License Agreement - Elan Pharmaceutical Technologies and Ligand Pharmaceuticals Inc.
TERM SHEET(1)
LIGAND LICENSE
LICENSE An exclusive license (the "License") from Elan
Pharmaceutical Technologies, a division of Elan
Corporation, plc ("Elan"), to Ligand Pharmaceuticals
Incorporated (collectively "Ligand") of Elan's patent
rights and know-how ("Intellectual Property") required
to package, use, promote, distribute, offer for sale and
sell Elan's once-daily solid oral dosage form of
morphine (the "Product").
For the avoidance of doubt, Elan's Intellectual Property
shall exclude patent rights and know-how owned and
licensed by ***
***
***
PRODUCT PRESENTATIONS *** capsules.
*** Ligand and its affiliates undertake ***
***
***
*** in the Territory
during the Term and for *** thereafter.
TRADEMARK Elan shall grant to Ligand a non-exclusive royalty free
license in the Territory (as defined below) for the Term
to use Elan's Morphelan(TM) trademark (the "Trademark")
solely for the purposes of exercising its rights and
performing its obligations under this License.
COMMERCIALIZATION Ligand will diligently pursue the commercialization of
the Product and shall use all *** efforts to market and
promote the Product in the Territory and in doing so,
shall use the same level of effort as with other similar
products of similar sales potential which it markets.
Within *** of the submission of the New Drug Application
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(1) Capitalized terms used in this Term Sheet and not otherwise defined herein
shall have the meanings set forth in Letter of Intent to which this Term
Sheet is attached.
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or its foreign equivalent (the "NDA") in each country of
the Territory, Elan and Ligand shall agree upon
appropriate due diligence obligations on Ligand for
marketing the Product including a promotional support
budget and minimum sales figures for the Product for the
*** following commercial launch of the Product having
regard to standard industry practices.
In the event that the parties are unable to agree upon
such due diligence obligations for the Product within
the time period as set out above, the parties shall
appoint an arbitrator who is technically knowledgeable
in the pharmaceutical industry to choose either Elan's
proposed terms or Ligand's proposed terms on the basis
of which terms he determines to be closer to standard
industry practice.
Ligand shall make a full scale commercial launch of the
Product in each country of the Territory within *** of
NDA approval, including marketing approvals, where
applicable, being granted in such country. Elan shall
not unreasonably withhold its agreement to a request by
Ligand for an extension of the said *** period if there
are legitimate commercial reasons for such an extension
or Elan is unable to timely supply Product for launch.
CO-PROMOTION ELAN
For the period from the date of execution of the
Definitive Agreements up until *** of the Product in
each country of the Territory, Elan shall have a *** to
co-promote the Product in such country of the Territory
for *** *** and on other terms to be agreed in good
faith between the parties and having regard to standard
industry practices in such country of the Territory.
LIGAND
For the period from the date of execution of the
Definitive Agreements up until *** *** for the Product
in each Member State of the European Union (excluding
Ireland and the United Kingdom), whether on an
individual approval basis or through the European
centralized procedure, Ligand shall have a *** to
co-promote the Product in such Member State of the
European Union for ***
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*** on terms to be agreed in good faith between the
parties and having regard to standard industry practices
in such Member State of the European Union; provided
that Ligand has established an appropriate sales force
in such Member State.
In the event that the parties are unable to agree upon
the terms for co-promotion of the Product by either
party as set out above, the parties shall appoint an
arbitrator who is technically knowledgeable in the
pharmaceutical industry to choose either Elan's proposed
terms or Ligand's proposed terms for the co-promotion on
the basis of which terms he determines to be closer to
standard industry practice.
PROJECT TEAM Elan and Ligand shall establish a project team (on which
they shall have equal representation) to supervise the
day-to-day activities related to the co-operative
aspects of the research, development and
commercialization of the Product. Disputes within the
project team that cannot be resolved by consensus will
be resolved by a management committee team (on which
they shall have equal representation) from Ligand and
Elan. If such management committee team cannot resolve
the matter, the dispute will be referred to a designated
senior officer of each of Elan and Ligand.
LICENSED TERRITORY United States of America and its territories and Canada
(the "Territory").
TERM The greater of (a) the life of the patent rights in the
relevant country or countries within the Territory and
(b) ***
Not later than *** prior to the expiration of the Term
for a given country, Elan and Ligand shall enter into a
long-term supply agreement upon terms and conditions to
be mutually agreed between the parties. If the parties
fail to enter into such a long-term supply agreement,
Elan shall grant Ligand a license to the know-how to
manufacture the Product upon terms and conditions to be
mutually agreed between the parties.
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SUBLICENSE AND
ASSIGNMENT RIGHTS *** shall ***
***
Neither party shall be entitled to assign this agreement
without the prior written consent of the other party,
save that either party may assign the License to their
respective affiliates provided that there is not an
adverse tax consequence for the other party.
