SARM Research, Development and License Agreement - TAP Pharmaceutical Products Inc. and Ligand Pharmaceuticals Inc.
SARM RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
by and between
TAP PHARMACEUTICAL PRODUCTS INC.
and
LIGAND PHARMACEUTICALS INCORPORATED
dated
JUNE 22, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS........................................................1
ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS..........................5
ARTICLE 3 RESEARCH PROGRAM...................................................6
ARTICLE 4 MANAGEMENT OF THE RESEARCH PROGRAM................................10
ARTICLE 5 DEVELOPMENT PROGRAM...............................................12
ARTICLE 6 LICENSES -- RESEARCH, DEVELOPMENT, MARKETING AND MANUFACTURING....14
ARTICLE 7 FEES, ROYALTIES AND MILESTONE PAYMENTS............................16
ARTICLE 8 ROYALTY REPORTS AND ACCOUNTING....................................17
ARTICLE 9 PAYMENTS..........................................................19
ARTICLE 10 INFRINGEMENT ACTIONS BY THIRD PARTIES............................20
ARTICLE 11 CONFIDENTIALITY..................................................20
ARTICLE 12 PUBLICATION......................................................22
ARTICLE 13 PATENTS..........................................................22
ARTICLE 14 TERM AND TERMINATION.............................................26
ARTICLE 15 INDEMNITY........................................................28
ARTICLE 16 FORCE MAJEURE....................................................29
ARTICLE 17 ASSIGNMENT.......................................................29
ARTICLE 18 NOTIFICATION OF PATENT TERM RESTORATION..........................30
ARTICLE 19 SEVERABILITY.....................................................30
ARTICLE 20 DISPUTE RESOLUTION...............................................30
ARTICLE 21 MISCELLANEOUS....................................................34
EXHIBIT A - RESEARCH PROGRAM DRAFT TECHNICAL OPERATING PLAN
EXHIBIT B - LIGAND'S SELECTIVE ANDROGEN RECEPTOR MODULATORS
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SARM RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
THIS AGREEMENT, effective the 22nd day of June, 2001 (the "Effective
Date") is by and between TAP PHARMACEUTICAL PRODUCTS INC., a Delaware
corporation, having its principal place of business at 675 North Field Drive,
Lake Forest, Illinois 60045 ("TAP") and LIGAND PHARMACEUTICALS INCORPORATED, a
Delaware corporation, having its principal place of business at 10275 Science
Center Drive, San Diego, California 92121 ("LIGAND").
R E C I T A L S
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WHEREAS, LIGAND has developed expertise, proprietary rights and
compounds relating to the discovery and development of pharmaceutical products
for the treatment and prevention of certain disease indications mediated through
the androgen receptor; and
WHEREAS, TAP has expertise in the development, marketing and sales of
pharmaceutical products; and
WHEREAS, TAP and LIGAND desire to engage in a joint effort to
discover, develop and commercialize pharmaceutical products that are small
molecule compounds which act through the androgen receptor; and
WHEREAS, in conjunction with such joint research, development and
commercialization, TAP desires to sponsor certain research and development
activities to be carried out by LIGAND and LIGAND and TAP desire that TAP
develop, register and commercialize products resulting from the joint research
and development.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, TAP and LIGAND agree as follows:
ARTICLE 1
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DEFINITIONS
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For the 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 a party, any other business
entity that directly or indirectly controls, is controlled by, or is under
common control with, such party. A business entity or party shall be regarded as
in control of another business entity if it owns or, directly or indirectly
controls (a) in the case of corporate entities at least *** percent (***%) (or
the maximum ownership interest permitted by law) of the equity securities in the
subject entity entitled to vote in the election of directors and (b) in the case
of an entity that is not a corporation, at least *** percent (***%) (or the
maximum ownership interest permitted by law) of the equity securities or other
ownership interests with the power to direct the management and policies of such
subject entity by any means whatsoever or entitled to elect the corresponding
management authority. Notwithstanding the foregoing, for purposes of this
Agreement, neither
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Abbott Laboratories nor Takeda Chemical Industries, Ltd. or any of their
subsidiary companies shall be deemed an "Affiliate" of TAP and such entities
shall be third parties for all purposes hereunder.
1.2"AGGREGATE ANNUAL RESEARCH FEE" shall mean the fee for a Contract
Year as set forth in the table in Section 3.2 unless modified by mutual
agreement of LIGAND and TAP.
1.3"ANNUAL RESEARCH FEE" shall mean on a per FTE basis (a) for the
first year of the Research Program, *** dollars ($***), and (b) for each
subsequent year of the Research Program, the Annual Research Fee for the
previous year increased by the percentage increase during the previous year in
the Consumer Price Index (CPI) as published by the U.S. Department of Labor,
Bureau of Labor Statistics. If such index ceases to be published, then such
index shall be replaced with the index that most closely resembles the
performance of such index, as determined by the mutual agreement of the parties.
1.4"CLINICAL CANDIDATE" shall mean a Research Compound selected by TAP
for pre-clinical development directed towards the filing of an IND.
1.5"CONTRACT YEAR" shall mean the *** period from the Effective Date
and each subsequent *** period during the Research Program Term.
1.6"DESIGNATED TARGET" shall mean the androgen receptor.
1.7"FDA" shall mean the United States Food and Drug Administration,
any successor entity thereto and any foreign equivalent thereof.
1.8"FIRST COMMERCIAL SALE" shall mean the first sale by TAP, its
Affiliates or sublicensees of a Licensed Product in a country after any required
marketing approval has been granted by the governing health authority of such
country.
1.9"FULL DEVELOPMENT" shall mean development and testing of a Clinical
Candidate in humans from its declaration as a Clinical Candidate by TAP through
approval by the appropriate regulatory authorities to market such Clinical
Candidate as a Licensed Product in the TAP Field.
1.10"FTE" shall mean the full-time equivalent of the scientific work
of one (1) scientist for *** which equates to a total of *** or *** of
scientific work on or directly related to the Research Program. Each LIGAND
scientist billed to the Research Program may be an equivalent of less than or
greater than one FTE, based on their hours worked, to meet Research Program
requirements.
1.11"IND" shall mean an Investigational New Drug Application as
defined in the United States Food, Drug and Cosmetic Act and regulations
promulgated thereunder, or any corresponding foreign equivalent thereof or
comparable regulatory or scientific filing to initiate human clinical exposure.
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1.12"JOINT RESEARCH COMMITTEE" or "JRC" shall mean the joint research
committee composed of representatives of LIGAND and TAP described in Section 4.1
hereof.
1.13"JOINT DEVELOPMENT COMMITTEE" or "JDC" shall mean the joint
development committee composed of representatives of LIGAND and TAP described in
Section 5.2 hereof.
1.14"LICENSED PRODUCT" shall mean a Clinical Candidate that has been
approved for marketing in the Territory by TAP, its Affiliates or sublicensees.
1.15"LIGAND FIELD" shall mean the treatment or prevention of prostate
cancer, benign prostatic hyperplasia, acne and hirsutism.
1.16"NDA" shall mean a New Drug Application as defined in the United
States Food, Drug and Cosmetic Act and the regulations promulgated thereunder,
or any corresponding foreign equivalent thereof.
1.17"NET SALES" shall mean:
A. With respect to a Licensed Product containing a Research Compound
as its sole pharmaceutically active ingredient, the gross
invoiced sales of such Licensed Product by a party, its
Affiliates or sublicensees to unrelated third parties less the
following deductions:
***
***
***
B. With respect to a Licensed Product containing a Research Compound
and one or more other pharmaceutically active ingredients which
is not a Research Compound, the gross invoiced sales of such
Licensed Product in a particular country by a party, its
Affiliates and its sublicensees to unrelated third parties less
the deductions
***
***
***
1.18 "PATENT RIGHTS" shall mean (a) all patent applications heretofore
or hereafter filed in any country within the Territory owned by or licensed to a
party, or to which a party otherwise
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acquires rights, claiming a Research Compound, Clinical Candidate or Licensed
Product, formulations of any of the foregoing, the process of manufacture or use
of a Research Compound, Clinical Candidate or Licensed Product, together with
any and all patents that have issued or in the future issue therefrom and (b)
all divisionals, continuations, continuations-in-part, reexaminations, reissues,
renewals, extensions or additions to any such patents and patent applications
and patents issuing thereon, as well as foreign equivalents of the foregoing;
all to the extent and only to the extent that such party now has or hereafter
will have the right to grant licenses or other rights thereunder; provided,
however, Patent Rights shall not include U.S. Patent No. *** and any
divisionals, continuations, continuations-in-part, reexaminations, reissues,
renewals, extensions or additions to such patent, as well as foreign equivalents
of the foregoing, unless such patent (or any of the foregoing) includes any
claim covering a compound listed on EXHIBIT B in which case such patent (or any
of the foregoing) shall be included in the Patent Rights. For purposes of
illustration, Patent Rights shall include, but are not limited to U.S. Patent
Application Serial Number *** .
1.19 "RESEARCH COMPOUND" shall mean (a) a compound which is identified
or confirmed as acting through or mediating the activity of the Designated
Target in the Research Program and synthesized during the Research Program Term,
or (b) LIGAND's selective modulators of the androgen receptor listed on EXHIBIT
B hereto.
1.20 "RESEARCH PROGRAM" shall mean, subject to Sections 3.3 and 14.3,
the three (3) year program of research and testing in which LIGAND and TAP will
participate and which is described generally in the Draft Technical Operating
Plan set forth in Article 3 and EXHIBIT A hereto, as the same may be revised
from time to time as provided in this Agreement.
1.21 "RESEARCH PROGRAM TERM" shall mean, subject to Sections 3.3 and
14.3, the three (3) year period of the Research Program measured from the
Effective Date, and any renewals and any mutually agreed extensions thereof.
1.22 "ROYALTY TERM" shall mean, on a country-by-country basis, with
respect to each Licensed Product in each country, the period of time equal to
the longer of (a) *** from the date of the First Commercial Sale of a Licensed
Product, (b) the date on which *** (c) with respect to the last patent, other
than a Significant Patent, that provides Meaningful Exclusivity and that
contains a Valid Claim, the earlier of (i) *** or (ii) *** or (d) solely in the
case of a country that is not a member country of the World Trade Organization,
*** . As used herein, "Meaningful Exclusivity" shall mean *** percent ( *** %)
or more of the independently audited annual sales volume of all forms and
formulations of products containing a Research Compound sold in a particular
country, provided that the form and source of the independently audited annual
sales volume data are satisfactory to both LIGAND and TAP and from a source such
as IMS (Intercontinental Medical Statistics) or similar provider of such data.
All expenses for such audited annual sales data will be the sole responsibility
of that party which would otherwise owe a royalty.
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1.23 "SIGNIFICANT PATENT" shall mean a patent within Patent Rights
that contains a Valid Claim covering either (a) the composition of a Research
Compound contained in a Licensed Product or (b) one of the registered
indications of a Licensed Product.
