Collaboration Agreement - Rigel Pharmaceuticals Inc. and Janssen Pharmaceutica NV
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is entered into as of
December 4, 1998 (the "Effective Date") by and between RIGEL PHARMACEUTICALS,
INC., a Delaware corporation ("Rigel") with its offices at 772 Lucerne Drive,
Sunnyvale, California 94086, and JANSSEN PHARMACEUTICA N.V., a Belgian
corporation ("Janssen") with offices at Turnhoutseweg 30, 2340 Beerse, Belgium
(Rigel and Janssen individually referred to as "Party", and collectively as
"Parties").
RECITALS
WHEREAS, Rigel is a leader in the discovery and validation of functional
peptide-target interactions regulating the cell cycle in specific tumor cells;
and
WHEREAS, Janssen is engaged in the research, development, marketing,
manufacture and distribution of pharmaceutical compounds useful in treating or
preventing human diseases and conditions; and
WHEREAS, Rigel and Janssen desire to enter into a collaborative
relationship to conduct research to identify novel targets for drug discovery,
as generally described in the Research Plan, with Janssen developing and
commercializing any compounds resulting therefrom; and
WHEREAS, Rigel and Janssen agree that they will conduct the research
under this Agreement on a collaborative basis with a goal of discovering and
identifying products that are suitable for commercialization; and
WHEREAS, Johnson & Johnson Development Corporation has agreed to purchase
and Rigel has agreed to sell one million five hundred thousand (1,500,000)
shares of Rigel Series D Preferred Stock with a total value of US$3 million
pursuant to a stock purchase agreement between the Parties of even date herewith
(the "Stock Purchase Agreement"); and
WHEREAS, if the research collaboration is successful, the resulting
compounds may have a broad range of applications, particularly in the diagnosis,
therapeutic treatment and/or prevention of certain tumors and other diseases;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties agree as follows:
1. DEFINITIONS
1.
<PAGE>
As used herein, the following terms shall have the following meanings:
1.1 "ACTIVE PEPTIDE" shall mean a molecule which changes cellular
function in an assay specified by the RMC.
1.2 "AFFILIATE" shall mean any company or entity controlled by,
controlling, or under common control with a Party hereto and shall include
without limitation any company fifty percent (50%) or more of whose voting stock
or participating profit interest is owned or controlled, directly or indirectly,
by a Party, and any company which owns or controls, directly or indirectly,
fifty percent (50%) or more of the voting stock of a Party.
1.3 "CONFIDENTIAL INFORMATION" shall mean all information
(generally not known to the public), inventions, know-how or data disclosed
by a Party to the other pursuant to this Agreement including, without
limitation, Rigel Know-How, Janssen Know-How, manufacturing, marketing,
financial, personnel, scientific and other business information and plans,
and the material terms of this Agreement, whether in oral, written, graphic
or electronic form.
1.4 "CONTROL" shall mean the possession of the ability to grant a
license or sublicense to know-how and patents without violating the terms of any
agreement or other arrangement with, or the rights of, any Third Party.
1.5 "DATE OF FIRST SALE" means the day on which Janssen, its Affiliate
or its sublicensee first sells a Product to a Third Party in an arm's length
transaction.
1.6 "DEVELOPMENT CANDIDATE" shall mean a compound selected for
pre-phase I studies, including, but not limited to, GLP toxicological and
pharmacological studies using GMP material.
1.7 "DIAGNOSTIC PRODUCT" shall mean any composition of matter used for
the diagnosis of a disease or condition, including but not limited to, the
diagnosis of disease susceptibility, or a choice of treatment or monitoring of a
disease or condition, or the determination of genetic traits where such
composition of matter is a component of a Validated Target-Peptide Pair or was
identified by or on behalf of Rigel or Janssen in a Janssen Collaboration Assay
and/or a Janssen Non-Collaboration Assay.
1.8 "EXCLUSIVITY TERM" shall have the meaning assigned to it in
Section 3.6.
1.9 "FDA" means the United States Food and Drug Administration.
1.10 "FIELD OF RESEARCH" shall mean the identification of Molecular
Targets and the related Active Peptides which cause alterations in the cell
cycle of human tumor cells, including changes in the capacity to transit through
various cell cycle stages, and restoration of normal cell cycle progression
which would result in the inhibition of proliferation or the induction of
apoptosis in these human tumor cells.
2.
<PAGE>
1.11 "FTE" shall mean the equivalent of a full-time scientist based on
at least of 47 (forty-seven) weeks per year of scientific work carried out by
one or more employees or consultants of Rigel, each of whom devotes a portion of
his or her time to scientific work on or directly related to the Research
Program; PROVIDED, HOWEVER, that Janssen understands and agrees that Rigel
retains complete discretion to change the identity, the frequency and time which
any individual employee devotes to the Research Program. Scientific work on or
directly related to the Research Program to be performed by Rigel employees or
consultants can include, but is not limited to, experimental laboratory work,
recording and writing up results, reviewing literature and references, attending
selected and appropriate seminars and symposia, managing and leading scientific
staff, and carrying out Research Program management duties (including service on
the Research Management Committee).
1.12 "HOMOLOGUE" shall mean a modification to one of the components of
a VTPP which is functionally equivalent to such VTPP component.
1.13 "INTERNAL JANSSEN RESEARCH" shall mean the internal research
conducted by Janssen and its permitted sublicensees using Rigel Technology or
with Rigel Technology Assays, to assess the alteration or normalization of
uncontrolled cell growth, cell division, dissemination or differentiation status
of cancer cells.
1.14 "JANSSEN COLLABORATION ASSAY" shall mean a drug discovery assay
incorporating a Janssen Collaboration Target.
1.15 "Janssen Know-How" shall mean any and all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information that is necessary and useful in the Field of Research and that
Janssen owns or Controls on the Effective Date and any replication or any part
of such information or material. Janssen Know-How shall exclude Janssen Patents.
1.16 "JANSSEN PATENTS" shall mean all foreign and domestic patents
(including, without limitation, extensions, reissues, reexaminations, renewals
and inventors certificates) issued as of, and patents issuing from patent
applications (including substitutions, provisionals, divisionals, continuations
and continuations-in-part) that are pending as of, the Effective Date which
claim inventions or discoveries necessary and useful in the Field of Research
and are owned or Controlled by Janssen. The RMC shall compile a list of Janssen
Patents from time to time.
1.17 "JANSSEN COLLABORATION TARGET" means a Validated Target-Peptide
Pair delivered by Rigel as provided in Section 3.5.
1.18 "JANSSEN TECHNOLOGY" shall mean Janssen Patents and Janssen
Know-How.
1.19 "MAJOR MARKET" shall mean the U.S.A., France, Germany, United
Kingdom or any country in the EU pursuant to an NDA approval by the EMEA, or
Japan.
3.
<PAGE>
1.20 "MOLECULAR TARGET" shall mean a molecule shown in an assay
specified by the RMC to play a role in a research pathway in human tumor cells.
1.21 "NDA" shall mean a New Drug Application or its equivalent for
biological products as more fully defined in 21 C.F.R. Section 314.5 et seq.,
and any equivalent filing in any regulatory jurisdiction.
1.22 "NET SALES" means the gross sales price billed by Janssen or an
Affiliate thereof or a sub-licensee thereof for sales of Products hereunder to a
Third Party less (in each case as may be applicable thereto and consistent with
such Party's then existing standard business practices): (a) standard trade
discounts, including cash discounts or rebates, actually allowed or granted from
the billed amount, (b) credits or allowances actually granted upon claims,
rejections or returns of Products, including recalls, regardless of the party
requesting such recall, (c) charges included as part of the gross sales price
for freight, postage, shipping and insurance charges, to the extent specifically
billed, (d) taxes (other than income taxes), duties or other governmental
charges levied on or measured by the billing amount when included in billing, as
adjusted for rebates and refunds, and (e) accounts that are uncollectible and
written off Janssen's books as uncollectible, provided that any uncollectible
accounts excluded pursuant to this clause (e) which are subsequently collected
by Janssen shall be included in Net Sales for the royalty period in which such
amounts are collected. In the event any Product is sold in the form of a
combination containing one or more active ingredients in addition to a Product,
Net Sales for such combination will be calculated by multiplying actual Net
Sales of such combination by the fraction A/(A+B), where A is the invoice price
of the applicable Product, if sold separately, and B is the total invoice price
of any other active component or components, or non-consumable devices (such as,
for example, implantable pumps or electronic stimulators; however, items such
as, for example, disposable transdermal patches or prefilled syringes shall
constitute consumable devices) in the combination, if sold separately. If, on a
country-by-country basis, the other active component or components in the
combination are not sold separately in said country, Net Sales for the purpose
of determining royalties of the combination shall be calculated by multiplying
actual Net Sales of such combination by the fraction A/C, where A is the invoice
price of the applicable Product, if sold separately, and C is the invoice price
of the combination. If, on a country-by-country basis, neither the Product nor
the other active component or components of the combination is sold separately
in said country, Net Sales for the purposes of determining royalties of the
combination shall be determined by the Parties in good faith.
1.23 "NON-COLLABORATION PHARMACEUTICAL PRODUCT" shall mean a
composition of matter, including, but not limited to a chemical entity, a
pro-drug, an isomer, a non-peptide, and a protein or nucleic acid or any
fragment thereof, that was identified by or on behalf of Janssen or its
permitted sublicensees in the Internal Janssen Research, that is useful for
treating and/or preventing human diseases.
1.24 "PHARMACEUTICAL COLLABORATION PRODUCT" shall mean a composition of
matter, including, but not limited to, a chemical entity, a pro drug, an isomer,
a non-peptide, and a protein or nucleic acid or any fragment thereof, that was
identified by or on behalf of Rigel or Janssen in a Janssen Collaboration Assay,
that is useful for treating and/or preventing human
4.
<PAGE>
diseases; PROVIDED, HOWEVER, that the term "Pharmaceutical Collaboration
Product" specifically excludes any composition of matter marketed or being
developed by Janssen as of the Effective Date.
1.25 "PHASE III CLINICAL TRIAL" shall mean that clinical trial of a
Product designed to be on a sufficient number of patients to establish the
safety and efficacy of a Product and generate pharmacoeconomic data to support
regulatory approval in a therapeutic indication as more fully defined in 21
C.F.R. 312.21(c), or any equivalent clinical trial in a non-U.S. regulatory
jurisdiction.
1.26 "PRELIMINARY TARGET-PEPTIDE PAIRS" shall mean a Molecular Target
together with an Active Peptide that binds thereto, which pair has been
identified or discovered in the course of the Research Program, and which has
been Validated Preliminarily.
1.27 "PRODUCTS" shall mean the Pharmaceutical Collaboration
Products, the Target-Peptide Therapeutic Products, the Diagnostic Products
and the Non-Collaboration Pharmaceutical Products.
1.28 "REGULATORY APPROVAL" shall mean any approval (including price and
reimbursement approvals), licenses, registrations, or authorizations of any
federal, state or local regulatory agency, department, bureau or other
government entity, necessary for the manufacture, use, storage, import,
transport or sale of a Product in a regulatory jurisdiction.
1.29 "RESEARCH MANAGEMENT COMMITTEE" OR "RMC" shall mean the committee
formed pursuant to Section 2.1.
1.30 "RESEARCH PERIOD" shall have the meaning assigned to it in Section
3.3.
1.31 "RESEARCH PLAN" shall mean the research plan attached as Exhibit A
to this Agreement, as it may be modified or amended from time to time as
permitted herein.
1.32 "RESEARCH PROGRAM" shall mean the program of the collaborative
research as described in Article 3.
1.33 "RESEARCH PROGRAM KNOW-HOW" shall mean any tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information, including information concerning target-peptide interaction
developed in the Research Program (including, without limitation, the functional
role of the Molecular Target involved) that is within the Field of Research, and
any replication or any part of such information or material; PROVIDED, HOWEVER,
that the term "Research Program Know-How" as defined specifically excludes
Research Program Patents and any compounds identified in Internal Janssen
Research.
1.34 "RESEARCH PROGRAM PATENTS" shall mean all foreign and domestic
patents (including extensions, reissues, reexaminations, renewals and inventors
certificates) issuing from applications (including substitutions, provisionals,
divisionals, continuations and continuations-
5.
<PAGE>
in-part) that claim inventions that are made in the Research Program and that
are filed by or on behalf of one or both of the Parties hereto.
1.35 "RESEARCH PROGRAM TECHNOLOGY" shall mean the Research Program
Patents and Research Program Know-How.
1.36 "RIGEL TECHNOLOGY ASSAYS" shall mean the assays transferred to
Janssen or its permitted sublicensees for use in the Internal Janssen Research
which assess the alteration or normalization of uncontrolled cell growth, cell
division, dissemination or differentiation status of cancer cells, which are
more specifically listed in Exhibit B.
1.37 "RIGEL KNOW-HOW" shall mean any and all tangible or intangible
know-how, trade secrets, inventions (whether or not patentable), data,
preclinical and clinical results, physical, chemical or biological material, and
other information that is necessary and useful in the Field of Research and that
Rigel owns or Controls on the Effective Date and any replication or any part of
such information or material, but subject to any limitations contained in any
license agreements.
1.38 "RIGEL PATENTS" shall mean all foreign and domestic patents
(including, without limitation, extensions, reissues, reexaminations, renewals
and inventors certificates) issued as of, and patents issuing from applications
(including substitutions, provisionals, divisionals, continuations and
continuations-in-part) pending as of, the Effective Date which claim inventions
or discoveries necessary and useful in the Field of Research and are owned or
Controlled by Rigel, but subject to any limitations contained in any license
agreements.
1.39 "RIGEL TECHNOLOGY" shall mean the Rigel Patents and Rigel
Know-How.
1.40 "STANFORD AGREEMENTS" shall mean the agreements by and between
Rigel and The Board of Trustees of Leland Stanford Junior University dated
October 7, 1996 (the "1996 Agreement"), August 18, 1997 (the "1997
Agreement"), and March 27, 1998 (the "1998 Agreement"), which have been
provided to Janssen with commercial terms redacted, and attached hereto as
Exhibit D.
1.41 "STANFORD REQUIRED PROVISIONS" shall mean the provisions relating
to (a) royalty reports, payments and accounting, (b) warranties or negation
thereof, and (c) indemnity, contained respectively in Articles 8, 9 and 10 of
the 1996 Agreement, Articles 7, 9 and 10 of the 1997 Agreement, and Articles 7,
8, and 9 of the 1998 Agreement.
1.42 "TARGET-PEPTIDE THERAPEUTIC PRODUCT" shall mean a product that
contains a component of a VTPP or a Homologue thereof.
1.43 "TERM OF THE AGREEMENT" shall have the meaning assigned to it in
Article 10.
1.44 "TERRITORY" shall mean the entire world.
6.
<PAGE>
1.45 "THIRD PARTY" shall mean any person or entity other than Janssen,
Rigel and Affiliates of either.
1.46 "VALIDATED PRELIMINARILY" shall mean demonstration of a functional
phenotype change in a primary assay and such other criteria as determined by the
RMC prior to the commencement of target evaluation by Rigel.
1.47 "VALIDATED TARGET-PEPTIDE PAIR" OR "VTPP" shall mean a Molecular
Target together with an Active Peptide that binds thereto, which pair has been
identified or discovered during the course of the Research Program in the Field
of Research, that meets the criteria for full validation established by the RMC
at the time that the respective Preliminary Target Peptide Pair is selected for
further validation.
2. RESEARCH PROGRAM GOVERNANCE
2.1 FORMATION OF RESEARCH MANAGEMENT COMMITTEE. The Research Program
established by this Agreement shall be overseen by a Research Management
Committee composed of an equal number of representatives from each Party (the
"Research Management Committee") drawn from the ranks of senior scientists and
senior research management of each Party. The total number of RMC members shall
be agreed upon by the RMC from time to time. The Parties shall designate their
representatives on the RMC within ten (10) days after the Effective Date. The
Parties shall notify one another in writing of any change in the membership of
the RMC as appropriate to allow for the participation of different research
groups within Janssen and Rigel. The Parties shall agree upon the appropriate
qualifications for members of the RMC and mechanisms for making substitutions
for RMC members. An alternate member designated by a Party may serve
temporarily in the absence of a permanent member of the RMC for such Party.
Each Party shall designate one of its representatives as a co-chair of the RMC.
Each co-chair of the RMC will be responsible for the agenda and the minutes of
alternating RMC meetings.
2.2 RESEARCH PLAN DEVELOPMENT AND MODIFICATION. The RMC shall develop
and periodically modify the Research Plan, commencing with the initial Research
Plan attached hereto as Exhibit A.
2.3 RMC ACTIONS. In taking actions by the RMC, each Party shall have
one vote. If the RMC fails to reach unanimity on a matter before it for
decision, the matter shall be referred for resolution to the CEO of Rigel and
the V.P. of Biological Research of Janssen for their consideration and
agreement. If they are unable to agree after negotiation in good faith, the
matter shall be resolved consistent with Janssen's position; PROVIDED, HOWEVER,
that solely in connection with technical issues involving Rigel Technology such
as, for example, how to carry out a certain experiment or which technique to be
applied to obtain a certain result, such issues shall be resolved consistent
with Rigel's position. Strategic decisions such as, for example, selection of
Preliminary Target Peptide Pairs for further validation and the criteria for
such validation, shall be resolved consistent with Janssen's position.
7.
<PAGE>
2.4 MEETINGS OF THE RMC. The RMC:
(a) shall hold meetings at such times and places as shall be
determined by the RMC (it being expected that meetings will alternate between
the U.S. and European offices of each party) but in no event shall such meetings
be held in person less frequently than once every three (3) months during the
first two (2) years after the Effective Date;
(b) may conduct meetings in person or by telephone conference,
provided that meetings by telephone conference shall not reduce the number of
meetings in person specified in paragraph (a) above;
(c) by mutual consent of the representatives of each Party, may
invite other senior personnel of their organization to attend meetings of the
RMC, as appropriate however such other senior personnel shall not have any
duties of an RMC member.
(d) may act without a meeting if prior to such action a written
consent thereto is signed by all members of the RMC;
(e) may form and subsequently disband subcommittees with
appropriate representation from each party; and
(f) may amend or expand upon the foregoing procedures for its
internal operation by unanimous written consent.
2.5 MINUTES. At each meeting, the RMC shall elect a secretary who
will prepare, within ten (10) days after each meeting (whether held in person or
be telecommunication), the minutes reporting in reasonable detail the actions
taken by the RMC, the status of the Research Program, issues requiring
resolution and resolutions of previously reported issues, which minutes are to
be signed by the RMC co-chair persons from each of the Parties.
2.6 SUBCOMMITTEES. Any subcommittee established by the RMC shall have
appropriate representation of each Party and may include representatives who are
not members of the RMC. Any such subcommittee shall be given assignments from
the RMC, shall be subject to the authority of the RMC and shall report its
actions to the RMC. At the request of either Party at any time, any such
subcommittee shall be dissolved and its powers and functions returned to the
RMC. The RMC shall not delegate any of its RMC Functions and Powers as
described in Article 2.7, without retaining the final approval before
implementing the subcommittee assignments.
2.7 RMC FUNCTIONS AND POWERS. The activities of the Parties under
this Agreement shall be managed by the RMC only to the extent set forth herein
(unless otherwise mutually agreed by the Parties). During the Research Period
the RMC shall:
(a) determine the goals for the Research Program and establish
and review the Research Plan for accomplishing such goals;
8.
<PAGE>
(b) encourage and facilitate ongoing cooperation and
information exchange between the parties;
(c) monitor the progress of the Research Plan and the parties'
diligence in carrying out their responsibilities thereunder;
(d) allocate tasks and coordinate activities required to
perform the Research Plan;
(e) schedule routine visits by Rigel and Janssen personnel to
Janssen and Rigel, respectively, and oversee secondment of Janssen and Rigel
personnel pursuant to Section 3.9;
(f) establish prospective criteria to determine when a
Molecular Target and Active Peptide is a Preliminary Target-Peptide Pair or a
Validated Target-Peptide Pair, and to amend the Research Plan accordingly;
(g) identify and select Preliminary Target-Peptide Pairs and
Validated Target-Peptide Pairs pursuant to Section 3.4 and 3.5;
(h) perform such other functions as expressly provided herein,
as appropriate to further the purposes of this Agreement, as mutually agreed by
the Parties.
2.8 OBLIGATIONS OF PARTIES DURING THE RESEARCH PERIOD. Janssen and
Rigel shall provide the RMC with reasonable access during regular business hours
to all Janssen Know-How, Rigel Know-How and Research Program Know-How specific
to the Research Program that the RMC determines that is reasonably required in
order to perform its obligations hereunder, subject to any bona fide obligations
of confidentiality to a Third Party.
2.9 LIMITATIONS OF POWERS OF THE RMC. The RMC shall have no power to
amend this Agreement and shall have only such powers as are specifically
delegated to it hereunder.
3. CONDUCT OF RESEARCH PROGRAM
3.1 SCOPE OF THE RESEARCH PROGRAM. The Parties hereby agree to
establish and conduct, during the Research Period, a collaborative research
program pursuant to the Research Plan in the Field of Research, as described
in this Article 3. The Parties will collaborate in producing Validated
Target-Peptide Pairs in order to discover, develop and manufacture products
useful in diagnosing, treating or preventing diseases in humans.
3.2 RESEARCH ACTIVITIES; REVISIONS.
(a) The Parties will perform research in the Field of Research
as directed by the RMC and pursuant to the Research Plan. Modifications of the
Research Plan shall be made in writing and only as directed and approved by the
RMC. In the event of any such modification, Exhibit A, the obligations of the
parties including, but not limited to, Rigel's resource obligations
9.
<PAGE>
under this Section 3.2 and Janssen's research support obligations under
Section 6.2, shall be revised as necessary and appropriate, subject to
written approval of the Parties.
(b) Rigel agrees to commit the resources set forth in this
subsection (b), to exert the efforts necessary and reasonable and consistent
with its normal business practices to execute and perform the Research Plan
(including extensions for the balance of the Research Period), to maintain
and utilize the scientific staff, laboratories, offices and other facilities
consistent with such undertaking. Rigel and Janssen agree to reasonably
cooperate with each other in the conduct of the Research Plan. The Parties
hereby agree that Rigel's current laboratories; offices and other facilities
are satisfactory for purposes of this Section 3.2. During the first three
(3) years of the Research Period, Rigel shall commit 10 FTEs to the Research
Program. The purchase of any item including, but not limited to, cell lines
reasonably required by Rigel to conduct the Research Plan shall be Rigel's
obligation and responsibility and all cost associated therewith shall be to
Rigel's account.
3.3 RESEARCH PERIOD; EXTENSIONS. The Research Program will commence on
the Effective Date and terminate three (3) years thereafter, unless extended by
mutual agreement or unless this Agreement is terminated earlier as provided in
Article 10 (the "Research Period"). Janssen shall have an option to extend the
Research Period beyond the initial Research Period of three (3) years for
additional one year periods for a total of two (2) years by giving notice to
Rigel at least one hundred twenty (120) days prior to the anniversary of the end
of the Research Period that it intends to exercise its option. The compensation
per FTE will be at the payment level as set forth herein.
3.4 IDENTIFICATION OF PRELIMINARY TARGET-PEPTIDE PAIRS. During the
Research Period, the RMC shall identify Preliminary Target-Peptide Pairs and
shall issue a list thereof not less often than quarterly.
3.5 IDENTIFICATION OF VALIDATED TARGET-PEPTIDE PAIRS.
(a) During the Research Period, the RMC shall select
Preliminary Target-Peptide Pairs to be further evaluated to determine whether
they are suitable to be selected by the RMC as Validated Target-Peptide Pairs
for the purpose of compound screening as provided in Section 3.6. Prior to
commencing such evaluation, the RMC shall establish the criteria ("Validation
Criteria") pursuant to Section 2.7(f) required for such Preliminary
Target-Peptide Pairs to qualify as Validated Target-Peptide Pairs.
(b) Preliminary Target-Peptide Pairs for which it has not been
established by the end of the Research Period whether or not they meet the
Validation Criteria, shall revert to Rigel; PROVIDED, HOWEVER, that the Parties
may determine that any Preliminary Target-Peptide Pair not fully validated may
be transferred to Janssen for further validation as Internal Janssen Research.
(c) During the Research Period, the RMC shall issue a list of
Validated Target-Peptide Pairs within thirty (30) days after each RMC
meeting, and a final list thereof
10.
