Turnhoutseweg 30, 2340 Beerse, Belgium ("Janssen"). DPC,
Neurocrine and Janssen are each referred to by name or as a "Party" or,
collectively, as "Parties".
RECITALS WHEREAS, The Parties each have on-going research in the field of
corticotropin-releasing factor (CRF) receptor antagonists and have developed
certain technology in this field.
WHEREAS, the Parties each have an interest in various intellectual
properties in the field of CRF receptor antagonists which is a source of
potential dispute among them.
WHEREAS, the Parties desire to settle potential disputes by the exchange of
certain rights and obligations hereunder. NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:
<PAGE>
21
[***] CONFIDENTIAL TREATMENT REQUESTED
ARTICLE I
DEFINITIONS
The terms in this Agreement with initial letters capitalized, whether
used in the singular or the plural, shall have the meaning set forth below or,
if not listed below, the meaning designated in places throughout this Agreement.
1.1 "Affiliate" means an individual, trust, business trust, joint venture,
partnership, corporation, association or any other entity which (directly or
indirectly) is controlled by, controls or is under common control with a Party.
For the purposes of this definition, the term "control" (including, with
correlative meanings, the term "controlled by" and "under common control with")
as used with respect to any Party, shall mean the possession of the power to
direct or cause the direction of the management and policies of an entity,
through the ownership of the outstanding voting securities or by contract or
otherwise.
1.2 "Control" means possession of the ability to grant a license or sublicense
as provided for herein without violating the terms of any agreement or other
arrangements with a Third Party.
*** **************************************************************.
1.4 "Date of First Sale" means, on a Product-by-Product basis, the date on which
a Party (or an Affiliate or a Sublicensee) first sells a Product to an
unaffiliated Third Party in an arms length commercial transaction. 1.5 "DPC
X-Patents" means the rights granted by any governmental authority under a Patent
derived from *********** and any counterparts thereof, and additionally, the
rights granted by any governmental authority under a Patent which claims
*********************** ***************************, which Patent is owned or
Controlled by DPC at any time.
<PAGE>
1.6 "Effective Date" means the date first written above.
1.7 "EMEA" means the European Medical Evaluation Agency.
1.8 "FDA" means the United States Food and Drug Administration or any successor
agency.
1.9 "Field" means the discovery, synthesis, and selection of X-Compounds and
N-Compounds and the manufacture, development and use of Products. 1.10 "IND"
means an investigational new drug application for a Product filed with the FDA
as more fully defined in 21 C.F.R.
ss.312.3 or its equivalent in any country.
1.11 "Information" means information, generally not known to the public,
relating to the Field and including screening data, pharmacological,
toxicological, clinical test data and analytical data. 1.12 "Janssen X-Patents"
means the rights granted by any governmental authority under a Patent derived
from *********** and any counterparts thereof, and additionally, the rights
granted by any governmental authority under a Patent which claims
*********************** ***************************, which Patent is owned or
Controlled by Janssen at any time.
1.13 "Major European Country" means France, Germany or the United Kingdom.
1.14 "N-Compounds" means those compounds which, as compounds or chemical
entities, are specifically or generically within the scope of
**************************************** and includes those compounds as
described in the disclosure of *********** and shown
***************************************************.
1.15 "NDA" means a New Drug Application and all supplements filed pursuant to
the requirements of the FDA, including all documents, data and other information
concerning Product which are necessary for or included in, FDA approval to
market a Product as more fully defined in 21 C.F.R. ss.314.50 et. seq.
<PAGE>
*** *************************************************************************
***************************************.
1.17 "Net Sales" means the amount billed by a Party or an Affiliate or
Sublicensee for sales of a Product to a Third Party less: (a) discounts,
including cash discounts, discounts to managed care or similar organizations or
government organizations, rebates paid, credited, accrued or actually taken,
including government rebates such as Medicaid chargebacks or rebates, and
retroactive price reductions or allowances actually allowed or granted from the
billed amount, and commercially reasonable and customary fees paid to
distributors (other than to a distributor that is an Affiliate of a Party), (b)
credits or allowances actually granted upon claims, rejections or returns of
such sales of Products, including recalls, regardless of a Party requesting such
recalls, (c) freight, postage, shipping and insurance charges paid for delivery
of such Product, to the extent billed separately on the invoice and paid by the
buyer, and (d) taxes, duties or other governmental charges levied on or measured
by the billing amount when included in billing, as adjusted for rebates,
charge-backs and refunds and (e) provisions for actual uncollectible accounts
determined in accordance with U.S. generally accepted accounting practices,
consistently applied to all products of a Party. Where a Product is sold in the
form of a combination Product containing one or more active ingredients in
addition to an X-Compound or N-Compound, Net Sales for such combination Product
will be calculated by multiplying actual Net Sales of such combination Product
by the fraction A/(A+B) where A is the invoice price of the X-Product or
N-Product if sold separately in the same dose, and B is the total invoice price
of any other active component or components, or devices, in the combination, if
sold separately in
<PAGE>
the same dose. If, on a country-by-country basis, the other active
component or components in the combination are not sold separately in the same
dose in said country, Net Sales for the purpose of determining royalties of the
combination Product shall be calculated by multiplying actual Net Sales of such
combination Product by the fraction A/C where A is the invoice price of the
Product, if sold separately in the same dose, 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 the same dose in said country, Net Sales for the purposes of
determining royalties of the combination Product shall be determined by the
Parties by mutual agreement.
1.18 "N-Product" means a Product comprised of an N-Compound.
1.19 "Neurocrine N-Patents" means the rights granted by any governmental
authority under a Patent derived from ************ and any counterparts thereof,
and additionally, the rights granted by any governmental authority under a
Patent which claims ******************** *************************, which Patent
is owned or Controlled by Neurocrine at any time.
1.20 "Neurocrine Receptor License" means the license granted to Neurocrine
pursuant to the
********************************************************************************
**************************, including rights under ************************.
1.21 "Neurocrine X-Patents" means the rights granted by any governmental
authority under a Patent derived from *********** and any counterparts thereof,
and additionally, the rights granted by any governmental authority under a
Patent which claims *********************** ***************************, which
Patent is owned or Controlled by Neurocrine at any time.
<PAGE>
********************************************************************************
********************************************************************************
*******************************.
1.23 "Patent" means (i) valid and enforceable letters patent including any
extensions, registration, confirmation, reissue, continuation, divisional,
continuation-in-part, re-examination, or renewal thereof, and (ii) pending
applications for letters patent.
1.24 "Patent Costs" means the reasonable fees and expenses paid to outside legal
counsel and other Third Parties, and filing and maintenance expenses, incurred
in connection with the establishment and maintenance of rights under Patents.
*** ***************************************************************************
********************************************************************************
**** **************************************************************************
***********************************************************************.
1.26 "Phase II" means that portion of the clinical development program for a
Product which provides for an indication of the dosage regimen in patients and
as an initial assessment of efficacy and safety required as more fully defined
in 21 C.F. R.
312.21(b).
1.27 "Phase III" means that portion of the clinical development program for a
Product which provides for large scale clinical studies intended as pivotal
trials for regulatory filings conducted in a sufficient number of patients to
establish Product clinical efficacy for one or more indications and its safety,
as more fully defined in 21 C.F.R. 312.21 (c).
1.28 "Product" means any form or dosage of a compound for pharmaceutical use in
humans or other animals or for use as a diagnostic tool that consists of an
X-Product or N-Product, as the case may be.
<PAGE>
*** ***************************************************************************
*************************************************.
1.30 "Regulatory Approval" means all official approvals by government, pricing
or health authorities in a country (or -------------------- super-national
organizations, such as the EMEA) which are required for first use or sale,
including, importation, manufacture (where manufacture is required), pricing or
reimbursement of a pharmaceutical product in such country where required.
1.31 "Sublicensee" means, with respect to a particular Product, a Third Party to
whom a Party has granted a license or sublicense ----------- under any Patents
to make, use and sell such Product. As used in this Agreement, "Sublicensee"
shall also include a Third Party to whom a Party has granted the right to
distribute a Product, provided that such Third Party is responsible for
marketing and promotion of such Product within its distribution territory.
1. 32 "Third Party" means any entity other than a Party hereto, excepting
Affiliates of a Party. -----------
1.33 "X-Compounds" means compounds which, as compounds or chemical entities, are
specifically or generically within the published ----------- claims of
*********** or which are specifically or generically within the published claims
of ***************************************** having the following base
structure: ********************** ************. For clarity and in accordance
with the foregoing, an "X-Compound" is not and does not include those compounds
described *******************************************************
********************************.
1.34 "X-Product" means a Product comprised of an X-Compound.
<PAGE>
1.35 "Valid Patent Claim" means a claim in any unexpired Patent, which has
matured into an issued patent which has not been held invalid by a non-appealed
or unappealable decision by a court or other appropriate body of competent
jurisdiction. The scope of a Valid Patent Claim shall be limited to its terms as
set forth in the Patent itself and as further defined by any court, body or law
of competent jurisdiction. For the purpose of royalty determination and payment,
any claim being prosecuted in a pending patent application shall be deemed to be
the equivalent of a Valid Claim of an issued, unexpired patent, provided it is
not pending for greater ********* ********* from the filing date of the patent
application in which case it shall cease being a Valid Claim until the patent
issues, provided further that in the case of interference proceedings in the
United States, ****************** period will be extended until the completion
of the interference.
ARTICLE II
LICENSE GRANTS
2.1 Common Interest Patent Cross License.
(a) DPC. DPC grants to Janssen and Neurocrine, separately, a non-exclusive
worldwide license under any Patent derived from *********** and any
counterparts thereof, to make, have made, use, sell, offer to sell, have
sold and import X-Compounds and X-Products.
(b) Janssen and Neurocrine.
Janssen and Neurocrine, separately, grant to DPC a non-exclusive worldwide
license in and to their respective rights under any Patent derived from
*********** and any counterparts thereof, to make, have made, use, sell,
offer to sell, have sold and import X-Compounds and X-Products.
<PAGE>
(c) Sublicenses. The licenses of this paragraph are without the right to grant
sublicenses except to the license grantor. -----------
2.2 Special Interest Patent Cross License.
- -----------------------------------------------
(a) DPC. Janssen and Neurocrine, separately, grant to DPC an exclusive
worldwide license, with a right to grant sublicenses, under their
respective rights in and to the Janssen X-Patents and Neurocrine X-Patents
and under their respective interests in DPC X-Patents to make, have made,
use, sell, offer for sale, have sold and import certain X-Compounds, which
X-Compounds contain *************************************
************************************* as in formula ****************** and
formula ****** ************ where such ************************* is
otherwise **************************************** otherwise specifically
do not include a total of ******** compounds which may be
*********************************************************************** and
provided that said specifically ************************ were not
previously************************************************************* or
which may be ******** ************************* after ************** and
before *********** ****** ********************* and provided that said
specifically named **************** were not
************************************** in a written record before
**********************.
(b) Janssen and Neurocrine. DPC grants to Janssen and Neurocrine, separately,
co-exclusive worldwide licenses, with the right to grant sublicenses, under
DPC X-Patents and under DPC's interest in Janssen X-Patents and Neurocrine
X-Patents to make, have made, use, sell, offer to sell, have sold and
import X-Compounds, which X-Compounds
<PAGE>
do not contain ********************************************************
******************* as in formula ****************** and formula *********
******** where such *********************** is otherwise ******************
********************* otherwise specifically include a total***********
compounds which may
be********************************************************************* and
provided that said specifically *********************** were not
****************************************************************
************ or which may be ********************************** after
****** ************************************************************ and
provided that said ************************************* were not
*********************************************************************** and
in accordance with the foregoing, DPC does not grant to Janssen or
Neurocrine a license (exclusive or non-exclusive) to any subject matter
disclosed or claimed in ************************************* or otherwise
as shown in formula ****************************************.