1.24 "TAP FIELD" shall mean the treatment or prevention of
hypogonadism, male sexual dysfunction, female sexual dysfunction, female
osteoporosis, frailty, male hormone replacement therapy and all other
indications, other than those within the LIGAND Field, with a Licensed Product.
1.25 "TERRITORY" shall mean the entire world.
1.26 "VALID CLAIM" shall mean any claim of an issued or granted and
unexpired patent included in Patent Rights, which claim has neither (i) been
held invalid or unenforceable by a court or agency of competent jurisdiction
(following exhaustion of all possible appeal processes), nor (ii) been admitted
by the patentee to be invalid or unenforceable.
ARTICLE 2
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REPRESENTATIONS, WARRANTIES AND COVENANTS
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Each party hereby represents, warrants and covenants to the other
party as follows:
2.1 CORPORATE EXISTENCE AND POWER. Such party (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
state in which it is incorporated, (b) has the corporate power and authority and
the legal right to own and operate its property and assets, to lease the
property and assets it operates under lease, and to carry on its business as it
is now being conducted, and (c) is in compliance with all known requirements of
applicable law, except to the extent that any noncompliance would not have a
material adverse effect on the properties, business, financial or other
condition of such party and would not materially adversely affect such party's
ability to perform its obligations under this Agreement ("Material Adverse
Effect").
2.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
reasonably necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms, subject to the effects of bankruptcy, insolvency
or other laws of general application affecting the enforcement of creditor
rights and judicial principles affecting the availability of specific
performance and general principles of equity whether enforceability is
considered a proceeding at law or equity.
2.3 CONSENTS. All necessary consents, approvals and authorizations of
all governmental authorities and other persons required to be obtained by such
party in connection with the execution, delivery and performance of this
Agreement have been and shall be obtained, except to the extent such failure to
obtain would not have a Material Adverse Effect on such party.
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2.4 NO CONFLICT. Notwithstanding anything to the contrary in this
Agreement, the execution and delivery of this Agreement and the performance of
such party's obligations hereunder (a) do not, to the best of its knowledge,
conflict with or violate any requirement of applicable laws or regulations
reasonably known to a party and (b) do not and shall not, to the best of its
knowledge, conflict with, violate or breach or constitute a default or require
any consent under, any contractual obligation of such party, except to the
extent that such violation, breach, default or the failure to obtain such
consent would not have a Material Adverse Effect on such party.
2.5 INTELLECTUAL PROPERTY. Such party (a) owns or is the licensee in
good standing of all Patent Rights, trade secrets and other intellectual
property to be used by it in connection with the Research Program, except to the
extent that such use is to be based upon patents, trademarks and other
intellectual property furnished by the other party pursuant to this Agreement;
(b) has received no notice of infringement or misappropriation of any alleged
rights asserted by any third party in relation to any technology to be used by
it in connection with the Research Program; (c) is not in default with respect
to any third-party agreement under which it has rights to be used by it in
connection with the Research Program; and (d) is not aware of any patent, trade
secret or other right of any third party which could materially adversely affect
its ability to carry out its responsibilities under the Research Program or the
other party's ability to exercise or exploit any license granted to it under
this Agreement. Such party agrees to immediately notify the other party in
writing in the event such party hereafter receives a notice of the type referred
to in (b) above, becomes in default under any third-party agreement referred to
in (c) above, or becomes aware of any patent, trade secret or other right of the
nature referred to in (d) above.
2.6 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY LIGAND OR TAP (A) THAT
ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE
PATENT RIGHTS, (B) THAT ANY PATENT WITHIN THE PATENT RIGHTS WHICH ISSUES WILL BE
VALID OR ENFORCEABLE, OR (C) THAT, EXCEPT FOR THE PROVISIONS OF SECTION 2.5
HEREIN WHICH SHALL NOT BE AFFECTED BY THIS SECTION 2.6, THE USE OF ANY LICENSE
GRANTED HEREUNDER OR THE USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT
OR PROPRIETARY RIGHTS OF ANY OTHER PERSON. FURTHERMORE, NEITHER LIGAND NOR TAP
MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PATENT RIGHTS EXCEPT AS PROVIDED IN SECTION 2.5.
ARTICLE 3
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RESEARCH PROGRAM
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3.1 Research Procedures.
3.1.1 CONDUCT OF RESEARCH. LIGAND and TAP each shall conduct the
work assigned to it in the Research Program in good scientific manner, and in
compliance in all material respects with all requirements of applicable laws and
regulations and with all applicable good laboratory practices and good
manufacturing practices to attempt to achieve its objectives hereunder
efficiently and expeditiously. LIGAND and TAP each shall proceed diligently with
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the work set out in the Research Program assigned to it by using their
respective good faith efforts to provide, among others, the following resources:
(a) in the case of LIGAND, allocation of that number of FTEs per year
determined by dividing the Aggregate Annual Research Fee for a
Contract Year by the Annual Research Fee for that year, using
personnel with sufficient skills and experience, together with
sufficient equipment and facilities, to carry out LIGAND's
obligations under the Research Program and to accomplish the
objectives thereunder, provided, however, that at least *** ( ***
%) of the FTEs shall be made up of persons engaged full time in
the Research Program; and
(b) in the case of TAP, allocation of a reasonable amount of time and
effort, using personnel or third parties with sufficient skills
and experience, together with sufficient equipment and
facilities, to carry out TAP's obligations under the Research
Program and to accomplish the objectives thereunder.
3.1.2 SCREENING RESPONSIBILITY. LIGAND shall be responsible for
conducting *** as set forth in the Research Program and as designated by the JRC
and shall promptly inform TAP and the JRC of the progress and results thereof.
3.1.3 USE OF RESEARCH FUNDING. LIGAND shall use the research
funding it receives from TAP under the Agreement for the purpose of achieving
the objectives of the Research Program.
3.1.4 SUBCONTRACTS DURING RESEARCH PROGRAM. Neither LIGAND nor
TAP shall subcontract to Affiliates or third parties portions of the Research
Program to be performed by it without the prior consent of the JRC, which
consent shall not be unreasonably withheld. Any agreement between a party and a
subcontractor shall contain confidentiality obligations equivalent in scope to
the confidentiality obligations contained in this Agreement to protect LIGAND's
confidential information for as long a duration as is reasonably possible, up to
the duration of TAP's obligations contained herein but in any case not less than
*** beyond the conclusion of work contemplated in the Agreement with the
subcontractor, and shall be in compliance in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory practices and good manufacturing practices. The contracting
party shall supervise and be responsible under this Agreement for such
subcontract work.
3.2 FUNDING OF THE RESEARCH PROGRAM. In consideration for LIGAND's
performance of its obligations under the Research Program, TAP shall pay LIGAND,
at a minimum, an amount equal to *** percent ( *** %) of the Aggregate Annual
Research Fee set forth below on a quarterly basis in advance for services to be
performed by LIGAND under the Research Program. The first payment shall be due
and payable on the fifth business day following the
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Effective Date. Subsequent payments shall be due and payable on or before the
fifteenth business day prior to the commencement of each subsequent quarterly
period.
MINIMUM MINIMUM AGGREGATE
CONTRACT YEAR FTES ANNUAL RESEARCH FEE
*** *** ***
*** *** ***
*** *** ***
*Subject to CPI adjustment per Section 1.3 herein
The FTEs and Aggregate Annual Research Fee shown above is the minimum amount to
be allocated by LIGAND and paid by TAP under the Research Program, and may be
increased as recommended by the JRC, and approved in writing by TAP and LIGAND.
In the event this Agreement is terminated by TAP pursuant to Section 14.2, TAP
shall be entitled to (a) a *** refund of the minimum Aggregate Annual Research
Fee previously paid to LIGAND for the particular quarterly period during which
the Agreement is terminated as well as (b) a *** refund of all payments which
have been made for any subsequent quarterly period, to the extent such amounts
have already been paid. Such refund shall be made by LIGAND to TAP within
forty-five (45) days of the date that TAP terminates this Agreement. Within
thirty (30) days after the end of each Contract Year, a reconciliation shall be
made based upon the records of LIGAND and LIGAND shall remit to TAP the excess,
if any, of the Aggregate Annual Research Fee for such Contract Year, if any,
over the product of the Annual Research Fee for such Contract Year multiplied by
the number of LIGAND FTEs used in the Research Program during such Contract
Year.
3.3 ANNUAL RENEW OPTION. TAP shall have the option to extend the
original term of the three-(3) year Research Program by up to two (2) additional
one-(1) year terms. At least *** prior to the *** anniversary of the Effective
Date, TAP shall provide LIGAND with written notice of its intent to extend the
Research Program for an *** . Should TAP desire to further extend the Research
Program for yet *** it shall provide LIGAND with written notice of its intent at
least *** prior to the extended *** anniversary of the Effective Date. The
amount paid to LIGAND per FTE shall, at a minimum, be in accordance with Section
1.3 herein, and the Aggregate Annual Research Fee shall, at a minimum, be the
same as for Contract Year *** under Section 3.2 herein, plus any increase for
CPI adjustments per Section 1.3 herein, unless otherwise authorized by the JRC.
3.4 LIGAND RESEARCH PROGRAM EXPENSES. TAP shall reimburse LIGAND for
all reasonable expenses authorized by the JRC and incurred by LIGAND, which are
not covered by the Aggregate Annual Research Fee, within thirty (30) days of the
presentation of an invoice by LIGAND for the same.
3.5 EXCLUSIVITY.
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3.5.1 During the Research Program Term, subject to Section 3.5.2,
LIGAND and TAP shall work exclusively with each other, whether directly,
indirectly or through an Affiliate, in the TAP Field; provided, TAP shall have
the right to distribute and/or co-promote Androgel with Unimed Pharmaceuticals,
Inc. pursuant to that certainCo-Promotion Agreement dated 1 June 2001.
3.5.2 Notwithstanding the provisions of Section 3.5.1 above, but
subject to TAP's license rights under Article 6 below and the parties'
confidentiality obligations set forth in Articles 11 and 12 below, LIGAND shall
have the right to ***
3.6 RESEARCH PROGRAM RECORDS AND REPORTS.
3.6.1 RECORDS. LIGAND and TAP each shall maintain records, in
sufficient detail and in good scientific manner appropriate for patent purposes,
which shall be complete and accurate and shall fully and properly reflect all
work done and results achieved in the performance of the Research Program
(including all data in the form required under all applicable laws and
regulations). Such records shall include books, records, reports, research
notes, charts, graphs, comments, computations, analyses, recordings,
photographs, computer programs and documentation thereof, computer information
storage means, samples of materials and other graphic or written data generated
in connection with the Research Program including any data required to be
maintained pursuant to all requirements of applicable laws and regulations.
3.6.2 INSPECTION OF RECORDS. LIGAND and TAP each, at its own
expense, shall have the right, during normal business hours and upon reasonable
notice, to inspect and copy all scientific and technical records and reports
related to the Research Program and reasonably deemed relevant by the JRC for
the performance of such party's obligations hereunder. Each party shall maintain
such records and the information of the other party contained therein in
confidence in accordance with Section 11.1 below and shall not use such records
or information except to the extent otherwise permitted by the Agreement.