<PAGE>
within thirty (30) days after the end of the Research Period. Promptly after
a Validated Target Peptide Pair has been listed, Rigel shall transfer all
Research Program Technology necessary for Janssen to initiate screening with
respect to that Validated Target Peptide Pair. Rigel shall not transfer any
component of a Validated Target Peptide Pair to any Third Party without prior
written approval of the Janssen.
3.6 COMPOUND SCREENING; DILIGENCE.
(a) Janssen may initiate compound screening with each
Validated Target-Peptide Pair at any time during the first three (3) years
following its determination by the RMC as a Validated Target-Peptide Pair
(the "Exclusivity Term"). Janssen shall notify Rigel promptly upon the
initiation of screening with each Validated Target-Peptide Pair.
(b) If Janssen does not initiate compound screening with a
Validated Target-Peptide Pair during the Exclusivity Term pertaining to such
Validated Target-Peptide Pair, or, having timely initiated compound screening,
Janssen fails to pursue such screening in a manner consistent with Janssen's
normal research practices, then, in either case, the licenses granted herein
by Rigel to Janssen for such Validated Target-Peptide Pair shall terminate and
Janssen shall grant Rigel an exclusive, worldwide, royalty-free license, with
the right to sublicense, under its interest in the Research Program Technology
with respect to such Validated Target-Peptide Pair.
(c) If, according to Rigel, Janssen has failed to comply
with the diligence requirements as set forth in subsection (b) above, Rigel
shall notify Janssen thereof in writing. Within thirty (30) days of such
notice, the Parties shall meet to discuss the matter. If no agreement is
reached, the dispute shall be resolved as provided in Section 12.3. Effective
upon such resolution, the licenses granted by Rigel hereunder shall terminate
as provided in subsection (b) above, or shall continue, depending on whether
or not Janssen is found to have breached the diligence obligations as
described in subsection (b).
3.7 ADDITIONAL JANSSEN RIGHT TO VALIDATED TARGET-PEPTIDE PAIR.
With respect to each Validated Target-Peptide Pair which reverts to Rigel as
provided in Section 3.6, Rigel will, upon identifying a compound during the
term of this Agreement which modulates the activity of such Validated
Target-Peptide Pair or its constituents provide written notice to Janssen of
such compound and provide the information reasonably necessary for Janssen to
determine whether Janssen wishes to discuss licensing such compound. If
Janssen notifies Rigel within ninety (90) days of Rigel's notice, of its
desire to license such compound, the Parties will conduct good faith
negotiations of terms upon which Rigel will license such compound to Janssen;
PROVIDED, HOWEVER, if the Parties are unable to reach agreement within a
further period of ninety (90) days (or such further period as the Parties may
mutually agree) after Janssen's notice, then Janssen will have no rights with
respect to such compound and Rigel will be free to exploit such compound
alone or with others without obligation or liability to Janssen; PROVIDED,
HOWEVER, that Rigel shall not enter into any agreement with a Third Party on
terms which are substantially the same or less favorable to Rigel, than the
terms last offered by Janssen.
11.
<PAGE>
3.8 RIGEL SCREENING. Rigel may initiate compound screening with a
Validated Target-Peptide Pair upon the explicit written request of Janssen
and acceptance by Rigel. However, Janssen shall have the exclusive right and
license to develop and exploit any compound so identified or discovered by
Rigel upon the terms provided in Sections 5.2 and 5.3.
3.9 SECONDMENT. In order to further a close working relationship,
the Parties will provide offices and support to each other at each other's
facilities for the visiting personnel of the other Party, as provided herein.
During the Research Period, each Party shall provide employees at the other
Party's facilities, on an as-needed basis to be determined by the RMC. In
addition, the RMC shall arrange for routine visits by other Rigel personnel
to Janssen facilities to facilitate information exchange between the Parties.
4. INTERNAL JANSSEN RESEARCH
4.1 TECHNOLOGY TRANSFER. During the Research Period, Janssen will
periodically notify Rigel of the Rigel Technology Assays and other assays
that are part of the Janssen Internal Research which Janssen or its permitted
sublicensees choose to pursue. Promptly thereafter, Rigel and Janssen shall
meet to determine whether the Rigel Technology Assays and such other assays
described in such notice are within the scope of Internal Janssen Research.
If the Parties determine that such assays are within the scope of the
Internal Janssen Research, Rigel shall transfer the Rigel Technology Assays
to Janssen or its permitted sublicensees, and shall provide such reasonable
assistance as is necessary to establish functioning assays, such assistance
to be included in the 10 FTE's that Rigel is required to allocate to the
Research Program. For the avoidance of any doubt, any Rigel Technology
Assays transferred, and any information shared with Janssen or its permitted
sublicensees in connection with the Internal Janssen Research shall be used
by Janssen or its permitted sublicensees only to the extent of the licenses
granted to Janssen under Section 5.4.
4.2 USE OF RIGEL ASSAYS. Janssen shall use the Rigel Technology
Assays for the Internal Janssen Research only, and shall not transfer or
otherwise grant access to such assays to any Affiliate or Third Party, other
than to permitted sublicensees pursuant to Section 5.4.
4.3 REPORTING. Janssen shall provide Rigel with written reports on
the Internal Janssen Research and the use of the Rigel Technology Assays not
less than once every calendar year.
5. LICENSE GRANTS; CONFLICTING PROGRAMS; DILIGENCE
5.1 LICENSE GRANTS FOR COLLABORATIVE RESEARCH.
(a) GRANT BY RIGEL. Rigel hereby grants to Janssen and its
Affiliates a nonexclusive, non-transferable, royalty-free license in the
Field of Research during the Research Period under the Rigel Technology, and
Rigel's interest in the Research Program Technology in the Territory, subject
to the terms of this Agreement, solely for the purpose of carrying out
Janssen's responsibilities under the Research Program.
12.
<PAGE>
(b) GRANT BY JANSSEN. Janssen hereby grants to Rigel and
its Affiliates a nonexclusive, non-transferable, royalty-free license in the
Field of Research during the Research Period under the Janssen Technology and
Janssen's interest in the Research Program Technology in the Territory,
subject to the terms of this Agreement, solely for the purpose of carrying
out Rigel's responsibilities under the Research Program.
5.2 COMMERCIAL LICENSE GRANT. Subject to the terms and
conditions of this Agreement, Rigel hereby grants to Janssen and its
Affiliates an exclusive, royalty-bearing license, with the right to grant
sublicenses, under the Rigel Technology and Rigel's interest in the Research
Program Technology, to discover, develop, identify, make, have made, use,
sell, have sold, offer for sale, export, and import Products in the Territory.
5.3 COMMERCIAL DUE DILIGENCE. The rights granted under Section 5.2
shall be subject to Janssen's obligation to discover, develop and commercially
exploit Products using the level of effort commensurate with other Janssen
products at a similar stage of development and of similar importance (based
on criteria such as patient population, price per treatment and competitive
position). If Janssen fails to use such diligence, Rigel may notify Janssen
of such failure and, if not cured within six (6) months of such notice,
terminate the license under Section 5.2 with respect to such Product.
5.4 LICENSE FOR INTERNAL JANSSEN RESEARCH. Rigel hereby grants
Janssen a non-exclusive, worldwide, royalty bearing license, during the Term
of Agreement under the Rigel Technology and Rigel's interest in the Research
Program Technology to the extent necessary to use the Rigel Technology Assays
for the Internal Janssen Research. Janssen shall have the right to grant
sublicenses under the license granted under this Section 5.4 to The R.W.
Johnson Pharmaceutical Research Institute, a Division of Ortho-McNeil
Pharmaceutical, Inc., and subject to Rigel's prior approval (which approval
shall not be unreasonably withheld) to other named Affiliates; PROVIDED,
HOWEVER, that any such sublicense shall provide for a license to Rigel
corresponding to the license granted by Janssen to Rigel under Section 5.5,
and shall be subject and subordinate to the terms of this Agreement. Janssen
shall provide Rigel with a copy of each sublicense agreement.
5.5 LICENSE TO RIGEL OF IMPROVEMENTS TO RIGEL TECHNOLOGY. Janssen
hereby grants to Rigel a nonexclusive, royalty-free, paid-up, worldwide
license (i) under Janssen's interest in all Research Program Technology, and
(ii) under Janssen's interest in any know-how, inventions or discoveries
generated or made in the course of the Internal Janssen Research, only to the
extent it constitutes an improvement of Rigel Technology.
5.6 EXCLUSIVITY PERIOD. During the first 18 months after the
Effective Date, Rigel will not enter into a research collaboration with a
Third Party ("Third Party Collaboration") in the Field of Research (the
"Exclusive Research Period").
5.7 CONFLICTING PROGRAMS.
13.
<PAGE>
(a) After the Exclusive Research Period and during the
Research Period, Rigel will notify Janssen if it has decided to pursue a
research project in human oncology described in such notice ("Additional
Program"). Within sixty (60) days after receipt of Rigel's notice, the
Parties shall determine whether or not the Additional Program conflicts with
the Research Program. An Additional Program will be considered to conflict
with the Research Program if, after consultation with the RMC, the VP
Biological Research of Janssen and the CEO of Rigel agree that there is
significant overlap between the molecular targets or pathways of the
Additional Program and the Field of Research.
(b) If such a conflict is determined to exist then (i) Rigel
shall not proceed with the Additional Program, and (ii) Janssen may notify
Rigel within sixty (60) days of such determination of its interest in such
Additional Program. If Janssen so notifies Rigel, then the Parties will enter
into good faith discussions to determine whether there are mutually agreeable
terms upon which they wish to collaborate with respect to the Additional
Program. If Janssen does not so notify Rigel or if the Parties do not enter
into an agreement with respect to the Additional Program within ninety (90)
days (or such further period as the Parties may agree) after Janssen's
notice, then such Additional Program shall not be added to the Research
Program.
(c) If such a conflict is determined not to exist, Janssen
may notify Rigel within sixty (60) days of such determination of its interest
in such Additional Program. If Janssen so notifies Rigel, then the Parties
will enter into good faith discussions to determine whether there are
mutually agreeable terms upon which they wish to collaborate with respect to
the Additional Program. If Janssen does not so notify Rigel or if the Parties
do not enter into an agreement with respect to the Additional Program within
ninety (90) days (or such further period as the Parties may agree) after
Janssen's notice, then Rigel shall be free to pursue the Additional Program
alone or with a Third Party; PROVIDED, HOWEVER, that Rigel shall not enter
into any agreement with a Third Party on terms which are substantially the
same or less favorable to Rigel, than the terms last offered by Janssen to
Rigel in writing.
5.8 SUBLICENSES UNDER STANFORD AGREEMENTS. Subject to Section 6.15
(Third Party Payments by Rigel), the Parties hereby acknowledge that the
Stanford Required Provisions are included in this Agreement for the benefit
of Stanford University. The sublicenses granted hereunder shall remain in
effect after termination of the Stanford Agreements, provided that any
obligations of Janssen under the sublicenses granted herein shall be owed to
Stanford.
6. FINANCIAL SUPPORT
6.1 SIGNING PAYMENT. Within ten (10) days of the Effective Date of
this Agreement, Janssen will pay Rigel One Million US Dollars (US$1,000,000).
6.2 RESEARCH SUPPORT. Janssen will provide funding to support
Rigel's efforts under the Research Program and 10 FTE'S of Rigel at a rate
of US$2,500,000 per year. Such amount shall be paid quarterly in advance.
6.3 PAYMENTS FOR PHARMACEUTICAL COLLABORATION PRODUCTS.
14.
<PAGE>
(a) MILESTONE PAYMENTS. For Pharmaceutical Collaboration
Products, the following payments will be due to Rigel upon the occurrence of
the following events:
---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
---------------------------------------------------------------------------------
1) First to occur of either (a) Janssen $500,000
initiating compound screening with the
second Validated Target-Peptide Pair
delivered by Rigel or (b) six (6) months
after Rigel delivers the second Validated
Target-Peptide Pair.
---------------------------------------------------------------------------------
2) Demonstration by Janssen of IN VIVO efficacy $500,000
in at least one animal model of the first
Pharmaceutical Collaboration Product
identified in a screening assay using a
Janssen Collaboration Target.
---------------------------------------------------------------------------------
3) Selection by Janssen of the first $1 million
Development Candidate.
---------------------------------------------------------------------------------
4) Enrollment of the fifth patient in a Phase $2 million
III Clinical Trial for the first
Pharmaceutical Collaboration Product
---------------------------------------------------------------------------------
5) Approval of the first NDA for each $5 million
Pharmaceutical Collaboration Product in the
first Major Market.
---------------------------------------------------------------------------------
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net
Sales of Pharmaceutical Collaboration Products at a rate of four percent (4%)
when the Pharmaceutical Collaboration Product contains a compound originating
from Janssen's compound collection and six percent (6%) when the
Pharmaceutical Collaboration Product contains a compound originating from
Rigel's compound collection.
6.4 PAYMENTS FOR TARGET-PEPTIDE THERAPEUTIC PRODUCTS.
(a) MILESTONE PAYMENTS. For Target-Peptide Therapeutic
Products, the following payments will be due to Rigel upon the occurrence of
the following events:
---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
---------------------------------------------------------------------------------
1) Demonstration by Janssen of in vivo efficacy $500,000
in at least one animal model of the first
Target-Peptide Therapeutic Product.
---------------------------------------------------------------------------------
2) Selection by Janssen of the first $1 million
Development Candidate.
---------------------------------------------------------------------------------
15.
<PAGE>
---------------------------------------------------------------------------------
3) Enrollment of the fifth patient in a Phase $2 million
III Clinical Trial for the first Target-
Peptide Therapeutic Product
---------------------------------------------------------------------------------
4) Approval of the first NDA for each Target- $5 million
Peptide Therapeutic Product in the first
Major Market.
---------------------------------------------------------------------------------
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net Sales
of Target-Peptide Therapeutic Products at a rate of six percent (6%).
6.5 PAYMENTS FOR DIAGNOSTIC PRODUCTS.
(a) MILESTONE PAYMENTS. For Diagnostic Products, the following
payment will be due to Rigel upon the occurrence of the following event:
---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
---------------------------------------------------------------------------------
1) Regulatory Approval of the first Diagnostic $500,000.00
Product derived from each VTPP
---------------------------------------------------------------------------------
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net
Sales of Diagnostic Products at a rate of two percent (2%) when the
Diagnostic Product is patented, and one percent (1%) when the Diagnostic
Product is not patented.
6.6 PAYMENTS FOR NON-COLLABORATION PHARMACEUTICAL PRODUCTS.
(a) MILESTONE PAYMENTS. For Non-Collaboration Pharmaceutical
Products, the following payments will be due to Rigel upon the occurrence of the
following events:
---------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT OF PAYMENT
---------------------------------------------------------------------------------
1) Enrollment of the fifth patient in a Phase $1 million
III Clinical Trial for the first Non-
Collaboration Pharmaceutical Product
---------------------------------------------------------------------------------
2) Approval of the first NDA for the first Non- $2.5 million
Collaboration Pharmaceutical Product in the
first Major Market.
---------------------------------------------------------------------------------
(b) ROYALTIES. Janssen shall pay Rigel royalties on Net Sales
of Non-Collaboration Pharmaceutical Products at a rate of two percent (2%).
16.
<PAGE>
6.7 ROYALTY PERIOD.
(a) In respect of Products for which a royalty is due,
Janssen's obligation to pay royalties to Rigel shall be for a period of ten
(10) years, on a Product-by-Product basis, from the Date of First Sale of
each such Product.
(b) For the purposes of determining whether royalties are
due hereunder, different dosage forms of a Product shall not be considered
different Products provided that different dosage forms contain the same
active ingredient.
(c) Upon termination of the royalty payment obligation,
Janssen shall thereafter have in perpetuity a royalty-free, non-exclusive
license to make, have made, use, sell, have sold, and import such Products
hereunder, without any accounting to Rigel.
6.8 MANNER OF PAYMENT. Remittance of payments under this Article 6
shall be made by means of wire transfer or other telegraphic transfer in U.S.
Dollars to Rigel's account in a bank in the United States to be designated
from time to time by Rigel.
6.9 REPORTS. Janssen shall provide written notice of the
occurrence of all milestone events in this Article. Within forty-five (45)
days following each quarterly period of a calendar year after the Date of
First Sale of the first Product, Janssen shall render to Rigel a written
report setting forth the Net Sales of such Products sold and the royalty due
and payable on a Product-by-Product and country-by-country basis (including
all deductions taken from the gross sales price in determining Net Sales).
6.10 INVOICING. All payments to be made by Janssen under this
Agreement shall be made based upon an invoice to be submitted by Rigel to
Janssen. The invoice shall be in the form attached hereto as Exhibit C.
Except as otherwise provided in Section 6.1, all payments shall be due within
fifteen (15) days of the receipt of such invoice by Janssen.
6.11 RECORDS AND AUDIT.
(a) During the term of this Agreement and for a period of at
least two (2) years thereafter, Janssen shall keep complete and accurate
records pertaining to the sale or other disposition of the Products
commercialized by it, in sufficient detail to permit Rigel to confirm the
accuracy of all payments due hereunder.
(b) Rigel shall have the right to cause an independent,
certified public accountant acceptable to Janssen to audit such records to
confirm Janssen's Net Sales of Products and royalty payments made under this
Agreement; PROVIDED, HOWEVER, that such auditor shall not disclose Janssen's
confidential information to Rigel, except to the extent such disclosure is
necessary to verify the amount of royalties due under this Agreement. Such
audits may be exercised once a year, within two (2) years after the royalty
period to which such records relate, upon prior written notice to Janssen and
during normal business hours. Rigel shall bear the full cost of such audit
unless such audit discloses an understatement of more than five percent (5%)
from the amount of the Net Sales or royalties previously paid. In such case,
Janssen shall bear
17.
<PAGE>
the full cost of such audit. In case that such audit discloses an
overpayment of royalties by Janssen, such overpayment shall be refunded to
Janssen. The terms of this Section 6.11 shall survive any termination or
expiration of this Agreement for a period of two (2) years.
6.12 FOREIGN EXCHANGE. The remittance of royalties payable on Net
Sales will be payable in U.S. dollars to Rigel at a bank and to an account
designated by Rigel using a rate of exchange of the currency of the country
from which the royalties are payable in accordance with the currency exchange
rates as published in the Wall Street Journal at the end of the calendar
quarter in which the Net Sales were made. All references to dollars herein
are references to U.S. dollar.
6.13 BLOCKED CURRENCY. Where royalties are due for Net Sales in a
country where by reason of currency regulations of any kind it is impossible
to make royalty payments for that country's Net Sales said royalties shall be
deposited in whatever currency is allowable for the benefit or credit of
Rigel in any accredited bank in that country as shall be acceptable to Rigel.
Moreover, when necessary to facilitate payments from countries other than the
United States, when requested by Janssen, Rigel shall enter into direct
license agreements with Janssen Affiliates designated by Janssen, whereby
such Affiliate will be obligated to remit royalty payments due for Net Sales
in such country directly to Rigel. Each such license agreement shall contain
substantially the same terms as this Agreement insofar as such terms are
lawful under applicable laws and regulations of the particular country; and
Janssen shall be responsible for the performance of all obligations of
Janssen Affiliates under such license agreements.
6.14 TAXES. All payments under this Agreement will be made without
any deduction or withholding for or on account of any tax unless such deduction
or withholding on behalf of Rigel is required by any applicable law. If
Janssen is so required to deduct or withhold, Janssen will:
(a) promptly notify Rigel of such requirement;
(b) pay to the relevant authorities the full amount required
to be deducted or withheld promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has
been assessed against Rigel;
(c) promptly forward to Rigel an official receipt (or
certified copy), or other documentation reasonably acceptable to Rigel,
evidencing such payment to such authorities.
6.15 THIRD PARTY PAYMENTS BY RIGEL. All payments due to Third
Parties pursuant to agreement between Rigel and a Third Party that relate to
Rigel Technology shall be made by and or the account of Rigel. Janssen assumes
no responsibility for any payment due to Stanford University, the State
University of New York at Stony Brook, BASF, any other Third Party pursuant to
an agreement between Rigel and such Third Party.
18.
<PAGE>
7. INTELLECTUAL PROPERTY
7.1 INFORMATION AND REPORTS. The Parties will provide to the RMC
promptly and at least quarterly the results of the research activities
conducted in the Research Program, such reports to be in such form as
specified by the RMC. The Parties shall keep complete and accurate records
pertaining to the results of work conducted pursuant to the Research Program.
Such records shall be maintained for a period of at least five (5) years
following the year in which any such efforts were made hereunder; PROVIDED,
HOWEVER, that all laboratory notebooks pertaining to the result of the work
conducted pursuant to the Research Program shall be maintained for at least
twenty (20) years.
7.2 DISCLOSURE OF PATENTABLE INVENTIONS. In addition to the
disclosures required, each Party shall provide the other any invention
disclosure related to the Research Program which has been submitted to it in
the normal course of disclosing an invention. Such invention disclosures
shall be provided promptly after submission and in no event later than 10
business days after the end of the calendar quarter in which the disclosure
was submitted.
7.3 OWNERSHIP OF RESEARCH PROGRAM KNOW-HOW; INVENTIONS. Except as
otherwise set forth herein, Research Program Know-How (including, without
limitation, any patentable invention or discovery) acquired, developed or
made solely by employees of one Party during the course of the Research
Program ("Sole Inventions") shall be the property of such Party. Research
Program Know-How (including, without limitation, any patentable invention or
discovery) acquired, developed or made jointly by employees of Janssen and
Rigel as determined in accordance with United States rules of inventorship,
shall be owned jointly by Janssen and Rigel, each to own an undivided
one-half (1/2) interest in such Research Program Know-How ("Joint Invention")
except as provided and subject to the licenses granted herein. Each Party
shall cooperate with the other in completing any patent applications relating
to Joint Inventions, and in executing and delivering any instrument required
to assign, convey or transfer to such other Party its undivided one-half
(1/2) interest.
7.4 PATENT PROSECUTION. Each Party will prepare, file, prosecute
and maintain patent applications for its Sole Inventions and shall be
responsible for related interference proceedings. The Parties will endeavor
to ensure that such patent applications are filed before any public
disclosure by either Party to maintain the validity of patent applications to
be filed outside of the United States and to comply with the provisions of
Article 9. Janssen shall be responsible for filing and prosecuting
applications for, and maintaining, Joint Inventions not related to Rigel
Technology, using counsel of its choice, throughout the world. Janssen shall
pay all expenses for filing applications for, and maintenance of, such Joint
Inventions. In the event that a Party decides not to proceed with filing or
prosecuting an application for, or maintaining, a Research Program Patent for
which it is responsible under this Section 7.3, it shall give the other Party
ninety (90) days written notice before any public disclosure or any relevant
prosecution or maintenance deadline and transmit all information reasonable
and appropriate relating to such Research Program Patent, and such other
Party shall have the right to pursue, at its own expense, prosecution of such
application for, or maintenance of, such patent.
19.
<PAGE>
7.5 INFRINGEMENT BY THIRD PARTIES.
(a) NOTICE. Each Party shall promptly notify the other in
writing of any alleged or threatened infringement of the Research Program
Patents, which may adversely impact the rights of the Parties hereunder, of
which it becomes aware.
(b) ENFORCEMENT ACTION. In the event that the Parties become
aware of any alleged or threatened infringement of the Research Program
Patents, other than Research Program Patents relating to Rigel Technology,
Janssen shall have the right, but not the obligation, to take appropriate
action against any person or entity directly or contributorily infringing such
Research Program Patent. In the event Janssen fails to institute an
infringement suit or take other reasonable action in response to such
infringement within sixty (60) days, Rigel shall have the right, but not the
obligation upon thirty (30) days written notice to Janssen, to institute such
suit or take other appropriate action in its own name, the joint owner's name,
or both. Rigel shall have the right, but not the obligation, to take
appropriate action against any person or entity directly or contributorily
infringing a Research Program Patent relating to Rigel Technology. In the
event Rigel fails to institute an infringement suit or take other reasonable
action in response to such infringement within sixty (60) days, Janssen shall
have the right, but not the obligation upon thirty (30) days notice to Rigel,
to institute such suit or take other appropriate action in its own name, the
joint owner's name, or both. Regardless of which Party brings an enforcement
action, the other Party hereby agrees to cooperate reasonably in any such
effort, including, if required, furnishing a power of attorney. The Party not
bringing the action shall have the right to participate in such action at its
own expense with its own counsel and in such case any recovery obtained by
settlement or otherwise shall be shared by the Parties in accordance with their
economic interests in such Research Program Patent.