(c) Program Patents. DPC X-Patents licensed to Janssen and Neurocrine under
this Article will be considered by Janssen and Neurocrine a "Program
Patent" under the agreement between Janssen and Neurocrine effective
January 1, 1995 for the purpose of determining the rights therein and the
obligations therefor as between Janssen and Neurocrine only. 2.3 Other
Patent Licenses.
<PAGE>
(a) Neurocrine N-Patents. Neurocrine grants to DPC an exclusive worldwide
license, with a right to grant sublicenses, under the Neurocrine N-Patents,
to make, have made, use, sell, offer to sell and import N-Compounds or
N-Products.
(b) Neurocrine Receptor License. At the election of DPC, Neurocrine agrees to
grant and will grant to DPC, by way of sublicense, a non-exclusive license,
with no right to grant sublicenses, under the Neurocrine Receptor License,
to ************************** ************************ This sublicense will
terminate ****************** unless extended by mutual agreement and is
fully paid-up with respect to license fees and patent prosecution and
maintenance expenses following provision by DPC of the payment specified in
Section 4.13(i). In the event DPC wishes to exercise its right to receive
such a sublicense, DPC must notify Neurocrine of such election in writing
within by no later than **************************************************.
Following the Effective Date, DuPont may request that Neurocrine deliver to
DPC the relevant terms, with appropriate substantiation, under which
Neurocrine has received the Neurocrine Receptor License. Neurocrine will
deliver the relevant terms, with appropriate substantiation, within 30 days
of the date of the request. Neurocrine and DPC will then
****************************************************, Neurocrine will
provide a sublicense to DPC and DPC will agree to pay royalties and other
amounts payable *********************************** ***********************
in accordance with the terms of such sublicense to
********************************************************** by reason of
DPC's exploitation of the sublicense. In any event,
<PAGE>
DPC will not be obligated to pay the Third Party licensor or Neurocrine for
acts under such license or sublicense any amount
***********************************************************************
with respect to equivalent acts.
2.4 Initial Payments License. In the event that Janssen elects to avoid any
obligation of payment to DPC required under sub-paragraph 4.1(b), then Janssen
agrees (and Neurocrine approves and consents to the extent that any such
approval or consent are necessary) that DPC may, at its option, assume from
Janssen all of Janssen's rights and obligations ************** which are held or
owed by Janssen at the time Janssen notified DPC of its intent to avoid such
payment and which are held or owed by Janssen **************************. In the
event DPC exercises this right, Neurocrine hereby agrees to cooperate to the
extent reasonably necessary to permit DPC to assume such rights and obligations.
DPC may exercise this right of assumption by written notice to Janssen within
ninety (90) days following DPC's receipt of the notice of Janssen's intent to
avoid payment pursuant to sub-paragraph 4.1(b). Upon exercise of this right of
assumption, DPC will assume all of Janssen's rights and obligations relating
specifically *******************************************************************
********************************************************************************
**********************************************************************. For
clarification, the future development and marketing efforts of DPC with
Neurocrine and Janssen with Neurocrine will be considered as independent
relationships with all rights and obligations being independently determined.
Specifically, the **************************************************************
************************************************************* will have no
effect on the other rights and obligations of Janssen *****
************************************* and the further development and sale of
compounds by Janssen and Neurocrine will have no effect
<PAGE>
on the rights and obligations of DPC under the portion of
*****************************************.
ARTICLE III
PRODUCT DEVELOPMENT AND COMMERCIALIZATION
3.1 Independent Programs. Unless otherwise specifically stated herein or
provided for elsewhere, each Party's efforts to identify, develop and
commercialize Products are separate and independent efforts. Unless otherwise
specifically stated herein or provided for elsewhere, there is no obligation or
right of the Parties herein to consult, collaborate or exchange information.
3.2 No diligence. Unless provided for by separate agreement between the Parties,
no research, development or commercialization diligence or efforts are agreed to
or required by the Parties hereunder. All business decisions, including, but not
limited to, the design, sale, price and promotion of X-Products and N-Products
under this Agreement and the decisions whether to market or discontinue
marketing any particular X-Product or N-Product shall be within the sole
discretion of the marketing Party. Any marketing of an X-Product or N-Product in
one market or country shall not obligate the marketing Party to market said
Product in any other market or country. Furthermore, the Parties make no
representation or warranty that the marketing of an X-Product or N-Product, as
the case may be, shall be the exclusive means by which a Party will participate
in any therapeutic field. ****************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*********************
<PAGE>
********************************************************************************
********************************************************************************
********************************************************************************
**********************************************************************.
ARTICLE IV **
PAYMENTS **
<PAGE>
In consideration of the assignments, rights and licenses granted under this
Agreement, the Parties agree to pay each other as follows:
4.1 License Fees Payable to DPC.
(a) Initial Payment. Within thirty (30) days after the Effective Date,
**************** ------------------- *********************************. (b)
Subsequent Payments. *********************************************
***********************************************************************
**************************************************** may avoid any payment
under this subparagraph by notifying *** of its intent to avoid such
payment and warranting to ************************
*********************************************************************** so
long as the payment is not made by no later than the payment due date. No
further amounts will be payable under this subparagraph
(b) and DPC will be entitled to exercise it option under Paragraph 2.4 above.
In the event Janssen shall have terminated or forfeited its rights to
develop and commercialize X-Products in favor of Neurocrine, then
Neurocrine will be solely responsible for the warranty made under this
sub-Paragraph. 4.2 Milestone Payments to DPC. Janssen agrees to make the
following payments to DPC upon the first occurrence of each milestone event
for the first ********************* developed by Janssen, its Affiliates,
or Sublicensees during the term of this Agreement. Janssen shall not be
required to make any milestone payment for ********************** once the
applicable milestone payment has been paid for *********************. If an
********** is dropped from development by Janssen and replaced with
****************** (a ************************), Janssen shall not be
obligated to make the same milestone
<PAGE>
payments for the ********************** as it already made in connection
with the ********** which was replaced. Except as specifically provided for
below, it is understood that in no event shall Janssen be obligated to make
the payment due on any milestone more than once with respect to the same
********** (or its **********************), regardless of the number of
indications for which such ********** is developed.
- --------------------------------------------------------------------------------
Milestone Payment
- --------------------------------------------------------------------------------
Filing and acceptance for review of an IND
or its equivalent in any Major European Country $***********
Enrollment of the fifth patient in a Phase II
clinical trial or its equivalent in any country $***********
Enrollment of the fifth patient in a Phase III
clinical trial or its equivalent in any country $***********
Filing and acceptance for review of a U. S. NDA $***********
Regulatory Approval in the U. S. for a first indication $***********
Regulatory Approval in any Major European
Country or by the EMEA $***********
Regulatory Approval in the U. S. of each additional indication $***********
4.3 Milestone Payments to Janssen. DPC agrees to make the following payments to
Janssen and/or Neurocrine, as the case may be, upon the first occurrence of each
milestone event for the first ************************************,
collectively, developed by DPC, its Affiliates, or Sublicensees, during the term
of this Agreement. Payments for *********** shall be made to Janssen and
payments *************** shall be made to Neurocrine. DPC shall not be required
to make any milestone payment for subsequent *********** or
***********
<PAGE>
once the applicable milestone payment has been paid for
*************************** ********. If an ************************ is dropped
from development by DPC and replaced with another
**************************************************** or
"**********************"), DPC shall not be obligated to make the same milestone
payments for the ********************** or ********************** as it already
made in connection with the ************************ which was replaced. Except
as specifically provided for below, it is understood that in no event shall DPC
be obligated to make the payment due on any milestone more than once with
respect to the same ***********************************************************
*****************************************, regardless of the
********************* ************************************. For clarification,
********************** shall be considered to form a single group of compounds
for the determination of amounts due under this Paragraph.
- --------------------------------------------------------------------------------
Milestone Payment
- --------------------------------------------------------------------------------
Filing and acceptance for review of an IND or its
equivalent in any Major European Country $***********
Enrollment of the fifth patient in a Phase II
clinical trial or its equivalent in any country $***********
Enrollment of the fifth patient in a Phase III
clinical trial or its equivalent in any country $***********
Filing and acceptance for review of a U. S. NDA $***********
Regulatory Approval in the U. S. for a first indication $***********
Regulatory Approval in any Major European
Country or by the EMEA $***********
Regulatory Approval in the U. S. of each
additional indication $***********
<PAGE>
4.4 Milestone Payment Timing. The Party achieving any milestone event shall
promptly give notice to the Party receiving payment that a milestone event has
been achieved and a milestone payment earned under Paragraphs 4.2 or 4.3 hereof.
The payments set forth in Paragraphs 4.2 and 4.3 shall each be due and payable
by the paying Party within thirty (30) days of receipt of such notice, provided
however, that in the event any of the milestone events have occurred prior to
the Effective Date, said milestone payments shall be due and payable within
thirty (30) days of the Effective Date. 4.5 DPC Earned Royalties For X-Products.