3.6.3 RESEARCH REPORTS. LIGAND and TAP each shall keep the other
party fully informed as to all discoveries and technical developments made under
the Research Program. LIGAND and TAP each shall prepare, and distribute to the
other party, a reasonably detailed written summary report at the meetings of the
JRC, but no later than *** of the actual work being completed, whichever time
period is shorter. LIGAND and TAP shall, upon the reasonable request of the
other party, provide the requesting party with appropriate final reports of
research studies conducted under the Research Program for use in connection with
the filing of an IND or Full Development of a Research Compound as contemplated
hereunder ("Final Reports"). During the Research Program Term, the preparation
of Final Reports shall be at no charge to the requesting party; following the
Research Program Term, the requesting party may obtain such Final Reports only
if such party agrees to pay the reasonable direct costs associated with the
preparation of such Final Reports.
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***
ARTICLE 4
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MANAGEMENT OF THE RESEARCH PROGRAM
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4.1 JOINT RESEARCH COMMITTEE.
4.1.1 COMPOSITION OF THE JRC. The Research Program and all
pre-clinical testing of Research Compounds, including Clinical Candidates, shall
be conducted under the direction of the JRC. The JRC shall be composed of three
(3) named representatives of TAP and three (3) named representatives of LIGAND.
The initial members of the JRC shall be as set forth below:
LIGAND REPRESENTATIVES TAP REPRESENTATIVES
*** ***
*** ***
*** ***
Each party may replace one or more of its representatives on the JRC from time
to time in its sole discretion, with prior written notice to the other party.
4.1.2 RESPONSIBILITIES OF THE JRC. The JRC shall supervise and
coordinate the Research Program. In addition to the other responsibilities
specifically given to the JRC in this Agreement, the JRC shall also, for
example, (a) review the research by LIGAND and TAP under the Research Program
and the pre-clinical testing of Research Compounds before commencement of Full
Development, (b) monitor the progress of the Research Program and evaluate the
work performed and the results obtained in relation to the goals of the Research
Program, (c) plan future activities under, and make any necessary or desirable
modifications to, the Research Program, (d) subject to the minimum FTE
requirement of Section 3.2, recommend adjustment to the size and composition of
LIGAND's research team , (e) recommend Research Compounds for further evaluation
by the parties under the Research Program and for designation as Clinical
Candidates (typically conducted *** prior to anticipated IND filing) and (f)
recommend Clinical Candidates for Full Development by TAP.
4.1.3 MEETINGS OF THE JRC. The JRC shall meet at least once each
three (3) month period during the Research Program Term, at such times and
places as agreed to by LIGAND and TAP, alternating between San Diego and Lake
Forest, or such other locations as the parties shall agree. LIGAND shall be
responsible for hosting the first meeting of the JRC. The JRC shall continue to
meet after the expiration of the Research Program so long as TAP, its Affiliates
or sublicensees are developing Research Compounds that have not commenced Full
Development. Meetings of the JRC may be attended by such other directors,
officers, employees, consultants and other agents of LIGAND and TAP as the
parties from time to time
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reasonably agree. The party hosting a JRC meeting shall submit an agenda to the
other party at least thirty (30) days prior to the JRC meeting the party is
hosting. Such an agenda shall be freely amendable by the parties up to five (5)
days prior to the meeting. The party hosting each meeting of the JRC promptly
shall prepare, and deliver to the other party within fifteen (15) business days
after the date of such meeting, minutes of such meeting setting forth all
decisions of the JRC relating to the Research Program in form and content
reasonably acceptable to the other party. Minutes shall be deemed approved
unless any member of the JRC objects to the accuracy of such minutes in writing
to the other party within *** after receipt. If a party objects to the minutes
and the objection is not resolved, the objection will be deemed a dispute and
resolved pursuant to Article 20 hereof. In addition to the quarterly in-person
meetings described herein, the JRC may schedule additional in-person and
telephonic meetings, as necessary, in which case the party desiring to hold the
additional meeting shall be responsible for preparing the agenda and minutes of
such meeting as described herein.
4.1.4 ACTIONS BY THE JRC. Any approval, determination or other
action agreed to by a majority of the TAP members and a majority of the LIGAND
members of the JRC present at the relevant JRC meeting (whether quarterly or
otherwise and either in-person or telephonic) shall be the approval,
determination or other action of the JRC; provided, however, that at least two
(2) representatives of each party shall be present at such meeting.
4.2 DISAGREEMENTS. All disagreements within the JRC shall be resolved
in the following manner:
4.2.1 Within *** of the relevant JRC meeting, the representatives
of the JRC shall present the disagreement to *** on behalf of LIGAND, and *** on
behalf of TAP or their designees.
4.2.2 Such executives shall confer within *** of the relevant JRC
meeting to discuss each party's view and to explain the basis for their
respective positions of such disagreement, and in good faith shall attempt to
resolve such disagreement between themselves.
4.2.3 If such executives cannot resolve such disagreement within
*** of the relevant JRC meeting, then such disagreement shall be resolved
pursuant to Article 20 hereof.
4.3 AVAILABILITY OF EMPLOYEES. Each party shall make its employees
engaged in the Research Program and relevant reports of non-employee consultants
available, upon reasonable notice during normal business hours, at their
respective places of employment to consult with the other party on issues
arising during the Research Program and in connection with any request from any
regulatory agency, including regulatory, scientific, technical and clinical
testing issues.
4.4 VISIT OF FACILITIES. Representatives of LIGAND and TAP may, upon
reasonable notice during normal business hours, (a) visit the facilities where
the Research Program is being conducted, to the degree that such rights can be
reasonably acquired from third parties (b) consult informally, during such
visits and by telephone, with personnel of the other party
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performing work on the Research Program, and (c) with the other party's prior
approval, which approval shall not be unreasonably withheld, visit the sites of
any experiments being conducted by such other party in connection with the
Research Program. On such visits, an employee of the party conducting the
research or development shall accompany the employee(s) of the visiting party.
If requested by the other party, LIGAND and TAP shall cause appropriate
individuals working on the Research Program to be available for meetings at the
location of the facilities where such individuals are employed at times
reasonably convenient to the party responding to such request.
ARTICLE 5
---------
DEVELOPMENT PROGRAM
-------------------
5.1 RECOMMENDATION OF CLINICAL CANDIDATES. LIGAND, TAP and/or the JRC
from time to time shall make recommendations of Research Compounds as Clinical
Candidates for development by TAP, including Full Development. TAP shall have
the right in its sole discretion, but without the obligation, to select Research
Compounds as Clinical Candidates (Declaration of Clinical Candidate) and shall
give prompt written notice to LIGAND of each such selection. TAP shall conduct
such development of each such selected Clinical Candidate as TAP desires and
shall inform LIGAND, the JRC and/or JDC, as appropriate, of the progress and
results thereof. TAP, at its sole expense, shall fund the costs of development
of any such Clinical Candidate.
5.2 Joint Development Committee.
5.2.1 COMPOSITION OF THE JDC. The Joint Development Committee
("JDC") shall be composed of two (2) named representatives of TAP and two (2)
named representatives of LIGAND. TAP and LIGAND shall identify the initial
members of the JDC within thirty (30) days of the commencement of Full
Development for the first Clinical Candidate by TAP. Each party may replace one
or more of its representatives on the JDC from time to time in its sole
discretion, with prior written notice to the other party.
5.2.2 RESPONSIBILITIES OF THE JDC. The purposes of the JDC shall
be to monitor and comment upon the Full Development of Clinical Candidates
through the initiation of Phase III Clinical Trials. As part of its
responsibilities, the JDC shall review and recommend clinical development plans
and progress on Phase I and Phase II studies, through initiation of Phase III
studies. The party hosting each meeting of the JDC promptly shall prepare, and
deliver to the other party within thirty (30) days after the date of such
meeting, minutes of such meeting setting forth all recommendations of the JDC
relating to the Full Development of each Clinical Candidate in form and content
reasonably acceptable to the other party.
5.2.3 MEETINGS OF THE JDC. The JDC shall meet at least once each
four (4) month period during the period of time any Clinical Candidate is
undergoing Full Development, through the initiation of Phase III Clinical Trials
for the last Clinical Candidate in Full Development, at such times and places as
agreed to by LIGAND and TAP, alternating between San Diego and Lake Forest, or
such other locations as the parties shall agree. Meetings of the JDC may be
attended by such other directors, officers, employees, consultants and other
agents of LIGAND and TAP as the parties from time to time reasonably agree.
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5.2.4 RECOMMENDATIONS BY THE JDC. Any recommendations agreed upon
to by a majority of the TAP members and a majority of the LIGAND members of the
JDC present at the relevant JDC meeting shall be reviewed and given serious
consideration by TAP, its Affiliates or sublicensees in the Full Development of
Clinical Candidates.
5.3 FULL DEVELOPMENT. TAP, at its sole expense, shall fund the costs
of Full Development of Clinical Candidates and Licensed Products.
Notwithstanding anything else in this Agreement, but subject to LIGAND's rights
under Article 6, TAP shall have the sole discretion to determine which Clinical
Candidates and/or Licensed Products to develop or market, or to continue to
develop or market, those for which regulatory approval to market will be sought,
and when and where and how and on what terms and conditions, to market such
Licensed Products in the Territory. LIGAND shall within a reasonable period of
time transfer all relevant technical information relating to a particular
Clinical Candidate in Full Development by TAP to TAP prior to the initiation by
TAP of Phase II studies with respect to such Clinical Candidate; provided LIGAND
shall have no obligation to transfer to TAP any LIGAND Information (as defined
in Section 11.2 below) related to LIGAND's proprietary technologies or processes
not licensed hereunder.
5.4 DEVELOPMENT INFORMATION. TAP shall keep LIGAND informed as to the
progress of Clinical Candidates and Licensed Products through Full Development
within the TAP Field, and the filing and obtaining of the approvals necessary
for marketing. Within *** after the end of the second calendar quarter following
the designation of a Clinical Candidate by TAP and every *** thereafter, TAP
shall provide to LIGAND a reasonably detailed written report which shall
describe the progress and plans, including clinical development plans, for each
Clinical Candidate and any resulting Licensed Products, all as supported by
adequate updated data.
5.5 TAP'S DILIGENCE OBLIGATIONS. TAP shall use its good faith efforts
to conduct such pre-clinical and human clinical trials as TAP determines are
necessary or desirable to obtain regulatory approvals to manufacture and market
Licensed Products in the Territory as TAP desires and diligently to develop,
seek necessary approval to market, commence marketing and market Licensed
Products in the Territory.