7.6 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS.
(a) JOINT STRATEGY. In the event that the use or sale of a
Product becomes the subject of a claim of infringement of a patent, copyright
or other proprietary right anywhere in the world, and without regard to which
Party is charged with said infringement, and the venue of such claim, the
Parties shall promptly confer to discuss the claim.
(b) DEFENSE. Unless the Parties otherwise agree, Janssen
shall assume the primary responsibility for the conduct of the defense of any
such claim. Rigel shall have the right, but not the obligation, to
participate in any such suit at its sole option and at its own expense. Each
Party shall reasonably cooperate with the Party conducting the defense of the
claim. Neither Party shall enter into any settlement that affects the other
party's rights or interests without such other party's written consent, not
to be unreasonably withheld.
8. REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other that:
20.
<PAGE>
(a) CORPORATE POWER. It is duly organized and validly existing
under the laws of its state or country of incorporation, and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
(b) DUE AUTHORIZATION. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
or persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action.
(c) BINDING AGREEMENT. This Agreement is legally binding upon
it and enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it may be bound, nor violate any material law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.
(d) GRANT OF RIGHTS; MAINTENANCE OF AGREEMENTS. It has not,
and will not during the term of this Agreement, grant any right to any Third
Party which would conflict with the rights granted to the other Party hereunder.
It has (or will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements necessary to perform
its obligations hereunder.
(e) VALIDITY. It is aware of no action, suit or inquiry or
investigation instituted by any governmental agency, which questions or
threatens the validity of this Agreement.
(f) EMPLOYEE OBLIGATIONS. All of its employees, officers and
consultants have executed agreements requiring in the case of employees and
officers, assignment to the Party of all inventions made during the course of
and as a result of their association with such Party and obligating the
individual to maintain as confidential the confidential information of the
Party, as well as the confidential information of a Third Party which such Party
may receive.
(g) PERFORMANCE BY AFFILIATES. The Parties recognize that each
may perform some or all of its obligations under this Agreement through
Affiliates, provided, however, that each Party shall remain responsible and be
guarantor of the performance by its Affiliates and shall cause its Affiliates to
comply with the provisions of this Agreement in connection with such
performance.
8.2 WARRANTY AND DISCLAIMER CONCERNING TECHNOLOGY. As of the
Effective Date of this Agreement, it is not aware of any Third Party patents
that would prevent the other Party from exercising the licenses granted herein,
or would prevent a Party from carrying out the Research Program.
NOTWITHSTANDING THE FOREGOING, THE TECHNOLOGY PROVIDED BY EACH PARTY HEREUNDER
IS PROVIDED "AS IS" AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF
DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT
21.
<PAGE>
OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE
OF DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.
Without limiting the generality of the foregoing, each Party expressly does
not warrant (i) the success of any research commenced under the Research
Program or (ii) the safety or usefulness for any purpose of the technology it
provides hereunder.
9. CONFIDENTIALITY; PUBLICATION
9.1 CONFIDENTIALITY. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing by the Parties, the Parties agree
that, for the term of this Agreement and for five (5) years thereafter, the
receiving Party (the "Receiving Party") shall keep confidential and shall not
publish or otherwise disclose and shall not use for any purpose other than as
provided for in this Agreement any Confidential Information furnished to it by
the other Party (the "Disclosing Party") pursuant to this Agreement unless the
Receiving Party can demonstrate by contemporaneous, competent written proof that
such Confidential Information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the Receiving Party in breach of the Agreement;
(d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the Disclosing Party or any Third Party not to disclose such
information to others; or
(e) was independently discovered or developed by the Receiving
Party without the use of Confidential Information belonging to the Disclosing
Party.
9.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patents relating to Research Program
Technology;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) conducting pre-clinical or clinical trials of Products; and
22.
<PAGE>
(f) disclosure to Affiliates, sublicensees, employees,
consultants or agents who agree to be bound by similar terms of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 9.
Notwithstanding the foregoing, in the event a Party is authorized to make
a disclosure of the other party's Confidential Information pursuant to this
Section 9.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and use reasonable efforts to secure
confidential treatment of such information. In any event, the Parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder. The Parties will consult with each other concerning the provisions of
this Agreement to be redacted in any filings made by the Parties with the
Securities and Exchange Commission or as otherwise required by law.
9.3 PUBLICATIONS.
(a) REVIEW AND APPROVAL. Each Party to this Agreement
recognizes that the publication of papers, including oral presentations and
abstracts, regarding the Research Program Know-How and the Research Program
Patents, subject to reasonable controls to protect Confidential Information,
will be beneficial to both Parties. However, each Party shall have the right to
review and approve any paper proposed for publication by the other Party or its
permitted sublicensees, including oral presentations and abstracts, which
utilizes data generated from the Research Program and/or includes Research
Program Know-How or Confidential Information of the reviewing Party.
(b) REVIEW AND APPROVAL PROCESS. At least thirty (30) days
before any such paper is presented or submitted for publication, the Party or
its permitted sublicensee proposing publication shall deliver a complete copy to
the other Party. The receiving Party shall review any such paper and give its
comments to the publishing Party or its permitted sublicensee within thirty (30)
days of the delivery of such paper to the receiving Party. With respect to oral
presentation materials and abstracts, the Parties shall make reasonable efforts
to expedite review of such materials and abstracts, and shall return such items
as soon as practicable to the publishing Party with appropriate comments, if
any, but in no event later than thirty (30) days from the delivery date thereof
to the receiving Party. The publishing Party or its permitted sublicensee shall
comply with the other Party's request to delete references to such other Party's
Confidential Information in any such paper and agrees to withhold publication of
same an additional ninety (90) days in order to permit the Parties to file
patent application, if either of the Parties deem it necessary, in accordance
with the terms of this Agreement.
9.4 PUBLICITY. Neither Party shall, without the prior written consent
of the other Party (which consent shall not be unreasonably withheld or
delayed), originate any publicity, news release or public announcement, written
or oral, whether to the public or press, relating to this Agreement, including
its existence, the subject matter to which it relates, performance under it or
any of its terms or to any amendment hereto, excepting only such announcements
as in the opinion of counsel for the Party making such announcement is required
by law to be made. Any such announcements shall be factual and as brief as
possible. If a Party decides to make an
23.
<PAGE>
announcement required by law, it will give the other Party 10 business days'
advance written notice, where possible, of the text of the announcement so
that the other Party will have an opportunity to comment upon the
announcement. To the extent that the receiving Party requests that any
information in the materials proposed to be disclosed be deleted, the
disclosing Party shall request confidential treatment of such information
pursuant to any applicable rules or regulations (including those of the
Securities and Exchange Commission) relating to the confidential treatment of
such information so that there be omitted from the materials that are
proposed to be disclosed any information that the receiving Party reasonably
requests to be deleted. The Parties shall mutually agree upon a press
release to be made on or promptly after the Effective Date. Any information
which has been disclosed to Third Parties pursuant to this Section 9.4 may be
repeated in whole or in part in any subsequent disclosures or statements to
Third Parties without the restrictions contained herein.
10. TERM AND TERMINATION
10.1 TERM OF THE AGREEMENT. This Agreement shall become effective upon
the Effective Date and continue, unless earlier terminated pursuant to Section
10.2 or 10.3, until the expiration of the last to expire patent claiming a
Product (the "Term of Agreement").
10.2 EARLY TERMINATION. This Agreement shall terminate upon thirty
(30) days prior notice by Rigel (a) if Janssen has not selected a Preliminary
Target-Peptide Pair for further evaluation pursuant to Section 3.4 prior to the
expiration of the Research Period or, (b) if Janssen does not initiate compound
screening as provided in Section 3.6 prior to the expiration of the latest to
expire Exclusivity Term.
10.3 TERMINATION FOR BREACH. In the event that (a) either Party shall
commit a material breach at any time and (b) such defaulting Party shall fail to
remedy such material breach within sixty (60) days after the date of notice
thereof by the non-defaulting Party to the defaulting Party (or, if such
material breach cannot be remedied within sixty (60) days, such longer period of
time as may be reasonably necessary provided the defaulting Party commences to
remedy such material breach within such sixty (60) day period and thereafter
proceeds promptly and diligently to complete such remedy) (with respect to the
defaulting Party, an "Event of Default"), then the non-defaulting Party may at
any time thereafter terminate this Agreement.
10.4 JANSSEN REMEDIES UPON TERMINATION. If this Agreement is
terminated as a result of an Event of Default by Rigel, the licenses granted in
Article 5 herein shall survive such termination. In such event, Janssen's
obligations in Article 6 shall survive, except that all royalty rates shall be
reduced by fifty percent.
10.5 RIGEL CHANGE OF CONTROL.
(a) If a Rigel Change of Control (as defined below) occurs
during the Research Period, then Janssen shall have the right, in its sole
discretion, to terminate the Research Program and the Research Period by giving
thirty (30) days' prior written notice thereof
24.
<PAGE>
to Rigel at any time during the sixty (60) day period following the
occurrence of the Rigel Change of Control. Upon such termination by Janssen
pursuant to this subsection (a), then:
(i) all unspent research funds paid to Rigel pursuant to
Section 6.2 shall be returned promptly to Janssen; and
(ii) Rigel shall have no further obligation to transfer
VTPPs or Rigel Technology Assays, or provide other assistance to Janssen for
Internal Janssen Research;
(iii) Section 2, 3 (except for Sections 3.6 (Compound
Screening; Diligence) and 3.7 (Additional Janssen Right to Validated
Target-Peptide Pair), 5.1, 5.6, 5.7, and 7.2 shall terminate;
(iv) all other terms and conditions of this Agreement
shall continue in full force and effect.
(b) For the purpose of this Section 10.5, a "Rigel Change of
Control" shall have occurred only at such time as a Third Party with (i) annual
sales of pharmaceutical and diagnostic products of more than one billion
dollars, and (ii) a market capitalization of more than fifteen billion dollars
acquires, in one transaction or a series of transactions, either (y) all or
substantially all of the assets of Rigel, or (z) more than 50% of the
outstanding voting securities of Rigel (whether by stock acquisition, merger or
otherwise).
10.6 TERMINATION NOT SOLE REMEDY. Termination is not the sole remedy
under this Agreement, and, whether or not termination is effected, all other
remedies will remain available except as agreed to otherwise herein (including,
without limitation, any remedies in favor of Janssen referred to in Paragraph
10.5).
11. INDEMNITY
11.1 RESEARCH AND DEVELOPMENT INDEMNIFICATION. Each Party (the
"Indemnifying Party") shall indemnify, defend and hold the other Party (the
"Indemnified Party") harmless from and against any and all liabilities, claims,
damages, costs, expenses or money judgments incurred by or rendered against the
Indemnified Party and its Affiliates and sub-licensees incurred in the defense
or settlement of a Third Party lawsuit or in a satisfaction of a Third Party
judgment arising out of any injuries to person and/or damage to property
resulting from (a) negligence of the Indemnifying Party performed in carrying
out the development program hereunder, and (b) personal injury to the
Indemnified Party's employees or agents or damage to the Indemnified Party's
property resulting from acts in carrying out activities contemplated by this
Agreement.
11.2 PRODUCT LIABILITY. Janssen hereby agrees to indemnify, hold
harmless and defend Rigel and its directors, officers, employees, and agents
against any claim or claims, including, but not limited to liability, suits,
actions, demands, expenses and/or loss including reasonable legal expenses and
attorneys fees, arising from bodily injury and death, resulting from or arising
out of the manufacture, use or sale of Products by Janssen, its Affiliates and
sub-licensees.
25.
<PAGE>
11.3 CONTROL OF DEFENSE. Any entity entitled to indemnification under
this Article shall give notice to the indemnifying Party of any Claims that may
be subject to indemnification, promptly after learning of such Claim, and the
indemnifying Party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified Party. If such defense is assumed by
the indemnifying Party with counsel so selected, the indemnifying Party will not
be subject to any liability for any settlement of such Claims made by the
indemnified Party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified Party with respect to such
Claims.
12. GOVERNING LAW; DISPUTE RESOLUTION
12.1 GOVERNING LAW. This Agreement shall be governed by Delaware law,
as such law applies to contracts entered into in Delaware by residents of
Delaware.
12.2 COMPLIANCE WITH LAWS. The Parties shall comply with all applicable
laws, rules, regulations and orders of the United States and all jurisdictions
and any agency or court thereof in connection with this Agreement and the
transactions contemplated thereby.
12.3 DISPUTE RESOLUTION. Except as provided in Section 2.3 above, in
the event of a dispute, the Parties shall refer such dispute to a designated
executive of Rigel and a designated executive of Janssen for attempted
resolution by good faith negotiations within thirty (30) days after such
referral is made. In the event such executives are unable to resolve such
dispute within such thirty (30) day period, either Party may invoke the
provisions of Section 12.4 below.
12.4 JURISDICTION AND VENUE. Except as provided in Section 2.3 and
12.3 above, any claim or controversy arising out of or related to this Agreement
or any breach hereof shall be adjudicated in the state and federal courts having
jurisdiction over disputes arising in the State of Delaware, and the Parties
hereby consent to the jurisdiction and venue of such court.
13. PRODUCT DEVELOPMENT AND COMMERCIALIZATION
13.1 JANSSEN'S DEVELOPMENT RESPONSIBILITIES. Janssen shall be solely
responsible for and have the sole right to select a compound for development
into a Product. Once such a compound is selected for development, Janssen shall
be solely responsible for and shall have the sole right to develop such compound
throughout Pre-phase I and Phases I, II and III including making all Drug
Approval Applications and obtaining all Regulatory Approvals on a worldwide
basis. In this regard, Janssen agrees to carry out development of such compound
consistent with its normal business practices. This development effort shall
include the right to slow or terminate development and all other actions deemed
by Janssen to be reasonable in the development of the compound. Moreover,
Janssen shall be responsible for all cost and expenses in connection with such
development efforts.
13.2 MARKETING OBLIGATIONS. All business decisions, including, but not
limited to, the design, sale, price and promotion of Products under this
Agreement and the decision whether to market any particular Product shall be
within the sole discretion of Janssen. Any marketing of a
26.
<PAGE>
Product in one market or country shall not obligate Janssen to market said
Product in any other market or country. Furthermore Janssen makes no
representation or warranty that the market of a Product shall be the
exclusive means by which Janssen will participate in any therapeutic field.
14. GENERAL PROVISIONS
14.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail addressed to the signatory to whom such notice is required or permitted to
be given and transmitted by facsimile to the number indicated below. All
notices shall be deemed to have been given when mailed, as evidenced by the
postmark at the point of mailing, or faxed; provided that such fax is confirmed
by electronic confirmation of transmission.
All notices to Janssen shall be addressed as follows:
Janssen Pharmaceutica N.V.
Turnhoutseweg 30
2340 Beerse, BELGIUM
Attention: Executive Vice President
Fax: (32+14) 60-28-41
with a copy to:
Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933 U.S.A.,
Telephone (732) 524-2485,
Telecopy (732) 524-2788
All notices to Rigel shall be addressed as follows:
Rigel Pharmaceuticals, Inc.
772 Lucerne Drive
Sunnyvale, California 94086
Attn: President
Fax: (408) 736-1588
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attn: Robert L. Jones, Esq.
Fax: (650) 857-0663
27.
<PAGE>
Any Party may, by written notice to the other, designate a new address
or fax number to which notices to the Party giving the notice shall
thereafter be mailed or faxed.
14.2 FORCE MAJEURE. No Party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the Party claiming excuse uses its best efforts
to overcome the same.
14.3 ENTIRETY OF AGREEMENT. This Agreement embodies the entire, final
and complete agreement and understanding between the Parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each Party.
14.4 NON-WAIVER. The failure of a Party in any one or more instances
to insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
14.5 DISCLAIMER OF AGENCY. Neither Party is, or will be deemed to be,
the legal representative or agent of the other, nor shall either Party have the
right or authority to assume, create, or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
14.6 SEVERABILITY. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either Rigel or Janssen deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and effect. To the
extent possible, the Parties shall revise such invalidated provision in a manner
that will closely approximate the parties' original intent.
14.7 AFFILIATES; ASSIGNMENT. Except as otherwise provided herein,
neither Party may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other Party, not to be unreasonably
withheld; PROVIDED, HOWEVER, that either Party may assign this Agreement to any
of its Affiliates or to any successor by merger or sale of substantially all of
its business unit to which this Agreement relates in a manner such that the
assignor will remain liable and responsible for the performance and observance
of all its duties and obligations hereunder. This Agreement shall be binding
upon the successors and permitted assigns of the Parties. Any attempted
delegation or assignment not in accordance with this Section 14.7 shall be of no
force or effect
14.8 HEADINGS. The headings contained in this Agreement have been
added for convenience only and shall not be construed as limiting.
14.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
28.
<PAGE>
14.10 ENGLISH LANGUAGE. This Agreement has been prepared in the English
language and shall be construed in the English language.
14.11 LICENSOR BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by Rigel to Janssen are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of Title 11, U.S. Code (the
"Bankruptcy Code"), licenses of rights to "intellectual property" as defined
under section 101(60) of the Bankruptcy Code. The Parties agree that Janssen,
as a licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code. Rigel
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, of all such intellectual property. The Parties further agree that,
in the event of the commencement of a bankruptcy proceeding by or against Rigel
under the Bankruptcy Code, Janssen shall be entitled to a complete duplicate of
(or complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and the same, if not already in its
possession, shall be promptly delivered to Janssen, upon written request
therefor by Janssen, (a) upon any such commencement of a bankruptcy proceeding,
unless Rigel elects to continue to perform all of its obligations under this
Agreement, or (b) if not delivered under clause (a) above, upon the rejection of
this Agreement by or on behalf of Rigel.
14.12 NO OTHER REPRESENTATIONS. Each of the Parties hereto acknowledges
and agrees (a) that no representation or promise not expressly contained in this
Agreement has been made by the other Party hereto or by any of its agents,
employees, representatives or attorneys; (b) that this Agreement is not being
entered into on the basis of, of in reliance on, any promise or representation,
expressed or implied, covering the subject matter hereof, other than those which
are set forth expressly in this Agreement; and (c) that each Party has had the
opportunity to be represented by counsel of its own choice in this matter,
including the negotiations which preceded the execution of this Agreement.
29.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement.
RIGEL PHARMACEUTICALS, INC. JANSSEN PHARMACEUTICA, N.V.
By: /s/ James M. Gower By: /s/ Gustav van Reet
----------------------------- --------------------------------------
Name: Jim Gower Name: Dr. Gustav van Reet
Title: President and CEO Title: Managing Director
By: /s/ Didier de Chaffoy de Courcelles
--------------------------------------
Name: Didier de Chaffoy de Courcelles
Title: Vice President Biological Research
30.
<PAGE>
EXHIBIT A
RESEARCH PLAN
31.
<PAGE>
SYNOPSIS
RIGEL-JANSSEN COLLABORATION PROPOSAL
APPROACH: To identify targets that regulate cell cycle checkpoint control
mechanisms. This will be accomplished by introducing into selected tumor
cells using proprietary retroviral delivery-vectors cDNA libraries and
constrained 18mer random peptide libraries in order to alter the cellular
phenotype of specific tumor cells. Using this approach in tumor cells, which
exhibit uncontrolled proliferation, target-peptide pairs will be identified
which restore normal cell-cycle progression and sensitivity to
chemotherapeutic agents.
cDNA LIBRARIES: Human fetal liver and brain. The reason for choosing these
tissues is that cells in these organs have a high degree on "differentiation
control mechanisms" and hence should contain targets that are important in
regulating the cell cycle.
PEPTIDE LIBRARIES: The first library to be tested will be a constrained 18mer
random peptide library. Other libraries will be screened as necessary.
CELL LINES FOR PRIMARY SCREENS: Cell lines derived from Colon, Lung and
Breast tumors will be studied. From Colon, the line HT-29; Lung, the cell
lines A549 (p53 wt) and H-1299; and Breast, the line MDA-MB-231. For each
cell line the p53, Rb, p16 and p21 status will be evaluated using antibodies
and sequencing of the gene to determine the presence and absence of specific
mutations. These will be compared to control levels from normal tissues.
PRIMARY SCREENS: For each of the above tumor cell lines, retrovirally delivered
libraries (cDNA and random constrained peptide) will be introduced into cells.
The cells will be stained with the Cell Tracker dye and monitored for cell
division by high through put FACS. Cells that don't divide will be sorted and
stained with a DNA labeling dye in order to identify those cells in G0/G1, S
or G2M. After several rounds of enrichment, library members that block/arrest
cell division in a particular phase of the cell cycle, will be identified.
SECONDARY SCREENS: Individual cDNA and peptide hits from the primary screens
will be evaluated in the same FACS assay as above, and in proliferation and
apoptosis assays in a "panel" of cell lines to be determined by the RMC.
PATHWAY MAPPING. Using the Yeast Two-Hybrid (YTH) technology cDNA hits
(those found by Rigel in their functional screens, or by Janssen, such as
Hrad17, Hrad1, etc.) will be used in YTH to find their interacting protein
partners, and these will be evaluated in the above assays for function.
Proteins that are demonstrated to significantly alter cell cycle in tumor
cells, will be subjected to a YTH screen with a constrained peptide library
to find an enriched "peptide binding" library that can identify functional
sites on these proteins in the above assays. The goal is to identify
peptide-protein pairs that restore normal cell cycle responses in a
significant number of tumor cell lines.
RESOURCES: 10 Rigel FTEs for 36 months.
<PAGE>
IDENTIFICATION OF FUNCTIONAL PEPTIDE-TARGET INTERACTIONS REGULATING CELL
CYCLE IN SPECIFIC TUMOR CELLS
JANSSEN PROJECT OUTLINE
INTRODUCTION
The hallmark of a malignant cell is uncontrolled proliferation. This
phenotype is acquired through the accumulation of gene mutations, the
majority of which promote passage through the cell cycle. Cancer cells
ignore growth regulatory signals and remain committed to cell division.
Classic oncogenes, such as RAS, lead to inappropriate transition from G1 to S
phase of the cell cycle, mimicking proliferative extracellular signals. Cell
cycle checkpoint controls ensure faithful replication and segregation of the
genome. The loss of cell cycle checkpoint control results in genomic
instability, greatly accelerating the accumulation of mutations which drive
malignant transformation. Hence, checkpoint regulators, such as p53 and ATM
(ataxia telangiectasia mutated), also function as tumor suppressors. Thus,
modulating cell cycle checkpoint pathways with therapeutic agents could
exploit the differences between normal and tumor cells, both improving the
selectivity of radio- and chemotherapy, and leading to novel cancer
treatments. THE GOAL OF THIS PROPOSAL IS TO IDENTIFY PEPTIDE/PROTEIN
INTERACTIONS THAT INHIBIT THE ABILITY OF SPECIFIC TUMOR CELLS TO PROLIFERATE,
BY ALTERING THEIR CAPACITY TO TRANSIT THROUGH VARIOUS STAGES OF THE CELL
CYCLE. This will be accomplished by identifying intracellular targets, and
their cognate regulating peptides, capable of inhibiting tumor cell
progression through the cell cycle, either by activating cell cycle
checkpoint pathways or ameliorating checkpoint defects (see Table 1 for
summary). The identification of these targets will allow for low molecular
weight compound screening to isolate activators or inhibitors of cell cycle
checkpoint pathways.
<PAGE>
Table 1 Summary of screens to identify functional peptide-target interactions
regulating cell cycle in specific tumor cells.
---------------------------------------------------- ---------------------------- ------------------------------------
SCREENING APPROACH READOUT LIBRARY STRUCTURE + TARGETING MOTIF
---------------------------------------------------- ---------------------------- ------------------------------------
1. Functional screening with peptide libraries Identify tumor cells - Linear 20 mer +/- NLS*
for inhibitors of tumor cell progression arrested in specific cell - Constrained 18-mer stem
through various phases of the cell cycle cycle phase using loop +/- NLS
four-parameter cell-based - 4 helix bundle +/- NLS
high throughput FACS assay
---------------------------------------------------- ---------------------------- ------------------------------------
2. Functional analysis of proteins (Hrad17, Examine effect of protein,
Hrad1, Hrad9, etc.) isolated by Janssen antisense, mutated protein
implicated in cell-cycle control. or peptide binding library
on tumor cells in assays
under Specific Aim 1
2.1 Retroviral-mediated functional analysis - N/A
of cell cycle control proteins
2.2 Large scale randon-mutagenesis analysis - Library of mutated
of cell cycle control proteins: proteins
Generation of libraries of mutant proteins
2.3 Cell cycle control protein-binding - "enriched by binding" library:
peptide library screen (see 3.2) constrained 18 mer
stem-loop +/- NLS
---------------------------------------------------- ---------------------------- ------------------------------------
3. Elucidation of the signaling pathways that -
mediate the control of cell cycle checkpoints
in specific tumor cells
3.1 Two hybrid screening of peptide hits from LacZ+, His+ - cDNA library:
1 to identify functional peptide-target - a specific tumor cells
protein pairs - a human fetal liver/brain
---------------------------------------------------- ---------------------------- ------------------------------------
3.2 Isolation of peptides that bind to LacZ+, His+ - "enriched by binding"
specific proteins implicated in cell peptide library: constrained
cycle regulation and determination of 18 mer stem-loop +/- NLS
their ability to specially inhibit tumor
replication and progression through
various phases of the cell cycle.