On a Product-by-Product basis, Janssen shall pay DPC a royalty, based on Net
Sales of X-Products sold by or for Janssen, or its Affiliates or Sublicensees
according to the following schedule:
(a) for Net Sales in the United States (its territories and possessions) only,
where a Valid Patent Claim on a composition of matter exists in a DPC
X-Patent or any Patent derived from ************ and any counterparts
thereof that covers the sale or use of an X-Product;
- ------------------------------------------------------------ --------------
Annual U. S. Net Sales Royalty Rate
- ------------------------------------------------------------ --------------
Less that *********** ***********
From *********** ***********
Greater than *********** ***********
(b) for all consolidated Net Sales outside the United States (its territories
and possessions), where a Valid Patent Claim on a composition of matter
exists in a DPC X-Patent or any Patent derived from *********** and any
counterparts thereof that covers the sale or use of an X-Product;
<PAGE>
- ------------------------------------------------------------ --------------
Annual ex-U. S. Net Sales Royalty Rate
- ------------------------------------------------------------ --------------
Less that *********** ***********
From *********** ***********
From *********** ***********
Greater than *********** ***********
The royalties payable under Section 4.5(a) are paid to DPC regardless of the
*******************************************************************************.
4.6 Janssen and Neurocrine Earned Royalties For Products. On a Product by
Product basis, DPC shall pay Janssen a royalty, based on Net Sales of X-Products
and Neurocrine a royalty based on Net Sales of N-Products sold by or for DPC, or
its Affiliates or Sublicensees according to the following schedule:
(a) for Net Sales in the United States (its territories and possessions) only,
where a Valid Patent Claim on a composition of matter exists in a
Neurocrine N-Patent, Neurocrine X-Patent, Janssen X-Patent or any Patent
derived ********* ****** and any counterparts thereof that covers the sale
or use of an X-Product or N-Product;
- ------------------------------------------------------------ ---------------
Annual U. S. Net Sales Royalty Rate
- ------------------------------------------------------------ ---------------
Less that $*********** ***********
From *********** ***********
Greater than *********** ***********
<PAGE>
(b) for all consolidated Net Sales outside the United States (its territories
and possessions), where a Valid Patent Claim on a composition of matter
exists in which Janssen or Neurocrine have rights and that covers sale or
use of an X-Product or N-Product;
- ------------------------------------------------------------ ---------------
Annual ex-U. S. Net Sales Royalty Rate
- ------------------------------------------------------------ ---------------
Less that $*********** ***********
From $*********** ***********
From $*********** ***********
Greater than $*********** ***********
The royalties payable under Section 4.6(a) are paid regardless of the
*******************************************************************************.
4.7 Term For Royalty Payment. Royalties payable under Paragraphs 4.5 and 4.6
shall be paid on a country-by-country, Product-by-Product basis from the Date of
First Sale until the expiration of the last to expire of any Janssen X-Patent,
Neurocrine X-Patent, DPC X-Patent and/or Neurocrine N-Patent including a Valid
Patent Claim on a composition of matter that covers the sale or use of such
Product. For clarification, the royalty rates are applicable to the incremental
Net Sales with which they are associated only, so that, for example, the highest
royalty rate is applicable to those incremental Net Sales in excess of
$*********** only. For further clarification, no royalty is due in countries
where there is no Valid Patent Claim that covers the sale or use of the Product
and Net Sales therein are not included in any calculation of royalty due.
<PAGE>
4.8 Third Party Patents. In the event that during the term of the royalty
obligation for a Product under this Article IV, a Third Party shall control a
Patent or Patents in any country covering the sale of a Product, and in the
reasonable judgment of the Party selling such Product pursuant to the licenses
granted hereunder, it would be impractical or impossible for such Party (or its
Affiliates or Sublicensees) to continue to sell the Product without obtaining a
royalty bearing license from such Third Party, then such Party shall be entitled
to a credit against the royalties due hereunder with respect to such country an
amount equal to *********** of the royalty paid to such Third Party, said credit
not to exceed *********** of the royalty rate due under this Agreement, arising
from the sale of the Product in said country. By way of example, in no event
shall a *********** royalty rate be less than ***********
4.9 Compulsory License. If at any time and from time to time a Third Party in
any country shall, under the right of a compulsory license granted or ordered to
be granted by a competent governmental authority, manufacture, use or sell a
Product with respect to which royalties would be payable pursuant to Paragraphs
4.5 or 4.6 hereof, manufacture, use or sale of such Product by the Third Party
shall not be considered sales by a Sublicensee hereunder. The Party by whom a
royalty would have been payable and the Party to whom a royalty would have been
payable under Paragraph 4.5 or 4.6, shall each be entitled to fifty percent
(50%) of the compulsory royalty payable by said Third Party as consideration for
the compulsory license.
4.10 Currency Restrictions. Except as herein provided in this Paragraph, all
royalties shall be paid in U.S. Dollars. If, at any time, legal restrictions
prevent the prompt remittance of part of or all royalties with respect to any
country where Products are sold, the paying Party shall have the right and
option to make such payments by depositing the amount thereof in local currency
to the receiving Party's accounts in a bank or depository in such country.
<PAGE>
22
4.11 Royalty Reports and Records.
(a) Reports. During the term of this Agreement and commencing with the Date of
First Sale of Product, the paying Party shall furnish, or cause to be
furnished to the receiving Party, written reports, including royalty
payment due, within sixty (60) days following the end of each calendar
quarter for which royalties are due, showing: (i) the Net Sales of all
X-Products or N-Products sold by the paying Party, its Affiliates and its
Sublicensees, during the calendar quarter; (ii)the royalties payable in
U.S. Dollars, which shall have accrued hereunder in respect to such Net
Sales; (iii) the exchange rates used, if any, in determining the amount of
U.S. Dollars; and (iv) any withholding taxes required to be paid from such
royalties.
(b) Currency. All payments to be made by the paying Party to the receiving
Party shall be made in U.S. Dollars, except as provided in Paragraph 4.10.
In the case of sales outside the United States, royalty payments shall be
converted to U.S. Dollars in accordance with the paying Party's current
customary and usual procedures for calculating same.
(c) Audit. The paying Party shall maintain complete and accurate records, in
accordance with U.S. generally accepted accounting practices, which are
relevant to costs, expenses and payments under this Agreement and such
records shall be open during reasonable business hours for a period of two
(2) years from creation of individual records for examination at the
receiving Party's expense and not more often than once each year by a
certified public accountant or other representative selected by the
<PAGE>
30
[***] CONFIDENTIAL TREATMENT REQUESTED
receiving Party and acceptable to the paying Party for the sole purpose of
verifying the correctness of calculations or such costs, expenses or
payments made under this Agreement. In the absence of material
discrepancies (in excess of five percent (5%)) in any request for
reimbursement resulting from such audit, the accounting expense shall be
paid by the receiving Party. If material discrepancies do result, the
paying Party shall bear the reasonable audit expense. Any records or
accounting information received from the paying Party shall be Confidential
Information for purposes of Article VII.
4.12 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 paying Party will (i) deduct those taxes
from otherwise remittable royalty, (ii) timely pay the taxes to the proper
taxing authority, and (iii) send proof of payment to the receiving Party within
thirty (30) days of receipt of confirmation of payment from the relevant taxing
authority.
4.13 Neurocrine Receptor License Payment. In the event that DPC elects to
receive a sublicense under the Neurocrine Receptor License, (i) in consideration
for ***************************************************************************,
DPC shall pay Neurocrine the amount of ************************************
within thirty (30) days after the effective date of any such sublicense for said
rights under said sublicense, and (ii) DPC shall be responsible for payment to
the Third Party licensor of the Neurocrine Receptor License, all amounts payable
under the Neurocrine Receptor License which are attributable to DPC's activities
under its sublicense. DPC shall pay to Neurocrine ***************************
********************************************************************************
********************************************************************************
**************************************************************************
<PAGE>
******************************************************************. For purposes
of clarification, it is intended that Neurocrine may arrange with its Third
Party licensor that royalty or milestone sums due under this Paragraph will be
paid directly to such Third Party licensor by DPC and DPC will cooperate in such
agreement. 4.14 Janssen or Neurocrine Obligation of Payment. Except as
specifically provided for otherwise, any obligation of payment to DPC pursuant
to the terms of this Article for the development and sale of Products are the
responsibility of Janssen. In the event Janssen shall have terminated or
forfeited its rights to develop and commercialize a Product in favor of
Neurocrine and where the obligation of payment arose due to acts taken by
Neurocrine subsequent to such termination or forfeiture, then such payments
shall be the obligation of Neurocrine alone. Additionally, the actions of
Janssen and Neurocrine under this Article will be considered the actions of a
single party in the determination of what milestone payments are due, in the
determination of royalty rate and in the determination of the number of Products
developed.
*****
<PAGE>
*****
<PAGE>
*****
<PAGE>
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ARTICLE VI **
RELEASE **
6.1 Release. Each of DPC, Neurocrine, and Janssen for itself, its officers,
directors, investors, employees, assigns and ** successors, in consideration of
the promises and covenants contained herein, the sufficiency of which is hereby
acknowledged, does ** hereby fully and forever release, remise, acquit and
discharge each other, their representatives, agents, employees, employers, **
officers, directors, shareholders, administrators, successors, attorneys,
insurers and assigns and any of their Affiliates of and ** from any and all
actions, causes of action, suits, claims, cross-claims, demands, debts, damages,
losses, costs and expenses, of ** every kind, nature and description, which it
now has, ever had, or which its administrators, successors, insurers and assigns
now ** have or may hereafter have on account of, or arising out of, or relating
to (i) the *********************************************************************
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*******************************************************************************
<PAGE>
********************************************************************************
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********************************************************************************
********************************************************************************
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***************. Each of DPC, Neurocrine and Janssen expressly agrees and
intends that this release shall release each other from any and all claims,
actual and potential, known and unknown, fixed and contingent including claims
of which the Parties are not aware as of the date hereof relating to
*************************** despite the fact that each may later discover facts
in addition to or different from those which it now believes to be true. Each of
DPC, Neurocrine and Janssen agrees that it will withdraw and desist from any
proceedings or arbitrations presently in progress with the acknowledgement that
the issues of such proceeding or arbitration have been finally settled. 6.2
General Release. Each of DPC, Neurocrine and Janssen, being represented by legal
counsel, acknowledges that it is familiar with provisions of California Civil
Code Section 1542, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR. Each of DPC, Neurocrine and Janssen,
being aware of said code section, agrees to expressly waive any rights it may
have thereunder, as well as under any other statute or common law principles of
similar effect. Neurocrine and Janssen further acknowledge and agree that this
<PAGE>
waiver of rights under Section 1542 of the Civil Code by DPC has been separately
bargained for and is essential and material term of this Agreement and, without
such waiver, each of DPC, Neurocrine and Janssen would not have entered into
this Agreement.
6.3 No Admission. DPC acknowledges that Neurocrine and Janssen have denied, and
continue to deny, any and all liability with respect to or relating
********************************************************************************
********************************************************************************
*******************************************************************************.
Nothing in this Agreement shall constitute any acknowledgment or admission of
liability whatsoever by Neurocrine and/or Janssen nor is this Agreement to be
construed as an admission or suggestion of liability on the part of Neurocrine
and/or Janssen. At all times and for all purposes, this is a settlement of any
disputed claims intended to forever terminate any claims or continuing demands
which may be or may have been made between DPC and/or Neurocrine and/or Janssen,
or any of their respective representatives, successors, assigns, officers,
directors, shareholders, members, agents employees or insurers with respect to
the foregoing.
6.4 Remedies. The Parties agree that after the Effective Date, each of DPC,
Neurocrine and Janssen shall be permitted to enforce this Agreement with respect
to any duty or obligation each other have undertaken hereunder, but in no event
and under no circumstances will each of DPC, Neurocrine and Janssen be permitted
to assert, publicly allege, threaten to bring or bring any claim against each
other for any act, event or omission which occurred prior to the Effective Date
relating **********************************************************************
********************************************************************************
********************************************************************************
<PAGE>
********************************************************************************
********************************************************************************
********************************************************************************
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***************************************************.