5.6 VISIT OF FACILITIES. Representatives of LIGAND and TAP may, upon
reasonable notice during normal business hours, with the other party's prior
approval, which approval shall not be unreasonably withheld, visit the sites of
any experiments being conducted by such other party in connection with Full
Development to the degree that such rights can reasonably be acquired from third
parties. On such visits, an employee of the party conducting the development
shall accompany the employee(s) of the visiting party. If requested by the other
party, LIGAND and TAP shall cause appropriate individuals working on Full
Development to be available for meetings at the location of the facilities where
such individuals are employed at times reasonably convenient to the party
responding to such request.
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ARTICLE 6
---------
LICENSES -- RESEARCH, DEVELOPMENT,
----------------------------------
MARKETING AND MANUFACTURING
---------------------------
6.1 LICENSE GRANT TO TAP. Subject to the provisions hereof, LIGAND
hereby grants to TAP an exclusive license, with the right to sublicense, within
the TAP Field and Territory under LIGAND's Patent Rights and trade secrets, to
make, have made, use, have used, import, export, sell, offer for sale, have sold
or otherwise have developed or develop Clinical Candidates selected for Full
Development by TAP hereunder. The license granted in this Section 6.1shall not
include a license to, or the right to practice or otherwise use LIGAND's
co-transfection technology, or any other LIGAND technology useful in the
identification and/or characterization of Research Compounds. The license
provided in this Section 6.1 shall be exclusive even as to LIGAND, except as
otherwise provided in Sections 6.4 and 6.5 of this Agreement.
6.2 LICENSE GRANT TO LIGAND. Subject to the provisions hereof, TAP
hereby grants to LIGAND an exclusive license, with the right to sublicense,
within the LIGAND Field, which license shall be exclusive even as to TAP with
respect to Research Compounds, under TAP's Patent Rights and trade secrets
throughout the Territory, including TAP's rights in any jointly owned Patent
Rights, which would be infringed but for such license, to make, have made, use,
have used, sell, offer for sale, have sold, export and import products within
the LIGAND Field. Subject to Section 3.5.1, TAP retains the right to practice
TAP Inventions (as defined in Section 13.1 below) for any purpose whatsoever in
any and all fields other than the LIGAND Field.
6.3 LIMITATION ON SUBLICENSE RIGHTS. Each party shall deliver a copy
of each sublicense to the other party promptly after execution. In addition to
provisions allowing such party to disclose the existence of any sublicense and
its terms to the other party, any sublicense granted by a party shall contain
terms and conditions substantially similar to *** of this Agreement, but no
sublicense or other agreement shall relieve a party of any obligations under
this Agreement.
6.4 LIGAND OPTION. No less than *** prior to the expiration of the
initial three (3) year term of the Research Program, LIGAND may provide written
notice (the "LIGAND Notice") to TAP of its intent to exercise the LIGAND Option
(as defined below). Within *** of TAP's receipt of the Ligand Notice, TAP shall
have the right to select up to a maximum of *** Research Compounds, a minimum of
*** of which shall have been declared Clinical Candidates. Within *** following
the expiration of the initial three (3) year term of the Research Program and
following delivery of the LIGAND Notice, LIGAND shall have the right to select
(the "LIGAND Option") for development and commercialization one (1) Research
Compound and one (1) backup Research Compound for indications within the TAP
Field (the "Selected Research Compound(s)"), said Research Compound and backup
Research Compound being selected from among those Research Compounds that TAP
has not selected hereunder. Following LIGAND's exercise of the LIGAND Option,
LIGAND shall have the exclusive, worldwide right and license, including the
right to grant sublicenses, to develop and commercialize the Selected Research
Compound(s) in the TAP Field. TAP shall have the right,
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exercisable within *** after the receipt of Phase IIA data from LIGAND for the
Selected Research Compound(s), to negotiate with LIGAND regarding the
co-development and co-promotion of said Selected Research Compound(s) for any
indications within the TAP Field within the United States and Canada. The terms
of such co-development and co-promotions shall be negotiated in good faith
between the parties for a period of up to *** following LIGAND's delivery of
Phase IIA Data for the Selected Research Compound(s). If LIGAND and TAP are
unable to agree upon the terms of such co-development and co-promotion within
said *** period of time, then LIGAND agrees that it shall not offer
substantially more favorable terms to a third party for the right to co-develop
and co-promote the Selected Research Compound(s) within the TAP Field and within
the United States and Canada without first offering the same terms to TAP.
Should TAP choose not to exercise its right to negotiate for the co-development
and co-promotion of the Selected Research Compound(s), then LIGAND shall be
required to report and pay a royalty of *** percent ( *** %) of the Net Sales of
such Selected Research Compound(s) within the TAP Field in the same manner as
TAP under Articles 7, 8 and 9 of this Agreement, except that no such royalty
shall be owed by LIGAND to TAP with respect to Research Compound(s) listed on
EXHIBIT B hereto, unless such Research Compounds were the subject of ***
relevant IN VIVO (animal) studies under the Research Program.
6.5 AFTER EXPIRATION. Within *** of the end of the Research Program
Term, TAP shall have the right to select additional Research Compounds (other
than Selected Research Compounds) to the extent necessary to replace any
Research Compounds previously selected by TAP under Section 6.4 (including any
Clinical Candidates previously included therein) and subsequently dropped from
development by TAP, such that TAP shall have up to *** Research Compounds, a
minimum of *** of which shall have been declared Clinical Candidates, selected
under this Section 6.5 and under Section 6.4 at the end of *** period following
the end of the Research Program Term. LIGAND shall then have the right in its
sole discretion at its sole expense, for its own benefit or together with an
Affiliate or a third party, to develop and commercialize within the Territory
for any and all indications, any Research Compound(s) not selected by TAP under
this Section 6.5 ("Remaining Research Compounds"). LIGAND shall be required to
report and pay a royalty of *** percent ( *** %) of the Net Sales of such
Remaining Research Compound(s) within the TAP Field in the same manner as TAP
under Articles 7, 8 and 9 of this Agreement, except that no such royalty shall
be owed with respect to Research Compound(s) listed on EXHIBIT B hereto, unless
such Research Compounds were the subject of *** relevant IN VIVO (animal)
studies under the Research Program.
6.6 INFORMATION CONCERNING SELECTED RESEARCH COMPOUNDS. LIGAND shall
keep TAP informed as to the progress of any Selected Research Compounds or
Remaining Research Compounds to which LIGAND shall have rights pursuant to
Section 6.4 or 6.5, respectively, through approval by the appropriate regulatory
authorities to market any such Selected Research Compound or Remaining Research
Compound as a product in the TAP Field, including the filing and obtaining of
the approvals necessary for marketing. Within *** after the end of the ***
following the exercise of LIGAND's option under Section 6.4 and every ***
thereafter, LIGAND shall provide to TAP a reasonably detailed written report
which shall describe the progress and plans, including clinical development
plans, for each Selected Research Compound,
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all as supported by adequate updated data. LIGAND shall provide TAP with the
opportunity to discuss the information contained in any such reports with
appropriate LIGAND personnel.
ARTICLE 7
---------
FEES, ROYALTIES AND
-------------------
MILESTONE PAYMENTS
------------------
7.1 ROYALTIES PAYABLE BY TAP. TAP shall pay to LIGAND, throughout the
Royalty Term, royalties on Licensed Products equal to the following percentages
of Net Sales calculated each year on a product-by-product basis, by TAP, its
Affiliates and sublicensees in the Territory:
ANNUAL NET SALES (IN MILLIONS)
PERCENTAGE OF EACH LICENSED PRODUCT IN THE TERRITORY
---------- -----------------------------------------
*** ***
*** ***
*** ***
For the purposes of clarification, when determining the applicable royalty
percentage set forth above, the annual Net Sales of all forms, formulations and
combinations of a particular Licensed Product across the Territory shall be
aggregated.
Royalties under this Article 7 shall be payable only once with respect to a
given Licensed Product, regardless of the number of Valid Claims within the
Patent Rights pertaining to the Licensed Product, or the number of countries in
which the manufacture, use or sale of a given Licensed Product occurs.
7.2 ROYALTY OFFSET. Subject to the provisions of Section 10.1, if TAP
becomes obligated after the Effective Date, to pay royalties to any third party
in connection with the manufacture, use or sale of a Clinical Candidate or
Licensed Product within the TAP Field, *** percent ( *** %) of such royalties
shall be creditable against royalties otherwise payable to LIGAND under this
Agreement, provided such credit shall not exceed *** percent ( *** %) of the
royalty which would otherwise be payable to LIGAND.
7.3 MILESTONE PAYMENTS. As consideration for additional Clinical
Candidate and Licensed Product development milestones when achieved by LIGAND,
TAP shall make the following non-refundable payments to LIGAND.
7.3.1 PROVISION OF LGD2226 DRUG SUBSTANCE. TAP shall pay LIGAND
three million, five hundred thousand dollars ($3,500,000.00) when LIGAND
provides to TAP no less than 8 kg of GMP LGD2226 Drug Substance formally
released by LIGAND Quality Assurance and Quality Control as having passed all
appropriate quality tests, together with a comprehensive report which, in
LIGAND's judgment, summarizes the supporting information regarding: (a) the
LIGAND developed Drug Substance manufacturing process, (b) Drug Substance
analytical
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methods for release testing and stability monitoring developed by LIGAND, and
(c) development of LIGAND clinical prototype formulations (0.1 and 1 mg dose
sizes) of the Drug Substance. This payment cannot be offset against any other
payments due pursuant to this Agreement.
7.3.2 STAGES OF DEVELOPMENT. When the following Stages of
Development are achieved, TAP shall pay LIGAND the milestone payments at the
times set forth below with respect to each Clinical Candidate or Licensed
Product, as the case may be.
Stage of Development Milestone Payment (in millions)
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
TOTAL
As used herein, "Major Market" shall mean *** . "Major Market Approval" shall
mean final approval to market a Licensed Product in a Major Market, and
"Initiation" of Phase II or Phase III shall be deemed to occur upon the
enrollment of the first patient in the given Phase II or Phase III clinical
trial in a Major Market. If Milestone Payments are made on a Clinical Candidate
that does not achieve Major Market Approval for a given indication, then one (1)
backup Research Compound or Clinical Candidate at any one time, as the case may
be, can be substituted for the unapproved Clinical Candidate in the same
indication, and no additional Milestone Payments shall be due on the backup
Clinical Candidate until it has advanced beyond the last stage of development on
which a Milestone Payment was paid for the unapproved Clinical Candidate.
Milestone Payments pursuant to this Section 7.3.2 shall be payable only once for
each Clinical Candidate that achieves Major Market Approval. However, once a
Clinical Candidate achieves Major Market Approval, then all other Clinical
Candidates developed by TAP for the same indication shall be subject to their
own set of Milestone Payments pursuant to this Section 7.3.2, such that for each
additional Clinical Candidate receiving Major Market Approval, TAP shall pay
LIGAND the full set of Milestone Payments totaling *** dollars ($ *** ). No
additional milestone payments shall be due for additional Major Market Approvals
for each Clinical Candidate or Licensed Product.