3.3 Cell cycle checkpoint pathway mapping LacZ+, His+ - cDNA libraries
- "enriched by binding"
peptide library: constrained
18mer stem-loop +/- NLS
---------------------------------------------------- ---------------------------- ------------------------------------
* NLS = nuclear localization sequence
2
<PAGE>
A. SPECIFIC AIMS
The outline of the Specific Aims below, is followed by a more detailed
discussion of the Experimental Methods and the Design of the Project.
SPECIFIC AIM 1:
FUNCTIONAL SCREENING WITH PEPTIDE LIBRARIES FOR INHIBITORS OF TUMOR CELL
PROGRESSION THROUGH VARIOUS PHASES OF THE CELL CYCLE.
Screens in specific aim 1 will be conducted on a panel of tumor cell lines
to be chosen by Janssen. These cell lines will be selected based on their
representation of important oncology markets, biological significance, and
clinical relevance. The characteristics of the tumor cell lines are detailed in
an addendum to be provided by Janssen. A Rigel-Janssen joint research committee
will review this information to ensure that it includes information relating to
culture conditions and molecular defects in key intracellular targets that could
influence the assay conditions (e.g. p53, Rb status, etc.).
Tumor cells selected by Janssen will each be infected with three
structurally different retroviral peptide libraries with and without
sub-cellular localization sequences (Appendix A). These peptide libraries will
consist of a linear 20mer with and without a nuclear localization signal (NLS),
a stem loop constrained 18mer with and without an NLS, and a third constrained
library containing a different scaffolding, such as a 4-helix bundle with and
without an NLS. Library infected tumor cells which are inhibited in their
progression through specific phases of the cell cycle will be selected using a
high throughput fluorescent activated cell sorter (FACS) (Appendix B). After
several rounds of enrichment, individual peptide sequences will be tested for
inhibitory function. Validated peptide hits will be subjected to secondary
assays in a broader panel of representative tumor cell lines to be chosen by
Janssen in order to determine their physiologic characteristics and specificity.
Peptides that demonstrate desirable characteristics will be used as bait in a
yeast two-hybrid screen to locate their intracellular binding partners (see
specific aim 3.1 for details). The right-hand side of Figure 1 illustrates this
identification cycle for functional peptide-target protein interactions (the
left-hand side will be discussed in section 2.3 and 3.3 below).
[Diagram]
(Figure 1)
SPECIFIC AIM 2:
FUNCTIONAL ANALYSIS OF PROTEINS IMPLICATED IN CELL CYCLE CHECKPOINT
CONTROL.
Cell cycle checkpoint control proteins, selected by Janssen scientists,
will be subjected to a detailed functional analysis to establish their potential
as targets for further pharmaceutical development. Initial examples will
include, but are not limited to, Hrad1 and Hrad17, two human homologues of S.
POMBE proteins implicated in DNA damage-dependent and DNA replication-dependent
cell cycle checkpoints. The genes encoding these proteins will be transduced
into selected cell lines and analyzed for cell cycle perturbances. Mutagenesis
studies will be conducted on each gene to identify mutants with
dominant-negative effects on cell cycle
3
<PAGE>
progression and checkpoint responses to anticancer agents. Together this
information will provide insight into the role these proteins play in
mammalian checkpoint control and how mutations in these genes may contribute
to tumorigenesis and chemotherapeutic sensitivity. These cell cycle control
proteins will be screened for interacting peptides in a yeast two-hybrid
system. The binding peptides will be assayed for their ability to influence
tumor cell growth and sensitivity to chemotherapic treatments.
2.1 Retroviral-Mediated Functional Analysis Of Cell Cycle Control
Proteins.
Cell cycle control genes selected by Janssen will be cloned into Rigel's
proprietary retroviral expression system for stable transduction into selected
tumor lines. Optimized infection protocols will be developed for each cell line.
Transduced cells will be analyzed for cell cycle effects and changes in
apoptotic responses (by FACS-based ways described in Appendix B). The radiation
and chemotherapeutic sensitivity of cells expressing these cell cycle control
genes will be assayed in collaboration with Janssen scientists. Anti-sense
versions of each gene will be assessed for loss-of-function phenotype and/or
dominant negative effects in cell cycle assays.
2.2 LARGE-SCALE RANDOM-MUTAGENESIS ANALYSIS OF CELL CYCLE CONTROL
PROTEINS: GENERATION OF LIBRARIES OF MUTANT PROTEINS.
Selected cell cycle control proteins will be randomly mutagenized to create
libraries of mutated proteins (Appendix C) and screened for dominant negative
cell cycle effects in different cell lines as described in Specific Aim 2.1.
2.3 CELL CYCLE CONTROL PROTEIN-BINDING PEPTIDE LIBRARY SCREEN.
The cell cycle control proteins defined above will be screened in a yeast
two-hybrid assay for interacting binding peptides (as described in Specific Aim
3.2). These interacting peptides will be introduced into selected tumor cell
lines to assess effects on cell cycle and sensitivity to chemotherapeutic
treatments as described in Specific Aim 1.
SPECIFIC AIM 3:
ELUCIDATION OF THE SIGNALING PATHWAYS THAT MEDIATE THE CONTROL OF CELL
CYCLE CHECKPOINTS IN SPECIFIC TUMOR CELLS
Specific aim 3 represents the final phase in the derivation of
functional-based peptide-protein pairs that are members of a pathway(s) that
regulate cell cycle in specific tumor cells.
3.1 TWO-HYBRID SCREENING OF PEPTIDE HITS TO IDENTIFY FUNCTIONAL
PEPTIDE-TARGET PROTEIN PAIRS.
The peptide hits identified in Specific Aim 1 will be used as bait in a
two-hybrid screen to identify their intracellular binding partners (Appendix
D). This will identify peptide-target pairs that can be further assessed in
secondary and orthogonal assays to be determined by the Rigel-
4
<PAGE>
Janssen joint research committee for their potential to specifically inhibit
tumor cells progression through various phases of the cell cycle. These protein
targets will also be subjected to additional two-hybrid screening to identify
neighboring interacting proteins that may also regulate the cell cycle and
proliferation of tumor cells (see 3.3 below).
3.2 ISOLATION OF PEPTIDES THAT BIND TO SPECIFIC PROTEINS IMPLICATED
IN CELL CYCLE REGULATION AND DETERMINATION OF THEIR ABILITY TO SPECIFICALLY
INHIBIT TUMOR REPLICATION AND PROGRESSION THROUGH VARIOUS PHASES OF THE CELL
CYCLE.
The cell cycle control proteins selected by Janssen (see Specific Aim 2.1)
will be subjected to a two-hybrid screen using a combinatorial peptide library
to identify specific binding peptides (Appendix E). The two-hybrid peptide
libraries contain the same peptide structures and sub-cellular localization
sequences as described in Specific Aim 1 and Appendix A. The isolated
target-binding peptides will be assessed for their ability to inhibit cell cycle
progression in tumor cells. Validated peptide hits will be subjected to
secondary assays to confirm their function and specificity.
3.3 CELL CYCLE CHECKPOINT PATHWAY MAPPING.
The protein targets identified above (Specific Aim 2 and 3.1) will be
screened for additional interactions with other proteins by yeast two-hybrid
technology (Appendix D). These binding proteins will be assayed for their
ability to halt tumor cell progression through various cell cycle phases. Those
that have function in this basic assay will be subjected to a two-hybrid screen
using a combinatorial peptide library to identify specific binding peptides
(Appendix F). The two-hybrid peptide libraries contain the same peptide
structures and sub-cellular localization sequences as described in Specific Aim
1 and Appendix A. The isolated target-binding peptides will be assessed for
their ability to inhibit cell cycle progression in tumor cells. Validated
peptide hits will be subjected to secondary assays to confirm their function and
specificity. This process represents a reverse of what was described earlier in
Specific Aim 1 and is illustrated in the left-hand side of Figure 1.
B. EXPERIMENTAL DESIGN AND METHODS
SPECIFIC AIM 1:
FUNCTIONAL SCREENING WITH PEPTIDE LIBRARIES FOR INHIBITORS OF TUMOR CELL
PROGRESSION THROUGH VARIOUS PHASES OF THE CELL CYCLE.
RATIONALE:
Altered regulation of proteins that control cell cycle checkpoints may
result in chromosomal instability which underlies the transformed state of many
tumor cells. Using Rigel's high throughput genetic screens, it is expected that
novel tumor-specific targets will be identified, which when bound to a peptide,
will result in the cell being blocked from exiting a specific phase of the cell
cycle.
5
<PAGE>
Rigel has demonstrated that it can identify and express cell cycle
regulating proteins, and specific peptides derived from them, which arrest cells
in a specific phase of the cell cycle (Appendix F). Consequently, it is expected
that the use of combinatorial constrained peptide libraries delivered using a
retroviral-based system will identify peptide families which interact with novel
cell-cycle checkpoint regulating targets.
1.0 PEPTIDE LIBRARY SCREENING AND TARGET IDENTIFICATION USING A CELL
CYCLE CHECKPOINT ASSAY.
Tumor cells selected by Janssen will be infected with each Rigel peptide
library (Appendix A). The screening protocol and timeline for identification of
the peptide inhibitors and their target proteins is shown diagrammatically in
Figure 2 for each of the three structurally different peptide libraries.
(Figure 2)
Each of these peptide libraries will be packaged into infectious viral
particles (for protocol, see Appendix G). Each library will be a mixture of
random peptide sequences with and without a nuclear localization sequence
(NLS) upstream of a reporter gene to identify infected cells and relative
peptide expression (Appendix H). In fact, we have developed several
retroviral constructs to control all aspects of peptide expression and
localization. This gives us great flexibility when designing retroviral
libraries within any cell line and with whichever characteristics are deemed
necessary for intracellular peptide expression (Appendix I). The three
structurally different peptide libraries will consist of a linear 20-mer
(first year), a constrained stem-loop 18-mer (first to second year) and a
third structure such as a 4-helix bundle to be determined by year three
(Appendix A).
Each screen will start with production of the primary retrovirus peptide
library. This primary library will be used to infect at least 10E9 tumor
cells. After infection, the tumor cells will be loaded with a fluorescent dye
(celltracker) that is uniformly partitioned into dividing cells. As cell
division progresses, the fluorescence is diminished proportionately to the
number of cell divisions. Hence, cells that fail to divide remain maximally
bright (Appendix B). The screen is conducted over a time period such that, in
tumor cells where no library is expressed, greater than 99% of the tumor
cells undergo a sufficient number of cell divisions resulting in less than 1%
of cells with the maximal celltracker fluorescence in the FACS. Prior to the
high throughput FACS sort, cultures of cells are labeled with a DNA staining
dye, such as Hoechst 33342, which enables the identification of viable cells
in different phases of the cell cycle. Cells which are maximally bright with
the celltracker dye (i.e. cells where the expressed peptide inhibits
division) will be sorted according to the specific phase of the cell cycle in
which they have been arrested (Appendix B). A positive control construct
encoding the cyclin-CDK-inhibitor (CKI)-family member, p2l, will be used to
optimize the assay conditions in selected target cell lines. Enriched
non-dividing tumor cell populations will be subjected to RT-PCR to amplify
the integrated peptide sequences. The PCR material will be used to construct
a new "enriched" retrovirus peptide library to initiate the next screening
round.
6
<PAGE>
It will take approximately 5-7 rounds of enrichment to identify individual
peptide sequences capable of inhibiting tumor cell cycle progression. For a
discussion of the statistics associated with enrichment, see Appendix J. The
most important factor that influences the number of enrichment rounds necessary
to identify individual peptide hits is the ratio between real positive peptide
hits in the original library and heritable false positives. The frequency of
real positive peptide hits is dependent upon the qualitative ability of the
peptide to access and, in the correct conformation, bind to the regulatory
domains on proteins in the pathway of interest. This is why we use multiple
scaffolding structures for presentation of random peptide surfaces and also
different localization sequences fused to those peptide structures (Appendix A).
Enrichment of real positive peptides becomes less efficient with false positive
rates above 2%. Consequently, great effort is placed in developing robust assays
with multiple parameters being analyzed for a given biologic process.
Uneven RT-PCR amplification may decrease overall amplification of real
peptides hits from one round to another. This is overcome by additional rounds
of library enrichment and is why RT-PCR amplification is carefully monitored
after each round of screening. We are also developing a direct biological rescue
to expedite enrichment and to overcome any decrease in amplification of peptide
hits due to uneven RT-PCR. Biological rescue involves direct transfer of
recombinant retroviral inserts from positively identified cell clones into naive
cells for retesting. By supplying retrovirus proteins GAG-POL-ENV to cells,
integrated proviral transcripts encoding putative peptide hits are selectively
re-packaged and secreted as new virions capable of infecting new cells. Positive
cells can be converted to retroviral producers by superinfection of
GAG-POL-ENV genes or alternatively, tetracycline-inducible packaging
functions can be preengineered into target cell lines. By either strategy,
peptides from enriched cells can be selectively transferred to new cells and
re-tested for phenotypic effects, eliminating the time-intensive and potentially
biased intermediary molecular cloning steps.
A separate strategy to enhance enrichment will involve a retroviral system
with inducible expression (e.g. tetracycline dependent). Inducible transcription
units can be placed within the retroviral vector; alternatively, inducible
promoter elements may be inserted into the retroviral promoter within the LTR
(see Appendix H). In this scheme, peptide expression is repressed following
sorting to alleviate the peptide-specific cell cycle arrest and to allow a
post-sort growout: Cells arrested due to non-peptide specific causes, such as
mutation or aneuploidy, would remain arrested. Re-induction of the peptide
expression will reinstate the arrested phenotype in true peptide hits, which can
subsequently be enriched in another round of sorting.
Once enrichment is achieved and individual peptide sequences are shown to
effect inhibition in an independent assay, the peptides will. be introduced into
a panel of tumor cells (to be obtained from the NCI) for secondary and
orthogonal assays as determined by the Rigel-Janssen joint research committee.
Validated peptides will then be used as bait to isolate their interacting
protein targets by two-hybrid approaches (see section 3 for details).
SPECIFIC AIM 2:
FUNCTIONAL ANALYSIS OF PROTEINS IMPLICATED IN CELL CYCLE CHECKPOINT CONTROL.
7
<PAGE>
RATIONALE:
Cell cycle control genes identified by Janssen, including (but not limited
to) human homologues of S. POMBE RAD1+ and RAD17+ checkpoint genes, will be
expressed in selected cell lines for detailed functional analysis to establish
their potential as targets for further pharmaceutical development. Expression of
dominant-negative mutants of cell cycle checkpoint regulators, such as p53 and
hBUB1. account for some inappropriate tumor cell responses to DNA damaging and
spindle-disrupting agents, respectively. Hence, mutagenesis studies will be
conducted on each cell cycle control gene to identify dominant-negative mutants
of these proteins. This will serve to map functional domains important in the
regulation of cell cycle checkpoint function and chemotherapeutic sensitivity.
Selected cell cycle control proteins will be screened for interacting peptides
in a yeast two-hybrid system. These binding peptides will be assayed for their
ability to influence tumor cell growth and for their sensitivity to
chemotherapeutic treatments.
2.1 RETROVIRAL-MEDIATED FUNCTIONAL ANALYSIS OF CELL CYCLE CONTROL
PROTEINS.
Cell cycle control genes selected by Janssen will be transferred into
Rigel's retroviral system for stable expression and functional analysis in
selected tumor cell lines. Encoding sequences will be cloned into the
multiple cloning region of the basic retroviral vector construct (Appendix
H). An internal ribosome entry site (IRES), placed immediately 3' of the
multiple cloning site, drives cap-independent translation of downstream
encoding sequences. This allows co-translational selection with a downstream
FACS-selectable marker (e.g. GFP). Infectious retroviral particles are
produced by transient transfection of retroviral vector constructs into high
efficiency packaging cell lines (Appendix G), harvested, and used to infect
target cell lines for stable integration into the target cell genome. Optimal
infection protocols will be developed for each cell line using a GFP control
vector. A generic protocol is detailed in Appendix G. Examples of infection
rate for various tumor cell lines is shown in Table 2.
TABLE 2. INFECTION RATES WITH RIGEL RETROVIRAL CONSTRUCTS FOR VARIOUS TUMOR CELL
LINES.
-----------------------------------------------------------------------------------------------------------
CELL LINE INFECTION EFFICIENCY (%)
-----------------------------------------------------------------------------------------------------------
A549 (non-small cell lung cancer) >80
HeLa (cervical carcinoma) >70
T47D (breast cancer) >70
SW480 (colorectal cancer) >70
CEM (T-lymphoblastoid leukemia) >30
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
In most cases, transduction rates of >70% are achievable with limited
optimization of the standard protocol. Occasionally, cells express low levels of
the retroviral receptor recognized by the retroviral envelope protein. This may
be compensated by engineering the target cell lines to express higher receptor
levels by introducing the ecotropic envelope protein receptor (EcoR), a basic
amino acid transporter. For example, infection efficiency of Jurkat
T-lymphoblastoid
8
<PAGE>
leukemia cells was enhanced from ~15% to >90% in EcoR-expressing lines.
Alternatively, retroviral vector particles may be pseudotyped with the
Vesticular Stomatitis Virus G-protein (VSV-G), which interacts with membrane
lipids (phosphatidylserine) to promote fusion.
The infection efficiency of individual constructs is monitored via
IRES-driven GFP co-expression by FACS and/or microscopy. Cells expressing
cell cycle control genes will be analyzed for direct cell cycle effects and
induction of apoptosis (Annexin-V binding) by FACS-assay. Furthermore, the
transduced cells will be assayed for chemotherapeutic (e.g. DNA replication
inhibitors, anti-metabolites, microtubule-disrupting agents) and radiation
(UV and gamma) sensitivity alterations in collaboration with Janssen
scientists.
Anti-sense versions of each cell cycle control gene will be constructed by
inserting the cDNA sequence in reverse orientation into the basic vector. The
insert length will be varied, creating small libraries of specific anti-sense
effectors for each gene. These constructs will be used to generate infectious
retroviral vector particles and transduced into selected cell lines as described
above. The transduced cells will be assayed for loss-of-function and/or dominant
negative effects on cell cycle checkpoint control as described above.
2.2 LARGE SCALE RANDOM-MUTAGENESIS ANALYSIS OF CELL CYCLE CONTROL
PROTEINS: GENERATION OF LIBRARIES OF MUTANT PROTEINS.
The polymerase chain reaction (PCR) can be used to generate
comprehensive, unbiased single-point mutation libraries. Essentially, the
mutagenesis strategy takes advantage of the ability of Taq DNA polymerase to
alter the fidelity of replication by doping the PCR reaction with divalent
cations. The use of magnesium to stabilize non-complementary base-pairs and
manganese to impair recognition of complementary base-pairs allows mutation
of up to 2% of all nucleotides per gene. The mutation frequency can be
controlled by titrating levels of the divalent cations to produce an average
of one mutation per gene. The use of altered dNTP ratios can eliminate the
inherent bias for transition-mutations in PCR mutagenesis. This controlled
PCR mutagenesis procedure can create complex, representative, mutant cDNA
libraries for genes of any length which can then be used to probe for
critical functional domains of the encoded protein. These libraries are
screened in the functional assay detailed in Appendix B. The Janssen-Rigel
joint research committee will determine treatment regimes with relevant DNA
damaging agents, radiation or chemotherapeutics for the tumor cells
expressing different cell cycle control gene mutant libraries.
2.3 CELL CYCLE CONTROL PROTEIN-BINDING PEPTIDE LIBRARY SCREEN.
The cell cycle control proteins defined above will be screened in a yeast
two-hybrid assay for interacting peptides as described in Specific Aim 3.2.
Interacting peptide encoding sequences will be transferred into a shuttle vector
for transfer into tumor cell lines. Peptide effects on cell cycle checkpoint
function will be assayed as described in Specific Aim 2.1.
SPECIFIC AIM 3:
9
<PAGE>
ELUCIDATION OF THE SIGNALING PATHWAYS THAT MEDIATE THE CONTROL OF CELL
CYCLE CHECKPOINTS IN SPECIFIC TUMOR CELLS
RATIONALE:
Peptides that inhibit the ability of tumor cells to transit through
specific phases of the cell cycle do so by binding to intracellular proteins
that are members of pathways which control cell replication. Identification of
functional peptide-target protein pairs which significantly alter these
responses will enable screening for low molecular weight inhibitory compounds.
3.1 TWO-HYBRID SCREENING OF PEPTIDE HITS TO IDENTIFY FUNCTIONAL
PEPTIDE-TARGET PROTEIN PAIRS.
The peptide hits identified in specific aim 1 will be used as bait in a
two-hybrid screen to identify their intracellular binding partners. This will
identify peptide-target pairs that can be assessed in secondary and orthogonal
assays for their potential to specifically inhibit tumor cell transition through
the cell cycle and proliferation. The cDNA libraries to be used are derived from
the specific tumor cells used in the screen, and from a control library derived
from human fetal liver and brain.
The identified peptide/protein pairs will be assessed for their ability to
regulate tumor cell growth and cell cycle progression in a panel of tumor cell
lines derived from a variety of sources (e.g. National Cancer Institute tissue
bank) in order to determine specificity, in addition to being examined for their
effect on normal cells, such as human epithelial and endothelial cells and
murine primary bone marrow cells. These protein targets will also be subjected
to additional two-hybrid screening to identify neighboring interacting proteins
(pathway mapping) involved in cell cycle pathways in tumor cells (see section
3.3).
The screening protocol for identification of peptide binding proteins is
summarized in Appendix E. The methods are as follows: oligo sequences encoding
the peptide hits will be cloned into pAS2-1K to fuse to the C-terminal of GAL4
DNA binding domain. The oligos can also be cloned into pAS2N to fuse to the
N-terminal of GAL4 DNA binding domain. Both bait plasmids can be used for
subsequent screenings.
The bait plasmids will be transformed into the Y190 yeast strain. This
yeast strain has the highest sensitivity for yeast two-hybrid screening. Optimal
3AT concentration needed to suppress any HIS background expression will be
determined on SD-WH+3AT plates.
cDNA libraries from both tumor cells and fetal and human brain will be used
to transform the yeast already containing the bait plasmid. At least 20 million
transformants from each library will be screened on SD-LWH+3AT plates. HIS+ and
LacZ+ clones will be grown up in SD-L liquid medium to retrieve plasmid and for
retransformation into Y190 to verify the binding specificity.
10
<PAGE>
3.2 ISOLATION OF PEPTIDES THAT BIND TO SPECIFIC PROTEINS IMPLICATED
IN CELL CYCLE REGULATION AND DETERMINATION OF THEIR ABILITY TO SPECIFICALLY
INHIBIT TUMOR REPLICATION AND PROGRESSION THROUGH VARIOUS PHASES OF THE CELL
CYCLE.
Hrad1, Hrad17, and other proteins implicated in regulating the cell cycle
identified by Janssen (see Specific Aim 2), will be subjected to a yeast
two-hybrid screen using a peptide library to identify binding peptides as
described in Appendix F. The identified binding peptides will then be assessed
for their ability to inhibit specific tumor cells in their progression through
the cell cycle. Validated peptide hits will be subjected to secondary assays to
confirm their function and specificity. This will identify functional peptides
that bind to the cell cycle control proteins and inhibit tumor growth (left side
of Figure 1).
