License Agreement - F. Hoffman-La Roche Ltd., Hoffman-La Roche Inc. and Human Genome Sciences Inc.
LICENSE AGREEMENT
between
F.HOFFMANN-LA ROCHE LTD, Grenzacherstrasse 124, CH-4070 Basel,
Switzerland, and
HOFFMANN-LA ROCHE INC., 340 Kingsland Street, Nutley, New Jersey 07110-
1199, U.S.A.
(hereinafter both jointly called "ROCHE")
and
HUMAN GENOME SCIENCES, INC., 9410 Key West Avenue, Rockville, Maryland 20850,
USA (hereinafter called "HGS")
***********************
WITNESSETH
WHEREAS, HGS professes to ROCHE to have substantial knowledge and expertise in
and owns or has rights to certain technology relating to genes and gene
sequencing, and
WHEREAS, ROCHE desires to utilize HGS Know-How (as hereinafter defined) to
research and develop Target Products and Products (other than Vaccines and
Immunotherapeutic Products against infectious agents).
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NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
1. DEFINITIONS
-----------
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "Affiliate" shall mean, with respect to either party hereto, any
corporation, partnership or other business entity controlled by,
controlling or under common control with either such party, with
"control" meaning direct or indirect beneficial ownership of at least
fifty percent (50 %) of the voting interest of such corporation or
other business entity. The term Affiliate of ROCHE shall not include
Genentech Inc, 460 Point San Bruno Bid, South San Francisco,
California, U.S.A unless ROCHE opts for such inclusion by giving a
written notice to HGS.
1.2 "Assembled Genome" shall mean the final results of the genome assembly
of a Streptococcus pneumoniae strain whose accuracy, quality, strategy
and time lines are set forth in Appendix 1, attached hereto and made a
part hereof.
1.3 "FDA" shall mean the United States Food and Drug Administration or the
equivalent regulatory agency in a Major Market Country.
1.4 "Field" shall mean the prevention, diagnosis or treatment of infectious
diseases in humans excluding Vaccines and Immunotherapeutics.
1.5 The term "First Commercial Sale" shall mean in each country the first
sale of any Product as part of a nationwide launch of Product by ROCHE,
its Affiliates or sublicensees following approval of its marketing
(including pricing) by the appropriate governmental agency for the
country in which the sale is to be made and when governmental approval
is not required, the first such sale in that country.
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1.6 "HGS" shall mean and include Human Genome Sciences, Inc. and its
Affiliates.
1.7 "HGS Know-How" shall mean all information and data with respect to the
Assembled Genome which is owned by HGS or as to which HGS has a
transferable interest and which is in the possession of HGS prior to
providing the Assembled Genome to ROCHE as set forth herein.
1.8 "HGS Patents" shall mean any and all patents and patent applications
anywhere in the world which are or will be owned by HGS or as to which
HGS has a transferable interest which is based on an invention
conceived or reduced to practice prior to delivery of the Assembled
Genome to ROCHE as set forth herein and which invention is directed to
a polynucleotide contained in the Assembled Genome or to an expression
product thereof or to an antibiotic produced by S. pneumoniae.
1.9 "Immunotherapeutics" shall mean products incorporating antibodies
and/or fragments thereof and/or derivatives thereof derived from
Technology, which have a protective or therapeutic effect against
infectious agents.
1.10 "Licensee" means any person or entity granted a right or license by
ROCHE to manufacture and/or use and/or sell a Product and/or Target
Product.
1.11 "Major Market Country" shall mean any one of the following countries:
the United States of America, France, Italy, Germany, United Kingdom or
Japan.
1.12 "NDA" shall mean a New Drug Application or Product License Application
by which approval is sought to sell a Product in the United States of
America pursuant to the regulations of the FDA or an equivalent
application in a Major Market Country.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
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1.13 "Net Sales" shall mean the gross sales of the Product to third parties
less deductions of returns (including withdrawals and recalls), rebates
(price reductions, including Medicaid and similar types of rebates e.g.
chargebacks), volume (quantity) discounts, discounts granted at the
time of invoicing, sales taxes and other taxes directly linked to and
included in the gross sales amount as computed in the central ROCHE's
Swiss Francs Sales Statistics for the countries concerned, whereby the
amount of such sales in foreign currencies is converted into Swiss
Francs at the average monthly rate of exchange at the time.