ARTICLE 8
---------
ROYALTY REPORTS AND ACCOUNTING
------------------------------
8.1 REPORTS, EXCHANGE RATES. During the term of this Agreement
following the First Commercial Sale of a Licensed Product, TAP shall furnish to
LIGAND a written report within sixty (60) days of the end of each calendar
quarter showing in reasonably specific detail, on a country by country basis,
(a) the gross sales of all Licensed Products sold by TAP, its Affiliates
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and its sublicensees in the Territory during the Reporting Period (as defined in
this Section 8.1 below) to which the report is applicable and the calculation of
Net Sales from such gross sales; (b) the royalties payable in U.S. dollars, if
any, which shall have accrued hereunder based upon Net Sales of Licensed
Products; (c) withholding taxes, if any, required by law to be deducted in
respect of such sales; (d) the dates of the First Commercial Sales of any
Licensed Products in any country in the Territory during the Reporting Period;
and (e) the exchange rates used in determining the amount of U.S. dollars. With
respect to sales of Licensed Products invoiced in U.S. dollars, the gross sales,
Net Sales, and royalties payable shall be expressed in U.S. dollars. With
respect to sales of Licensed Products invoiced in a currency other than U.S.
dollars, the gross sales, Net Sales and royalties payable shall be expressed in
the domestic currency of the party making the sale together with the U.S. dollar
equivalent of the royalty payable, calculated using the Inter Bank rate set
forth in the International Report published by International Reports Inc. as
Foreign Exchange Rates quoted in New York on the day nearest the last business
day of the calendar quarter. As used in this Section 8.1, the term "Reporting
Period" shall mean the fiscal quarter ending on the final day of March, June,
September and December (as the case may be).
8.2 AUDITS.
8.2.1 Upon the written request of a party and not more than ***
in each calendar year, the other party shall permit an independent certified
public accounting firm of nationally recognized standing, selected by the party
requesting the audit and acceptable to the other party,(whose acceptance shall
not be unreasonably withheld) at the requesting party's expense, to have access
during normal business hours to such of the records of the other party as may be
reasonably necessary to verify the accuracy of the royalty reports hereunder for
any year ending not more than *** prior to the date of such request. The
accounting firm shall disclose to the requesting party only whether the records
are correct or not and, if applicable, the specific details concerning any
discrepancies. No other information shall be shared unless the audited party
invokes the dispute resolution proceedings of Article 20.
8.2.2 If such accounting firm concludes that additional royalties
were owed during such period, the audited party shall pay the additional
royalties within *** of the date the requesting party delivers to the audited
party such accounting firm's written report so concluding. The fees charged by
such accounting firm shall be paid by the requesting party; PROVIDED, HOWEVER,
if the audit discloses that the royalties payable by the audited party for the
audited period are more than *** percent ( *** %) of the royalties actually paid
for such period, then the audited party shall pay the reasonable fees and
expenses charged by such accounting firm.
8.2.3 The parties shall include in each permitted sublicense
granted by it pursuant to the Agreement a provision requiring the sublicensee to
make reports to the sublicensor, to keep and maintain records of sales made
pursuant to such sublicense and to grant access to such records by the licensing
party's accounting firm to the same extent required of parties in Section 8.2.1
under this Agreement. Upon the expiration of *** following the end of
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any year, the calculation of royalties payable with respect to such year shall
be binding and conclusive upon LIGAND, TAP and its sublicensees, and such
sublicensees shall be released from any liability or accountability with respect
to royalties for such year.
8.3 CONFIDENTIAL FINANCIAL INFORMATION. The parties shall treat all
financial information subject to review under this Article 8 or under any
sublicense agreement as confidential, and shall cause its accounting firm to
retain all such financial information in confidence, except as otherwise
specified in Section 8.2.1.
ARTICLE 9
---------
PAYMENTS
--------
9.1 PAYMENT TERMS. Royalties shown to have accrued by each royalty
report provided for under Article 8 of this Agreement shall be due and payable
on the date such royalty report is due. Payment of royalties in whole or in part
may be made in advance of such due date.
9.2 PAYMENT METHOD. All royalties and other payments by TAP to LIGAND
under this Agreement shall be made by bank wire transfer in immediately
available funds to such account as LIGAND shall designate at least thirty (30)
days before such payment is due; provided, however, that any fees or taxes
imposed on a transfer by a non-United States Bank that would not be imposed on a
transfer by a United States Bank shall be paid by TAP. If at any time legal
restrictions in any country in the Territory prevent the prompt remittance in
the manner set forth in this Section 9.2 of part or all royalties owing with
respect to Licensed Product sales in such country, then the parties shall
mutually determine a lawful manner of remitting the restricted part of such
royalty payments so long as such legal restrictions exist.
9.3 WITHHOLDING TAXES. The parties may deduct the amount of any taxes
imposed on the other party which are required to be withheld or collected by the
party remitting payment, its Affiliates or sublicensees under the laws of any
country on amounts owing from one party to the other party hereunder to the
extent one party, its Affiliates or sublicensees pay to the appropriate
governmental authority on behalf of the other party such income taxes. The party
withholding such taxes shall promptly deliver to the other party proof of
payment of such taxes together with copies of all communications from or with
such governmental authority with respect thereto.
9.4 LATE PAYMENTS. Unless otherwise provided in this Agreement, a
party shall pay interest to the other party on the aggregate amount of any
payments by a party that are not paid on or before the date such payments are
due under the Agreement at a rate per annum equal to the lesser of the prime
rate of interest as reported by Bank of America NT&SA in San Francisco,
California, from time to time, plus *** percent ( *** %), or the highest rate
permitted by applicable law, calculated on the number of days such payment is
delinquent.
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ARTICLE 10
----------
INFRINGEMENT ACTIONS BY THIRD PARTIES
-------------------------------------
10.1 If a party, or to its knowledge, any of its Affiliates,
sublicensees or customers shall be sued by a third party for infringement of a
patent because of the development, manufacture, use or sale of Research
Compounds, Clinical Candidates or Licensed Products, such party shall promptly
notify the other in writing of the institution of such suit. The party sued
shall control the defense of such suit at its own expense. The other party shall
cooperate fully in the defense of such suit and shall furnish to the party that
has been sued all evidence and assistance in its control. The party sued shall
make a preliminary decision to defend or not defend its interests in such suit
and shall so notify the other party in writing of its decision within ***
business days of the institution of such a suit. If a party after electing to
defend a suit should at any time elect to drop such defense, said party shall
immediately notify the other party. If the party sued notifies the other party
in writing per the above that it shall not defend such a suit, then the other
party shall have the right, but not the obligation, to defend its interests in
such a suit, and shall have the right to litigate, settle or otherwise dispose
of such suit as its sees fit, provided, however, that such other party may not
settle such suit in a manner that would materially impact or adversely affect
the Patent Rights of the party originally sued. Any judgments, settlements or
damages payable with respect to legal proceedings covered by this Article 10
shall be paid by the party which controls the litigation, subject to any claims
against the other party for breach of or indemnification under this Agreement or
otherwise available at law or in equity. Any third party royalty payments
required to be paid as the result of a judgment or settlement under this Article
10 shall be paid by the party controlling the suit subject to any claims against
the other party for breach of or indemnification under this Agreement or
otherwise available at law or in equity; PROVIDED, HOWEVER, in the case of a
Licensed Product sold by TAP, if such third party royalty payments arise from
the infringement of a patent having a claim or claims which cover the screening
activities of LIGAND under the Research Program, the third party royalty
payments shall be creditable against royalties owed LIGAND under this Agreement;
PROVIDED, FURTHER, that in no event shall the credit taken for any third party
royalties (notwithstanding the provisions of Section 7.2) be in excess of ***
percent ( *** %) of the royalty due LIGAND under this Agreement for Licensed
Product sales which caused such third party royalty payments, subject to any
claims for breach of or indemnification under this Agreement or otherwise
available at law or in equity.
ARTICLE 11
----------
CONFIDENTIALITY
---------------
11.1 NONDISCLOSURE OBLIGATIONS. Except as otherwise provided in this
Article 11 and subject to Article 12 hereof, during the term of the Agreement
and for a period of *** thereafter, (a) both parties shall maintain in
confidence information and data disclosed to the other party prior to the
Effective Date or resulting from or related to the Research Program or the
development of Research Compounds, Clinical Candidates or Licensed Products; and
(b) both parties shall also maintain in confidence and use only for purposes of
this Agreement all information and data supplied by the other party whether
supplied prior to or after the Effective
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Date, which if disclosed in writing is marked "Confidential," or if disclosed
orally is promptly thereafter confirmed in writing to be confidential.
11.2 PERMITTED DISCLOSURES. For purposes of this Article 11,
information and data described in Sections 11.1 (a) or (b) above shall be
referred to as "Information." To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, (w) a party may disclose Information it is otherwise obligated under
this Article 11 not to disclose to its Affiliates, sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis on
condition that such persons or entities agree to abide by confidentiality
obligations equivalent in scope to the confidentiality obligations contained in
this Agreement and for as long a duration as is reasonably possible, up to the
duration of TAP's obligations contained herein but in any case not less than ***
years beyond the completion date of the third parties obligations; (x) a party
or its Affiliates or sublicensees may disclose such Information to government or
other regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or authorizations to conduct clinical trials with,
and to commercially market the Licensed Product, provided that the disclosing
party shall request confidential treatment thereof; (y) a party may disclose
Information as required by applicable law, regulation or judicial process,
provided that such party shall give the other party prior written notice thereof
and reasonable (as dictated by the circumstances) opportunity to object to any
such disclosure or to request confidential treatment thereof; and (z) a party
may disclose Information as permitted under Section 12.1. The obligation not to
disclose or use Information shall not apply to any part of such Information that
(i) is or becomes patented, published or otherwise part of the public domain
other than by acts of the party obligated not to disclose such Information or
its Affiliates or sublicensees in contravention of this Agreement; or (ii) is
disclosed to the receiving party or its Affiliates or sublicensees by a third
party, provided such Information was not obtained by such third party directly
or indirectly from the other party under this Agreement on a confidential basis;
or (iii) prior to disclosure under the Agreement, was already in the possession
of the receiving party or any of its Affiliates or sublicensees, provided such
Information was not obtained directly or indirectly from the other party under
this Agreement; or (iv) is disclosed in a press release agreed to by both
parties under Section 11.3 below. Notwithstanding anything to the contrary
herein, TAP shall be entitled to disclose Information to Abbott Laboratories and
Takeda Chemical Industries, Ltd. on condition that such entities agree to keep
the Information confidential for the same time periods and to the same extent as
TAP is required to keep the Information confidential, provided that TAP shall be
responsible for any breach by Abbott Laboratories or Takeda Chemical Industries,
Ltd. of any such confidentiality obligations.