3.3 CELL CYCLE CHECKPOINT PATHWAY MAPPING.
The second-level two-hybrid screening of protein targets that bind to peptide
hits (from Specific Aim 3.1), or cell cycle control proteins selected by Janssen
(Specific Aim 2.1). is referred to as functional-based pathway mapping. This
will elucidate interacting members within the cell cycle checkpoint control
pathway. These interacting proteins will be assayed for their ability to
modulate growth and progression through the cell cycle in "normal" and tumor
cell lines. Those with function will be subjected to a two-hybrid screen using
a peptide library to identify binding peptides (Appendix F). The protocol is the
same as described in Appendix E, except that peptide libraries are used instead
of cDNA libraries. These binding peptides will then be assessed for their
ability to inhibit growth and cell cycle progression in tumor cells. Individual
peptide hits will be subjected to secondary assays to confirm their function and
specificity. This will produce additional peptide/protein pairs capable of
regulating tumor growth.
C. INITIAL STEPS FOR TARGET IDENTIFICATION/VALIDATION (SEE FLOWCHART IN
APPENDIX K)
It is important to recognize that once a protein target has been identified
that binds to a confirmed peptide hit, by virtue of the functional screen that
produced the peptide hit the functional relationship of the target protein to
the pathway of interest is defined for that particular cell type. False
positives only arise if the peptide hit binds to additional proteins not related
to the functional pathway altered by the peptide hit. Below is a protocol to
discriminate false positives from pathway specific peptide/protein target pairs.
Once the desired change in the phenotype of the library-infected cells is
achieved, the peptides responsible will be sequenced. Individual peptide
sequences derived from the libraries will be tested for their ability to inhibit
tumor cell progression through various phases of the cell cycle in the original
screening assay under Section 1.0. Individual peptides, with inhibitory effects
will be subjected to two-hybrid screening using cDNA libraries derived from
human tumor cell lines. cDNAs that are isolated from the two-hybrid screen and
retested for binding to the peptide will be defined as initial targets. In
parallel with the two-hybrid screening, peptide hits will be subjected to
secondary screens to test their specificity in several tumor cell lines (see
11
<PAGE>
Appendix K). Orthogonal assays will include evaluating peptide effects on the
cell cycle and proliferative characteristics of normal and primary cells.
Once protein targets that bind to the functional peptides have been
isolated and confirmed by two-hybrid screening, their ability to interact in
mammalian cells will be assessed. This will be accomplished by uniquely tagging
both the target protein and peptide and then immunoprecipitating in either
direction to determine if its partner can be co-immunoprecipitated. After this
test, the resulting peptide/protein pairs can be subjected to numerous secondary
and orthogonal assays to confirm their role in cell cycle regulation. The type
of peptide/protein pairs identified will dicate the exact assays performed.
These assays include over-expression of the target protein and dominant negative
mutants, anti-sense expression of the target protein sequence, complementation
by over-expressing the target protein in cells expressing the inhibitory binding
peptide, and knockout somatic cell lines of the target protein. These assays
will assist in the determination of targets to be introduced into Janssen small
molecule compound screens. Below is a brief description of the rationale and
approach for each of the assays described above.
Over-expression of the target protein may modulate cell cycle progression
or modify checkpoint responses in tumor cells, thereby implicating a regulatory
role. This can be accomplished very simply with Rigel's retroviral vector
system. By using reporter genes downstream of the cDNA encoding the target
protein we can track infected cells and determine the relative concentration of
the target protein. This will allow us to titrate its biological effect as a
means to confirm the target protein's role in inhibiting tumor cell progression
through the cell cycle. If overexpression of the protein target influences the
cell cycle, mutant libraries of the protein can be screened for loss-of-function
as described below.
Target proteins will be randomly mutated (see Appendix C) and screened
in FACS assay (Appendix B) for mutant proteins that inhibit tumor cell cycle
function. Two variations of this approach allow us to narrow our screen of
mutant target proteins. One variation is to perform mutagenesis on the target
cDNA and then subject them to a 2-hybrid screen with the cognate peptide as
bait to identify mutants that no longer bind the peptide. These mutant
proteins can be tested for loss-of-function in mammalian cells.
Alternatively, the peptide is chemically crosslinked to the target protein to
identify the region bound by the peptide using mass spectrometry. Then the
peptide-binding region of the target protein is randomly mutated and the
clones screened for their ability to inhibit tumor cell growth. The advantage
of this variation is that the regulatory domain of the target protein is
identified.
A third approach to confirming the role of the target protein in tumor cell
cycle regulation is complementation. The screening cell lines are infected with
the peptide and its target protein that is under the control of an inducible
promoter such as tetracycline or metallothionein. The target protein is induced
and tested for its ability to overcome the inhibition of the peptide.
Finally, somatic and germline knockout cell lines of the target protein
can be generated to assess tumor cell growth in the absence of the target
protein. Although this approach takes
12
<PAGE>
longer, in the case of the germline knockout mice they allow for in vivo
experiments to assess the function of the target protein.
Some or all of the above methods can be employed to confirm that a
peptide/protein pair, identified in the initial screen, functions. It will be
the task of the joint scientific board from Rigel and Janssen to determine
which assays are necessary to sufficiently define a functional peptide/
protein pair for the next phase of development, specifically small molecular
weight compound screening.
D. HEADCOUNT
To run optimally, the project will take 10 Rigel FTEs:
XIANG XU: Dr. Xu is the Project leader for the Cell Cycle Regulation Project.
She will coordinate all scientific and administrative aspects of the project.
In addition, she will carry out functional analysis of specific targets
identified in the screens and in the secondary two-hybrid analyses. She is
full time on this project.
JIM LORENS: Dr. Lorens is Head of Technology Development at Rigel. He will work
directly on retroviral vector design and library rescue techniques, in addition
to carrying out many of the experiments detailed under Specific Aim 2, which is
the analysis of proteins identified by Janssen that regulate cell cycle
checkpoint controls. He is full time on this project.
YNGJU JANG: Y. Jang is a Senior Research Associate who is responsible for
conducting the cell based high throughput screens on the different tumor cell
lines. She will carry out the primary infections with the libraries on the
different tumor cells and do the different labeling steps to prepare the cell
lines for HTS. She will also help in the library rescue and re-infection steps.
She is full time on this project.
YASUMICHI HITOSHI: Dr. Hitoshi is a Senior Scientist responsible for carrying
out functional analysis of specific targets identified in the HTS assays. In
addition, he will carry out the generation of the "protein mutant libraries" of
specific proteins identified by Janssen and characterize the functionally
important mutants. He is full time on this project.
DAVID PADILLA: D. Padilla is a cell biology Research Associate responsible for
all the tissue culture work for the project. He maintains all the different
tumor cell lines, the Phoenix packaging cell line, and the sorted cell
populations. He is full time on the project.
RANDY ARMSTRONG: R. Armstrong is the Senior Research Associate in charge of
retroviral library design and production. He is responsible for the generation
of all peptide libraries with their various scaffolds and localization
sequences. He will perform the library rescue for the peptide screens, the
subsequent subcloning of both the peptide hits and the targets into shuttle
vectors for post two-hybrid functional analysis. He is full time on this
project.
13
<PAGE>
BETTY HUANG: B. Huang is the Senior Research Associate in charge of two-hybrid
screening. She is responsible for setting up and carrying out all the
two-hybrid assays, analyzing and isolating full-length clones, and generating
the cDNA libraries. She is full time on this project.
YING LUO: Dr. Luo is Head of Target Identification and the two-hybrid technology
group at Rigel. He is responsible for developing and constructing the vectors,
as well as analyzing the results of the screens. He will develop and maintain
the database of genes derived from two hybrid technology and the supporting
bioinformatics. He will also establish and implement mammalian two-hybrid
screening. He is full time on this project.
JOHN PATTON: J. Patton is the Research Associate in charge of all the DNA
sequencing. This includes sequencing of all rescued libraries (to check for
enrichment and contamination), all verified peptide hits, and all two-hybrid
hits. He is also responsible for managing the sequence database and all related
DNA bioinformatics of the project. He will coordinate the data entry into the
Cell Cycle database. He is full time on this project.
DENISE PEARSALL: D. Pearsall is a Senior Research Associate in charge of
analyzing all the peptide hits in different tumor cell lines, determining
peptide hit specificity, and conducting secondary proliferation assays in normal
and transformed cell lines. She is also responsible for coordinating all the
initial steps in the cell based high throughput screens. She is full time on
this project.
BILL THRONDSET. B. Throndset is the Senior Research Associate in charge of the
high-speed flow cytometry and is responsible for setting-up and implementing all
the FACS-based assays. He win perform these assays and sort the library hits for
the Cell Cycle project. He will also supervise the FACS-associated
bioinformatics for all the screens. He is full time on this project.
JEFF QUAST: J. Quast is a molecular biology Research Associate in the target
identification group. He is responsible for all the support work on the
two-hybrid analyses, including media prep, plate pouring, minipreps, colony
picking, gel analysis, and subcloning. He is full time on this project.
14
<PAGE>
APPENDIX A
[diagram]
<PAGE>
APPENDIX B
FUNCTIONAL SCREEN FOR PEPTIDE INHIBITORS OF TUMOR CELL PROGRESSION
[diagram]
<PAGE>
APPENDIX C
MUTAGENIC PCR GENERATES A LIBRARY OF RANDOM TARGET CDNA VARIANTS
[diagram]
<PAGE>
APPENDIX D
YEAST TWO-HYBRID SCREENING
[diagram]
<PAGE>
1. GROW UP YEAST REPORTER STRAINS ON YPD PLATES FROM FROZEN STOCK.
Since no antibiotics are added into the yeast medium, very stringent
sterilization procedures are required during inoculation.
There are many reporter strains available from different resources. In general,
Y190 consistently showed higher sensitivity than other yeast strains such as
HF7c. Yeast reporter strains with both a lacZ reporter gene and a HIS3 reporter
gene are strongly recommended. HIS selection will ensure that only interacting
clones will grow, which makes colony picking much easier later.
2. DETERMINE OPTIMAL 3AT CONCENTRATION.
3AT can be used to suppress background expression from the HIS reporter gene
of Y190. 3AT concentration varies among different reporter strains and ranges
from 0 mM (HF7c) to 15 mM (Y190). To test the optimal concentration of 3AT,
one yeast colony should be re-suspended in 10 ml of TE. 100 micoliters of the
re-suspended yeast is spread on SD-H+0mM3AT, SD-H+5mM3AT, SD-H+10mM3AT,
SD-H+15mM3AT, SD-H+25mM3AT, and SD-H+40mM3AT plates. Although 15 mM 3AT is
sufficient to suppress background HIS expression of Y190, higher
concentrations of 3AT (30-40 mM) are routinely used in our cDNA library
screening.
3. CONSTRUCT BAIT PLASMID.
pAS2/pACT2 series plasmids showed higher level of sensitivity than pGAD424
/pGBT9 series plasmids (Estojak et al 1995; Legrain et al. 1994). The
disadvantage of using pAS2 is the large size of this plasmid (8 kb), which may
present a challenge to cloning large cDNA fragments into the plasmid. Peptide
fragments should fused to the C-terminal and/or N-terminal of GaL4 binding
domain in frame (Figure 4A). The junction sequence between Gal4 and cDNA should
have a GGG amino acid sequence to avoid any interruption of domain structure.
Alternatively, a constrained peptide presentation structure may be used. Either
full-length cDNA or partial fragments can be used to generate bait plasmid.
4. TRANSFORM BAIT INTO YEAST: 1ST ROUND.
1 ug of bait plasmid is transformed into Y190 with small-scale yeast
transformation protocol. Transformants should be plated on SD-W, SD-WH, and
SD-WH+3AT(5-40mM) plates. A LacZ color assay can also be done after colonies
grow to a diameter of 1mm. If colonies grow up on SD-WH+40mM3AT plates after 3
days incubation and/or LacZ color assay of these colonies show a positive result
after only 30 minutes incubation with X-Gal, the bait gene is not suitable for
two-hybrid screening without further modification. The bait gene itself may be
able to activate transcription of reporter genes HIS/lacZ.
Although co-transformation of the bait plasmid and cDNA library can be done in a
single step, co-transformation efficiency is at least 10 fold lower than single
plasmid transformation. A mating approach may also be used to introduce cDNA
library into yeast cells containing the bait vector. Please refer to the
protocol published by Finley and Brent (Finley and Brent, 1994).
5. TRANSFORM CDNA LIBRARY: 2ND ROUND.
1
<PAGE>
Y 190 containing bait plasmid is grown up for second round of transformation by
cDNA library plasmid. Incubation time after transformation varies significantly
from 4 days to 11 days.
6. IDENTIFY POSITIVE CLONES.
Identification of positive clones needs experience. It should also be pointed
out that background colonies at lightly populated areas of the plates tend to
grow bigger, occasionally reaching the size of a positive colony in a dense area
on the same plate. The size of the positive colony should be at least 4 times
bigger than the neighboring background colonies. Positive colonies may also turn
red faster.
7. PERFORM LACZ COLOR ASSAY.
Positive colonies should be re-streaked to another SD-LWH+3AT plate to isolate
single colonies for color assay and plasmid retrieval. If a colony does not turn
blue after a 4-hour incubation, strong protein-protein interaction is highly
unlikely. It is not recommended to pick positive clones after 12 hours
incubation, except when the protein-protein interaction being studied is very
weak.
8. RETRIEVE PLASMIDS.
There are several methods to retrieve plasmids from yeast, ranging from
lyticase lysis to glass beads. Electroporation is by far the most efficient
method to transform plasmids from yeast miniprep into E. COLI. Bait and cDNA
plasmid may carry different antibiotic selection markers to facilitate
separation in E. COLI. For example, Rigel's bait plasmid carries a Kan-TM
gene and the cDNA plasmid carries an Amp-TM gene.
9. VERIFY POSITIVE CLONES.
cDNA clones recovered from positive HIS/lacZ double colonies should be
re-transformed into yeast with other non-specific bait controls to rule out
non-specific binding. IN VITRO protein binding assays and function assays should
also be done to rule out false positive clones.
2
<PAGE>
Yeast Two-Hybrid Screening
[diagram]
1
<PAGE>
From Identified Gene to Peptide Hits
[diagram]
Appendix E
3
<PAGE>
Appendix F
Retrovirally expressed cell cycle control proteins and peptides induce cell
cycle arrest
DIAGRAM
DIAGRAM
DIAGRAM
4
<PAGE>
Appendix G
Protocol for Transfection of Phoenix Cells and Infection of Nonadherent Target
Cells
DIAGRAM
Day 1:
Seed Phoenix cells (Es or As) in 10cm plates at 5 x 10x6 cells in 6 ml (DMEM +
10% FBS + Pen/Strep) per plate the day before transfection.
Day 2:
Allow all reagents to reach room temperature 30 min. before starting. Add 50
microM chloroquine at 8 microliter/plate (50 microM final) before preparing the
transfection solution.
Mix CaPO4 reagents in 15 ml polypropylene tube:
Per plate: 10 micrograms DNA
122 microliters 2M CaCl2
876 microliters H2O
1.0 ml 2X HBS
Add 2X HBS and depress the expulsion button completely to bubble air through
the mix for 10 secs. Immediately add mixture gently dropwise to plate.
Incubate 3-8 hours. Remove medium and replace with 6.0 ml DMEM-medium.
Day 3:
Change medium again to 6.0 mls of medium optimal for the cells to be infected.
Move to 32 degree C either in the morning or afternoon depending on the Phoenix
cell confluency and whether you will infect at 48 or 72 hrs after transfection.
Day 4 or 5:
Collect virus supernatant from transfected plates (6.0 ml) into 50 ml tubes and
add protamine sulfate to a final concentration of 5 micrograms/ml. Pass through
a 0.45 microm filter. Count target cells and distribute 10x7 cells per 10 cm
plate transfected to 50 ml tubes and pellet 5 min. Resuspend each pellet of
target cells in virus supernatant and transfer to a 6 well plate at 1.0-1.2 ml
per well. Seal plate with parafilm and centrifuge at RT for 30-90 min. at 2500
RPM. Remove parafilm and incubate plate over night at 37 degrees C.
Day 5:
Collect and pellet each well of target cells. Resuspend in 3 ml medium and
transfer back to the same 6 well plate. Infection can be repeated by refeeding
the Phoenix cells with 6ml fresh medium and reinfecting the same cells again up
to 3 times to increase % of cells infected (for instance at 48, 56, and 72
hours)
5
<PAGE>
Day 7 or 8:
At 48 to 72 hrs. post infection, target cells are ready to analyze for
expression.
6
<PAGE>
APPENDIX H
[diagram]
7
<PAGE>
APPENDIX I
RETROVIRAL LIBRARY DESIGN FEATURES
[diagram]
8
<PAGE>
APPENDIX J
[chart]
9
<PAGE>
APPENDIX K
FLOW CHART FOR FUNCTIONAL SCREENS
(IDENTIFICATION OF FUNCTIONAL PEPTIDE/PROTEIN PAIRS)
[diagram]
10
<PAGE>
RIGEL - JANSSEN COLLABORATION
[chart]
11
<PAGE>
TIMELINES FOR RIGEL SCREENS
[diagram]
12
<PAGE>
RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[diagram]
[diagram]
[diagram]
13
<PAGE>
RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
14
<PAGE>
RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
15
<PAGE>
RIGEL - JANSSEN COLLABORATION
IDENTIFICATION OF NOVEL DRUG DISCOVERY TARGETS
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
16
<PAGE>
RIGEL - JANSSEN COLLABORATION
[diagram]
[diagram]
17
<PAGE>
RIGEL - JANSSEN COLLABORATION
[diagram]
[diagram]
[diagram]
[diagram]
[diagram]
18
<PAGE>
RIGEL - JANSSEN COLLABORATION
[diagram]
[diagram]
[diagram]
19
<PAGE>
EXHIBIT B
RIGEL TECHNOLOGY ASSAYS
20
<PAGE>
EXHIBIT C
FORM OF INVOICE
[Rigel Letterhead]
INVOICE NO. [__]
[Invoice Date]
Janssen Pharmaceutica NV
F.A.O. Lidi Van Gool
Turnhoutseweg 30
2340 Beerse
Belgium
VAT number 403834160
COLLABORATION AGREEMENT BETWEEN RIGEL, INC. AND JANSSEN PHARMACEUTICA, N.V.
DATED DECEMBER 4, 1998
Dear Ms. Van Gool:
Pursuant to Section [ ] of the above agreement, please pay to Rigel the
following amount for [description of services for research funding or a
milestone event for milestone payments, or make reference to net sales report
from Janssen for royalty payments]:
US$ [ ]
Please remit the above amount within fifteen (15) days from the date this
invoice by wire transfer to the following account:
[account information]
Sincerely,
Rigel, Inc.
----------------------------
21
<PAGE>
EXHIBIT D
STANFORD AGREEMENTS
22
<PAGE>
AGREEMENT
Effective as of October 7, 1996 ("Effective Date"), THE BOARD OF TRUSTEES OF
THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the
laws of the State of California ("STANFORD") and RIGEL PHARMACEUTICALS, INC., a
Delaware corporation having a principle place of business at 24 Windsor Drive,
Hillsborough, CA 94010 ("RIGEL"), agree as follows:
1. BACKGROUND.
1.1 STANFORD has an assignment of U.S. Patent Application No.
08/589,109, entitled "Methods for Screening for Transdominant Effector Peptides
and RNA Molecules" (the "NOLAN/ROTHENBERG PATENT APPLICATION") claiming an
invention developed in the laboratory of Dr. Garry Nolan (the "Invention"), and
any Licensed Patent(s), as hereinafter defined, which may claim such Invention.
1.2 STANFORD has certain biological materials and other know-how
("Know-How"), as herein defined, pertaining to the Invention.
1.3 STANFORD desires to have the Know-How and Invention perfected and
marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 RIGEL desires a license under said Know-How, Invention, and
Licensed Patent(s) in the field of use of gene transfer technologies, including
retrovirally mediated nucleic acid libraries, for drug development, drug
delivery, drug screening, and target analysis and discovery associated with the
development, manufacture, use and sale of Licensed product(s), as defined below.
1.5 RIGEL acknowledges that certain of the Cell Lines (as defined
below) were made in the course of research supported by Progenesys.
1.6 The patent application entitled "Methods for Screening for
Transdominant Intracellular Effector Peptides and RNA Molecules," which claims
technology useful in the field and which was developed in the laboratory of Dr.
Garry Nolan (the "Nolan Patent Application"), has previously been assigned to
RIGEL.
2. DEFINITIONS.
2.1 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A, including certain vector libraries ("Vector Libraries") and cell
lines ("Cell Lines") set forth therein, as amended from time to time upon the
parties' mutual written consent.
2.2 "LICENSED KNOW-HOW" means all know-how necessary or useful for the
commercial exploitation of the Licensed Patents in the Licensed Field of Use,
including without limitation all know-how, trade secrets, protocols,
information, processes or other subject matter
1
<PAGE>
which is either disclosed in the Nolan/Rothenberg Patent Application, or
necessary or useful to practice the licenses granted to RIGEL in this
Agreement with respect to the Invention. Licensed Know-How excludes the
Licensed Patents and includes the Licensed Biological Materials.
2.3 "LICENSED PATENT(S)" means any Letters Patent, both foreign
(subject to Section 7) and domestic, issued upon (i) the Nolan/Rothenberg
Patent Application (STANFORD's U.S. Patent Application Serial Number
08/589,109, filed January 23, 1996), (ii) any substitutions, divisionals,
continuations, and continuations-in-part (to the extent such
continuations-in-part claim subject matter disclosed or claimed in the
Nolan/Rothenberg Patent Application as filed on January 23, 1996 and to the
extent that the practice of an invention claimed in a Licensed Patent issuing
from a patent application other than such continuation-in-part would infringe
a claim of Licensed Patent issuing from such continuation-in-part), and (iii)
any foreign counterparts of (i) or (ii).
2.4 "LICENSED TECHNOLOGY" means the Licensed Patent(s) and the
Licensed Know-How.
2.5 "LICENSED PRODUCT(S)" means:
(a) any product, the manufacture, use, sale, offer for sale or
import of which:
(1) is covered by a valid claim of an issued,
unexpired Licensed Patent(s) directed to the Invention (claim of an issued,
unexpired Licensed Patent(s) shall be presumed to be valid unless and until it
has been held to be invalid by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken), or
(2) is covered by any claim being prosecuted in a
pending application directed to the Invention, which claim has not been pending
for more than three (3) years from first filing of such claim;
(b) any product which directly incorporates any of the Licensed
Biological Materials; or
(c) any product which would not, but for the use of the
Licensed Biological Materials, have been identified, discovered, or developed.
2.6 "NET SALES" means the gross revenue derived by RIGEL and/or RIGEL's
sublicensee(s) from the sales of Licensed Product(s), less the following
items insofar as they actually pertain to the disposition of such Licensed
Product(s) by RIGEL or RIGEL's sublicensee(s), are included in such gross
revenue, and are separately billed:
(a) Import, export, excise and sales taxes, and custom duties;
(b) Credit for returns, allowances, trades, or retroactive
price adjustments;
(c) Transportation charges, issuances and allowances;
2
<PAGE>
(d) Discounts actually allowed; or
(e) Royalties payable to third parties on the manufacture, use,
sale, offer for sale or import of Licensed Products.
2.7 "LICENSED FIELD OF USE" means the use of gene transfer
technologies, including retrovirally mediated nucleic acid libraries, for
drug development, drug delivery, and target analysis and discovery. Solely
with respect to the phiNX Cell Lines set forth on Exhibit A, the Licensed
Field of Use excludes the use of such Cell Lines, derivatives or vectors
thereof or other tangible products that are a direct lineal descendent from
such Cell Lines (although obtained in any manner therefrom), wherein cells
treated with any one or more of the aforementioned materials are contained
within a human subject or are subsequently transplanted into a human subject.
2.8 "EXCLUSIVE" means that, subject to Article 4, STANFORD shall not
grant further licenses in the Licensed Field of Use.
3. GRANT.
3.1 STANFORD hereby grants and RIGEL hereby accepts a worldwide
license in the Licensed Field of Use under STANFORD's right, title and interest
in the Licensed Patents and the Vector Libraries to make, use, sell, offer for
sale and import Licensed Product(s).
3.2 The license granted in Section 3.1 is Exclusive, including the
right to sublicense pursuant to Article 13, in the Licensed Field of Use for a
term (the "Exclusivity Term") commencing as of the Effective Date and ending on
the first to occur of the following:
(a) twenty (20) years from the Effective Date; or
(b) ten (10) years from the date of first commercial sale of a
Licensed Product(s) by RIGEL or RIGEL's sublicensee(s). RIGEL agrees to
promptly inform STANFORD in writing of the date of first commercial sale of
Licensed Products. After expiration of the Exclusivity Term, said license shall
become nonexclusive and continue indefinitely.