From the so adjusted gross sales there shall be a lump sum deduction of
[****] for those sales related deductions which are not accounted for
on a product-by-product basis (e.g. outward freights, transportation
insurance, packaging materials for dispatch of goods, custom duties,
discounts granted later than at the time of invoicing, cash discounts
and other direct sales expenses).
1.14 "Product(s)" shall mean a pharmaceutical preparation or composition
containing the Substance as its active ingredient(s).
1.15 "Research" shall mean the activities conducted directly or indirectly
by ROCHE to discover and develop Products and Target Products in the
Field.
1.16 "S. Aureus Data" shall mean the DNA sequencing data set forth in
Appendix II, attached hereto and made a part hereof.
1.17 "Substance" shall mean a polypeptide expressed by a polynucleotide from
an Assembled Genome or an antibiotic produced by S. pneumoniae which is
identified by or on behalf of ROCHE prior to the Assembled Genome being
generally available to the public and which was not known to the
general public prior to such identification by or on behalf of ROCHE.
1.18 "Target" shall mean a polynucleotide (or expression product thereof)
present in the Assembled Genome, which polynucleotide (or expression
product thereof) is selected as a target for screening by ROCHE.
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1.19 "Target Product" shall mean any product, material, substance or
composition which results directly or indirectly from screening against
a Target. For the avoidance of doubt a product, substance or material
or composition which is based on or derived from a product, material,
substance or composition which is identified by screening against a
Target is a Target Product, however, a product, substance or material
or composition which is based on or derived from a product, material,
substance or composition for which the screening test has been started
only after the Target or its genomic sequence has become known to the
public or to ROCHE independently from the collaboration hereunder,
shall not be considered as a Target Product.
1.20 "Technology" means the Assembled Genome or any portion thereof and/or
HGS Know-How and/or S. Aureus Data.
1.21 "Vaccine" shall mean products incorporating genes and/or gene products
and/or fragments thereof and/or derivatives thereof derived from
Technology, utilized for active immunization against infectious agents.
1.22 "Valid Claim" shall mean any claim in an unexpired patent included
within the HGS Patents which claim has not been disclaimed of held
invalid by a decision beyond the right of review.
1.23 The use herein of the plural shall include the singular and the use of
the masculine shall include the feminine.
2. OBLIGATION OF HGS
-----------------
2.1 ROCHE hereby acknowledges that HGS has provided ROCHE with S. Aureus
Data.
2.2 HGS agrees to use its reasonable efforts to provide to ROCHE the
Assembled Genome in accordance with Appendix I and until March 31, 1997
at the latest.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
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2.3 HGS agrees to provide HGS Know-How to ROCHE as it becomes available to
HGS.
3. LICENSES
--------
3.1 For the term of this Agreement, HGS hereby grants to ROCHE a worldwide
non-exclusive, royalty bearing license in the Field, under HGS Patent
Rights and HGS Know-How, without the right to grant sublicenses for the
purpose of performing preclinical research under this Agreement and
with the right to grant such sublicenses to develop, make, have made,
use and sell Products and Target Products in the Field, in each case in
accordance with the terms and conditions of this Agreement.
3.2 HGS grants to ROCHE and its Affiliates the non-exclusive right to use
the S. Aureus Data for Research in the Field.
3.3 HGS agrees that for a period of [****] from the date that the Assembled
Genome is provided to ROCHE, HGS will not grant access to the Assembled
Genome to any third party for use by such third party in the Field.
4. CONFIDENTIALITY AND PUBLICATION
-------------------------------
4.1 ROCHE agrees to retain Technology in confidence and not to disclose any
such Technology to a third party without the prior written consent of
HGS and to use Technology only for the purposes of this Agreement.