ARTICLE VII **
CONFIDENTIALITY **
7.1 Confidentiality; Exceptions. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing, ** ----------------------------
the Parties agree that, for the time royalties are due and for five (5) years
thereafter, the receiving Party shall keep confidential and shall not publish or
otherwise disclose or use for any purpose other than as provided for in this
Agreement any Information and ** other confidential and proprietary information
and materials furnished to it by the other Party pursuant to this Agreement **
(collectively, "Confidential Information"), except to the extent that it can be
established by the receiving Party that such ** Confidential Information:
(a) was in the lawful knowledge and possession of the receiving Party prior to
the time it was disclosed to, or learned by, the receiving Party, or was
otherwise developed independently by the receiving Party, as evidenced by
written ** records kept in the ordinary course of business, or other
documentary proof of actual use by the receiving Party;
<PAGE>
33
(b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of
the receiving Party in breach of this Agreement; or
(d) was disclosed to the receiving Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the disclosing
Party not to disclose such information to others.
7.2 Authorized Disclosure. If a Party is required by law or regulation to make
any disclosure of the other Party's Confidential Information it will, except
where impracticable for necessary disclosures, for example in the event of
medical emergency, give reasonable advance notice to the other Parties of such
disclosure requirement and, except to the extent inappropriate in the case of
Patents, will use its reasonable efforts to secure confidential treatment of
such Confidential Information required to be disclosed.
7.3 Survival. This Article VII shall survive the termination or expiration of
this Agreement for a period of five (5) years.
7.4 Public Announcements. No Party shall originate any publicity, news release
or public announcements, written or oral, whether to the public or press,
stockholders or otherwise, relating to this Agreement, including its existence,
the subject matter to which it relates, performance under it or any of its
terms, to any amendment hereto or performances hereunder, other than those
announcements that are required by law to be made without the prior written
consent of the other Parties. Such announcements shall be brief and factual. If
a Party decides to make an announcement required by law, it will where
reasonable possible give the other Parties
<PAGE>
at least five (5) business days advance notice, of the text of the announcement
so that the other Parties will have an opportunity to comment upon the
announcement. To the extent that any Party reasonably requests that a disclosing
or announcing Party seek confidential treatment pursuant to Rule 406 of the
Securities Act of 1933 or Rule 24b-2 of the Securities Exchange Act of 1934 as
amended, as applicable (or any other applicable regulation relating to the
confidential treatment of information) of any information proposed to be
disclosed or announced, the disclosing or announcing Party will omit the
information from the disclosure or announcement unless in the opinion of the
disclosing Party's legal counsel such information is legally required to be
fully disclosed.
ARTICLE VIII
INTELLECTUAL PROPERTY
8.1 Ownership of Patents. Patents shall be owned according to the laws in effect
and agreements made by the Parties hereto. There is no provision herein
affecting or transferring the ownership of any Patent. 8.2 Patent Filings on
N-Compounds or N-Products. Neurocrine will cooperate with DPC to file divisional
applications worldwide, as necessary, to isolate those claims relating to
N-Compounds or N-Products and contained in Neurocrine N-Patents in separate
applications. In regard to such divided applications relating N-Compounds and
N-Products, DPC shall assume all control and responsibility for filing,
prosecuting and maintaining such Patents, including having the right to direct
or control all material actions relating to the prosecution or maintenance of
such Patents. DPC will determine the countries in which to file Patents relating
to N-
<PAGE>
Compounds and N-Products and will assume all Patent Costs relating to filing,
prosecuting and maintaining such Patents. The parties will cooperate with each
other with respect to any interference between subject matter in DPC's patents
covering subject matter that overlaps with the subject matter in the Neurocrine
N-Patents.
8.3 Patent Filings.
(a) Prosecution and Maintenance. Each Party shall prepare, file, prosecute,
maintain and own Janssen X-Patents, Neurocrine X-Patents, Neurocrine
N-Patents and DPC X-Patents to cover discoveries and inventions made solely
by its own employees or consultants and use reasonable efforts to file
initially all such applications in the United States, the European Patent
Office or the appropriate forum under the circumstances.
(b) Control. The Party who is responsible for filing a Janssen X-Patent,
Neurocrine X-Patent, or DPC X-Patent will be termed the "Filing Party" and,
unless specifically provided for otherwise, shall have the right to direct
or control all material actions relating to the prosecution or maintenance
of such Patent and shall bear all Patent Costs associated therewith. The
Filing Party shall keep the other Parties apprised of the status of each
Janssen X-Patent, Neurocrine X-Patent, or DPC X-Patent and shall seek the
advice of the other Parties with respect to patent strategy and drafting
applications and shall give reasonable consideration to any suggestions or
recommendations of the other Parties concerning the preparation, filing,
prosecution, maintenance and defense thereof, in so far as such status and
advice relates to X-Compounds, or X-Products. The Parties shall cooperate
reasonably in the prosecution of all Janssen X-Patents, Neurocrine
X-Patents, or DPC X-Patents and shall share all material information
relating thereto, including all material communications from patent
offices, promptly after receipt of such information, in so far as such
information relates to X-Compounds, or X-Products.
<PAGE>
34
[***] CONFIDENTIAL TREATMENT REQUESTED
*** **************************************************************************
**************************************************************************
**************************************************************************
**************************************************************************
***********************************.
(d) Breadth of Filing. Unless specifically provided for otherwise, the
determination of the countries in which to file Janssen X-Patents,
Neurocrine X-Patents, and DPC X-Patents shall be made by the Filing Party.
In the case of applications *********** and ***********, equivalent Patents
covering X-Compounds and X-Products must be filed in at
least***********************************************************
************************************************. The country list of this
sub-Paragraph may be reduced as to one application or the other where there
is a good faith discussion and agreement among the Parties that such filing
would not serve the interest of the Parties.
(e) Discontinuation. If, during the term of this Agreement, the Filing Party
intends to allow any Janssen X-Patent, Neurocrine X-Patent, or DPC X-Patent
to lapse or go abandoned, the Filing Party shall, whenever practicable,
notify the non-filing Parties of such intention at least sixty (60) days
prior to the date upon which such Patent shall lapse or become abandoned,
and the non-filing Parties shall thereupon have the right, but not the
obligation, to assume responsibility for the prosecution, maintenance and
defense thereof and all expenses related thereto. The Filing Party will
receive a non-exclusive, royalty-free license under such Patent in the
countries concerned.
<PAGE>
41
8.4 Infringement by Third Parties. If any Janssen X-Patent, Neurocrine X-Patent,
and/or DPC X-Patent is infringed by a Third Party in any country in connection
with the manufacture, use and sale of a X-Product in such country, the Party to
this Agreement first having knowledge of such infringement shall promptly notify
the others in writing. The notice shall set forth the known facts of that
infringement in reasonable detail. The Party owning such Patent shall have the
primary right, but not the obligation, to institute, prosecute, and control any
action or proceeding with respect to such infringement, by counsel of its own
choice, and at its own expense. If the owning Party fails to bring an action or
proceeding within a period of one hundred eighty (180) days after a request by
the exclusively licensed Party of the infringed subject matter to do so, the
exclusively licensed Party of the infringed subject matter shall have the right
to bring and control any such action by counsel of its own choice, and at its
own expense. The Party bringing suit under this Paragraph shall bear all costs
and expenses of the suit and shall retain any damages or other monetary awards
recovered. A settlement or consent judgment or other voluntary final disposition
of a suit brought by such exclusively licensed Party under this Paragraph may be
entered into without the consent of the owning Party; provided that such
settlement, consent judgment or other disposition does not admit the invalidity
or unenforceability of any Patent; and provided further, that any rights to
continue the infringing activity in such settlement, consent judgment or other
disposition shall be limited to the Product or activity that was the subject of
the suit. A settlement or consent judgment or other voluntary final disposition
of a suit brought by the owning Party under this Paragraph may be entered into
only with the consent of such exclusively licensed Party. 8.5 Defense and
Settlement of Third Party Claims. If a Third Party asserts that a patent,
trademark or other intangible right owned by it is infringed by the manufacture,
use or sale of
<PAGE>
any Product, the Party responsible for the payment of royalties on such Product
pursuant to Article IV above (the "Defending Party') will be solely responsible
for defending against any such assertions at its cost and expense. The Defending
Party shall have the right to defend and settle against such charge of
infringement
8.6 Patent Assignment. No Party may assign its rights under any Janssen
X-Patent, Neurocrine X-Patent, Neurocrine N-Patent or DPC X-Patent, except with
the prior written consent of the Party(ies) obligated to pay royalties on
Products covered by such Patent under Article IV above; provided, however, that
a Party may assign such rights without consent to permitted assignee under this
Agreement in connection with a merger or similar reorganization or the sale of
all or substantially all of its assets.
8.7 Notices Relating to the Act. The Filing Party with respect to any Janssen
X-Patent, Neurocrine X-Patent, DPC X-Patent shall notify the Party(ies)
obligated to pay royalties on Products covered by such Patent under Article IV
above, of communications as to which the Filing Party receives (as patent owner)
a notice pursuant to the Drug Price Competition and Patent Term Restoration Act
of 1984 (hereinafter the "Act"), including but not necessarily limited to
notices pursuant to ss.ss.101 and 103 of the Act from persons who have filed an
abbreviated NDA ("ANDA") or a "paper" NDA.
8.8 Authorization Relating to Patent Term Extension. The Filing Party of
any Janssen X-Patent, Neurocrine X-Patent, or DPC X-Patent hereby authorizes the
Party(ies) obligated to pay royalties on Products covered by such Patent under
Article IV above, to (a) provide in any NDA a list of patents which includes the
Filing Party Patents that relate to such Product and such other information as
the Party believes is appropriate; (b) commence suit for infringement of the
Patents under ss. 271(e) (2) of Title 35 of the United States Code; and (c)
exercise any rights that
<PAGE>
may be exercisable by the Filing Party as Patent owner under the Act, including
without limitation, applying for an extension of the term of any patent licensed
to such Party hereunder. In the event that applicable law in any country
provides for the extension of the term of any patent included among the Filing
Party's Patents, such as under the U.S. Drug Price Competition and Patent Term
Restoration Act of 1984, the Supplementary Certificate of Protection of the
Member States of the European Union and other similar measures in any other
country, the Filing Party shall apply for and use its reasonable efforts to
obtain such an extension or, should the law require the Party(ies) obligated to
pay royalties to so apply, the Filing Party hereby gives permission to such
Party hereunder to do so. The Party(ies) obligated to pay royalties hereunder
and the Filing Party agree to cooperate with one another in obtaining such
extension. The Filing Party agrees to cooperate with the Party(ies) obligated to
pay royalties or its Sublicensee, as applicable, in the exercise of the
authorization granted herein and will execute such documents and take such
additional action as such Party hereunder may reasonably request in connection
therewith, including, if necessary, permitting itself to be joined as a Party in
any suit for infringement brought by such Party licensed hereunder. DPC agrees
that Janssen and Neurocrine will in all cases be considered as the Party
obligated to pay royalties under this Paragraph for any Product for any DPC
X-Patent.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. Each Party (the "Indemnifying Party") shall indemnify,
defend and hold the other Parties (each an "Indemnified Party") harmless from
and against any and all liabilities, claims, damages, costs, expenses or money
judgments ("Losses") incurred by or
<PAGE>
rendered against the Indemnified Party and its Affiliates and Sublicensees
incurred in the defense or settlement of a Third Party lawsuit or in a
satisfaction of a Third Party judgment arising out of any injuries to person
and/or damage to property resulting from the research, development and
commercialization of Products by the Indemnifying Party, provided however, an
Indemnified Party shall not be entitled to indemnification hereunder to the
extent any Loss is attributable to the Indemnified Party's negligence. 9.2
Procedure. In the event that an Indemnified Party is seeking indemnification
under Paragraph 9.1, it shall inform Indemnifying Party of a claim as soon as
reasonably practicable after it receives notice of the claim, shall permit the
Indemnifying Party to assume direction and control of the defense of the claim
(including the right to settle the claim solely for monetary consideration), and
shall cooperate as requested (at the expense of the Indemnifying Party in the
defense of the claim.