3.3 STANFORD additionally grants, and RIGEL hereby accepts, a
worldwide, nonexclusive license in the Licensed Field of Use under STANFORD's
right, title and interest in the Licensed Know-How other than the Vector
Libraries to make, use, sell, offer for sale and import Licensed Product(s).
The term of such nonexclusive license shall commence upon the Effective Date
and continue indefinitely.
3.4 Notwithstanding the Exclusive license granted to RIGEL, pursuant
to Sections 3.1 and 3.2, STANFORD shall have the right to practice the Licensed
Patents and to use the Vector Libraries for non-commercial, academic research
purposes.
4. GOVERNMENT RIGHTS.
3
<PAGE>
This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Product(s) sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder, relating to the Invention. STANFORD agrees to provide
reasonable assistance to RIGEL in the event RIGEL decides to seek a waiver under
such domestic manufacture requirement.
5. DILIGENCE.
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture, and sale of Licensed Product(s) and to diligently
develop markets for the Licensed Product(s). RIGEL shall demonstrate such
diligence to STANFORD by achieving proof of principle through written
documentation of the following within eighteen (18) months after the Effective
Date:
(a) Construction of a retroviral vector library;
(b) Infection of cells with such vector library;
(c) Detection of a physiological response to such infection in
an infected cell; and
(d) Isolation and analysis of the peptide eliciting such
physiological response from the cell.
5.2 If RIGEL is unable to demonstrate the foregoing proof of principle
within eighteen (18) months after the Effective Date, STANFORD may elect to
narrow the definition of the Licensed Field of Use to include only the use of
retrovirally mediated nucleic acid libraries for drug development, drug
delivery, drug screening, and target analysis and discovery, by providing
written notice to RIGEL thereof. Additionally, RIGEL shall provide to
STANFORD within eighteen (18) months after the Effective Date a plan for the
development and commercialization of Licensed Products (a "Development
Plan"). STANFORD shall comment upon and approve such plan, which approval
shall not be unreasonably withheld. After the Development Plan is approved
by STANFORD, RIGEL shall use reasonable efforts to diligently perform its
obligations under such Development Plan. If Stanford reasonably believes
that RIGEL is not using reasonable efforts to perform the Development Plan,
STANFORD may so notify RIGEL. The parties shall promptly thereafter meet to
discuss RIGEL's progress under the Development Plan, and shall develop a
mutually agreeable plan for remedying any such lack of diligence ( the
"Proposed Remedy"). If RIGEL fails to perform the Proposed Remedy within one
hundred and eighty (180) days after the Proposed Remedy is agreed upon,
STANFORD may elect to narrow the definition of the Licensed Field of Use to
include only the use of retrovirally mediated nucleic acid libraries for drug
development, drug delivery, and target analysis and discovery by providing
written notice to RIGEL. If RIGEL then fails to perform the Proposed Remedy
within ninety (90) days after receiving STANFORD's notice that it has elected
to so narrow the
4
<PAGE>
Licensed Field of Use definition, then STANFORD may elect to convert the
Exclusive License granted to RIGEL pursuant to Sections 3.1 and 3.2 to a
nonexclusive license for the remaining term of this Agreement.
5.3 PROGRESS REPORT. On or before each anniversary of the Effective
Date until RIGEL markets a Licensed Product(s), RIGEL shall make a written
annual report to STANFORD covering RIGEL's progress during the preceding year
toward commercial use of Licensed Product(s). Such report shall include, as
a minimum, information sufficient to enable STANFORD to satisfy relevant
reporting requirements of the U.S. Government and to ascertain RIGEL's
progress toward meeting the diligence requirements of this Article 5.
6. ROYALTIES.
6.1 RIGEL agrees to pay to STANFORD a noncreditable, nonrefundable
license issue royalty of [text omitted in original signature document] half
of which shall be paid within forty-five (45) days after the Effective Date
and the balance of which shall be on the first anniversary of the Effective
Date.
6.2 Upon each anniversary of the Effective Date, RIGEL shall also pay
to STANFORD a Minimum Annual Royalty as follows:
Anniversary of Effective Date Minimum Annual Royalty Due
First and Second [text omitted in original signature document]
Third through Seventh [text omitted in original signature document]
Eighth and Thereafter [text omitted in original signature document]
Said Minimum Annual Royalty payments are nonrefundable but they are
creditable against earned royalties to the extent provided in Paragraph 6.5.
The foregoing Minimum Annual Royalty payment shall be decreased by fifty
percent (50%) if either:
(i) Stanford abandons all patent applications from which
Licensed Patent(s) could issue prior to the time that any Licensed Patent(s)
issue; or
(ii) Stanford elects to narrow the definition of the Licensed
Field of Use pursuant to Section 5.2.
6.3 If Rigel grants to a third party a sublicense under the Licensed
Technology solely for research, and not commercialization purposes (a
"Research Sublicense"), Rigel shall also pay to STANFORD a milestone payment
equal to [text omitted in original signature document] of any research
milestone payment that RIGEL receives as consideration for the grant of such
Research Sublicense. RIGEL shall pay such amount to STANFORD within sixty
(60) days after RIGEL receives such research milestone payment.
If RIGEL grants to a third party a sublicense under the Licensed
Technology which includes the right to sell and offer for sale Licensed Products
(a "Commercialization Sublicense"), RIGEL shall pay to STANFORD a sublicense fee
as follows:
5
<PAGE>
First Sublicense Granted [text omitted in original signature document]
Second Sublicensed Granted [text omitted in original signature document]
Each Additional Sublicense Granted [text omitted in original signature document]
RIGEL shall pay such sublicense fees to STANFORD within sixty (60) days after
the effective date of each Commercialization Sublicense.
6.4 In addition, RIGEL shall pay STANFORD earned royalties equal to
[text omitted in original signature document] of Net Sales of Licensed
Products set forth in Sections 2.5(a) and 2.5(b), or [text omitted in original
signature document] of Net Sales of Licensed Products which can only be
categorized under Section 2.5(c). If a Licensed product can be included in more
than one of Sections 2.5(a), 2.5(b) or 2.5(c), the royalty rate due to STANFORD
on Net Sales of such Licensed Product shall be [text omitted in original
signature document].
6.5 As further consideration for the license granted to RIGEL under
this Agreement, RIGEL shall issue to STANFORD [text omitted in original
signature document] shares of Preferred Stock of RIGEL, pursuant to a Stock
Purchase Agreement. If such number of shares shall equal less than [text
omitted in original signature document] of the total outstanding shares of
RIGEL's stock at any time during the period from the date of issuance of such
stock until one (1) year thereafter, STANFORD and RIGEL shall discuss whether
RIGEL shall adjust the number of shares issued to Stanford under this Section
6.5.
6.6 Creditable payments under this Agreement shall be an offset to
RIGEL against up to fifty percent (50%) of each earned royalty payment which
RIGEL would be required to pay pursuant to Paragraph 6.4 until the entire
creditable amount is exhausted.
6.7 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties hereunder shall continue
until ten (10) years after first commercial sale of Licensed Products.
6.8 The royalty on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
6.9 Within thirty (30) days after receipt of a statement from
STANFORD, RIGEL shall reimburse STANFORD for all costs incurred by STANFORD,
including those costs incurred prior to the Effective Date, in connection with
the preparation, filing and prosecution of all patent applications and
maintenance of patents claiming the Invention.
7. PATENT RIGHTS.
STANFORD shall have the obligation to file, prosecute and maintain all
patent applications and patents included in the Licensed Patents. STANFORD will
provide RIGEL
6
<PAGE>
with an opportunity to review and comment upon the prosecution strategy and
to consult with STANFORD on the content of patent filings, and will provide
copies of any correspondence relating to patent applications and patents
included in the Licensed Patents to RIGEL or a designee of RIGEL. RIGEL
shall have the right to designate, in its sole discretion, those foreign
countries in which STANFORD will file, prosecute and maintain patents and
patent applications included in the Licensed Patents. STANFORD may propose
to file, prosecute and maintain a Licensed Patent in a country which RIGEL
has not designated pursuant to this Section 7. If RIGEL agrees to such
designation, it shall reimburse STANFORD costs of such filing, prosecution of
maintenance of such patent or patent applications pursuant to Section 6.9 and
such patent or patent applications shall be included in the Licensed Patents.
If RIGEL does not agree to such proposal, STANFORD may elect to proceed
with such filing, prosecution or maintenance at its own expense, and such
patent or patent application shall not be included in the Licensed Patents.
8. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING.
8.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the
first sale of a Licensed Product, RIGEL shall make written reports (even if
there are no sales) and earned royalty payments to STANFORD within thirty
(30) days after the end of each calendar quarter. This report shall be in the
form of the report of Exhibit B and shall state the number, description, and
aggregate Net Sales of Licensed Product(s) during such completed calendar
quarter, and resulting calculation pursuant to Paragraph 6.4 of earned
royalty payment due STANFORD for such completed calendar quarter. Concurrent
with the making of each such report, RIGEL shall include payment due STANFORD
of royalties for the calendar quarter covered by such report.
8.2 ACCOUNTING. RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license herein
granted. Such records will include general ledger records showing cash receipts
and expenses, and records which include production records, customers serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided for in Paragraph 8.1. Such examination is
to be made by STANFORD or its designee, at the expense of STANFORD, except in
the event that the results of the audit reveal an underreporting of royalties
due STANFORD of five percent (5%) or more, then the audit costs shall be paid by
RIGEL.
9. NEGATION OF WARRANTIES.
9.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by STANFORD as to the validity
or scope of any Licensed Patent(s);
7
<PAGE>
(b) A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted in this Agreement is or
will be free from infringement of patents, copyrights, and other rights of third
parties;
(c) An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Article 13;
(d) Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of STANFORD or other persons
other than Licensed Patent(s), regardless of whether such patents or other
rights are dominant or subordinate to any Licensed Patent(s); or
(e) An obligation to furnish any technology or technological
information other than the Licensed Technology.
9.2 Except as expressly set forth in the Agreement STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY
OTHER EXPRESS OR IMPLIED WARRANTIES.
9.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and U.S.
Patent No. 4,740470, both entitled, "Biologically Functional Molecular Chimeras"
(collectively known as the Cohen/Boyer patents), or reissues thereof; or
(b) U.S. Patent 4,656,134 "Amplification of Eucaryotic Genes"
or any patent application corresponding thereto.
9.4 STANFORD represents and warrants that it has all right, power and
authority necessary to grant the licenses set forth in Article 3 to RIGEL,
and that it has not, and will not during the term of this Agreement, grant
any right to any third party which would conflict with the rights granted to
RIGEL hereunder.
10. INDEMNITY.
10.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD and
Stanford Health Services and their respective trustees, officers, employees,
students, and agents against any and all claims by third parties for death,
illness, personal injury, property damage, and improper business practices
arising out of the manufacture, use, sale, or other disposition of
8
<PAGE>
the Invention, Licensed Technology, or Licensed Product(s) by RIGEL or
RIGEL's sublicensee(s) or customers.
10.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whatsoever with respect to Licensed
Product(s).
10.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
10.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance including Products Liability Insurance, with
reputable and financially secure insurance carrier(s) to cover the activities
of RIGEL and its sublicensee(s) in the amounts and during the periods
specified herein. Such insurance shall provide minimum limits of liability of
One Million Dollars ($1,000,000) as of the first anniversary of the date upon
which RIGEL first leases a facility in which it will conduct research and
development activities, and of Five Million Dollars ($5,000,000) as of the
commencement of human clinical trials of Licensed Products. Such insurance
shall include STANFORD, Stanford Health Services, their trustees, directors,
officers, employees, students, and agents as additional insureds. Such
insurance shall be written to cover claims incurred, discovered, manifested,
or made during or after the expiration of this Agreement. At STANFORD's
request, RIGEL shall furnish a Certificate of Insurance evidencing primary
coverage and requiring thirty (30) days prior written notice of cancellation
or material change to STANFORD. RIGEL shall advise STANFORD, in writing, that
it maintains excess liability coverage (following form) over primary
insurance for at least the minimum limits set forth above. All such insurance
of RIGEL shall be primary coverage; insurance of STANFORD or Stanford Health
Services shall be excess and noncontributory.
11. MARKING.
Prior to the issuance of patents on the Invention, RIGEL agrees to mark
Licensed Product(s) (or their containers or labels) made, sold, or otherwise
disposed of by it under the licenses granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patent(s).
12. STANFORD NAMES AND MARKS.
RIGEL agrees not to identify STANFORD in any promotional advertising or
other promotional materials to be disseminated to the pubic or any portion
thereof or to use the name of any STANFORD faculty member, employee, or student
or any trademark, service mark, trade name, or symbol of STANFORD or the
Stanford University Hospital, or that is associated with either of them, without
STANFORD's prior written consent, except as required by law. STANFORD shall not
unreasonably hold consent under this Section 12.
9
<PAGE>
13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS.
13.1 RIGEL shall promptly inform STANFORD of any suspected infringement
of any Licensed Patent(s) by a third party. During the Exclusive period of this
Agreement, STANFORD and RIGEL each shall have the right to institute an action
for infringement of the Licensed Patent(s) against such third party in
accordance with the following:
(a) If STANFORD and RIGEL agree to institute suit jointly, the
suit shall be brought in both their names, the out-of-pocket costs thereof shall
be borne equally, and any recovery or settlement shall be shared equally. RIGEL
and STANFORD shall agree to the manner in which they shall exercise control over
such action. STANFORD may, if it so desires, also be represented by separate
counsel of its own selection, the fees for which counsel shall be paid by
STANFORD;
(b) In the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join RIGEL as a plaintiff. If
STANFORD decides to institute suit, then it shall notify RIGEL in writing.
STANFORD shall bear the entire cost of such litigation and shall be entitled to
retain the entire amount of any recovery or settlement; and
(c) In the absence of agreement to institute a suit jointly and
if STANFORD notifies RIGEL that it has decided not to join in or institute a
suit, as provided in (a) or (b) above, RIGEL may institute suit and, at its
option, join STANFORD as a plaintiff. RIGEL shall bear the entire cost of such
litigation and shall be entitled to retain the entire amount of any recovery or
settlement, provided, however, that any recovery in excess of litigation costs
shall be deemed to be Net Sales, and RIGEL shall pay STANFORD royalties thereon
at the rates specified herein.
13.2 Should either STANFORD or RIGEL commence a suit under the
provisions of Paragraph 13.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires, continue
prosecution of such suit, provided, however, that the sharing of expenses and
any recovery in such suit shall be as agreed upon between STANFORD and RIGEL.
14. SUBLICENSE(S).
14.1 RIGEL may grant sublicense(s) under its Exclusive license rights
during the Exclusivity Term. RIGEL may grant sublicense(s) under nonexclusive
license rights, if such sublicense is in conjunction with a sublicense of other
RIGEL proprietary technology.
14.2 If RIGEL is unable or unwilling to serve or develop a potential
market or market territory for which there is a willing sublicense(s), RIGEL
will, at STANFORD's request negotiate in good faith a sublicense(s) hereunder on
commercially reasonable terms.
14.3 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
10
<PAGE>
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 8, 9, and 10 for the benefit of STANFORD and provide for the transfer
of all obligations including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated.
14.4 RIGEL agrees to provide STANFORD a copy of any sublicense(s)
granted pursuant to this Article 14.
15. TERMINATION.
15.1 RIGEL may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the Effective Date of
termination selected by RIGEL.
15.2 STANFORD may terminate this Agreement if RIGEL:
(a) Is in default in payment of royalty or providing of
reports;
(b) Is in material breach of any provision hereof; or
(c) Intentionally provides any false report;
and RIGEL fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof by STANFORD.
15.3 SURVIVING ANY TERMINATION ARE:
(a) RIGEL's obligation to pay royalties accrued or accruable;
(b) Any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) The provisions of Articles 8, 9, and 10.
16. ASSIGNMENT.
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
17. DOUBLE PATENTING CONTINGENCY.
11
<PAGE>
If the PTO rejects either the Nolan/Rothenberg Patent Application for
double patenting in view of the claims of the Nolan Patent Application, or the
claims of the Nolan Patent Application for double patenting in view of the
claims of the Nolan/Rothenberg Patent Application, then RIGEL may elect to
assign its right, title and interest in the Nolan Patent Application to
STANFORD, in which case STANFORD shall grant to RIGEL an irrevocable, exclusive,
worldwide, royalty-free license under STANFORD's right, title and interest in
the Nolan Patent Application for all purposes.
18. ARBITRATION.
18.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
18.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgement upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
18.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
18.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
19. NOTICES.
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: 24 Windsor Drive
Hillsborough, CA 94010
Attention: Dr. Donald G. Payan
Either party may change its address upon written notice to the other party.
12
<PAGE>
20. WAIVER
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
21. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
22. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
23. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto, embodies the
entire understanding of the parties and shall supercede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
24. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force and
effect as if the parties had executed the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katherine Ku
-----------------------------
Name Katherine Ku
----------------------------------
Title Director, Technology Licensing
---------------------------------
Date October 7, 1996
----------------------------------
RIGEL
Signature /s/ Donald G. Payan
-----------------------------
Name Donald G. Payan
----------------------------------
Title President & CEO
---------------------------------
Date 10/9/96
----------------------------------
13
<PAGE>
EXHIBIT A
MATERIALS FROM NOLAN LAB TO BE
LICENSED TO RIGEL
VECTOR LIBRARIES
1. Random peptide library in pMSCU & Bst X1
2. SH-3 first generation library
3. CPP32 inhibitor peptide library
4. SH-3 second generation library
5. Coiled-coil library
PLASMIDS
1. pMSCU SD & Bst X1
2. pBabc Pur
3. pMSCU SD - IRES neo Bst X1
4. p5 & MD
CELL LINES
1. phiNX cell lines - gp, eco, ampho
2. 293 T
<PAGE>
EXHIBIT B
SAMPLE REPORTING FORM
Stanford Docket No. S______-________
This report is provided pursuant to the license agreement between Stanford
University and ______________________________________________________.
License Agreement Effective Date: __________________________
Report Covering Period _________
Fixed Fees (Annual Minimum Payment) $_________
Number of Sublicenses Executed _________
Net Sales $_________
Royalty Calculation _________
Royalty Subtotal $_________
Credit $_________
Royalty Due $_________
Comments:
<PAGE>
AMENDMENT
The Board of Trustees of the Leland Stanford Junior University ("Stanford") and
Rigel Pharmaceuticals, Inc. ("Rigel") agree to extend the time period within
which Rigel must pay the license issue royalty due to Stanford pursuant to the
License Agreement between Stanford and Rigel dated October 7, 1996 (the
"Agreement"). Section 6.1 of the Agreement is hereby amended to provide that
Rigel will pay the license issue royalty to Stanford within ninety (90) days
after the Effective Date of the Agreement.
Accepted and agreed by:
/s/ Katherine Ku /s/ Donald G. Payan
---------------------------------- ---------------------------
Ms. Katherine Ku; Director, Technology Licensing Dr. Donald G. Payan
Stanford University Rigel Pharmaceuticals, Inc.
December 6, 1996 November 25, 1996
----------------------- ----------------------
Date Date
<PAGE>
TABLE OF CONTENTS
PAGE
1. BACKGROUND...........................................................................1
2. DEFINITIONS..........................................................................1
3. GRANT................................................................................3
4. GOVERNMENT RIGHTS....................................................................4
5. DILIGENCE............................................................................4
6. ROYALTIES............................................................................5
7. PATENT RIGHTS........................................................................7
8. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING............................................7
9. NEGATION OF WARRANTIES...............................................................8
10. INDEMNITY............................................................................9
11. MARKING..............................................................................9
12. STANFORD NAMES AND MARKS............................................................10
13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS.......................................10
14. SUBLICENSE(S).......................................................................11
15. TERMINATION.........................................................................11
16. ASSIGNMENT..........................................................................12
17. DOUBLE PATENTING CONTINGENCY........................................................12
18. ARBITRATION.........................................................................12
19. NOTICES.............................................................................12
20. WAIVER..............................................................................13
21. APPLICABLE LAW......................................................................13
i
<PAGE>
LICENSE AGREEMENT
Effective as of August 18, 1997 (the "Effective Date"), THE BOARD OF
TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate
powers under the laws of the State of California ("STANFORD") and RIGEL
PHARMACEUTICALS, INC., a Delaware corporation having a principle place of
business at 772 Lucerne Drive, Sunnyvale, CA 94086 ("RIGEL"), agree as follows:
1. BACKGROUND.
1.1 STANFORD owns certain Phoenix and 293T cell lines and
derivatives thereof developed in the laboratories of Dr. Garry Nolan and Dr.
Michele Calos at STANFORD.
1.2 STANFORD has previously granted to RIGEL a nonexclusive license to
such materials pursuant to the License Agreement between RIGEL and STANFORD
dated October 7, 1996 (the "1996 License Agreement").
1.3 RIGEL now desires to obtain an exclusive worldwide license to such
materials for all uses in the RIGEL Field (as defined below), which exclusive
license shall be in addition to the nonexclusive license provided in the 1996
License Agreement.
2. DEFINITIONS.
2.1 "EXCLUSIVE" means that, subject to Article 3, STANFORD shall not
grant further licenses in the RIGEL Field.
2.2 "GENE THERAPY" means the treatment of cells which are contained
within a human subject or which are subsequently transplanted into a human
subject with the Materials.
2.3 "LICENSED PRODUCT(S)" means any product in the RIGEL Field which:
(i) directly incorporates any of the Materials; or (ii) would not, but for the
use of the Materials, have been identified, discovered or developed. Licensed
Products shall include without limitation both diagnostic and therapeutic
pharmaceutical products.
2.4 "MATERIALS" means the PhiNX helper-free retrovirus producer
lines, PhiNX ampho and PhiNX eco (collectively, the "Phoenix cell lines") and
the 293T cell lines developed in the laboratories of Dr. Garry Nolan and Dr.
Michele Calos at STANFORD.
2.5 "RIGEL FIELD" means the creation and use of retrovirally produced
peptide and protein libraries of random sequence for the screening of
transdominant effector peptides and RNA molecules as claimed in U.S. Patent
Application Serial No. 589911/PCT No. 9701019 (entitled "Methods for Screening
for Transdominant Intracellular Effector Peptides and RNA Molecules") as such
claims were filed on January 23, 1997, and U.S. Patent Application Serial No.
589109/PCT No. 9701048 (entitled "Methods for Screening for Transdominant
Effector Peptides and RNA Molecules"), as such claims were filed on January 23,
1997, as well as any
1.
<PAGE>
processes, techniques and applications disclosed in the foregoing patent
applications, for drug discovery and therapeutic target identification.
2.6 "NET SALES" means the gross revenue derived by RIGEL and/or
RIGEL's sublicensees from the sales of Licensed Product(s), less the following
items insofar as they actually pertain to the disposition of such Licensed
Product(s) by RIGEL or RIGEL's sublicensees, are included in such gross revenue,
and are separately billed.
(a) Import, export, excise and sales taxes, and custom duties;
(b) Credit for returns, allowances, trades or retroactive price
adjustments;
(c) Transportation charges, issuance and allowances;
(d) Discounts actually allowed; or
(e) Royalties payable to third parties on the manufacture, use,
sale offer for sale or import of Licensed Products.
3. GRANT; TRANSFER OF MATERIALS.
3.1 STANFORD hereby grants, and RIGEL hereby accepts, a worldwide,
royalty-bearing, sublicensable license in the RIGEL Field under STANFORD's
right, title and interest in the Materials to make, use, sell, offer for sale
and import Licensed Products.