ROCHE's obligation hereunder shall terminate five (5) years after the
expiration or termination of this Agreement.
4.2 The obligations of confidentiality will not apply to Technology which:
(i) was known to ROCHE or generally known to the public prior to
its disclosure hereunder; or
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"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
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(ii) subsequently becomes known to the public by some means other
than a breach of this Agreement;
(iii) is subsequently disclosed to ROCHE by a third party having a
lawful right to make such disclosure;
(iv) is required by law or bona fide legal process to be disclosed,
provided that ROCHE takes all reasonable steps to restrict and
maintain confidentiality of such disclosure and provides
reasonable notice to HGS; or
(v) is approved for release by mutual written agreement of the
parties.
4.3 HGS shall not publish or allow publication of or otherwise publicly
disclose Technology for[****] following the delivery of the Assembled
Genome to ROCHE.
4.4 Subject to Art. 4.3 and except as required by law (including applicable
federal or state securities laws), neither ROCHE nor HGS shall disclose
the terms and conditions of this Agreement to any third party or issue
press releases relating to this Agreement for any purpose whatsoever
without the other party's prior written consent, which consent shall
not be unreasonably withheld.
4.5 The term "ROCHE" as used in Articles 4.1, 4.2 and 4.4 above shall mean
and include F.Hoffmann-La Roche Ltd and its Affiliates and consultants
who have agreed to be bound by the confidentiality and non-use
obligations of this Article 4.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
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5. ROYALTIES
---------
5.1 ROCHE shall pay HGS a royalty of two and one half percent (2 1/2%) of
the Net Sales of Products sold or distributed by ROCHE, or a Licensee
in a country where such Product would infringe a Valid Claim. The
Initial Royalty Payment shall be due in accordance with Art.7.1.
In the case of Product being sold as a combination of Substance and one
or more other therapeutically active principle(s), the parties shall
negotiate in good faith and agree on such adjusted royalty rate
reflecting the significance of the Substance in relation to the other
active principle(s).
5.2 Royalties shall be payable on a country by country, Product by Product
basis, for ten (10) years from First Commercial Sale of a Product in a
country where such Product would infringe a Valid Claim or until the
expiration of the last to expire HGS Patent containing such Valid Claim
in such country whichever is later.
5.3 [****]
6. RESEARCH PAYMENTS
------------------
6.1 ROCHE has paid to HGS, a non-refundable and non-creditable research
payment of [****] and HGS hereby acknowledges the receipt thereof.
6.2 Within thirty (30) days after delivery of the Assembled Genome by HGS
to ROCHE, ROCHE shall pay to HGS an additional research payment of
[****] provided that in the event the Assembled Genome data has on or
before that date [****], the payment set forth herein shall not be
payable.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
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7. INITIAL ROYALTY PAYMENTS
------------------------
7.1 For each Product, ROCHE shall pay HGS an initial royalty payment of
[****] within thirty (30) days after [****].
7.2 For each Target Product, ROCHE shall pay to HGS an initial royalty
payment of [****] within thirty (30) days after [****].
8. AUDIT, ACCOUNTING AND PAYMENT
-----------------------------
8.1 ROCHE shall keep full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all
royalties payable to HGS. Such books of account shall be kept at their
principal place of business and, abstracts thereof shall be made
independently by ROCHE's public accountants and shall be made available
for audit not more frequently than once per calendar year and upon at
least thirty (30) working days' prior written notice. Any such audit
shall be made at the request and expenses of HGS and conducted during
regular business hours in such a manner as to not unnecessarily
interfere with ROCHE's normal business activities. All information,
data documents and abstracts herein referred to shall be used only for
the purpose of verifying royalty statements or compliance with this
agreement, shall be treated as ROCHE Confidential Information subject
to the obligations of this Agreement and need neither be retained more
than one (1) year after completion of an audit hereof, if an audit has
been requested; nor more than two (2) years from the end of the
calendar year to which each shall pertain; nor more than one (1) year
after the date of termination of this Agreement, whichever period is
shorter. In the event that such audits shall indicate that in any
calendar year that the royalties which should have been paid by ROCHE
are at least five percent (5 %) greater than those which were actually
paid by ROCHE, then ROCHE shall pay the cost of such inspection.