CERTAIN CHANGES OF
CONTROL In the event that (a) a technological competitor to Elan
or its affiliates *** shall, directly or indirectly,
acquire ***% or more of the capital stock of Ligand, or
otherwise control or influence in any material respect
their management or business, or (b) any other person or
entity shall acquire ***% or more of the voting stock of
Ligand, or otherwise merge, consolidate or enter into
any similar transaction (or binding agreement in respect
thereof) with any of such entities, the License, at ***
*** provided, however, that the foregoing shall not
apply in relation to any exercise of any options by Elan
as contemplated by the definitive documents.
LICENSE ROYALTIES
PAYABLE BY LIGAND
TO ELAN In consideration of the rights and license of the Elan
patent rights for the Product, Ligand shall pay the
following amounts to Elan:
$5,000,000 in cash or in Common Stock (valued at $11.65
per share), at Ligand's option, upon signing of the
License;
$10,000,000 payable through an increase in the Notes, as
described in Exhibit C to the Letter of Intent, upon
signing of the License;
$*** in cash or in Common Stock (valued at a price per
share equal to the ***
***
***
***
*** and
$*** in cash or in Common Stock (valued at a price per
share equal to the ***
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***
***
*** at Ligand's option, upon
***
PATENTS The substantive documents shall contain mutually-
agreeable provisions on filing, prosecution,
enforcement and maintenance.
REGULATORY APPROVALS Regulatory approvals for the Product in the Territory
shall be prosecuted and owned by Elan.
SUPPLY OF PRODUCT Ligand shall purchase the Product exclusively from Elan.
Product shall be supplied to Ligand in finished market
packs Ex Works the manufacturing facility designated by
Elan.
Elan shall advise Ligand of a minimum batch size for the
manufacture and supply of each dosage strength of
Product.
Ligand shall provide quarterly forecast updates on a
rolling *** basis to Elan. The *** of such forecast will
be binding.
In the event of a failure to supply (to be defined) by
Elan, Elan shall grant to Ligand a production license to
manufacture the Product.
PRICE OF PRODUCT The price to be charged by Elan to Ligand for the supply
of Product for commercial sale in the Territory shall
be:
- ***% of NSP for the *** *** for Product in the
Territory;
- ***% of NSP for the *** *** for Product in the
Territory; and
- ***% of NSP for *** during the Term of the Agreement.
Product for distribution as *** promotional samples
shall be supplied by Elan to Ligand at *** ***
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In no event shall Elan be required to supply Product for
commercial sale to Ligand *** ***
NSP shall mean in the case of Product sold by Ligand or
an affiliate, that sum determined by ***
***
*** for the Product by Ligand or, its affiliate, as the
case may be, in accordance with standard accounting
principles, a maximum deduction of ***% to cover the
following:-
(a) customs duties or other taxes (excluding income or
corporation tax), directly related to the sale of the
Product which are paid by Ligand or its affiliates as
the case may be;
(b) a discount from the gross sales proceeds to cover
such normal costs as are incurred by Ligand or its
affiliates, as the case may be, in respect of transport,
shipping insurance, returns, discounts directly related
to the sale of the Product.
In Market shall mean the sale of the Product in the
Territory by Ligand or its Affiliates, to an
unaffiliated third party, including but not limited to a
wholesaler, chain store, distributor, managed care
organization, hospital or pharmacy.
Fully Allocated Cost shall include direct labour, direct
materials and supplies, variable labor, overhead and
attributable administration, quality control, quality
assurance and other costs; such costs to be calculated
in accordance with ***
PRODUCT SUPPORT Elan shall be responsible, ***, for the completion
of the clinical studies for the Product listed in
Schedule I, which are currently in progress. For the
avoidance of doubt, Ligand shall be responsible for the
cost of all development work and/or clinical trials on
the Product in addition to such ongoing clinical
studies. ***
Ligand shall commit to undertake additional clinical
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Confidential Treatment and filed separately with the Commission.
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expenditure, including ***
***
***
*** which shall include direct
labor, overhead and attributable administration, quality
control, quality assurance and other costs, calculated
in accordance with *** during the *** following
submission of the NDA in the United States.
CUSTOMARY TERMS The License will contain customary terms, including
terms and conditions relating to payments; patent rights
and related protection and prosecutions; auditing and
review rights, confidentiality; representations and
warranties; indemnities; and other customary provisions.
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SCHEDULE I
MORPHLEAN CLINICAL DEVELOPMENT PROGRAM
STUDY I.D. TRIAL NAME LOCATION COMPARATOR STUDY VOLUNTEERS/ CRO ESTIMATED ESTIMATED STATUS/
DESIGN PATIENTS START COMPLETE COMMENTS
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