ARTICLE X
TERM AND TERMINATION
10.1. Term. This Agreement shall commence on the Effective Date and shall remain
in effect on a Product-by-Product basis until the expiration of the obligation
to pay royalties on the part of any Party for such Product.
10.2 Material Breach.
(a) In the event that either Party commits a breach of any material term
or condition of this Agreement and that Party fails to remedy that
breach within sixty (60) days after receipt of written notice of that
breach from the other Party, the Party giving notice may, at its
option, begin arbitration proceedings pursuant to Paragraph 11.2 and
seek whatever relief he is entitled to under the law.
<PAGE>
(b) The Parties agree that a breach, including a material breach, by one
Party under this Agreement in its obligations to a second Party will
not effect the rights and obligations of the third Party hereunder.
Specifically, a breach by Janssen of its obligations owed to DPC will
not disturb the rights of Neurocrine, including the licenses held by
Neurocrine, and a breach by Neurocrine of its obligations owed to DPC
will not disturb the rights of Janssen, including the licenses held by
Janssen.
(c) A material breach by Janssen under this Agreement which results in a
loss of rights by Janssen which effects Janssen's ability to market
X-Products will be considered a material breach by Janssen under the
agreement between Janssen and Neurocrine effective January 1, 1995.
10.3 Bankruptcy. Each Party may, in addition to any other remedies
available to it by law or in equity, exercise the rights set forth
below by written notice to any other Party (the "Insolvent Party"), in
the event the Insolvent Party shall have become insolvent or bankrupt,
or shall have made an assignment for the benefit of its creditors, or
there shall have been appointed a trustee or receiver of the Insolvent
Party or for all or a substantial part of its property, or any case or
proceeding shall have been commenced or other action taken by or
against the Insolvent Party in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up arrangement, composition or
readjustment of its debts or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect, or there shall have been
issued a warrant of attachment, execution, distraint or similar
process against any substantial part of the property of the Insolvent
Party, and any such event shall have continued for sixty (60) days
undismissed, unbonded and undischarged. All rights and licenses
granted
<PAGE>
under or pursuant to this Agreement are, and shall otherwise be deemed
to be, for purposes of Section 365 (n) of the U.S. Bankruptcy Code,
licenses of rights to "intellectual property" as defined under Section
101 of the U.S. Bankruptcy Code. The Parties agree that the Parties as
licensees of such rights under this Agreement, shall retain and may
fully exercise all of their rights and elections under the U.S.
Bankruptcy Code. The Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against any Party under
the U.S. Bankruptcy Code, the other Parties shall be entitled to a
complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual
property, and same, if not already in the their possession, shall be
promptly delivered to them (i) upon any such commencement of a
bankruptcy proceeding upon its written request therefor, unless the
Party subject to such proceeding elects to continue to perform all of
their obligations under this Agreement or (ii) if not delivered under
(i) above, upon the rejection of this Agreement by or on behalf of the
Party subject to such proceeding upon written request therefor by the
other Party. Upon the insolvency of any Party hereto, the other
Parties shall have the option to (i) terminate this Agreement or (ii)
keep this Agreement in full force and effect and retain all licenses
granted hereunder subject to the payment of all milestones and
royalties set forth above. The Parties expressly agree that a Party
reserves a security interest in any amounts owed to the Insolvent
Party and maintains a right of setoff against amounts owed to such
Party by the Insolvent Party or the value of damages caused by any
failure to perform by the Insolvent Party. 10.4 Survival. Termination,
relinquishment or expiration of the Agreement for any reason shall be
without prejudice to any obligations which shall have accrued prior to
such termination, relinquishment or expiration, including, without
limitation, the any payment obligations and any
<PAGE>
and all damages arising from any breach hereunder. Such termination,
relinquishment or expiration shall not relieve any Party from
obligations that are expressly indicated to survive termination or
expiration of the Agreement.
ARTICLE XI
DISPUTE RESOLUTION
11.1 Dispute Resolution and Arbitration. In the case of any disputes between the
Parties arising from this Agreement, and in case this Agreement does not provide
a solution for how to resolve such disputes, the Parties shall discuss and
negotiate in good faith a solution acceptable to both Parties and in the spirit
of this Agreement. If after good faith discussions, the Parties fail to reach an
amicable agreement, then either Party may upon written notice to the other
submit to binding arbitration pursuant to Section 11.2. 11.2 Arbitration. Any
dispute, controversy or claim arising out of or in connection with or relating
to this Agreement, or the interpretation, application, breach, termination or
validity thereof, including any claim of inducement by fraud or otherwise not
settled by the procedures set forth in Paragraph 11.1 above or the breach or
alleged breach of a material provision of this Agreement shall be adjudicated by
arbitration in accordance with the Arbitration Proceedings as set forth in
Exhibit A attached hereto.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY.
12.1 Representations and Warranties. Each of the Parties hereby represents and
warrants and covenants as follows: (a)
<PAGE>
42
[***] CONFIDENTIAL TREATMENT REQUESTED
(a) Binding Agreement. This Agreement is a legal and valid obligation
binding upon such Party and enforceable in accordance with its terms
except as (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of
creditor's rights and (ii) equitable principles of general
applicability.
(b) Due Authorization. Each party is duly authorized and validly existing
under the laws of the state of Delaware and has full corporate power
and authority to enter into this Agreement and carry out the
provisions hereof.
(c) No Conflict. 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.
(d) Third Party Rights. Each Party has not, and during the term of the
Agreement will not, grant any right to any Third Party relating to its
respective technology in the Field which would conflict with the
rights granted to the other Party hereunder.
(e) Patents. Each Party owns or otherwise controls all of the rights,
title and interest in and to Patents licensed by it hereunder.
12.2 Patents Warranties. To its reasonable best knowledge as of the Effective
Date, each Party represents and warrants that it is not aware of any Third Party
right, other than *************************************************************;
which would interfere with the exercise by the Parties of the rights granted
hereunder.
<PAGE>
53
12.3 Exclusivity. Unless specifically stated herein or provided for elsewhere,
the Parties are free to compete in any market or therapeutic area, including the
Field, without restriction and make no promises of exclusivity.
ARTICLE XIII
MISCELLANEOUS
13.1 Relationship of Parties. For the purposes of this Agreement, each Party is
an independent contractor and not an agent or employee of any other Party. No
Party shall have authority to make any statements, representations, or
commitments of any kind, or to take any action which shall be binding on any
other Party, except as may be explicitly provided for herein or authorized in
writing.
13.2 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall be
deemed to be one and the same instrument.
13.3 Headings. All headings in this Agreement are for convenience only and shall
not affect the meaning of any provision hereof. 13.4 Binding Effect. This
Agreement shall inure to the benefit of and be binding upon the Parties and
their respective lawful successors and assigns. 13.5 Assignment. No party may
assign this Agreement without the prior written consent of the other Parties,
except that a Party may assign this Agreement to an Affiliate or to a successor
in connection with the merger, consolidation, or sale of all or substantially
all of its assets or that portion of its business pertaining to the subject
matter of this Agreement.
<PAGE>
13.6 Amendment and Waiver. This Agreement may be amended, supplemented, or
otherwise modified at any time, but only by means of a written instrument signed
by all of the Parties. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.
13.7 Governing Law. This Agreement and the legal relations among the parties
shall be governed by and construed in accordance with the laws of the State of
Delaware, USA, irrespective of any choice of laws or conflict of laws
principles.
13.8 Severability. In the event that any provision of this Agreement shall, for
any reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid or unenforceable provision
had not been included herein.
13.9 Entire Agreement. This Agreement constitutes the entire agreement among the
Parties with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous oral and prior written agreements and understandings.
13.10 Advice of Counsel. The Parties have each consulted counsel of their choice
regarding this Agreement, and each acknowledges and agrees that this Agreement
shall not be deemed to have been drafted by one party or another and will be
construed accordingly.
13.11 Consents Not Unreasonably Withheld. Whenever provision is made in this
Agreement for a Party to secure the consent or approval of any other, that
consent or approval shall not unreasonably be withheld, and whenever in this
Agreement provision is made for a Party to object to or disapprove a matter,
such objection or disapproval shall not unreasonably be exercised.
<PAGE>
13.12 Retained Rights. Nothing in this Agreement shall limit in any respect the
right of any Party to conduct research and development with respect to and
market products outside the Field using such Party's know-how.
13.13 Force Majeure. No Party shall lose any rights hereunder or be liable to
any 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. Notwithstanding the
foregoing, this Section 13.13 shall not operate to relieve a Party from
performance of any obligation for more than ninety (90) days.
13.14 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.
13.15 No Trademark Rights. Except as otherwise provided herein, no right,
express or implied, is granted by the Agreement to use in any manner the name of
any Party, or any other trade name or trademark of the any Party or its
Affiliates in connection with the performance of the Agreement.
13.16 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 addresses for a Party as shall be
specified
<PAGE>
by like notice; provided, that notices of a change of address shall be effective
only upon receipt thereof).
If to DPC,
addressed to: Vice-President
Product Planning & Acquisition
DuPont Pharmaceuticals Company
974 Centre Road
Chestnut Run Plaza, Walnut Run
Wilmington, DE 19805
Phone: (302) 992-4545
Facsimile: (302) 992-3040
With a copy to: Patent Department
Chief Intellectual Property Counsel
DuPont Pharmaceuticals Company
974 Centre Road
Chestnut Run Plaza, Walnut Run
Wilmington, DE 19805
Facsimile: (302) 992-3999
If to Janssen:
addressed to: President, JRF
Janssen Pharmaceutica N. V.
Turnhoutseweg 30
2340 Beerse, Belgium
Phone: (32 +14) 602111
Facsimile: (32+14) 602841
With a copy to: Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Facsimile: 732-524-2788
If to Neurocrine:
<PAGE>
addressed to: President & CEO
Neurocrine Biosciences Inc.
10555 Science Center Drive
San Diego, CA 92121
Phone: 858-658-7600
Facsimile: 858-658-7605
With a copy to: General Counsel
Each of the Parties consent to the personal jurisdiction of the U.S. Federal
Courts and agree to accept any legal process served upon such Party at the
addresses specified above for such Party.