3.2 The license granted in Section 3.1 is Exclusive, including the
right to sublicense pursuant to Article 12, in the RIGEL Field for a term
(the "Exclusivity Term") commencing as of the Effective Date and ending three
(3) years thereafter with respect to both the 293T and Phoenix cell lines;
provided, however, that RIGEL may extend such Exclusivity Term with respect
to either or both of such cell lines as follows: If RIGEL elects to extend
the Exclusivity Term with respect to the 293T cell line for an additional
year, RIGEL shall pay to STANFORD an exclusivity extension fee of
[text omitted in original signature document] (the "293T Exclusivity
Extension Fee"). If RIGEL elects to extend the Exclusivity Term with respect
to the Phoenix cell line for an additional year, RIGEL shall pay to STANFORD
an exclusivity extension fee of [text omitted in original signature document]
(the "Phoenix Exclusivity Extension Fee"). Such exclusivity extension fees
shall be due any time prior to the third anniversary of the Effective Date,
and shall operate to extend the Exclusivity Term until the fourth anniversary
of the Effective Date with respect to the 293T cell line, if RIGEL pays the
293T Exclusivity Extension Fee, and/or the Phoenix cell line, if RIGEL pays
the Phoenix Exclusivity Extension Fee. RIGEL may elect to extend the
Exclusivity Term for additional one year periods of time with respect to the
293T cell line and/or the Phoenix cell line, as applicable, by so notifying
STANFORD of its intent to extend the Exclusivity Term with respect to the
293T cell line and/or the Phoenix cell line at least thirty (30) days prior
to the following anniversary of the Effective Date and paying to STANFORD
either or both of the 293T Exclusivity Extension Fee and the Phoenix
Extension Fee, as applicable, prior to the following anniversary of the
Effective Date. Any exclusivity extension fees paid by RIGEL pursuant to
this Section 3.2 shall be nonrefundable but creditable against
2.
<PAGE>
earned royalties as provided in Section 6.4. If RIGEL extends the
Exclusivity Term, RIGEL and STANFORD shall discuss in good faith additional
appropriate diligence milestones.
3.3 After expiration of the Exclusivity Term with respect to the
293T cell line and/or the Phoenix cell line, the license granted to RIGEL
pursuant to Section 3.1 with respect to such cell line(s), shall terminate.
Such termination shall not affect the term of the nonexclusive license
granted to RIGEL under the 1996 License Agreement.
3.4 Notwithstanding the Exclusive license granted to RIGEL pursuant to
Section 3.1, STANFORD shall have the right to use and to distribute the
Materials to other nonprofit and academic institutions for non-commercial,
academic research purposes in the RIGEL Field. Any transfer of the Materials by
STANFORD pursuant to this Section 3.4 shall be governed by a material transfer
agreement which (i) restricts the recipient's use of the Materials to the
performance of specified academic research projects, (ii) does not allow the
recipient to transfer the Materials to any other entity, and (iii) contains
other terms and conditions typically included in agreements governing the
transfer and use of biological materials for noncommercial academic research
purposes.
3.5 Promptly after the Effective Date, STANFORD shall transfer to
RIGEL such quantities of the Materials as RIGEL shall reasonably request.
Thereafter, STANFORD shall transfer to RIGEL such additional quantities of
Materials as RIGEL shall reasonably request in the event that RIGEL's stock of
the Materials is destroyed or contaminated.
4. GOVERNMENT RIGHTS.
This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Product(s) sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder. STANFORD agrees to provide reasonable assistance to
RIGEL in the event RIGEL decides to seek a waiver under such domestic
manufacture requirement.
5. DILIGENCE.
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all reasonable efforts and diligence to proceed with the
development, manufacture and sale of Licensed Product(s) and to develop
diligently markets for the Licensed Product(s). RIGEL shall demonstrate such
diligence to STANFORD by achieving proof of principle though written
documentation of the following achievements:
(a) Construction of a retroviral vector library;
(b) Infection of cells with such vector library;
(c) Detection of a physiological response to such infection in
an infected cell;
3
<PAGE>
(d) Isolation and analysis of the peptide eliciting such
physiological response from the cell; and
(e) Identification of two novel targets for drug design, or
demonstration that two previously known targets have a novel activity suitable
for drug design.
5.2 If RIGEL is unable to demonstrate items 5.1(a) through (d) within
eighteen (18) months after the Effective Date, and item 5.1(e) within thirty six
(36) months after the Effective Date, STANFORD may request that RIGEL meet with
STANFORD to discuss RIGEL's lack of diligence. The parties shall meet within
thirty (30) days after RIGEL receives any such notice to develop a mutually
agreeable plan for remedying any such lack of diligence (the "Proposed Remedy").
If RIGEL fails to perform the Proposed Remedy within one hundred eighty (180)
days after the Proposed Remedy is agreed upon, STANFORD may elect to terminate
this Agreement, which termination shall not have any effect upon the rights
granted to RIGEL pursuant to the 1996 License Agreement.
5.3 On or before each anniversary of the Effective Date during the
Exclusivity Term, RIGEL shall make a written annual report to STANFORD covering
RIGEL's progress during the preceding year toward commercial use of the Licensed
Product(s). Such report shall include as a minimum information sufficient to
enable STANFORD to satisfy relevant reporting requirements of the U.S.
Government and to ascertain RIGEL's progress toward meeting the diligence
requirements of this Article 5.
6. LICENSE FEE AND ROYALTIES.
6.1 In partial consideration for the Exclusive License granted by
STANFORD to RIGEL with respect to the Phoenix cell lines included in the
Materials, RIGEL agrees to pay to STANFORD the following:
(a) A noncreditable, nonrefundable license issue royalty of
[text omitted in original signature document], which amount shall be paid
within thirty (30) days after the Effective Date.
(b) An exclusivity fee equal to [text omitted in original
signature document] for each of the three (3) years following the first
anniversary of the Effective Date, which amounts shall be paid to STANFORD
within thirty (30) days after each of the first, second and third
anniversaries of the Effective Date. Such payments shall be nonrefundable
but creditable against earned royalties to the extent provided in Section 6.4.
(c) RIGEL shall issue to STANFORD [text omitted in original
signature document] Stock of RIGEL, pursuant to a stock purchase agreement to
be entered into between RIGEL and STANFORD within ninety (90) days after the
Effective Date.
(d) If RIGEL grants to a third party a sublicense to the
Materials solely for research, and not commercialization purposes (a
"Research Sublicense"), RIGEL shall also pay to STANFORD a milestone payment
equal to [text omitted in original signature document] payment that
4
<PAGE>
RIGEL receives as consideration for the grant of such Research Sublicense.
RIGEL shall pay such amount to STANFORD within sixty (60) days after RIGEL
receives such research milestone payment. If RIGEL grants to a third party a
sublicense under the Materials which includes the right to sell and offer for
sale Licensed Products (a "Commercialization Sublicense"), RIGEL shall pay to
STANFORD a sublicense fee as follows:
First Commercialization Sublicense Granted [text omitted in original
signature document]
Second Commercialization Sublicense Granted [text omitted in original
signature document]
Each Additional Commercialization Sublicense [text omitted in original
Granted signature document]
If RIGEL owes amounts to STANFORD pursuant to this Section 6.1(d) and also
pursuant to Section 6.3 of the 1996 License Agreement with respect to a
particular Research Sublicense or Commercialization Sublicense, the amounts due
to STANFORD pursuant to this Section 6.1(d) shall be reduced by any amounts due
to STANFORD pursuant to Section 6.3 of the 1996 License Agreement with respect
to such Research Sublicense or Commercialization Sublicense. RIGEL shall pay
such sublicense fees to STANFORD within sixty (60) days after the effective date
of each Commercialization Sublicense.
6.2 In partial consideration for the Exclusive License granted by
STANFORD to RIGEL for the 293T cell lines included in the Materials, RIGEL
agrees to pay to STANFORD an exclusivity fee equal to [text omitted in original
signature document] for each of the three (3) years following the first
anniversary of the Effective Date, which amounts shall be paid to STANFORD
within thirty (30) days after each of the first, second and third
anniversaries of the Effective Date. Such payments shall be nonrefundable
but creditable against earned royalties to the extent provided in Section 6.4.
6.3 As further consideration for the license granted to RIGEL pursuant
to Section 3.1, RIGEL shall pay to STANFORD earned royalties equal to [text
omitted in original signature document] of Net Sales of Licensed Products by
RIGEL and its sublicensees; provided, however, that if royalties on Net Sales
of a particular Licensed Product by RIGEL and its sublicensees would be due
to STANFORD pursuant to both this Section 6.3 and Section 6.4 of the 1996
License Agreement, RIGEL shall be obligated to pay only the royalties due to
STANFORD pursuant to Section 6.4 of the 1996 License Agreement on Net Sales
of such Licensed Products.
6.4 Creditable payments under this Agreement shall be an offset to
RIGEL against up to fifty percent (50%) of each earned royalty payment which
RIGEL would be required to pay pursuant to Section 6.4 until the entire
creditable amount is exhausted.
6.5 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties pursuant to Section 6.3
shall continue until ten (10) years after first commercial sale of Licensed
Products.
5
<PAGE>
6.6 The royalties on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
7. Royalty Reports, Payments, and Accounting.
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the
first sale of a Licensed Product, RIGEL shall make written reports (even if
there are no sales in a particular quarter) and earned royalty payments to
STANFORD within thirty (30) days after the end of each calendar quarter. This
report shall be in the form of the report of Exhibit A and shall state the
number, description, and aggregate Net Sales of Licensed Product(s) during such
completed calendar quarter, and resulting calculation pursuant to Section 6.3 of
earned royalty payments due STANFORD for such completed calendar quarter.
Concurrent with the making of each such report, RIGEL shall include payment due
STANFORD of earned royalties for the calendar quarter covered by such report.
7.2 ACCOUNTING. RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license herein
granted. Such records will include general ledger records showing cash receipts
and expenses, and records which include production records, customers serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided for in Section 7.1. Such examination is to
be made by STANFORD or its designee, at the expense of STANFORD, except in the
event that the results of the audit reveal an underreporting of royalties due
STANFORD of five percent (5%) or more, then the audit costs shall be paid by
RIGEL.
8. PATENTS; NEW INVENTIONS.
8.1 STANFORD's Office of Technology Licensing represents and warrants
that to the best of its knowledge as of the Effective Date, STANFORD has not
sought or obtained patent protection of the Materials or any use thereof in the
Rigel Field. STANFORD agrees that future inventions and discoveries using or
relating to the Materials may be useful to RIGEL in the development and/or
commercialization of Licensed Products. Subject to STANFORD's obligations with
respect to sponsored research, STANFORD will, as soon as practicable, bring any
such new invention or discovery to RIGEL's attention and provide RIGEL a
reasonable opportunity to negotiate a license therefor.
9. WARRANTIES.
6
<PAGE>
9.1 STANFORD's Office of Technology Licensing represents and warrants
that as of the Effective Date, it has received no claims by third parties that
the use of the Materials infringes any patents, copyrights, and other rights of
third parties.
9.2 STANFORD represents and warrants that it has all right, power and
authority necessary to grant the License set forth in Article 3 to RIGEL, and
that it has not, and will not during the term of this Agreement, grant any right
or interest in the Materials to any third party which would conflict with the
rights granted to RIGEL hereunder.
9.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and U.S.
Patent No. 4,740,470, both entitled, "Biologically Functional Molecular
Chimeras" (collectively known as the Cohen/Boyer patents), or reissues thereof;
or
(b) U.S. Patent 4,656,134, entitled "Amplification of
Eucaryotic Genes" or any patent application corresponding thereto.
9.4 Except as provided in Section 9.1 and as otherwise expressly set
forth in this Agreement, nothing in this Agreement will be construed as a
warranty or representation that anything made, used, sold, or otherwise disposed
of under any license granted in this Agreement is or will be free from
infringement of patents, copyrights, and trademarks of third parties; conferring
rights to use in advertising, publicity, or otherwise any trademark or the name
of "STANFORD"; or granting by implication, estoppel, or otherwise any licenses
or rights under patents of STANFORD.
9.5 EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY
OTHER EXPRESS OR IMPLIED WARRANTIES.
10. INDEMNITY.
10.1 RIGEL agrees to indemnify, hold harmless, and defend STANFORD and
STANFORD Health Services (or any successor thereto) and their respective
trustees, officers, employees, students, and agents against any and all claims
by third parties for death, illness, personal injury, property damage, and
improper business practices arising out of the manufacture, use, sale, or other
disposition of the Materials or Licensed Product(s) by RIGEL or RIGEL's
sublicensee(s) or customers.
7
<PAGE>
10.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whatsoever with respect to Licensed
Product(s).
10.3 RIGEL shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
10.4 In addition to the foregoing, RIGEL shall maintain Comprehensive
General Liability Insurance, including Products Liability Insurance, with
reputable and financially secure insurance carrier(s) to cover the activities of
RIGEL and its sublicensee(s) in the amounts and during the periods specified
herein. Such insurance shall provide minimum limits of liability of One Million
Dollars ($1,000,000) as of the first anniversary of the date upon which RIGEL
first leases a facility in which it will conduct research and development
activities, and of Five Million Dollars ($5,000,000) as of the commencement of
human clinical trials of Licensed Products. Such insurance shall include
STANFORD, Stanford Health Services (or any successor thereto), their trustees,
directors, officers, employees, students, and agents as additional insureds.
Such insurance shall be written to cover claims incurred, discovered,
manifested, or made during or after the expiration of this Agreement. At
STANFORD's request, RIGEL shall furnish a Certificate of Insurance evidencing
primary coverage and requiring thirty (30) days prior written notice of
cancellation or material change to STANFORD. RIGEL shall advise STANFORD, in
writing, that it maintains excess liability coverage (following form) over
primary insurance for at least the minimum limits set forth above. All such
insurance of RIGEL shall be primary coverage; insurance of STANFORD or Stanford
Health Services (or any successor thereto) shall be excess and noncontributory.
11. STANFORD NAMES AND MARKS
11.1 RIGEL agrees not to identify STANFORD in any promotional
advertising or other promotional materials to be disseminated to the public or
any portion thereof or to use the name of any STANFORD faculty member, employee,
or student or any trademark, service mark, trade name, or symbol of STANFORD or
the STANFORD Health Services (or any successor thereto), or that is associated
with either of them, without STANFORD's prior written consent, except as
required by law. STANFORD shall not unreasonably hold consent under this
Section 11.
12. SUBLICENSE(S).
12.1 RIGEL may, solely in conjunction with a sublicense under the
rights licensed to RIGEL pursuant to Section 3.1 of the 1996 License Agreement,
grant sublicense(s) under its Exclusive license rights during the Exclusivity
Term.
12.2 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
8
<PAGE>
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant a sublicense to a third party; and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 7, 9, and 10 for the benefit of STANFORD and provide for the transfer
of all obligations including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated, if such sublicenses remain in effect after termination of this
Agreement.
12.3 RIGEL agrees to provide STANFORD a copy of any sublicense(s)
granted pursuant to this Article 12.
13. TERM AND TERMINATION.
13.1 The term of this Agreement shall commence upon the Effective
Date and shall continue until expiration of both the Phoenix cell Exclusivity
Term and the 293T cell line Exclusivity Term. Additionally, RIGEL may
terminate this Agreement prior to such expiration date by giving STANFORD
notice in writing at least thirty (30) days in advance of the effective date
of termination selected by RIGEL. If RIGEL terminates this Agreement prior
to the third anniversary of the Effective Date, RIGEL's obligations to make
the payments due to STANFORD pursuant to Sections 6.1(b), and 6.2 and shall
survive such termination until expiration of RIGEL's obligations thereunder.
Any termination or expiration of this Agreement shall have no effect upon the
Rights granted to RIGEL pursuant to the 1996 License Agreement.
13.2 STANFORD may terminate this Agreement if RIGEL:
(a) Is in default in payment of royalty or providing of
reports;
(b) Is in material breach of any provision hereof; or
(c) Intentionally provides any false report;
and RIGEL fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof to RIGEL by STANFORD.
13.3 SURVIVING ANY TERMINATION ARE:
(a) RIGEL's obligation to pay exclusivity fees pursuant to
Sections 6.1(b) and 6.2, royalties accrued or accruable pursuant to Section 6.3,
and Sections 6.4, 6.5 and 6.6;
(b) Any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) The provisions of Articles 7, 9 and 10.
9
<PAGE>
14. ASSIGNMENT.
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
15. ARBITRATION.
15.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
15.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgment upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
15.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
15.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
16. NOTICES.
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: 772 Lucerne Drive
Sunnyvale, CA 94086
Attention: Dr. Donald G. Payan
Either party may change its address upon written notice to the other party.
17. WAIVER.
10
<PAGE>
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California. Any claim or controversy arising out of or related to this
Agreement or any breach hereof shall be submitted to a court of applicable
jurisdiction in the State of California, and each party hereby consents to the
jurisdiction and venue of such court.
19. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
20. ENTIRE AGREEMENT.
This Agreement, together with the Exhibit attached hereto, embodies the
entire understanding of the parties and shall supersede all previous
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
21. COUNTERPARTS.
This Agreement may be executed in counterparts, with the same force and
effect as if the parties had executed the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Jon Sandelin
---------------------------
Name Jon Sandelin
--------------------------------
Title Acting Director
-------------------------------
Date August 18, 1997
--------------------------------
RIGEL PHARMACEUTICALS , INC.
Signature /s/ Donald G. Payan
---------------------------
Name Donald G. Payan
--------------------------------
Title VP R&D and COO
-------------------------------
Date 8/18/97
--------------------------------
12
<PAGE>
EXHIBIT A
SAMPLE REPORTING FORM
Stanford Docket No. S____-_______
This report is provided pursuant to the license agreement between Stanford
University and ____________________________________________.
License Agreement Effective Date: _______________________
---------------------------------------------------------------------------------
Report Covering Period
---------------------------------------------------------------------------------
Fixed Fees (Annual Minimum Payment) $
---------------------------------------------------------------------------------
Number of Sublicenses Executed
---------------------------------------------------------------------------------
Net Sales $
---------------------------------------------------------------------------------
Royalty Calculation
---------------------------------------------------------------------------------
Royalty Subtotal $
---------------------------------------------------------------------------------
Credit $
---------------------------------------------------------------------------------
Royalty Due $
---------------------------------------------------------------------------------
<PAGE>
1. Background...........................................................................1
2. Definitions..........................................................................1
3. Grant; Transfer of Materials.........................................................2
4. Government Rights....................................................................3
5. Diligence............................................................................3
6. License Fee and Royalties............................................................4
7. Royalty Reports, Payments, and Accounting............................................6
8. Patents; New inventions..............................................................6
9. Warranties...........................................................................7
10. Indemnity............................................................................7
11. STANFORD Names and Marks.............................................................8
12. Sublicense(s)........................................................................8
13. Term and Termination.................................................................9
14. Assignment..........................................................................10
15. Arbitration.........................................................................10
16. Notices.............................................................................10
17. Waiver..............................................................................11
18. Applicable Law......................................................................11
19. Severability........................................................................11
20. Entire Agreement....................................................................11
21. Counterparts........................................................................11
<PAGE>
LICENSE AGREEMENT
Effective as of March 27, 1998 ("Effective Date"), THE BOARD OF TRUSTEES
OF THE LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under
the laws of the State of California ("STANFORD"), and RIGEL PHARMACEUTICALS,
INC., a Delaware corporation doing business as RIGEL, INC. in California, having
a principal place of business at 772 Lucerne Drive, Sunnyvale, California 94086
("RIGEL"), agree as follows:
1. BACKGROUND
1.1 STANFORD has an assignment of U.S Provisional Applications (the
"Provisionals"), Serial No. 042576, filed April 2, 1997, and Serial No.
054623, filed August 4, 1997 entitled, "Detection of Molecular Interactions
by Reporter Subunit Complementation" from the laboratory of Helen M. Blau,
Ph.D. (the "Invention"), and as described in Stanford Docket S96-125, and any
Licensed Patents, as hereinafter defined, which may claim such Invention.
1.2 STANFORD has certain biological materials ("Licensed BIOLOGICAL
Materials") and other know-how ("Know-How"), as defined below, pertaining to the
Inventions.
1.3 STANFORD desires to have the Know-How and Inventions perfected and
marketed at the earliest possible time in order that products resulting
therefrom may be available for public use and benefit.
1.4 RIGEL desires a license under said Know-How, Invention and
Licensed Patents to develop, manufacture, use and sell Licensed Products in the
Licensed Field of Use, as defined below.
1.5 The Know-How and Invention were made in the course of research
supported by the National Institutes of Health.
2. DEFINITIONS
2.1 "EXCLUSIVE" means that STANFORD shall not grant further licenses
in the Licensed Territory in the Licensed Field of Use.
2.2 "LICENSED BIOLOGICAL MATERIALS" means the materials listed on
Exhibit A, as amended from time to time upon the parties' mutual written
consent.
2.3 "LICENSED FIELD OF USE" means, subject to Section 14:
(a) the development of reporter systems useful for the analysis
of protein-protein interactions;
(b) the development of methods for analyzing molecular
interactions by reporter subunit complementation; and
(c) applications of the systems and methods set forth in (a)
and (b) to functional genomics, target analysis and drug discovery.
1.
<PAGE>
2.4 "LICENSED KNOW-HOW" means know-how useful for the commercial
exploitation of the Licensed Patents in the Licensed Field of Use and is
provided to RIGEL by STANFORD, including know-how, trade secrets, protocols,
information, processes or other subject matter which is either disclosed in the
Licensed Patents, or useful to practice the Invention in the Licensed Field of
Use. Licensed Know-How excludes the Licensed Patents and includes the Licensed
Biological Materials. STANFORD has no obligation to provide such know-how.
2.5 "LICENSED PATENTS" means any Letters Patent issued upon (i)
patent applications claiming priority from or based upon the Provisionals;
(ii) any patents issuing from any divisional, continuations, substitute, or
continuation-in-part (to the extent provided in this Section 2.5) application
relating to the patent applications described in (i); and (iii) any foreign
counterparts of the patent applications described in (i) or (ii).
Continuation-in-part applications are included in the Licensed Patents to the
extent that such continuation-in-part claims subject matter disclosed in the
applications set forth in (i) and to the extent that the practice of an
invention claimed in a Licensed Patent issuing from a patent application
other than such continuation-in-part would infringe a claim of a Licensed
Patent issuing from such continuation-in-part.
2.6 "LICENSED PRODUCTS" means
(a) any product, the manufacture, use, sale, offer for sale and
import of which:
(i) is covered by one or more valid claims of an issued,
unexpired Licensed Patent directed to the Invention. Claims of issued,
unexpired Licensed Patent shall be presumed to be valid unless and until they
have been held to be invalid by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken; or
(ii) is covered by any claim being prosecuted in a
pending application directed to the Invention, which claim has not been pending
for more than three (3) years from the first filing of such claim; and
(b) any product which directly incorporates any of the Licensed
Biological Materials; and
(c) any product which would not, but for the use of the
Licensed Technology, have been identified, discovered or developed.
2.7 "LICENSED TECHNOLOGY" means the Licensed Patents and the Licensed
Know-How.
2.8 "LICENSED TERRITORY" means all the countries in the world.
2.9 "NET SALES" means the gross revenue derived by RIGEL and/or its
sublicensee(s) from the sales of Licensed Products to end users thereof, less
the following items but only insofar as they actually pertain to the disposition
of such Licensed Products by RIGEL or RIGEL's sublicensee(s), are included in
such gross revenue, and are separately billed:
2.
<PAGE>
(a) import, export, excise and sales taxes, and custom duties;
(b) transportation charges, issuances and allowances;
(c) credit for returns, allowances, trades or retroactive price
adjustments;
(d) discounts actually allowed; or
(e) royalties payable to third parties on the manufacture, use,
sale, offer for sale or import of Licensed Products.
2.10 "SERVICE PROVIDER" means a third party contract research or
similar organization that performs assay services (i) for other entities on a
fee-for-service basis and (ii) not in connection with such organization's own
drug development programs (whether such programs are conducted solely by such
entity or jointly by such entity and one or more third parties).
3. GRANT
3.1 STANFORD hereby grants, and RIGEL hereby accepts, a license in the
Licensed Field of Use to make, use, sell, offer for sale and import Licensed
Products in the Licensed Territory.
3.2 RIGEL hereby grants, and STANFORD hereby accepts, a non-exclusive,
royalty free license under its interest in any inventions conceived by RIGEL
during the term of this Agreement that solely relate to the technology claimed
in the Licensed Patents and any intellectual property rights related thereto
(collectively, "Improvements"), to practice and grant licenses under such
Improvements solely for noncommercial, academic research purposes.
3.3 The license granted to RIGEL pursuant to Section 3.1 under the
Licensed Know-How shall be nonexclusive for the term of this Agreement. The
license granted in Section 3.1 under the Licensed Patents is Exclusive for a
term (the "Exclusivity Term") commencing as of the Effective Date and ending
(except as otherwise provided in this Agreement) on the first to occur of the
following:
(a) the fifth anniversary of the Effective Date if STANFORD
does not grant a license under the Licensed Patents outside the Licensed Field
of Use to a third party prior to or on such date; or
(b) the eighth anniversary of the Effective Date, if STANFORD
grants a license under the Licensed Patents outside the Licensed Field of Use to
a third party prior to or on the fifth anniversary of the Effective Date.