11.3 PUBLICITY REVIEW. Except as required by applicable law, rule or
regulation, neither party shall make any material statement to the public
regarding the execution and the subject matter of this Agreement, the work under
the Research Program or any other aspect of this Agreement, without the prior
written consent of the other party, except for statements for which consent has
previously been obtained or which have been previously disclosed, or as
otherwise set forth in this Agreement. Any of such statements may be made by
LIGAND to a third party (a) to whom LIGAND is seeking to sell an equity
interest, e.g., common or preferred stock or an instrument convertible into
common or preferred stock, (b) from whom LIGAND is
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seeking a loan or (c) with whom LIGAND is engaging in merger or acquisition
discussions; provided that such third party is bound under obligations of
confidentiality similar to those of this Article 11. LIGAND and TAP shall not
disclose any terms or conditions of this Agreement to any third party without
the prior consent of the other party, except as set forth in this Section 11.3.
ARTICLE 12
----------
PUBLICATION
-----------
12.1 NOTICE OF PUBLICATION. During the term of the Agreement, LIGAND
and TAP each acknowledge the other party's interest in publishing certain of its
results to obtain recognition within the scientific community and to advance the
state of scientific knowledge. Each party also recognizes the mutual interest in
obtaining valid patent protection and protecting business interests.
Consequently, either party, its employees or consultants wishing to make a
publication (including any oral disclosure made without obligation of
confidentiality) relating to work performed by such party as part of the
Research Program (the "Publishing Party") shall transmit to the other party (the
"Reviewing Party") a copy of the proposed written publication or an outline of
such oral disclosure at least *** days prior to submission for publication or
oral disclosure. Both parties shall use reasonable best efforts to ensure that
proposed written publication relating to work on Research Compounds either
performed or sponsored by a party will be forwarded to the other party for
review. In all instances, the Reviewing Party shall have the right (a) to
propose modifications to the publication for patent, trade secret or commercial
reasons and (b) to request a reasonable delay in or avoidance of publication in
order to protect patentable information and trade secrets, the disclosure of
which would materially affect the interests of the Reviewing Party under this
Agreement. Subject to Article 13, a party shall have the right in its own
discretion to seek patents on inventions made solely by its own employees.
12.2 TIMING OF PUBLICATION. If the Reviewing Party requests such a
delay or avoidance, the Publishing Party shall delay submission or presentation
of the publication for a period of *** to enable modification as provided in
Section 12.1 or patent applications protecting each party's rights in such
information to be filed in accordance with Article 13 below. Upon the expiry of
*** from transmission to the Reviewing Party, the Publishing Party shall be free
to proceed with the written publication or the presentation, respectively,
unless the Reviewing Party has requested the delay or avoidance described above.
ARTICLE 13
----------
PATENTS
-------
13.1 OWNERSHIP OF INVENTIONS, APPLICATIONS FOR PATENT AND PATENTS.
Subject to such rights as are granted under this Agreement, the ownership of
Inventions (as defined herein) shall be as follows: (a) LIGAND shall own the
entire right, title and interest in and to all Inventions (and patents thereon)
made solely by its employees or others (other than TAP, TAP Affiliates, TAP
employees and TAP consultants) acting on behalf of LIGAND in the course of
performing work under the Research Program ("LIGAND Invention"); (b) TAP shall
own the entire right,
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title and interest in and to all Inventions (and patents thereon) made solely by
its employees or others (other than LIGAND, LIGAND Affiliates, LIGAND employees
and LIGAND consultants) acting on behalf of TAP in the course of performing work
under the Research Program ("TAP Invention"); (c) the parties shall jointly own
the right, title and interest in and to all Inventions (and patents thereon)
made jointly by their employees or others in the course of performing work under
the Research Program ("Joint Invention"), subject to the rights granted each
party under this Agreement; and (d) all other inventions made by employees or
others acting on behalf of either party (or solely by such persons and third
parties) or jointly with employees or others acting on behalf of the other party
shall be owned in accordance with United States laws of inventorship. For
purposes of this Section 13.1, "Inventions" means all inventions, discoveries
and improvements or other technology directed at a Research Compound, Clinical
Candidate or Licensed Product and all processes or uses relating thereto,
whether or not patentable, together with all patent applications or patents
based thereon, made during and as a result of the Research Program. Any dispute
regarding the inventorship of a LIGAND Invention, TAP Invention or Joint
Invention that cannot be resolved pursuant to Section 13.2, shall be resolved
through the procedure of Article 20 in which the Neutral shall be an independent
patent counsel, mutually acceptable to the parties. Each party shall promptly
disclose to the other party and the JRC or the parties' agreed upon designated
representatives the conception or reduction to practice under the Research
Program of Inventions by employees or others acting on behalf of such party.
Each party hereby represents and agrees that they will use their reasonable best
efforts to have all employees and other persons acting on its behalf in
performing its obligations under this Agreement to agree to be obligated under a
binding written agreement or applicable law to assign to such party or its
Affiliate all Inventions made or developed by such employee or other person.
LIGAND further represents and agrees that it will use its reasonable best
efforts to obtain patents within the Patent Rights specific for a Clinical
Candidate in Full Development and/or a Licensed Product.
13.2 PATENT APPLICATIONS.
13.2.1 PRIORITY FILINGS. When a LIGAND Invention, TAP Invention
or Joint Invention has been made under the Research Program, such invention
shall be promptly disclosed to the other party and the JRC as well as each
party's respective patent counsel. The JRC shall consult with each party's
respective patent counsel in its determination of whether such invention is a
LIGAND, TAP, or Joint Invention. If the JRC and each party's respective patent
counsel all agree on the determination of inventorship, such determination shall
be conclusive. If, however, the JRC and the party's respective patent counsel
cannot agree as to whether an invention is a LIGAND, TAP, or Joint Invention,
the status of such an invention shall be determined pursuant to Article 20 of
this Agreement. If a Joint Invention has been made under the Research Program,
the JRC shall designate independent patent counsel that shall file such
application, which shall be in the name of both parties as assignees or
applicants as appropriate. The party or independent patent counsel filing the
application with respect to a Joint Invention made under the Research Program
shall give the other party an opportunity to review the text of the application
before filing, and in good faith shall consider and incorporate the reasonable
requests of the other party. The party or independent patent counsel filing the
application with respect to any LIGAND or TAP Invention or Joint Invention made
under the Research Program shall supply the other party with a copy of the
application as filed, together with notice of its filing date and serial number.
In the event that the JRC is no longer in
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existence and a determination regarding inventorship under this Section 13.2.1
is necessary, a designated representative of each party shall act in the place
of the JRC under this Section 13.2.1.
13.2.2 FOREIGN FILING DECISIONS. No later than *** following the
filing date of a priority patent application with respect to a Joint Invention
made under the Research Program filed according to Section 13.2.1 above, the
parties shall consult together, through the JRC, the parties' agreed upon
designated representatives or otherwise, to determine whether such priority
application with respect to such Joint Invention should be abandoned without
replacement; abandoned and refiled; prosecuted within the country of filing
only; or used as originally filed the basis for a claim of priority under the
Paris Convention for corresponding applications in or designating other
countries, or otherwise determine a foreign filing strategy.
13.2.3 PROSECUTION AND MAINTENANCE. Subject to Section 13.2.1,
LIGAND and TAP, as applicable, shall have the right, using commercially
reasonable practices, to control the prosecution, issuance and maintenance of
its Patent Rights with respect to each Invention made under the Research
Program, and to select all patent counsel or other professionals to advise,
represent or act for it in all matters relating to such Patent Rights. All costs
incurred in connection therewith shall be borne by the party taking action with
respect to such Patent Rights. In the case of Joint Inventions made under the
Research Program, the JRC (or the parties' agreed upon designated
representatives) shall designate the party which shall control the prosecution,
issuance and maintenance of joint Patent Rights. The party controlling the
prosecution, issuance and maintenance of such joint Patent Rights shall consider
all reasonable requests of the other party with respect thereto. All costs
incurred in connection with the prosecution, issuance and maintenance of such
joint Patent Rights shall be *** . Each party shall inform the other party at
regular intervals, or on request, about the status of all patent applications or
patents for which it is responsible with respect to Inventions or Joint
Inventions made under the Research Program.
In the event that LIGAND or TAP elects not to file a patent
application on an Invention or Joint Invention made under the Research Program
in any country, or decides to abandon any pending application or issued patent
claiming an Invention or Joint Invention made under the Research Program in any
country, it shall provide adequate notice to the other party and give the other
party the opportunity to file and/or pay an issuance fee and/or maintain such
application and/or patent at such other party's own expense; provided, however,
that should LIGAND or TAP elect not to file a patent application on a solely
owned invention based on an election by the owner to maintain the invention as a
trade secret, the other party shall have no right to file an application for
patent on such invention.
13.3 COOPERATION. Each party shall make reasonably available to the
other party or its authorized attorneys, agents or representatives, its
employees, agents or consultants necessary or appropriate to enable the other
party to file, prosecute and maintain patent applications and/or resulting
patents claiming all Inventions or Joint Inventions made under the Research
Program, as set forth in Section 13.2 above, for a period of time sufficient for
such party to obtain the assistance it needs from such personnel. Where
appropriate, each party shall sign or cause to
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have signed all documents relating to said patent applications and/or patents at
no charge to the other.
13.4 NO OTHER TECHNOLOGY RIGHTS. Except as otherwise provided in this
Agreement, under no circumstances shall a party hereto or its Affiliates or
sublicensees, as a result of this Agreement, obtain any ownership interest or
other right in any Research Compounds, Clinical Candidates, Licensed Products,
technology, trade secrets, patents, pending patent applications, products,
vaccines, antibodies, cell lines or cultures, or animals of the other party,
including items owned, controlled or developed by the other, or transferred by
the other to such party at any time pursuant to this Agreement.
13.5 ENFORCEMENT OF PATENT RIGHTS. LIGAND and TAP each shall use good
faith efforts to enforce their respective Patents Rights licensed hereunder,
including their sole Inventions or Joint Inventions made under the Research
Program, against infringers, and to consult with the other party both prior to
and during said enforcement. Upon learning of infringement of such Patent Rights
by a third party, LIGAND or TAP, as the case may be, promptly shall provide
notice to the other party in writing of the fact and shall supply the other
party with all evidence possessed by the notifying party pertaining to and
establishing said infringement(s). The party whose Patent Rights allegedly are
being infringed shall have *** from the date of receipt of notice under this
Section 13.5, or such lesser period of time if a *** period would result in
material harm to, or the loss of a material right of, the other party (e.g., in
the case of the filing of a paragraph 4 ANDA certification pursuant to 21 CFR
314.95 by one or more third parties), to file suit against at least one of the
infringers, at its sole expense, following consultation with the other party.
The party whose Patent Rights allegedly are being infringed shall not be
obligated to bring or maintain more than one such suit at any time, unless the
failure to bring more than one suit would result in material harm to, or the
loss of a material right of the other party (e.g., in the case of the filing of
a paragraph 4 ANDA certification pursuant to 21 CFR 314.95 by one or more third
parties).