13.17 Waiver. Except as specifically provided for herein, the waiver from time
to time by any Party of any of its rights or its 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.
13.18 Compliance with Laws. The Parties shall comply with all applicable laws,
rules, regulations and orders of the United States and applicable European
countries and supra-governmental organizations and all jurisdictions and any
agency or court thereof in connection with this Agreement and the transactions
contemplated thereby.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
........JANSSEN PHARMACEUTICA, N.V.
........By:....../s/ Dr. Alan Dunton
.................President
NEUROCRINE BIOSCIENCES, INC.
........By:....../s/ Gary Lyons
.................President
DUPONT PHARMACEUTICALS COMPANY.
........By: ...../s/ Kurt M. Landgraf
.................Kurt M. Landgraf
.................Executive Vice-President &
Chief Operating Officer, DuPont
<PAGE>
Exhibit A
Arbitration Proceedings
1.1 (a) Any dispute, controversy or claim arising out of or in
connection with or relating to this Agreement, or the
interpretation, application, breach, termination or validity
thereof, including any claim of inducement by fraud or
otherwise, shall, before submission to arbitration, first be
mediated through non-binding mediation in accordance with
the Model Procedures for the Mediation of Business Disputes
promulgated by the Center for Public Resources ("CPR") then
in effect, except where those rules conflict with these
provisions, in which case these provisions control. The
mediation shall be conducted in Philadelphia, PA and shall
be attended by a senior executive with authority to resolve
the dispute from each of the operating companies that are
Parties.
(b) The mediator shall be an attorney specializing in business
litigation who has at least 15 years of experience as a lawyer
with a law firm of over 25 lawyers or was a judge of a court
of general jurisdiction and who shall be appointed from the
list of neutrals maintained by CPR.
(c) The Parties shall promptly confer in an effort to select a
mediator by mutual agreement. In the absence of such an
agreement, the mediator shall be selected from a list
generated by CPR with each Party having the right to exercise
challenges for cause and two peremptory challenges within
three business days of receiving the CPR list.
(d) The mediator shall confer with the Parties to design
procedures to conclude the mediation within no more than
forty-five (45) days after initiation. Unless agreed upon by
the Parties in writing, under no circumstances shall the
commencement of arbitration under Section 1.2 hereof be
delayed more than forty-five (45) days by the mediation
process specified herein.
(e) Each Party agrees to toll all applicable statutes of
limitation during the mediation process and not to use the
period or pendency of the mediation to disadvantage the other
Party procedurally or otherwise. All negotiations pursuant to
this clause will be confidential and shall be treated as
compromise and settlement negotiations for the purposes of the
Federal Rules of Evidence and all other evidentiary purposes.
(f) Each Party has the right to pursue provisional relief from any
court, such as attachment, preliminary injunction, replevin,
etc., to avoid irreparable harm, maintain the status quo, or
preserve the subject matter of the arbitration, even though
mediation has not been commenced or completed.
1.2 (a) Following the mediation procedures set forth in Exhibit A
Section 1.1, any dispute, controversy or claim arising out of
or in connection with or relating to this Agreement, or the
interpretation, application, breach, termination or validity
thereof, including any claim of inducement by fraud or
otherwise, will be submitted for resolution to arbitration
pursuant to the commercial arbitration rules then pertaining
of the Center for Public Resources ("CPR"), except where those
rules conflict with these provisions, in which case these
provisions control. The arbitration will be held in
Philadelphia, PA.
(b) The panel shall consist of three arbitrators chosen from the
CPR Panels of Distinguished Neutrals each of whom is a lawyer
specializing in business litigation with at least 15 years
experience with a law firm of over 25 lawyers or was a judge
of a court of general jurisdiction.
(c) The Parties agree to cooperate (1) to obtain selection of the
arbitrators within thirty (30) days of initiation of the
arbitration, (2) to meet with the arbitrators within thirty
(30) days of selection and (3) to agree at that meeting or
before upon procedures for discovery and as to the conduct of
the hearing which will result in the hearing being concluded
within no more than nine (9) months after selection of the
arbitrators and in the award being rendered within sixty (60)
days of the conclusion of the hearings, or of any post-hearing
briefing, which briefing will be completed by both Parties
with twenty (20) days after the conclusion of the hearings. In
the event no such agreement is reached, the CPR will select
arbitrators, allowing appropriate strikes for reasons of
conflict or other cause and three peremptory challenges for
each side. The arbitrators shall set a date for the hearing,
commit to the rendering of the award within sixty (60) days of
the conclusion of the evidence at the hearing, or of any
post-hearing briefing (which briefing will be completed by
both sides in no more than twenty (20) days after the
conclusion of the hearings), and provide for discovery
according to these time limits, giving recognition to the
understanding of the Parties hereto that they contemplate
reasonable discovery, including document demands and
depositions, but that such discovery be limited so that the
time limits specified herein may be met without undue
difficulty. In no event will the arbitrators allow either side
to obtain more than a total of forty (40) hours of deposition
testimony from all witnesses, including both fact and expert
witnesses. In the event multiple hearing days are required,
they will be scheduled consecutively to the greatest extent
possible.
(d) The arbitrators shall render their award following the
substantive law of Delaware. The arbitrators shall render an
opinion setting forth findings of fact and conclusions of law
with the reasons therefor stated. A transcript of the evidence
adduced at the hearing shall be made and shall, upon request,
be made available to either Party.
(e) To the extent possible, the arbitration hearings and award
will be maintained in confidence.
(f) Any United States District Court having jurisdiction of the
matter may enter judgment upon any award. In the event the
panel's award exceeds Five Million Dollars (5,000,000) in
monetary damages or includes or consists of equitable relief,
then the court shall vacate, modify or correct any award where
the arbitrators' findings of fact are clearly erroneous,
and/or where the arbitrators' conclusions of law are
erroneous; in other words, it will undertake the same review
as if it were a federal appellate court reviewing a district
court's findings of fact and conclusions of law rendered after
a bench trial. An award for less than Five Million Dollars
(5,000,000) in damages and not including equitable relief may
be vacated, modified or corrected only upon the grounds
specified in the Federal Arbitration Act. The Parties consent
to the jurisdiction of the District Court for the enforcement
of these provisions, the entry of judgment on any award, and
the vacatur, modification and correction of any award as above
specified.
(g) Each Party has the right before or during the arbitration to
seek and obtain from the appropriate court provisional
remedies such as attachment, preliminary injunction, replevin,
etc. to avoid irreparable harm, maintain the status quo, or
preserve the subject matter of the arbitration.
(h) Each Party hereto waives its right to trial of any issue by
jury.
(i) Each Party hereto waives any claim to punitive, exemplary and
consequential damages from the other.
[***] CONFIDENTIAL TREATMENT REQUESTED
REDACTED FOR CONFIDENTIALITY
AMENDMENT NUMBER ONE
TO AGREEMENT BETWEEN
NEUROCRINE BIOSCIENCES, INC. AND
JANSSEN PHARMACEUTICA, N.V.
AMENDMENT NUMBER ONE dated September 24, 1999 (this "Amendment") to the
Agreement effective as of January 1, 1995 (the "Original Agreement") by and
between Neurocrine Biosciences, Inc., a Delaware corporation with principle
offices located at 10555 Science Center Drive, San Diego, California 92121
("Neurocrine") and Janssen Pharmaceutica, N.V., a corporation organized under
the laws of Belgium with principle offices located at Turnhoutseweg 30, 2340
Beerse, Belgium ("Janssen").
WHEREAS, pursuant to the Original Agreement, Janssen and Neurocrine have
conducted a collaborative research program in the field of
corticotropin-releasing factor (CRF) Receptor Antagonists (as defined below) and
have developed certain technology in this field.
WHEREAS, the Research (as defined below) conducted by Neurocrine and Janssen
pursuant to the Original Agreement has led to filing of patents and the
identification of certain CRF Receptor Antagonist pre-clinical and clinical
development candidate compounds.
WHEREAS, Research Term (as defined in the Original Agreement) expired on January
1, 1998 and Janssen and Neurocrine now wish to conduct an additional program of
collaborative research (the "Back-up Program") designed to identify new CRF
Receptor Antagonist which will be subject to the terms of the Original Agreement
as amended hereby.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
Defined Terms. Capitalized terms used herein that are not defined herein shall
have the meanings assigned to such terms in the Original Agreement.
1.1 "Amendment Effective Date" shall mean April 15, 1999.
1.2 "Back-up PCC" shall mean any composition of matter that (or, in the case of
prodrugs, an active ----------- metabolite of which):
(a) demonstrates CRF Receptor Antagonist activity
****************************** ****************; and
<PAGE>
(b) demonstrates CRF Receptor Antagonist activity at a dosage of
***************************************************************************
**************************************************************************,
provided that at the request of Neurocrine, such activity is confirmed in
the ******** by repeating the experiment; and
(c) is within the scope of the Back-up Program Patents; and
(d) is discovered, identified, synthesized, developed or acquired by or on
behalf of Neurocrine or Janssen within the scope and during the Back-up
Program Term and is recognized by either Party to meet the conditions of
(a) and (b) hereof, prior to the first anniversary of the end of the
Back-up Program Term.
1. 3 "Back-up Program" shall mean all work performed by the Parties or on their
behalf directed towards or in connection with the discovery, identification and
synthesis of Back-up PCCs during the Back-up Program Term, but shall not include
work performed by Janssen on the PCCs of the Original Agreement without the
direct cooperation or assistance of Neurocrine.
1. 4 "Back-up Program Patents" shall mean the Patents ****************
************ which consist of **********************************************
***************** ****************** and the Neurocrine Back-up Patents.
1.5 "Back-up Program Term" shall mean the term beginning on April 15, 1999 and
ending February 15, 2001 or such earlier date as Janssen shall terminate the
Back-up Program in accordance with section 2a.13.
1.6 "Neurocrine Back-up Patents" shall mean *************************** filed by
Neurocrine, excluding any genus thereof outlicensed to a Third Party with the
knowledge of Janssen.
1.7 "Preliminary Back-up Candidate" shall mean a PCC, including Back-up PCC,
that meets the following criteria:
(i) demonstrates ************************* in Exhibit B; and
(ii) demonstrates the ******************** in Exhibit B; and
(iii) demonstrates no **************** as set forth in Exhibit B; and
(iv) falls within the scope of the claims of a Program Patent, including
Back-up Program Patent, or is licensed to Janssen and Neurocrine by
DuPont Pharmaceuticals Company under the executed Settlement Proposal,
and on the basis of review of published applications appears to be free
of published Patent claims of Third Parties.
1.8 "Settlement Proposal" shall mean the settlement proposal among Janssen,
Neurocrine and a Third Party (DuPont Pharmaceuticals Company),
****************************.
<PAGE>
4
ARTICLE 2
AMENDMENT OF CERTAIN DEFINITIONS.