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8.2 In each year the amount of royalty due shall be calculated half yearly
as of June 30 and December 31 (each as being the last day of an
"ACCOUNTING PERIOD") and shall be paid half yearly within the ninety
(90) days next following such date, every such payment shall be
supported by the accounting prescribed in Paragraph 8.3 and shall be
made in United States currency. For countries other than the United
States, when calculating the adjusted gross sales, the amount of such
sales in foreign currencies shall be converted into Swiss Francs as
computed in the central ROCHE's Swiss Francs Sales Statistics for the
countries concerned, using the average monthly rate of exchange at the
time for such currencies calculated on the basis of the average daily
rate of exchange as retrieved from the Reuters System during such
month.
When calculating the royalties on Net Sales, such conversion shall be
at the average rate of the Swiss Franc to the United States currency
calculated on the basis of the average daily rate of exchange as
retrieved from the Reuters System for the applicable ACCOUNTING PERIOD.
8.3 With each half yearly payment, ROCHE shall deliver to HGS a full and
accurate accounting to include at least the following information:
(a) Quantity of each Product subject to royalty sold (by country)
by ROCHE, and its Affiliates and sublicensees;
(b) Total adjusted gross sales for each Product subject to royalty
sold (by country) by ROCHE, its Affiliates and sublicensees;
(c) Total royalties payable to HGS.
8.4 Any tax required to be withheld by ROCHE under the laws of any foreign
country for the account of HGS, shall be promptly paid by ROCHE for and
on behalf of HGS to the appropriate governmental authority, and ROCHE
shall furnish HGS with proof of payment of such tax. Any such tax
actually paid on HGS's behalf shall be deducted from royalty payments
due HGS.
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8.5 Only one royalty shall be due and payable for the manufacture, use and
sale of a Product irrespective of the number of patents or claims
thereof which cover the manufacture, use and sale of such Product.
8.6
(a) If at any time a Product is sold in a country in which
conditions or legal restrictions exist which prohibit
remittance of United States dollars or other currency
("Blocked Country"), the following provisions shall apply to
the payment of the corresponding royalty, depending on where
the Product is made:
(i) If such Product is made in the same or another Blocked
Country, ROCHE shall have the right and option to make such
royalty payment by depositing the amount thereof in the
currency of the country of sale or manufacture, at HGS's
election, to HGS's account in a bank designated by HGS in such
country.
(ii) If such Product is made in a country which is not a Blocked
Country, then a "number' shall be obtained by multiplying the
applicable royalty rate by the price at which the Product is
sold to the entity selling in the Blocked Country. ROCHE or
its Affiliates (A) shall pay that "number' to HGS and (B)
shall deposit the excess of the applicable royalty over the
"number', in the currency of the country of sale of the
Product, to HGS's account in a bank designated by HGS in such
Blocked Country.
(b) If in any country where the Product is sold, rates of
royalties provided for herein are prohibited by law or
regulation, ROCHE shall pay royalties to HGS at the highest
rate permitted in that country for license of the type herein
granted, provided that such rate is less than the rate
applicable under this Agreement.
<PAGE>
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9. INDEMNIFICATION AND WARRANTY
----------------------------
9.1 (a) ROCHE agrees to indemnify and hold harmless HGS, its
directors, officers, employees, shareholders and agents (each
an "Indemnitee"), against any and all actions, claims
(specifically including, but not limited to, any damages based
on product liability claims), suits, losses, demands,
judgments, and other liabilities (including attorney's fees
until ROCHE assumes the defense as described below) asserted
by third parties, government and non-government, resulting
from or arising out of ROCHE's activities under this
Agreement, and/or Research conducted by ROCHE and/or any
Product or Target Product which is manufactured, used or sold
by or on behalf of ROCHE or a Licensee. If any such claims or
actions are made, HGS shall be defended at ROCHE's sole
expense by counsel selected by ROCHE and reasonably acceptable
to HGS provided that HGS may, at its own expense, also be
represented by counsel of its own choosing.