***
If the party whose Patent Rights allegedly are being infringed does
not, within *** of receipt of such notice or such lesser period of time if a ***
period would result in material harm to, or the loss of a material right of, the
other party (e.g., in the case of the filing of a paragraph 4 ANDA certification
pursuant to 21 CFR 314.95 by one or more third parties), file suit to enforce
its Patent Rights against at least one infringing party in a country of the
Territory, the other party shall have the right to take whatever action it deems
appropriate in its own name or, if required by law, in the name of the party
whose Patent Rights allegedly are being infringed, to enforce such Patent
Rights. LIGAND and TAP shall fully cooperate with each other in the planning and
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execution of any action to enforce Patent Rights. The other party shall be fully
consulted during any enforcement action, including any settlement negotiations,
and shall, to the extent legally permissible under the law, be entitled to join
such action at its own expense. In addition, the other party shall be required
to join such enforcement action at the enforcing party's expense if (i) this is
requested by the enforcing party and (ii) is required to maintain any such
enforcement action.
All monies recovered upon the final judgment or settlement of any suit
under this Section 13.5 shall, after reimbursement of expenses, (a) to the
extent such infringement occurred prior to First Commercial Sale, be shared by
LIGAND and TAP in a ratio equal to *** percent (***%) for the party who pursued
such action to *** percent ( *** %) for the other party and (b) to the extent
such infringement occurred after First Commercial Sale, be treated as *** with
respect to the division between the parties.
The parties shall confer and agree upon strategies for enforcement of
jointly owned Patent Rights. In the absence of any other agreement as to the
enforcement of jointly owned Patent Rights, during the Research Program Term,
TAP shall have the right to enforce jointly owned Patent Rights arising from
sale of a Licensed Product within the TAP Field and LIGAND shall have the right
to enforce jointly owned Patent Rights arising from sale of a product within the
LIGAND Field. After expiration or termination of the Research Program Term, in
the absence of any agreement between the parties, each party shall have the
right to enforce the jointly owned Patent Rights at its own expense and retain
any award of damages and expenses.
13.6 UNAUTHORIZED USE OF PATENT RIGHTS. Neither LIGAND nor TAP shall
willfully take any action which would, directly or indirectly, infringe, or
induce or contribute to the infringement of, one or more claims of any issued
patent of the other party or any of its Affiliates, except to the extent such
action is authorized by a license or other right granted under this Agreement.
13.7 SUMMARY OF INVENTIONS. The JRC shall maintain a summary of all
Inventions disclosed to it under Section 13.1. The list will be updated at least
annually and within one hundred eighty (180) days of the expiration or
termination of the Research Program Term.
ARTICLE 14
----------
TERM AND TERMINATION
--------------------
14.1 EXPIRATION. Unless terminated earlier by agreement of the parties
or pursuant to this Article 14, this Agreement shall expire on the expiration of
the last party's obligations to pay royalties under this Agreement.
14.2 LIMITED RIGHTS TO TERMINATE FOR BREACH. A party shall not have
the right to terminate this Agreement for breach by the other party and shall
seek remedies, both equitable and legal, for breach and in other disputes using
the procedure of Article 20 except to the extent that Article 20 is limited by
its own terms. If:
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(i) the Neutral, in accordance with the procedures set forth in
Article 20 renders a ruling (an "Adverse Ruling") that a party
has materially breached this Agreement by (x) materially failing
to make milestone payments with respect to a Clinical Candidate
or Licensed Product as and when due, or (y) materially failing to
make royalty payments with respect to a Licensed Product as and
when due, and
(ii) the breaching party has materially failed to comply with the
terms of the Adverse Ruling within the time period specified
therein for compliance or, if no time period is stated, within
*** thereafter, and
(iii) the other party has served notice upon the breaching party to
undertake the actions specified to comply with the terms of the
Adverse Ruling and the breaching party has materially failed,
within *** of such notice, to undertake such action, then the
other party shall have the right
(A) where the basis for the Adverse Ruling is the breaching
party's material failure to make the milestone payments with
respect to a Clinical Candidate or Licensed Product as and
when due, to terminate any license granted by it under this
Agreement with respect to such Clinical Candidate or
Licensed Product by delivering written notice to the
breaching party within *** after expiration of the ***
period under Section 14.2(iii) above, or
(B) where the basis for the Adverse Ruling is the breaching
party's material failure to make the royalty payments with
respect to a Licensed Product to terminate any license
granted by it under this Agreement with respect to such
Licensed Product by delivering written notice to the
breaching party within *** after expiration of the ***
period under paragraph 14.2(iii) above, and where, according
to the Adverse Ruling, royalties should have been paid with
respect to sales of such Licensed Product but were not paid.
Termination of the Agreement does not relieve either party
of the obligation to make any payments that have accrued,
but not yet been paid, at the time of termination.
14.3 EFFECT OF TERMINATION. In the event of termination hereunder by
TAP, all licenses granted under this Agreement to TAP for Clinical Candidates
which are at that time in Full Development or commercialization, or Research
Compounds selected by TAP in accordance with Sections 6.4 or 6.5 shall not be
affected and shall continue in full force and effect, subject to TAP's
obligation to make milestone and royalty payments pursuant to Article 7 herein,
and TAP shall have the right to exercise all such licenses. All licenses granted
under this Agreement to LIGAND shall automatically terminate upon such
termination by TAP, except with respect to any compounds in development by
LIGAND pursuant and subject to LIGAND'S obligations
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under Sections 6.3, 6.4 and 6.5 herein. In the event of termination hereunder by
LIGAND, all licenses granted under this Agreement to LIGAND shall not be
affected and shall continue in full force and effect, and LIGAND shall have the
right to exercise all licenses provided under this Agreement. All licenses
granted under this Agreement to TAP shall automatically terminate upon such
termination by LIGAND. Termination of this Agreement by LIGAND shall not affect
TAP's obligations to pay milestones on any Clinical Candidates for which TAP
retains a license hereunder or royalties on Licensed Products resulting
therefrom. The provisions of Articles 1 and 2, Sections 3.2, 3.4, 3.5, 3.6, 3.7,
5.2, 5.3 and 5.4, and Articles 6-15 and 18-21, as they may apply, shall survive
the expiration or termination of the Agreement. Any rights and obligations which
have accrued prior to termination or expiration of this Agreement in any respect
shall survive such termination or expiration.
14.4 BANKRUPTCY. Either party shall have the right to terminate this
Agreement by delivering sixty (60) days prior written notice to the other party
in the event of the other party's bankruptcy (not to include reorganization) or
insolvency, provided that applicable federal bankruptcy laws shall apply.
ARTICLE 15
----------
INDEMNITY
---------
15.1.1 DIRECT INDEMNITY. Each party shall indemnify and hold the
other party, its Affiliates and sublicensees harmless, and hereby forever
releases and discharges the other party, its Affiliates and sublicensees, from
and against all claims, demands, liabilities, damages and expenses, ***
(collectively, "Liabilities") arising out of ***
15.2 OTHER INDEMNITY. Each party shall indemnify and hold the other
party, its Affiliates and sublicensees harmless from and against all Liabilities
suffered or incurred in connection with ***
15.3 PROCEDURE. A party (the "Indemnitee") that intends to claim
indemnification under this Article 15 shall promptly notify the other party (the
"Indemnitor") of any Liability or action in respect of which the Indemnitee or
any of its Affiliates or sublicensees intend to claim such indemnification, and
the Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, jointly with any other Indemnitor similarly noticed, to
assume the defense thereof with counsel selected by the Indemnitor; PROVIDED,
HOWEVER, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses of such counsel to be paid by the Indemnitee, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity agreement in this Article 15 shall not apply to
amounts paid in settlement of any loss, claim,
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damage, liability or action if such settlement is effected without the consent
of the Indemnitor, which consent shall not be withheld unreasonably. The failure
to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Article 15, but the omission so to deliver notice to the Indemnitor will
not relieve it of any liability that it may have to any Indemnitee otherwise
than under this Article 15. The Indemnitee under this Article 15, its employees
and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification.
15.4 INSURANCE. TAP shall maintain, through self-insurance or
otherwise, insurance with respect to the development, manufacture and sale of
Licensed Products in such amount as TAP customarily maintains with respect to
its other products. TAP shall maintain such insurance for so long as it
continues to develop, manufacture or sell any Licensed Products, and thereafter
for so long as TAP maintains insurance for itself covering such manufacture or
sales. The requirement to maintain insurance shall apply MUTATIS MUTANDIS to
LIGAND in the circumstance where LIGAND acquires the right under this Agreement
to commercialize products.
15.5 INDEMNITY EXCLUSION. A party that relinquishes rights to a
Research Compound, Clinical Candidate or Licensed Product to the other party
shall not be obligated to indemnify the other party, its Affiliates or
sublicensees under Sections 15.1 and 15.2 with respect to their use of
information obtained from the relinquishing party as a result of the
relinquishing of rights to the Research Compound, Clinical Candidate or Licensed
Product.
ARTICLE 16
----------
FORCE MAJEURE
-------------
Neither party shall be held liable or responsible to the other party
nor be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement when such failure
or delay is caused by or results from causes beyond the reasonable control of
the affected party including but not limited to fire, floods, embargoes, war,
acts of war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the other party.
ARTICLE 17
----------
ASSIGNMENT
----------
This Agreement may not be assigned or otherwise transferred, nor,
except as expressly provided hereunder, may any right or obligations hereunder
be assigned or transferred *** ; PROVIDED, HOWEVER, that *** may, without such
consent, assign this Agreement and its rights and obligations hereunder in
connection *** . Any permitted assignee shall assume all obligations of its
assignor under this Agreement.
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ARTICLE 18
----------
NOTIFICATION OF PATENT TERM RESTORATION
---------------------------------------
LIGAND or TAP, as the case may be, shall notify the other party of (a)
the issuance of each U.S. patent, or foreign patent where extension is possible,
included within the Patent Rights, giving the date of issue and patent number
for each such patent, and (b) each notice pertaining to any patent included
within the Patent Rights which it receives as patent owner pursuant to the Drug
Price Competition and Patent Term Restoration Act of 1984 (hereinafter called
the "Act") or equivalent foreign laws, including notices pursuant to ss.ss. 101
and 103 of the Act from persons who have filed an abbreviated NDA ("ANDA"). Such
notices shall be given promptly, but in any event within five (5) calendar days
of each such patent's date of issue or receipt of each such notice pursuant to
the Act, whichever is applicable. LIGAND or TAP, as the case may be, shall
discuss relevant issues and decide upon appropriate action with respect to
patent term restoration under the Act, any allegations of failure to show due
diligence and all awards of patent term restoration (extensions) with respect to
the Patent Rights. Likewise, LIGAND or TAP, as the case may be, shall inform the
other party of patent extensions and periods of data exclusivity in the rest of
the world regarding any Licensed Product. In the instance where a TAP Licensed
Product is covered by only one (1) LIGAND patent, and the same LIGAND patent
covers additional products of other LIGAND licensees, then TAP shall have
priority to obtain the benefit of a patent term restoration of said LIGAND
patent, provided that TAP licensed said LIGAND patent prior to the other LIGAND
licensee(s). In cases where there is more than one patent within the Patent
Rights covering a Research Compound, TAP shall have the right, at its sole
discretion, to choose which of such patents to apply for patent term restoration
under the Act or equivalent foreign law.