2.1 The definition of Collaboration Tangible Research Product is hereby revised
to read as set forth below: ---------------------------------------
"Collaboration Tangible Research Product" means any composition of
matter or other tangible asset, including but not limited to compounds,
natural products or fermentation broths and/or extracts or factions
thereof, immunoglobulin molecules, including active fragments thereof
and monoclonal antibodies, cells and cell lines, DNA and RNA molecules,
plasmids, proteins, peptides, receptors, receptor fragments, research
tools, materials for use in screening methods and techniques made or
synthesized by either Party in the course of the Research or Back-up
Program, or acquired by Neurocrine in the course of the Research or
Back-up Program with funds provided by Janssen under 2.5(c) or
2a.7(iii) as mutually agreed.
2.2 The definition of Non-Collaboration Tangible Research Product is hereby
revised to read as set forth below:
"Non-Collaboration Tangible Research Product" means any composition of
matter or other tangible asset, including but not limited to compounds,
natural products or fermentation broths and/or extracts or factions
thereof, immunoglobulin molecules, including active fragments thereof
and monoclonal antibodies, cells and cell lines, DNA and RNA molecules,
plasmids, proteins, peptides, receptors, receptor fragments, research
tools, materials for use in screening methods and techniques made or
synthesized by either Party outside of the Research or Back-up Program
before, during or after the Research Term and Back-up Program Term and
actually utilized by such Party in conducting the Research or Back-up
Program, respectively.
2.3 The definition of Primary Collaboration Compounds or PCC is hereby amended
so that subparagraphs (c)(i) and (c)(ii) shall read as set forth below:
(i) is (A) discovered, identified, synthesized or
acquired by or on behalf of Neurocrine or Janssen
prior to the end of the Research Term and is
recognized by either Party to meet the conditions of
(a) and (b) hereof, prior to the first anniversary of
the end of the Research Term or (B) is a Back-up PCC;
or
(ii) is (A) first discovered, identified, synthesized or
acquired by or on behalf of Janssen during the period
beginning with the end of the Research Term and
ending on the Amendment Effective Date and recognized
by Janssen to meet the condition of (b) hereof prior
to the third anniversary of the end of the Research
Term, or (B) first discovered, identified,
synthesized or developed by Janssen or by a Third
Party directly or indirectly on behalf of Janssen
during the period beginning on the Amendment
Effective Date and ending on the third anniversary of
the end of the Research Term and
<PAGE>
recognized by Janssen to meet the condition of (b)
hereof during such period if the discovery,
identification, synthesis or development (whether by
Janssen or a Third Party) would, but for any licenses
granted hereunder or pursuant to the Settlement
Proposal, infringe any Neurocrine Patent; or
2.4 The definition of Program Patents is hereby amended to read as set forth
below:
"Program Patents" shall mean on a genus by genus basis, the genuses in
any Patent (or pending application for a Patent) the subject of which
is an invention that (i) was conceived (in a writing provided to the
other Party) or reduced to practice by Janssen or Neurocrine in the
course of the Research or within the scope and during the term of the
Back-up Program and (ii) that comprises a PCC or SCC or a formulation,
method of use or method of manufacture thereof.
ARTICLE 3
OTHER AMENDMENTS
3.1 Amendment of Paragraph 9.1. Paragraph 9.1 of the Original Agreement is
hereby amended so that the second sentence shall read as set forth below:
Title to all other Patents claiming inventions made solely by an
employee of a Party in the course of performing Research or the Back-up
Program shall be owned by such Party.
3.2 Amendment of Paragraph 9.2. Paragraph 9.2 of the Original Agreement is
hereby amended so that the first sentence shall read as set forth below:
Each Party shall provide to the other any invention disclosure
submitted in the normal course and disclosing an invention arising in
the course of the Research or Back-up Program.
3.3 Amendment of Paragraph 10.3. Paragraph 10.3 of the Original Agreement
is hereby amended to read as set forth below:
10.3 Exclusivity/ Non-Competition. During the Research Term and
thereafter until the Amendment Effective Date, Neurocrine shall not
conduct, have conducted or fund any research, development, regulatory,
manufacturing or commercialization activity directed to the discovery,
development or commercialization of CRF Antagonists for use in anxiety,
depression or drug abuse except as permitted pursuant to this
Agreement.
3.4 Amendment of Paragraph 11.6. The first sentence of Paragraph 11.6 of the
Original Agreement is hereby revised to read as set forth below:
11.6 Termination for Convenience. Janssen may terminate this
Agreement for any reason without cause at any time with further
obligations of payment on the part of Janssen being limited to amounts
expected by Neurocrine under Paragraph 2.5 (including
<PAGE>
without limitation 2.5(b)), Paragraph 6.1 above and paragraph 2a.7,
which Neurocrine would have received if the Agreement had not been
terminated under this Paragraph 11.6.
3.5 Amendment of Paragraph 15.8. Paragraph 15.8 of the Original Agreement is
hereby amended to read as set forth below.
----------------------------
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 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 Neurocrine,
addressed to: Neurocrine Biosciences, Inc.
10555 Science Center Drive
San Diego, CA 92121
Attention: President & CEO
Telephone: 858-658-7600
Telecopy: 858-658-7605
If to Janssen,
addressed to: Janssen Pharmaceutica,N.V.
Turnhoutseweg 30
2340 Beerse, Belgium
Attention: President, JRF
Telephone: (32 + 14) 60-21-11
Telecopy: (32 + 14) 60-28-41
With a copy to: Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Each of the Parties consent to the personal jurisdiction of the U.S.
Federal Courts and agree to accept any legal process served upon such
Party at the addresses specified above for such Party.
ARTICLE 4
ADDITION OF NEW ARTICLE II A
The Original Agreement is hereby amended by the addition of the following new
article covering the terms and conditions under which the parties have agreed to
conduct the Back-up Program.
<PAGE>
13
[***] CONFIDENTIAL TREATMENT REQUESTED
ARTICLE II A
BACK-UP PROGRAM
2a.1 Back-up Program. Janssen and Neurocrine agree to conduct a
collaborative Back-up Program under the terms and conditions set forth
in this Article II A.
(i) Scope. The scope of the Back-up Program will be limited to
identification, characterization and pre-clinical development
of CRF Antagonist compounds within the scope of the Back-up
Program Patents. The Parties acknowledge that a number of CRF
Antagonist Compounds identified in the scope of the Research
have been designated PCCs. It is anticipated that the Back-up
Program will focus on the discovery of new PCCs but to the
extent the JRC elects to conduct further characterization and
development of PCCs identified in the course of the Research
as part of the Back-up Program, the characterization and
development of such PCCs shall be subject to the terms of this
Article II A.
(ii) Goal. It is the goal of the Back-up Program to********
*************************************************************
**************************************************************
********************************.
The Parties will in good faith use commercially reasonable
efforts to meet the goals of the Back-up Program. For
clarification, there is no obligation on the part of Janssen
to file an IND or any equivalent thereof on any PCC, including
Back-up PCC, imposed by the operation of this Amendment except
as provided in 2a.8(ii).
2a.2 The JRC.
(i) Formation. Janssen and Neurocrine will establish a Joint
Research and Development Committee ("JRC") to oversee, review
and co-ordinate the Back-up Program and the implementation
thereof. The JRC will consist of at least three (3) members
from each of Janssen and Neurocrine (with Janssen and
Neurocrine having equal representation).
(ii) Decisions. Each Party shall have one consolidated vote on
any issue and decisions of the JRC shall be by unanimous vote.
If the JRC fails to resolve any matter before it for
consideration, the matter shall be resolved pursuant to the
dispute resolution provisions of Paragraph 13.1.
(iii) FTE use. The JRC will use reasonable efforts to allocate
work under the Plan to supply Neurocrine with Neurocrine's
expected utilization rate of approximately ******/calendar
quarter. The JRC may provide that FTE utilization be moved
from one quarter to another where such is in the best interest
of the Plan and convenient to Neurocrine.
(iv) Subcommittees. From time to time the JRC may establish
subcommittees to oversee particular projects or activities
(such as separate committees to manage
<PAGE>
the research phase and pre-clinical phase of the Back-up
Program) and such committees will be constituted as the JRC
agrees.
(v) Meetings. The JRC will meet regularly according to a
mutually agreed schedule.
2a.3 Research Plan.
(i) Agreement on Research Plan. Promptly after the Amendment
Effective Date, the Parties shall meet and mutually agree on
a plan for the conduct of the Back-up Program (the "Plan").
The Plan will outline the Back-up Program objectives and
timeline and describe the activities to be conducted by each
Party. The JRC shall review the Plan on an ongoing basis and
approve changes thereto as the JRC deems appropriate. The
Plan shall be consistent with this paragraph 2a.3 and
consistent with each Party's available resources. An initial
Plan is outlined in Exhibit B.
(ii) Efforts. The Plan will include general responsibilities of
Neurocrine and Janssen FTEs devoted to the Back-up Program.
Neurocrine will commit to devote approximately
*************** FTEs in total to the conduct of the Back-up
Program. Janssen will play an active role in both the
research phase and pre-clinical phase of the Back-up Program
and commit resources accordingly.
(iii) Responsibilities.
(A) Neurocrine. The Parties have agreed that Neurocrine
will be responsible for the initial identification,
synthesis and pharmacological and toxicological
profiling of PCCs, including Back-up PCCs, during
the Back-up Program. This will include medicinal
chemistry, synthesis scale up, in vitro CRF
receptor studies, in vivo pharmacological studies
related to depression, anxiety and substance abuse,
pharmacokinetics, non-GLP toxicology and
teratogenicity screening.
(B) Janssen. The Parties have agreed that Janssen will
be responsible for testing of PCCs, including
Back-up PCCs, which are suitably scaled up in the
***************************************************
and for GLP toxicology. Subject to the obligations
imposed by sub-Paragraph 2a.1(ii) and regardless of
2a.2(ii), Janssen shall have final say of which
compounds are scaled up for further testing at any
point where scale up from the initial synthesis is
necessary. Any decision on which Janssen has final
say will be consistent with the objective of the
Plan and with timelines contained therein.
2a.4 Identification of Preliminary Back-up Candidate. The determination
of whether a Preliminary Back-up Candidate has been identified will be
based upon the good faith results of the above mentioned animal models.
In the case of the *****************
<PAGE>
****************************************, the model may be run a second
time and the average result will be determinative. In the case of the
******************** **************, the first results will be
determinative.
2a.5 Collaboration Tangible Research Products. During the Back-up
Program Term each Party shall use reasonable efforts to make available
to the other, Collaboration Tangible Materials to the extent such
transfer shall be reasonably necessary for a party to conduct their
responsibilities under the Plan.
2a.6 Reports. Janssen and Neurocrine will use reasonable efforts to
make available and disclose to one another Information known by Janssen
or Neurocrine on the Amendment Effective Date that directly relates to
the scope of the Back-up Program. During the Back-up Program Term
Janssen and Neurocrine will use reasonable efforts to disclose to one
another Information regarding compounds synthesized or discovered,
initial leads, activities of leads, derivatives, and results of in
vitro and in vivo studies arising in the course of the conduct of the
Back-up Program. Notwithstanding the foregoing, the Parties agree that
Information disclosed during the course of the Back-up Program will be
limited to Information within the scope of the Back-up Program the
disclosure of which is reasonably necessary for the Parties to conduct
the Back-up Program in accordance with the Plan. Consistent with the
above, each Party will provide the other with raw data for work
conducted in the course of the Back-up Program to the extent reasonably
requested by the other Party.