(b) ROCHE's indemnification hereunder shall not apply to any
liability, damage, loss or expense of an Indemnitee to the
extent that it is attributable to the negligence or
intentional misconduct (including breach of warranty) by the
Indemnitee, in which case HGS shall indemnify and hold
harmless ROCHE under the same terms and conditions as required
of ROCHE hereunder.
(c) ROCHE shall have the right to control the defense, settlement
or compromise of any such action; however, no settlement or
compromise shall be made without the consent of HGS which
consent shall not be unreasonably withheld.
9.2 HGS and ROCHE warrant to each other that it has the full right and
authority to enter into this Agreement and that it is not aware of any
impediment which would inhibit its ability to perform any of its
obligations.
<PAGE>
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10. ASSIGNMENT, SUCCESSORS
----------------------
10.1 This Agreement shall not be assignable by either of the parties without
the prior written consent of the other party (which consent shall not
be unreasonably withheld), except that either party may assign this
Agreement to an Affiliate or to a successor in interest or transferee
of all or substantially all of the portion of the business to which
this Agreement relates.
10.2 Subject to the limitations on assignment herein, this Agreement shall
be binding upon and inure to the benefit of said successors in interest
and assigns of ROCHE and HGS. Any such successor or assignee of a
party's interest shall expressly assume in writing the performance of
all the terms and conditions of this Agreement to be performed by said
party and such Assignment shall not relieve the Assignor of any of its
obligations under this Agreement.
11. TERMINATION
-----------
11.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to Paragraph 1 1.2 of this Agreement, this
Agreement and the licenses and rights granted thereunder shall on a
country-by-country basis remain in full force and effect until ROCHE's
obligations to pay royalties hereunder has expired. After such expiry
in such country, ROCHE shall have the right to use or have used the
rights and licenses granted to ROCHE hereunder in such country without
further payment to HGS. In addition, after receipt of the Assembled
Genome and payment of the license fee set forth in Article 6.2, ROCHE
shall have the right to terminate this Agreement at any time within
sixty (60) days prior written notice; provided that upon such
termination all rights and licenses granted to ROCHE hereunder shall
terminate and ROCHE shall be bound by the covenant set forth in Article
12.1
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11.2 Upon material breach of any material provisions of this Agreement by
either party to this Agreement, in the event the breach is not curred
within thirty (30) days after written notice to the breaching party by
the other party, in addition to any other remedy it may have, the other
party at its sole option may terminate this Agreement, provided that
such other party is not then in breach of this Agreement.
11.3 The termination of this Agreement means that all rights and obligations
of this Agreement shall terminate except those of Articles 4, 9 and 12
and of Paragraphs 3.2, 7.1, 7.2, 11.1, 11.3 and 11.4 of this Agreement.
11.4 Upon termination of this Agreement for any reason, nothing herein shall
be construed to release either party from any obligation that matured
prior to the effective date of such termination.
12. COVENANTS OF ROCHE
------------------
12.1 ROCHE hereby covenants that, so long as the Technology is not publicly
known, it will use the Technology solely in the Field and only to the
extent ROCHE retains a license hereunder with respect thereto.
12.2 ROCHE hereby guarantees and shall be responsible for compliance by its
Affiliates with all terms and conditions of this Agreement.
13. GENERAL PROVISIONS
------------------
13.1 The relationship between HGS and ROCHE is that of independent
contractors. HGS and ROCHE are not joint venturers, partners, principal
and agent, master and servant, employer or employee, and have no
relationship other than as independent contracting parties. HGS shall
have no power to bind or obligate ROCHE in any manner. Likewise, ROCHE
shall have no power to bind or obligates HGS in any manner.
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13.2 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all
prior agreements in this respect. There shall be no amendments or
modifications to this Agreement, except by a written document which is
signed by both parties.