ARTICLE 19
----------
SEVERABILITY
------------
Each party hereby agrees that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries. In any term or provision of this Agreement is held to
be invalid, illegal or unenforceable by a court or other governmental authority
of competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other term or provision of this Agreement, which shall remain in
full force and effect. The holding of a term or provision to be invalid, illegal
or unenforceable in a jurisdiction shall not have any effect on the application
of the term or provision in any other jurisdiction.
ARTICLE 20
----------
DISPUTE RESOLUTION
------------------
20.1 The parties recognize that from time to time a dispute may arise
relating to either party's rights or obligations under this Agreement. The
parties agree that any such dispute, except one having to do with the scope,
enforceability, infringement or validity of a patent or trade secret, shall be
resolved by the Alternative Dispute Resolution ("ADR") provisions set forth
herein, the result of which shall be binding upon the parties.
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20.2 To begin the ADR process, a party first must send written notice
of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their designees) of the
affected subsidiaries, divisions, or business units within *** after such notice
is received (all references to "days" in this ADR provision are to calendar
days). If the matter has not been resolved within *** of the notice of dispute,
or if the parties fail to meet within such *** either party may initiate an ADR
proceeding as provided herein. The parties shall have the right to be
represented by counsel in such a proceeding.
20.2.1 To begin an ADR proceeding, a party shall provide written
notice to the other party of the issues to be resolved by ADR. Within *** after
its receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.
20.2.2 Within *** following receipt of the original ADR notice,
the parties shall select a mutually acceptable neutral party (hereinafter
"Neutral") to preside in the resolution of any disputes in this ADR proceeding.
If the parties are unable to agree on a mutually acceptable Neutral within such
period, either party may request the President of the CPR Institute for Dispute
Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to
select a Neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less
than five (5) candidates within fifteen (15) days after
receipt of the request, along with a CURRICULUM VITAE
for each candidate. No candidate shall be an employee,
director, shareholder, distributor, licensor, licensee,
or have any other direct affiliation with either party
or any of their subsidiaries or Affiliates or Abbott
Laboratories or Takeda Chemical Industries, Ltd.
(b) Such list shall include a statement of disclosure by
each candidate of any circumstances likely to affect
his or her impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the
greatest preference) and shall deliver the list to the
CPR within fifteen (15) days following receipt of the
list of candidates. If a party believes a conflict of
interest exists regarding any of the candidates, that
party shall provide a written explanation of the
conflict to the CPR along with its list showing its
order of preference for the candidates. Any party
failing to return a list of preferences on time shall
be deemed to have no order of preference.
(d) If the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR
immediately shall designate as the Neutral the
candidate for whom the parties
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collectively have indicated the greatest preference.
If a tie should result between two candidates, the CPR
may designate either candidate. If the parties
collectively have identified three (3) or more
candidates deemed to have conflicts, the
CPR shall review the explanations
regarding conflicts and, in its sole discretion, may
either (i) immediately designate as the Neutral the
candidate for whom the parties collectively have
indicated the greatest preference, or (ii) issue a new
list of not less than five (5) candidates, in which
case the procedures set forth in Sections 20.2(a) -
2(d) shall be repeated.
20.2.3 In the event of a dispute between the parties relating to
the calculation of any royalties or the amount of other consideration payable
under this Agreement (including, without limitation, the results of any audit
conducted on behalf of a party pursuant to this Agreement), then, in addition to
the procedure set forth in Section 20.2.2 above, the Neutral shall be a partner
or full member of an internationally recognized certified public accounting firm
which is not an auditing firm for either party and has not provided material
services to either party during the last two (2) year period prior to the date
of ADR initiation.
20.3 No earlier than *** or later than *** after selection, the
Neutral shall hold a hearing to resolve each of the issues identified by the
parties. Each party may be represented by counsel. Prior to the hearing the
parties shall be entitled to engage in discovery under procedures of the Federal
Rules of Civil Procedure, provided, however, that a party may not submit more
than *** written interrogatories or take more than *** depositions. There shall
not be any, and the Neutral shall not permit, any discovery within *** of the
hearing. The Neutral shall have sole discretion regarding the admissibility of
evidence and conduct of the hearing. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the Neutral
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or Affiliates or Abbott Laboratories or
Takeda Chemical Industries, Ltd.
20.4 At least *** prior to the hearing, each party shall submit the
following to the other party and the Neutral:
(a) a copy of all exhibits on which such party intends to rely
in any oral or written presentation to the Neutral;
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(b) a pre-hearing brief (up to 20 pages), and a proposed
disposition of the dispute (up to 5 pages). The proposed
disposition shall be limited to proposed rulings and
remedies on each issue, and shall contain no argument on or
analysis of the facts or issues; provided, however, that the
parties will not present proposed monetary remedies.
(c) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of
each witness;
Except as expressly set forth in Sections 20.3 and 20.4(a) - 4(c), no additional
discovery shall be required or permitted by any means.
20.5 The hearing shall be conducted on up to five (5) consecutive days
and shall be governed by the following rules:
(a) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal
testimony, documents or other evidence, to cross-examine
witnesses, and to make a closing argument. Cross-examination
of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged
against the party conducting the cross-examination.
(b) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not
only issues it raised but also any issues raised by the
responding party. The responding party, if it chooses to
make an opening statement, also shall address all issues
raised in the ADR. Thereafter, the presentation of regular
and rebuttal testimony and documents, other evidence, and
closing arguments shall proceed in the same sequence.
(c) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(d) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also
shall not be admissible. As to all other matters, the
neutral shall have sole discretion regarding the
admissibility of any evidence.
20.6 Within *** following completion of the hearing, each party may
submit to the other party and the Neutral a post-hearing brief in support of its
proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
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20.7 The Neutral shall rule on each disputed issue within ***
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one party's proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues. The Neutral shall not
issue any written opinion or otherwise explain the basis of the ruling.
20.8 The Neutral shall be paid a reasonable fee plus expenses. These
fees and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows:
(a) If the Neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay *** % of such
fees and expenses.
(b) If the Neutral rules in favor of one party on some issues
and the other party on other issues, the Neutral shall issue
with the rulings a written determination as to how such fees
and expenses shall be allocated between the parties. The
Neutral shall allocate fees and expenses in a way that bears
a reasonable relationship to the outcome of the ADR, with
the party prevailing on more issues, or on issues of greater
value or gravity, recovering a relatively larger share of
its legal fees and expenses.
20.9 The rulings of the Neutral and the allocation of fees and
expenses shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
20.10 Except as provided in Section 20.9 or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and briefs), and
the rulings shall be deemed Information. The Neutral shall have the authority to
impose sanctions for unauthorized disclosure of Information.
ARTICLE 21
----------
MISCELLANEOUS
-------------
21.1 NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier), or internationally recognized
overnight courier, addressed to such other party at its address indicated below,
or to such other address as the addressee shall have last furnished in writing
to the addressor and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.
If to LIGAND: LIGAND Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121
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Attention: President
With a copy to: General Counsel
Fax: (858) 550-1825
If to TAP: TAP Pharmaceutical Products Inc.
675 North Field Drive
Lake Forest, Illinois 60045
Attention: President
With a copy to: General Counsel
Fax: (847) 582-5007
21.2 APPLICABLE LAW. The Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without reference to its
conflict of laws provision, except as set forth in the immediately following
sentence, and shall not be governed by the United Nations Convention on
Contracts for the International Sale of Goods. The status of information claimed
as a trade secret shall be governed by the law of the jurisdiction in which the
party claiming the information as a trade secret has its principal place of
business. As used in this Agreement, the term "trade secret" when applied to
information claimed by TAP to be a trade secret shall have the meaning ascribed
under the Illinois Trade Secrets Act, and when applied to information claimed by
LIGAND to be a trade secret shall have the meaning ascribed under the California
Uniform Trade Secrets Act, Cal. Un. Code.
21.3 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
including the Confidential Disclosure Agreements entered into between the
parties on July 19, 2000, as amended February 22, 2001 and February 22, 2001,
heretofore made are expressly merged in and made a part of this Agreement. This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both parties hereto.
21.4 HEADINGS. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
21.5 INDEPENDENT CONTRACTORS. It is expressly agreed that LIGAND and
TAP shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
LIGAND nor TAP shall have the authority to make any statements, representations
or commitments of any kind, or to take any action, which shall be binding on the
other, without the prior consent of the party to do so.
21.6 U.S. EXPORT LAWS AND REGULATIONS. Each party warrants and
represents to the other that it does not intend to, nor will it export from the
United States or re-export from any foreign country, or permit a third party to
export or re-export technology or technical information of the other party, to a
country where such export or re-export would be in violation of U.S. Export
Administration Regulations.
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21.7 WAIVER. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
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21.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
--------------------------------------- -----------------------------------
TAP PHARMACEUTICAL PRODUCTS INC. LIGAND PHARMACEUTICALS INCORPORATED
--------------------------------------- -----------------------------------
By: /S/ H. THOMAS WATKINS By: /S/ DAVID E. ROBINSON
------------------------------------ ------------------------------
H. Thomas Watkins David E. Robinson
Title: President Title: President & Chief
Executive Officer
Date: 7/5/01 Date: 6/22/01
<PAGE>
EXHIBIT A
RESEARCH PROGRAM
DRAFT TECHNICAL OPERATING PLAN
<PAGE>
Ligand-TAP SARM Research Program
Technical Operating Plan
A. Overview
The proposed Research Program will be an integrated drug
discovery program, focusing on the identification and development of
novel, non-steroidal androgen receptor modulators, pursuant to the
terms of the Agreement. The Research Program is anticipated to run for
an initial term of 36 months, with potential to extend for up to two
(2) additional one (1)-year terms.
This document sets forth a technical operating plan (the
"Technical Operating Plan") for the Research Program research and
development activities, including additional disease-model profiling &
development support as required for LGD2226, identification &
profiling of a Back-up candidate to LGD2226, and discovery of
second-generation Research Compounds targeted for indications in the
TAP Field. Capitalized terms used but not otherwise defined herein
have the meanings assigned to them in the Agreement.
B. Goals, Rationale, and Product Profile(s)
1. Goals
***
2. Rationale
***
3. Product Profiles
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Ligand-TAP SARM Research Program
Technical Operating Plan
***
C. Research Program Headcount and Operations
***
1. Research Program Headcount
***
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PROPOSED SARM RESEARCH PROGRAM RESOURCING -
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2. Research Team
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Ligand-TAP SARM Research Program
Technical Operating Plan
***
3. Joint Research Committee (JRC)
***
D. Research Program *** Objectives
***
E. Research Plan
***
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Ligand-TAP SARM Research Program
Technical Operating Plan
DRAFT 2ND-GENERATION SARM DISCOVERY FLOWSCHEME
***
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EXHIBIT B
LIGAND'S SELECTIVE ANDROGEN
RECEPTOR MODULATORS
***
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