After expiration of the Exclusivity Term, the license granted to RIGEL
pursuant to Section 3.1 under the Licensed Patents shall be nonexclusive
for the remainder of the term of the Agreement.
3.
<PAGE>
3.4 Notwithstanding the Exclusive license under the Licensed Patents
granted to RIGEL pursuant to Section 3.1, STANFORD shall have the right to
practice the Licensed Technology in the Licensed Field of Use for noncommercial,
academic research purposes. STANFORD shall have the right to publish any
information included in the Licensed Technology.
3.5 STANFORD may grant sublicenses under Improvements to third parties
solely for noncommercial, academic research purposes, provided that each such
sublicense is granted in conjunction with a license under the Licensed
Technology. After the expiration of the Exclusivity Term, STANFORD may grant
sublicenses under Improvements to third parties for purposes other than
conducting noncommercial academic research, provided that each such sublicense
is granted solely in conjunction with the grant of a license under the Licensed
Technology. STANFORD's license under Section 3.2 and its ability to grant
sublicenses thereunder as provided in this Section 3.5 shall survive termination
of this Agreement.
4. GOVERNMENT RIGHTS
This Agreement is subject to all of the terms and conditions of Title 35
United States Code Sections 200 through 204, including an obligation that
Licensed Products sold or produced in the United States be "manufactured
substantially in the United States," and RIGEL agrees to take all reasonable
action necessary on its part as licensee to enable STANFORD to satisfy its
obligation thereunder relating to Inventions.
5. DILIGENCE; PROGRESS REPORTS
5.1 As an inducement to STANFORD to enter into this Agreement, RIGEL
agrees to use all commercially reasonable efforts and diligence to proceed with
the development, manufacture and sale of Licensed Products and to diligently
develop markets for the Licensed Products. RIGEL shall demonstrate such
diligence to STANFORD by achieving the following goals:
(a) before the first anniversary of the Effective Date,
RIGEL shall identify and characterize beta gal mutants with improved
properties (e.g., mutants which have lower affinities than those disclosed in
the Provisional and yet still provide adequate complementary binding
characteristics such that the assay's signal to noise ratio is adequate for
high throughput commercial use.)
(b) before the second anniversary of the Effective Date, RIGEL
shall establish two (2) new high throughput screening assays that utilize the
Licensed Technology, one (1) of which is primarily useful for target
identification and one (1) of which is primarily useful for screening to
identify small molecules that bind to drug targets; and
(c) before the fourth anniversary of the Effective Date, use
the assays described in (b) to identify one new drug target and one small
molecule that competes with the binding of molecules to a drug target.
5.2 If RIGEL is unable to demonstrate its diligence by achieving the
goals provided in Section 5.1 within the time frames set forth therein, the
parties shall meet no later than thirty (30) days after the relevant date set
forth in Section 5.1 to discuss in good faith the reasons for such
4.
<PAGE>
failure, and mutually acceptable mechanisms for remedying such failure. If
the parties do not agree upon modifications to the diligence requirements set
forth in Section 5.1 during such discussion, then STANFORD may thereafter
convert RIGEL's exclusive license under the Licensed Patents to non-exclusive
upon thirty (30) days written notice to RIGEL.
5.3 If RIGEL succeeds in meeting the goals provided in Section 5.1,
RIGEL and STANFORD agree to meet within ninety (90) days prior to the fourth
anniversary of the Effective Date to establish further mutually acceptable
diligence requirements applicable to the next two (2) year period during the
term of the Agreement. If the parties, after good faith effort, cannot agree on
such additional requirements, STANFORD may in its sole discretion elect to
convert RIGEL's exclusive license under the Licensed Patents to non-exclusive as
of the fourth anniversary of the Effective Date by written notice to RIGEL.
5.4 On or before August 1, 1998 and each anniversary thereof until
RIGEL markets Licensed Products, RIGEL shall make a written annual report to
STANFORD covering RIGEL's progress during the preceding year toward commercial
use of Licensed Products. Such report shall include, as a minimum, information
sufficient to enable STANFORD to satisfy reporting requirements of the U.S.
Government and for STANFORD to ascertain progress by RIGEL toward meeting the
diligence requirements of this Article 5.
6. PAYMENTS AND ROYALTIES
6.1 RIGEL shall upon the Effective Date:
(a) pay to STANFORD a noncreditable, nonrefundable license
issue royalty of [text omitted in original signature document]; and
(b) issue to STANFORD [text omitted in original signature
document] Stock pursuant to a stock purchase agreement to be separately
executed by the parties.
6.2 Subject to Section 6.6, RIGEL also agrees to pay the following
minimum annual royalties to STANFORD within thirty (30) days after the
occurrence of each date below:
Anniversary of Effective Date Minimum Annual Royalty Due
----------------------------- --------------------------
First and Second [text omitted in original signature document]
Third through Fifth [text omitted in original signature document]
Sixth and Thereafter [text omitted in original signature document]
These minimum annual royalty payments are nonrefundable, but they are
creditable against earned royalties due to Stanford pursuant to Section
6.4. In addition, the minimum annual royalties set forth in this
Section 6.2 shall be reduced by fifty percent (50%) if STANFORD abandons
all patent applications from which Licensed Patents could issue prior to
the time that any Licensed Patents issue.
5.
<PAGE>
6.3 RIGEL also agrees to pay to STANFORD upon the occurrence of the
following events, the following amounts:
Event Milestones
----- ----------
Earlier of the execution of the first sublicense [text omitted in original signature document]
by Rigel under the Licensed Technology or 18
months after the Effective Date
Earlier of the execution of the second sublicense [text omitted in original signature document]
by Rigel under the Licensed Technology or 48
months after the Effective Date
Earlier of the execution of the third sublicense [text omitted in original signature document]
by Rigel under the Licensed Technology or 78
months after the Effective Date
Execution of any additional sublicenses by Rigel [text omitted in original signature document]
after payment of all of the foregoing milestones
6.4 RIGEL shall pay to STANFORD earned royalties of
[text omitted in original signature document] of Net Sales during the
Exclusivity Term. Should total earned royalties due on Licensed Products to
STANFORD under this Agreement and any other agreement between STANFORD and
RIGEL (the "Other Agreements") equal or exceed [text omitted in original
signature document] of Net Sales, STANFORD shall, upon request by RIGEL, meet
with RIGEL to discuss an appropriate mechanism, if RIGEL's royalty
obligations under this Agreement and the Other Agreements render further
development and commercialization of License Products uneconomic. The
parties will discuss in good faith appropriate adjustments to RIGEL's
obligations under this Agreement.
6.5 RIGEL shall also pay to STANFORD [text omitted in original
signature document] upon the issuance of the first patent included in the
Licensed Patents.
6.6 Within thirty (30) days after the license granted under the
Licensed Patents pursuant to Section 3.1 becomes non-exclusive pursuant to
Sections 3.3, 5.2 or 5.3, STANFORD shall provide to RIGEL a written summary of
all non-confidential material terms of any other license agreements with third
parties relating to the Licensed Technology. STANFORD shall use reasonable
efforts to obtain consent of any such third parties to disclose such material
terms or at least a general description of the economic terms of such other
license agreements to RIGEL. Within thirty (30) days after receiving such
summary, RIGEL shall elect one of the following options by written notice to
STANFORD:
(a) to allow this Agreement to continue in full force and
effect, except that the minimum annual royalties due to STANFORD pursuant to
Section 6.2 shall be reduced by fifty percent (50%); or
6.
<PAGE>
(b) to modify the terms of this Agreement to include terms no
less favorable to RIGEL than those STANFORD then provides to third party
licensees of the Licensed Technology.
If no such license agreement between STANFORD and any such third party
exists at the time RIGEL must elect either (a) or (b), then (a) shall
automatically apply. If RIGEL elects the option set forth in Section
6.6(a), such a reduction shall be in addition to any reduction resulting
from the application of Section 6.2. If RIGEL elects the option set forth
in Section 6.6(b), RIGEL and STANFORD shall modify the Agreement to
contain all rights and obligations contained in licenses available to
such other licensees.
6.7 Creditable payments under this Agreement shall be offset against
up to fifty percent (50%) of each earned royalty payment which RIGEL would be
required to pay pursuant to Section 6.4, until the entire creditable amount is
exhausted.
6.8 If this Agreement is not terminated in accordance with other
provisions hereof, RIGEL's obligation to pay royalties hereunder shall continue
until ten (10) years after first commercial sale of Licensed Products.
6.9 The royalty on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate foreign exchange rate for such currency
quoted by the Bank of America (San Francisco) foreign exchange desk, on the
close of business on the last banking day of each calendar quarter. Royalty
payments to STANFORD shall be in U.S. Dollars. All non-U.S. taxes related to
royalty payments shall be paid by RIGEL and are not deductible from the payments
due STANFORD.
7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT - Beginning with the
first sale of Licensed Products, RIGEL shall make written reports (even if there
are no sales) and earned royalty payments to STANFORD within thirty (30) days
after the end of each calendar quarter. This report shall be in the form of the
report of Appendix B and shall state the number, description and aggregate Net
Sales of Licensed Products during such completed calendar quarter, and shall
state the resulting calculation pursuant to Section 6.4 of earned royalty
payments due STANFORD for such completed calendar quarter. Concurrent with the
making of each such report, RIGEL shall include payment due STANFORD of
royalties for the calendar quarter covered by such report.
7.2 ACCOUNTING - RIGEL agrees to keep and maintain records for a
period of three (3) years showing the manufacture, sale, use and other
disposition of products sold or otherwise disposed of under the licenses herein
granted. Such records will include general ledger records showing cash receipts
and expenses and records which include production records, customers, serial
numbers and related information in sufficient detail to enable the royalties
payable hereunder by RIGEL to be determined. RIGEL further agrees to permit its
books and records to be examined by STANFORD from time to time to the extent
necessary to verify reports provided
7.
<PAGE>
for in Section 7.1. Such examination is to be made by STANFORD or its
designee, at the expense of STANFORD, except in the event that the results of
the audit reveal an underreporting of royalties due STANFORD of five percent
(5%) or more, then the audit costs shall be paid by RIGEL.
8. NEGATION OF WARRANTIES
8.1 Nothing in this Agreement is or shall be construed as:
(a) a warranty or representation by STANFORD as to the validity
or scope of any Licensed Patents;
(b) a warranty or representation that anything made, used, sold
or otherwise disposed of under any license granted in this Agreement is or will
be free from infringement of patents, copyrights and other rights of third
parties;
(c) an obligation to bring or prosecute actions or suits
against third parties for infringement, except to the extent and in the
circumstances described in Article 13;
(d) granting by implication, estoppel or otherwise any licenses
or rights under patents or other rights of STANFORD or other persons other than
Licensed Technology, regardless of whether such patents or other rights are
dominant or subordinate to any Licensed Technology; or
(e) an obligation to furnish any technology or technological
information other than the Licensed Technology.
8.2 Except as expressly set forth in this Agreement, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCT(S)
WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER
EXPRESS OR IMPLIED WARRANTIES.
8.3 RIGEL agrees that nothing in this Agreement grants RIGEL any
express or implied license or right under or to U.S. Patent 4,656,134
"Amplification of Eucaryotic Genes" or any patent application corresponding
thereto.
9. INDEMNITY
9.1 LICENSEE agrees to indemnify, hold harmless, and defend STANFORD,
UCSF-Stanford Health Care and Stanford Health Services and their respective
trustees, officers, employees, students and agents against any and all claims
for death, illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale or
8.
<PAGE>
other disposition of Inventions, Licensed Products or Licensed Technology by
RIGEL or RIGEL's sublicensee(s), or their customers.
9.2 STANFORD shall not be liable for any indirect, special,
consequential or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not have
any responsibilities or liabilities whatsoever with respect to Licensed
Product(s).
9.3 LICENSEE shall at all times comply, through insurance or
self-insurance, with all statutory workers' compensation and employers'
liability requirements covering any and all employees with respect to
activities performed under this Agreement.
9.4 In addition to the foregoing, LICENSEE shall maintain, during
the term of this Agreement, Comprehensive General Liability Insurance,
including Products Liability Insurance, with reputable and financially secure
insurance carrier(s) to cover the activities of LICENSEE and its
sublicensee(s). Such insurance shall provide minimum limits of liability of
$5 Million and shall include STANFORD, UCSF-Stanford Health Care, Stanford
Health Services, their trustees, directors, officers, employees, students and
agents as additional insureds. Such insurance shall be written to cover
claims incurred, discovered, manifested, or made during or after the
expiration of this Agreement. At STANFORD's request, LICENSEE shall furnish
a Certificate of Insurance evidencing primary coverage and requiring thirty
(30) days prior written notice of cancellation or material change to
STANFORD. LICENSEE shall advise STANFORD, in writing, that it maintains
excess liability coverage (following form) over primary insurance for at
least the minimum limits set forth above. All such insurance of LICENSEE
shall be primary coverage; insurance of STANFORD, USCF-Stanford Health Care,
and Stanford Health Services shall be excess and noncontributory.
10. MARKING
Prior to the issuance of patents on the Inventions, RIGEL agrees to mark
Licensed Products (or their containers or labels) made, sold, or otherwise
disposed of by it under the license granted in this Agreement with the words
"Patent Pending," and following the issuance of one or more patents, with the
numbers of the Licensed Patents.
11. STANFORD NAMES AND MARKS
RIGEL agrees not to identify STANFORD in any promotional advertising or
other promotional materials to be disseminated to the public or any portion
thereof or to use the name of any STANFORD faculty member, employee, or student
or any trademark, service mark, trade name, or symbol of STANFORD, STANFORD
Health Services or UC-Stanford Health Care, or that is associated with any of
them, without STANFORD's prior written consent.
12. PATENT RIGHTS
12.1 STANFORD shall have the obligation to file, prosecute and maintain
all patent applications and patents included in the Licensed Patents.
9.
<PAGE>
12.2 STANFORD will provide RIGEL with an opportunity to review and
comment upon the prosecution strategy and to consult with STANFORD on the
content of patent filings. In addition, STANFORD will provide RIGEL or a
designee of RIGEL with copies of any correspondence relating to patent
applications and patents included in the Licensed Patents.
12.3 RIGEL shall have the right to designate, in its sole discretion,
those foreign countries in which STANFORD will file, prosecute and maintain
patents and patent applications included in the Licensed Patents. STANFORD may
propose to file, prosecute and maintain Licensed Patents in a country which
RIGEL has not designated pursuant to this Section 12.3. If RIGEL agrees to such
designation, it shall reimburse STANFORD for the costs of such filing,
prosecution and maintenance of such patents or patent applications pursuant to
Section 12.4 and such patents or patent applications shall be included in the
Licensed Patents. If RIGEL does not agree to such proposal, STANFORD may elect
to proceed with such filing, prosecution or maintenance at its own expense, and
such patents or patent applications in such country shall not be included in the
Licensed Patents.
12.4 Within thirty (30) days after the Effective Date, RIGEL shall
reimburse STANFORD for all costs incurred by STANFORD prior to the Effective
Date in connection with the filing and prosecution of the patent applications
described in Section 2.5 ("Prior Patent Costs"). RIGEL shall also reimburse
STANFORD for all costs incurred by STANFORD after the Effective Date with
respect to the filing, prosecution, issuance and maintenance of patent
applications described in Section 2.5 and the Licensed Patents ("Future Patent
Costs"); PROVIDED, HOWEVER, that:
(a) if STANFORD grants a license under the Licensed Patents to
any third party (an "Other Licensee"), RIGEL's obligation to reimburse STANFORD
under this Section 12.4(a) shall be reduced such that RIGEL and such Other
Licensee(s) shall pay a pro-rata share of all Future Patent Costs incurred after
the date STANFORD executes such license agreement with such Other Licensee (such
pro-rata share shall be equal to the total Future Patent Costs incurred divided
by the number of licensees under the Licensed Patents at the time such costs are
incurred); and
(b) in addition to any reimbursement due RIGEL pursuant to
Section 12.4(a), if STANFORD grants a license under the Licensed Patents to an
Other Licensee prior to the second anniversary of the Effective Date, STANFORD
shall reimburse RIGEL for fifty percent (50%) of the Prior Patent Costs.
13. INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS
13.1 RIGEL shall promptly inform STANFORD of any suspected infringement
of any Licensed Patents by a third party. During the Exclusivity Term, STANFORD
and RIGEL each shall have the right to institute an action for infringement of
the Licensed Patents against such third party in accordance with the following:
10.
<PAGE>
(a) if STANFORD and RIGEL agree to institute suit jointly, the
suit shall be brought in both their names, the out-of-pocket costs thereof shall
be borne equally, and any recovery or settlement shall be shared equally. RIGEL
and STANFORD shall agree to the manner in which they shall exercise control over
such action. STANFORD may, if it so desires, also be represented by separate
counsel of its own selection, the fees for which counsel shall be paid by
STANFORD;
(b) in the absence of agreement to institute a suit jointly,
STANFORD may institute suit, and, at its option, join RIGEL as a plaintiff. If
STANFORD decides to institute suit, then it shall notify RIGEL in writing.
STANFORD shall bear the entire cost of such litigation and shall be entitled to
retain the entire amount of any recovery or settlement; and
(c) in the absence of agreement to institute a suit jointly and
if STANFORD notifies RIGEL that it has decided not to join in or institute a
suit, as provided in (a) or (b) above, RIGEL may institute suit and, at its
option, join STANFORD as a plaintiff. RIGEL shall bear the entire cost of such
litigation. Any recovery in excess of litigation costs will be shared with
STANFORD as follows:
(i) Any payment for past sales will be deemed to be Net
Sales and RIGEL will pay STANFORD royalties thereon at the rates specified in
Paragraph 6.4; and
(ii) any payment which covers future sales will be deemed
a sublicense and royalties will be shared as specified in Paragraph 6.3 and
Article 15.
LICENSEE and STANFORD agree to negotiate in good faith an
appropriate compensation to STANFORD for any non-cash
amounts or awards received in any settlement or cross-
license resulting from a suit brought by RIGEL pursuant to
this Section 13.1(c). STANFORD will not share in the
portion of the recovery, if any, that is payment for
"willful infringement."
13.2 Should either STANFORD or RIGEL commence a suit under the
provisions of Section 13.1 and thereafter elect to abandon the same, it shall
give timely notice to the other party who may, if it so desires, continue
prosecution of such suit; PROVIDED, HOWEVER, that the sharing of expenses and
any recovery in such suit shall be as agreed upon between STANFORD and RIGEL.
14. OTHER LICENSEE(S) OF STANFORD
14.1 If during the Exclusivity Term STANFORD discusses with, or has
received an offer from, a third party (a "Potential Licensee") with respect to
an opportunity for such Potential Licensee to obtain a license under the
Licensed Technology within the Licensed Field of Use, STANFORD may so notify
RIGEL. Such notice shall specify the field within which such Potential Licensee
desires to obtain a license under the Licensed Technology (the "Field of
Interest"). Within thirty (30) days after RIGEL receives a notice from STANFORD
pursuant to this Section 14.1, the parties will meet to discuss RIGEL's current
activities directed toward, or
11.
<PAGE>
plans for, developing Licensed Products useful within the Field of Interest.
If RIGEL does not demonstrate that it is then diligently conducting such
activities or provide plans for diligently developing Licensed Products
within the Field of Interest that are reasonably acceptable to STANFORD, then
RIGEL and STANFORD shall discuss in good faith reasonable modifications to
the Agreement that exclude the Field of Interest from the definition of the
Licensed Field of Use. STANFORD may thereafter license to such Potential
Licensee the Licensed Technology in the Field of Interest.
14.2 If STANFORD has not entered into an agreement with a Service
Provider outside the Licensed Field of Use during the Exclusivity Term, then
after the expiration of the Exclusivity Term STANFORD and RIGEL agree to discuss
in good faith how to modify appropriately the definition of the Licensed Field
of Use to enable STANFORD to increase the interest of Service Providers in
obtaining a license under the Licensed Technology outside any modified Licensed
Field of Use.
15. SUBLICENSE(S)
15.1 RIGEL may grant sublicense(s) to its corporate partners in
conjunction with a sublicense of RIGEL's proprietary technology other than the
Licensed Technology and Improvements; provided that the Licensed Technology is
applicable to the field within which RIGEL and such corporate partner are
collaborating.
15.2 Any sublicense(s) granted by RIGEL under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement, except:
(a) Sublicense terms and conditions shall reflect that any
sublicensee(s) shall not grant sublicenses to a third parties (subject to
Section 15.4); and
(b) The earned royalty rate specified in the sublicense(s) may
be at higher rates than the rates in this Agreement.
Any such sublicense(s) also shall expressly include the provisions of
Articles 7, 8, and 9 for the benefit of STANFORD and provide for the transfer of
all obligations, including the payment of royalties specified in such
sublicense(s), to STANFORD or its designee, in the event that this Agreement is
terminated if such sublicenses remain in effect after termination of this
Agreement.
15.3 RIGEL agrees to provide STANFORD with a copy of any sublicense
granted pursuant to this Article 15.
15.4 STANFORD agrees that RIGEL and/or its permitted sublicensee(s) may
(i) distribute Licensed Products through their normal channels, and (ii)
contract for the manufacture of Licensed Products with one or more third
parties.
16. TERMINATION
12.
<PAGE>
16.1 RIGEL may terminate this Agreement by giving STANFORD notice in
writing at least thirty (30) days in advance of the effective date of
termination selected by RIGEL.
16.2 STANFORD may terminate this Agreement if RIGEL:
(a) is in default in payment of royalties or providing of
reports;
(b) is in breach of any provision hereof (subject to Section
5.2); or
(c) intentionally provides any false report;
and fails to remedy any such default, breach, or false report within
thirty (30) days after written notice thereof by STANFORD.
16.3 Surviving any termination are:
(a) RIGEL's obligation to pay royalties accrued or accruable;
(b) any cause of action or claim of RIGEL or STANFORD, accrued
or to accrue, because of any breach or default by the other party; and
(c) the provisions of Sections 3.2, 3.5 and Articles 7, 8 and
9.
17. ASSIGNMENT
This Agreement may not be assigned by either party without the express
written consent of the other party, except that RIGEL may assign the Agreement
in connection with a merger, consolidation or sale of all or substantially all
of RIGEL's assets.
18. ARBITRATION
18.1 Any controversy arising under or related to this Agreement, and
any disputed claim by either party against the other under this Agreement
excluding any dispute relating to patent validity or infringement arising under
this Agreement, shall be settled by arbitration in accordance with the Licensing
Agreement Arbitration Rules of the American Arbitration Association.
18.2 Upon request by either party, arbitration will be by a third party
arbitrator mutually agreed upon in writing by RIGEL and STANFORD within thirty
(30) days of such arbitration request. Judgement upon the award rendered by the
arbitrator shall be final and nonappealable and may be entered in any court
having jurisdiction thereof.
18.3 The parties shall be entitled to discovery in like manner as if
the arbitration were a civil suit in the California Superior Court.
18.4 Any arbitration shall be held at Stanford, California, unless the
parties hereto mutually agree in writing to another place.
13.
<PAGE>
19. NOTICES
All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail, registered or
certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
STANFORD University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To RIGEL: Rigel, Inc.
772 Lucerne Drive
Sunnyvale, CA 94086
Attention: President
Either party may change its address upon written notice to the other
party.
20. WAIVER
None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
21. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed and performed wholly within
California.
22. SEVERABILITY; ENTIRE AGREEMENT
If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not be in any way affected or impaired thereby.
This Agreement embodies the entire understanding of the parties and shall
supersede all previous [text omitted in original signature document]
communications, representations or understandings, either oral or written,
between the parties relating to the subject matter hereof. No amendment or
modification hereof shall be valid or binding upon the parties unless made in
writing and signed by duly authorized representatives of both parties.
23. COUNTERPARTS
14.
<PAGE>
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one legal
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katherine Ku
-------------------------
Name Katherine Ku
------------------------------
Title Director
-----------------------------
Date April 15, 1998
------------------------------
RIGEL
Signature /s/ James M. Gower
-------------------------
Name James M. Gower
------------------------------
Title President & CEO
-----------------------------
Date 3/27/98
------------------------------
15.
<PAGE>
EXHIBIT A
LICENSED BIOLOGICAL MATERIALS
[there was no text in Exhibit A]
16.
<PAGE>
17.