13.3 This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware.
In the event of any controversy or claim arising out of or relating to
any provision of this Agreement or the breach thereof, the parties
shall try to settle those conflicts amicably between themselves.
Should the parties fail to agree, any controversy, dispute or claim
which may arise out of or in connection with this Agreement, or the
breach, termination or validity thereof other than with respect to
patent validity shall be settled by final and binding arbitration
pursuant to the Rules of the American Arbitration Association ("AAA")
as herein provided.
(a) The Arbitration Tribunal shall consist of three arbitrators.
Each party shall nominate in the request for arbitration and
the answer thereto one arbitrator and the two arbitrators so
named will then jointly appoint the third arbitrator as
chairman of the Arbitration Tribunal. If one party fails to
nominate its arbitrator or, if the parties' arbitrators cannot
agree on the person to be named as chairman within sixty (60)
days, the necessary appointments shall be made under the rules
of the AAA.
(b) The place of arbitration shall be in Wilmington, Delaware and
the arbitration proceedings shall be held in English. The
procedural law of the place of arbitration shall apply where
the AAA Rules are silent.
(c) The award of the Arbitration Tribunal shall be final and
judgement upon such an award may be entered in any competent
court or application may be made to any competent court for
judicial acceptance of such an award and order of enforcement.
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13.4 The headings in this Agreement have been inserted for the convenience
of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.
13.5 Any delay in enforcing a party's rights under this Agreement or any
waiver as to a particular default or other matter shall not constitute
a waiver of a party's right to the future enforcement of its rights
under this Agreement, excepting only as to an expressed written and
signed waiver as to a particular matter for a particular period of
time.
13.6 Notices. Any notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given and delivered upon the
earlier of (i) when received at the address set forth below, or (ii)
three (3) business days after mailed by certified or registered mail
postage prepaid and properly addressed, with return receipt requested,
or (iii) on the day when sent by facsimile as confirmed by certified or
registered mail. Notices shall be delivered to the respective parties
as indicated:
To HGS: Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, MD 20850
Attn: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax No. (201) 994-1744
Attn: Elliot M. Olstein, Esq.
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To ROCHE: F.Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH-4070 Basel
Switzerland
Attn: Corporate Law
and
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07110-1199
U.S.A.
Att: Corporate Secretary
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
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Basel, this March 12, 1996 F.HOFFMANN-LA ROCHE LTD
/s/
---------------------------------
Apprv'd As To Form
LAW DEPT.
Nutley, this March 12, 1996 HOFFMANN-LA ROCHE INC.
By /s/
---------
/s/
---------------------------------
Rockville, this March 20, 1996 HUMAN GENOME SCIENCES, INC.
/s/ William A. Haseltine
---------------------------------
William A. Haseltine
<PAGE>
[LOGO]
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
APPENDIX I: STREPTOCOCCUS PNEUMONIAE
1. Sequencing and Genome Assembly
Our plan is to sequence and assemble the [****] of Streptococcus
pneumoniae. This strain is a Type IV pathogenic clinical isolate.
Sequencing will be performed in both a sheared genomic library (present
in the plasmid pUC18) containing inserts of approximately [****] and a
lambda genome library containing inserts of approximately [****]. The
majority of our sequencing efforts will be from 2-3 libraries prepared
in pUC18. Sequencing will be performed from both the 5' and 3' ends of
each clone picked. Clones will be stored as glycerol stocks in 96-well
microtiter dishes and will be made available to Roche as well as the
host E. coli strain SURE2 (Stratagene) in which the libraries have been
established and the S. pneumoniae strain [****].