2a.7 Funding.
(i) Prior Efforts. In consideration of research conducted and data
and information generated prior to the Effective Date, Janssen
will pay to Neurocrine
**************************************** within thirty (30)
days of the Amendment Effective Date.
(ii) FTEs. Janssen will reimburse Neurocrine for costs
associated with the conduct of the Back-up Program by
Neurocrine personnel by providing funding equal
************************************************** per
calendar quarter for the Back-up Program Term or until the
total sum ***************
**************************************************** is paid.
Such funding shall be provided in advance in quarterly
installments. The payments for the first and last quarters
shall be prorated to reflect the April 15, 1999 effective date
for the Back-up Program Term with the first such payment being
due and payable within thirty (30) days after the Amendment
Effective Date and the first payment shall include past due
amounts for calendar 1999 as well as the advance payment for
the fourth quarter of 1999.
(iii) Outside Costs. Janssen will be responsible for all
outside and third party costs associated with Back-up Program
activities approved by the JRC in the Plan including the costs
associated with third party contractors retained to perform
tasks approved by the JRC. In addition, Janssen may elect to
have third party
<PAGE>
contractors reasonably acceptable to Neurocrine perform some
of Janssen's obligations under the Plan to the extent Janssen
is unable to perform the task internally within the approved
timeline or when Janssen otherwise deems it appropriate
consistent with the goals of the Back-up Program. Similarly,
Neurocrine may elect to use third party contractors for
certain toxicology, manufacturing and other tasks approved by
the JRC. Janssen will be responsible for all such third party
costs. Regardless of 2a.2(ii), Janssen shall have final say as
to all outside and third Party Costs associated with Back-up
Program activities, including the costs associated with Third
Party contractors retained to perform tasks approved by the
JRC. Any decision on which Janssen has final say will be
consistent with the objectives of the Plan and with timelines
contained therein.
(iv) Records. Neurocrine will maintain complete and accurate
records relevant to the expenditure of Back-up Program funding
hereunder. Such records shall be open during reasonable
business hours for a period of three (3) years from the date
of creation of such records for the sole purpose of allowing
Janssen to verify payments hereunder.
2a.8 Milestones
(i) Payments. Within thirty (30) days following the first
occurrence of the events set forth below, Janssen shall make
the following one-time milestone payments to Neurocrine:
Event Payment
Identification of Preliminary Back-up Candidate,
which Preliminary Back-up Candidate ******
*******************************************
***********************************
Filing and acceptance for review of an IND or equivalent in a
country of the European Union of a PCC, including Back-up PCC,
discovered, identified or synthesized or developed
in the Back-up Program *************
In the event the event that the milestone on acceptance for
review of an IND is paid, then the milestone for
identification of a Preliminary Back-up Candidate will be paid
where it was previously unpaid. The milestones of this
Paragraph will be paid in total only once. Milestone payments
based on further post IND development of a PCC developed in
the scope of the Back-up Program will be subject to any unpaid
milestones under Paragraph 6.3.
(ii) Diligence. In the event that Janssen has not incurred the
obligation to pay the milestone for
*********************************************, then upon the
later of six (6) months following
********************************** or
<PAGE>
nine (9) months following ************************************
**************************************************************
**************************************************************
agrees to either (A) pay such milestone *****************
******************************, or (B) on a compound by
compound basis *****************************************
**************************************************************
**************************************************************
**************************************************************
***********************************************.
The return of rights under this sub-Paragraph will include
rights to all data and information and be free of any royalty
obligation to Janssen.
(iii) In the event that the milestone for
**************************************************************
**************************************** and the Milestone For
**************************************************************
*************************************************************
*************************************************************,
then Janssen agrees to pay such milestone for identification
of a Back-up Preliminary Candidate at the time the milestone
is paid pursuant to 2a.8(i) or 2a.8(ii).
2a.9 Royalties. Janssen will pay to Neurocrine Royalties on Net Sales
of PCCs developed in the scope of the Back-up Program as set forth in
Article VI.
2a.10 Clinical Development and Commercialization.
(i) Clinical Development. Clinical development of PCCs developed
in the course of the Back-up Program will be conducted in
accordance with Article III.
(ii) Commercialization. Commercialization of PCCs developed in
the course of the Back-up Program will be conducted in
accordance with Article IV.
(iii) Manufacture. Janssen shall be responsible for the
manufacture of PCCs developed in the scope of the Back-up
Program consistent with Article VII.
(iv) Indemnification. For the purposes of Article XII, the
conduct of the Back-up Program shall be considered a
Research and Development activity.
2a.11 Licenses and Patents.
(i) Back-up Program. Janssen hereby grants to Neurocrine a
non-exclusive license under the Janssen Patents and Program
Patents as shall be reasonably necessary or useful for
Neurocrine to conduct the Back-up Program. Neurocrine hereby
grants to Janssen a non-exclusive license under the
Neurocrine Patents (including Neurocrine Back-up Patents)
and Program Patents as shall be reasonably necessary or
useful for Janssen to conduct the Back-up Program.
(ii)
<PAGE>
Janssen. Janssen will receive rights and assume obligations
consistent with Article IX for any back-up Program Patents
that are determined during the Back-up Program Term to
actually contain a PCC to the extent Janssen did not
previously have such rights and obligations. Upon the
determination that all or a portion of a Neurocrine Back-up
Patent is a Program Patent, Janssen will reimburse
Neurocrine for past fees and expenses incurred with respect
to all or part of such Patent, as the case may be, prior to
such determination. Thereafter, Janssen will assume
responsibility for such Program Patent consistent with
Article IX.
2a.12 Exclusivity/ Non-Competition. Janssen acknowledges that
Neurocrine has informed Janssen that during the period between the end
of the Research Term and the Amendment Effective Date, Neurocrine has
conducted an internal research program directed to the discovery and
characterization of CRF Antagonist compounds which do not fall within
the scope of the Program Patents ("Neurocrine Compounds") with the
intention of developing these compounds for stroke and other
indications that would not be categorized as anxiety, depression and/or
drug abuse within the time periods dictated by Paragraph 10.3 and,
following the expiration of the limitations imposed by Paragraph 10.3,
expanding the development of these compounds to anxiety, depression and
drug abuse should the compounds demonstrate activity in such
indications. Neurocrine has also informed Janssen that Neurocrine's
willingness to conduct the Back-up Program is conditioned on Janssen's
recognition of Neurocrine's continued right to conduct independent
research and development of CRF Antagonist compounds. It is understood
that **************************************************************
************************** entitles the Parties to use
******************** ******************* for any purpose subject to
obligations of confidentiality in Article VIII. This would include the
use of ****************************** in the development of the
********************.
2a.13 Termination.
(i) Convenience. In the event Janssen shall elect to terminate
this Agreement under Paragraph 11.6, Janssen shall pay to
Neurocrine all amounts that would have been payable under
Paragraphs 2a.7(ii) (up to ********************) and reimburse
Neurocrine for all noncancelable obligations incurred by
Neurocrine for JRC approved activities.
(ii) Breach. Notwithstanding the provisions of paragraph 11.2, in the event
either Party shall default in --------------- the performance of any material
obligation set forth in this Article II A, the sole remedy of the other Party
shall be termination of the Back-up Program. In the event the Back-up Program
shall be terminated by reason of a default by Janssen, Janssen shall pay to
Neurocrine all amounts that would have been payable under paragraph 2a.7(ii) and
(iii), grant to Neurocrine an exclusive license under the Program Patents to
make, use and sell Back-up PCCs which are Preliminary Back-up Candidates and
reimburse Neurocrine for all noncancelable obligations incurred by Neurocrine
for JRC approved activities. In the event the (iii)
<PAGE>
Back-up Program shall be terminated by reason of a default by
Neurocrine, Neurocrine will return to Janssen the initial
payment and any milestone payments made by Janssen hereunder
and any Neurocrine Back-up Patent and Back-up Program Patent
that contains a Preliminary Back-up Candidate will be
considered a Program Patent which contains in each chemical
genus thereof at least one member which is a PCC meeting the
requirements of Paragraph 1.38 (c)(i).
(iii) Early Termination. Janssen shall have the right to
terminate the Back-up Program as **************** upon
delivering notice of its intention to do so by *************.
Upon such termination, Janssen will reimburse Neurocrine for
noncancelable obligations incurred by Neurocrine for JRC
approved activities and thereafter shall have no further
obligation to fund the conduct of the Back-up Program by
Neurocrine. Janssen will retain all rights, patent or
otherwise, to PCCs which are such by the terms of the Original
Agreement except that any development of such a PCC by Janssen
which was discovered, identified, synthesized or developed in
the Back-up Program will be subject to the milestone payments
herein. Upon such termination, Neurocrine will retain all its
rights, patent or otherwise, to any compound which, except for
the terms of this Amendment would not be a PCC. The definition
of Program Patent would return to that of the Original
Agreement. Neurocrine's retained rights under this
sub-Paragraph will be free of any royalty obligation to
Janssen and include all rights to data.
ARTICLE V
MISCELLANEOUS
5.1 Assignment. Either Party may assign this Amendment or its ownership interest
in jointly owned Program Patents: (i) to a party that succeeds to substantially
all of the business or assets of such Party by reason of a merger or similar
reorganization or the sale of substantially all of its business or assets, or
(ii) otherwise with the prior written consent of the other Party. This Amendment
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 Amendment
shall be void.
5.2 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.
5.3. Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Amendment
<PAGE>
5.4 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
Amendment.
5.5 Severability. If any term, covenant or condition of this Amendment 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 Amendment, 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 Amendment 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
applicable thereof in good faith in order to provide a reasonably acceptable
alternative to the term, covenant or condition of this Amendment 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.
5.6 Counterparts. This Amendment 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.
5.7 Entire Agreement. The Original Agreement as amended hereby, the accompanying
Stock Purchase 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 and therein. No subsequent
alteration, amendment, change or addition to this Amendment shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.
5.8 Relationship of Parties. Nothing herein shall be construed to create any
relationship of employer and employee, agent and principal, partnership or
joint venture between the Parties. Each Party is an independent contractor.
Neither Party shall assume, either directly or indirectly, any liability of or
for the other Party. Neither Party shall have the authority to bind or
obligate the other Party and neither Party shall represent that it has such
authority.
<PAGE>
14
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date
first written above.
NEUROCRINE BIOSCIENCES, INC.
/s/Gary Lyons
By: Gary Lyons
President & CEO
JANSSEN PHARMACEUTICA, N.V.
/s/Dr. Alan Dunton
By: Dr. Alan Dunton
President
<PAGE>
[***] CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A
*******************
<PAGE>
EXHIBIT B
*******************
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