Based on preliminary sequencing efforts, approximately [****]
nucleotides from each genomic insert will be obtained from both the 5'
and 3' end on first-pass sequencing. Assuming a genomic size of 2.3-2.5
MB, approximately [****] high quality sequencing reactions will be
required to obtain a 3-5X coverage of the genome. As only [****] of
sequencing reactions result in high quality sequence information, we
estimate that the number of sequencing reactions will be significantly
higher than the [****] predictedrequired to provide [****] coverage of
the genome. After adequate coverage [****] of the genome is complete,
further sequencing on selected clones from both the pUC18 and lambda
libraries will be required to obtain closure of the genome. In
addition, other methods, including PCR, will be used to order and
complete the genome sequence map. The final accuracy of the assembled
genome will be equivalent to the [****]. As sequence ambiguities in
important genes may not be acceptable, HGS will undertake additional
in-depth sequencing of clones selected by Roche (see #2 below)
2. Individual Gene Sequencing
For those sequences of most importance to Roche (limited to [****]),
further in-depth sequencing will be performed if after a threefold
coverage there still exists sequence ambiguities in the individual
clones. We estimate that a [****] coverage of individual genes in
question will be more than sufficient to resolve all sequencing
ambiguities. Sequencing of these chosen clones will continue through
the time perod in which Roche has exclusive access.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
3. Data Transmittal
Our plan is to submit edited sequence information weekly to Hoffmann-La
Roche. Potential homologies of Streptococcus pneumoniae genes to known
genes obtained by Blast analysis will also be provided. Once an
appropriate [****] coverage is obtained, preliminary assembly data can
also be provided. Both raw data and a chromatogram representing the
actual sequence run can be provided if needed.
We look forward to working with your informatics people to implement a
responsive and reliable method for transmitting sequence information
and annotation throughout the project. An effective transmission scheme
should:
* Deliver information in a usable electronic form
* Maintain key relationships among the various data elements
* Transmit additions and changes to the information as they occur
* Ensure transmission integrity; enable simple recovery from network or
equipment failures
* Ensure the data is secure from unauthorized disclosure
The details of the transmission technique should be worked out jointly
between Roche and HGS technical experts. Several schemes are possible
to meet these objectives.
Our recommendation is to use a transaction-based "store and forward"
system to transmit sequence information, sequence annotation,
preliminary assemblies and the genome as it is being completed. Under
this architecture, a database server at Roche facilities will be
connected with the HGS network via an encrypted wide-area network link.
As changes are posted to the HGS database, they will be transmitted
automatically to a database machine at Roche where the transactions
will executed on the Roche copy of the database.
This architecture has the advantage of delivering the information
directly in database format without requiring the development of
export/import procedures. Delivering information in database format
ensures that key relationships among database entities and database
integrity constraints are maintained across the wide-area link. HGS
currently uses the Sybase database management system, so the Sybase
Replication Server product is the natural candidate for performing the
wide-area database synchronization functions.
Obviously, there are other scenarios we can follow. Please feel free to
have your informatics group contact us regarding additional
possibilities and suggestions for data transmittal if they believe that
the above does not adequately address the needs of Hoffmann-La Roche.
<PAGE>
"The information below marked [****] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
4. Timeline
* Preparation of [****] insert libraries in [****] - one is completed,
others are ongoing
* Preparation of lambda genomic library - [****]
Estimated
Completion
-------------
Sequencing to obtain [****] coverage - [****] weeks [*
[****] Coverage - 20 weeks *
[****] Coverage (if needed) - [****] weeks *]
Further sequencing, gap filling and genome assembly is estimated to
take an additional [****], suggesting a final completion date of
between [****] . Patent submission on the assembled genome will likely
take place within this time frame.
Assuming a genome size of 2.5 MB, sequence runs of [****] base pairs,
and [****] of sequencing reactions resulting in high quality sequence.
APPENDIX II: STAPHYLOCOCCUS AUREUS
1. Sequencing Data Set
HGS will provide sequence information and frozen bacterial glycerol
stocks for [****] GSTs (Genome-Specific Tags). This library was
prepared with sheared genomic DNA from Staphylococcus strain [****], a
strain cured of the prophages present in the NCTC8325 strain of S.
aureus. The genomic library is present in plasmid pBluescript
(Stratagene). The average sequence read on these GSTs is [****]
nucleotides and the fragment sizes range from [****] bp. Plasmids are
present in E. coli strain XL-1 Blue (Stratagene).