COLLABORATIVE DEVELOPMENT AND
MARKETING AGREEMENT
This
COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT is entered into
as of August 12, 2004 (the “Effective Date ”),
by and between PALATIN TECHNOLOGIES, INC., a Delaware corporation
having an address of Cedar Brook Corporate Center, 4C Cedar Brook
Drive, Cranbury, New Jersey 08512 (“ Palatin ”)
and KING PHARMACEUTICALS, INC., a Tennessee corporation having an
address of 501 Fifth Avenue, Bristol, Tennessee 37620, (“
King ”). Each of King and Palatin is sometimes
referred to individually herein as a “ Party ”
and collectively as the “ Parties ”.
WHEREAS, Palatin
Controls and develops certain Technology and/or Proprietary
Materials related to its proprietary treatment for sexual
dysfunction; and
WHEREAS, King is
engaged in the development and marketing of human therapeutics;
and
WHEREAS, the
Parties desire to enter into a collaboration for the purpose of
Developing and Marketing Products derived from Palatin Technology
and Proprietary Materials; and
WHEREAS, King
has also agreed to make, simultaneous with the Closing and upon the
occurrence of certain milestones specified herein, equity
investments in Palatin common stock, such investments to be made
pursuant to the terms of the Securities Purchase Agreement, in the
form attached hereto as Exhibit H (the “ Securities
Purchase Agreement ”), dated as of the date of the
Closing, which Securities Purchase Agreement requires the issuance
by Palatin of Warrants pursuant to Section 6.2.4 hereof.
NOW, THEREFORE,
in consideration of the mutual covenants contained herein, and for
other good and valuable consideration the receipt and sufficiency
of which are acknowledged by the Parties, the Parties hereto,
intending to be legally bound, agree as follows.
1.
DEFINITIONS
Whenever used in
this Agreement with an initial capital letter, the terms defined in
this Section 1 shall have the meanings specified.
1.1 “ Accounting and Finance Plans ”
means the written plans (which shall include a detailed strategy,
budget, proposed timelines and all Collaboration Costs) describing
the financial plans to be carried out by each Party during each
Calendar Year pursuant to this Agreement which, with respect to
Palatin, shall include the activities for which responsibility has
been allocated to Palatin and, with respect to King, shall include
the activities for which responsibility has been allocated to King.
In addition, the Accounting and Finance Plan shall include all
budgets for the Collaboration, including budgets for the overall
Development and Marketing Program and each of the Program Plans.
After the date hereof, each Accounting and Finance Plan will be set
forth in a written document prepared by the Parties and approved by
the JDMC and annexed as an amendment to Exhibit G . The
Accounting and Finance Plans shall not create an obligation on the
Parties to coordinate their accounting methods or undertake any
sort of joint accounting, except to the extent specified in the
definition of Collaboration Costs.
1.2 “ Action" has the meaning set forth in Section
12.5.
1.3 “ Adverse Event ” means any
life-threatening drug experience, serious adverse drug experience,
unexpected adverse drug experience, expected drug experience or
non-serious drug experience, all as defined in ICH Guidance ICH E2A
or in any provision of the Food and Drug Act, any law, rule or
regulation promulgated thereunder, or any foreign equivalent, or
other similar experience in a human who is administered a Product,
whether or not considered Product related, including, without
limitation, any undesirable sign (including abnormal laboratory
findings of clinical concern), symptom or disease associated with
the use, abuse, or withdrawal of or from such Product.
1.4 “ Affiliate ” means any
corporation, firm, partnership or other entity which directly or
indirectly controls or is controlled by or is under common control
with a Party to this Agreement. For purposes of this definition,
(x) “control” means ownership, directly or through one
or more Affiliates, of (a) fifty percent (50%) or more of the
shares or voting rights in case of a corporation or limited
company, (b) fifty percent (50%) or more of the shares of stock
entitled to vote for the election of directors, in the case of a
corporation, (c) fifty percent (50%) or more of the equity or
controlling interests in the case of any other type of legal entity
(including, without limitation, joint ventures) or status as a
general partner in any partnership, or (d) any other arrangement
whereby a Party controls or has the right to control the Board of
Directors or equivalent governing body of an entity, and (y)
following the Merger, shall exclude Somerset Pharmaceuticals,
Inc.
1.5 “ Agreement ” means this
Collaborative Development and Marketing Agreement, including all
attached exhibits, as well as all amendments, supplements and/or
restatements thereof.
1.6 “ API ” means, with respect to a
Product, the active pharmaceutical ingredient used in the
Product.
1.7 “ Applicable Law ” means
applicable U.S. and foreign laws, rules, regulations, guidelines
and standards, including but not limited to those of the FDA and
comparable foreign Regulatory Authorities.
1.8 “ Assets ” has the meaning set
forth in Section 5.5.2.
1.9 “ Bankruptcy Code ” means the U.S.
Bankruptcy Code, 11 U.S.C.ss.ss. 101 et seq.
1.10 “ Calendar Quarter ” means, with
respect to the first such Calendar Quarter, the period beginning on
the Effective Date and ending on the last day of the calendar
quarter within which the Effective Date falls and, thereafter, each
successive period of three (3) consecutive calendar months ending
on March 31, June 30, September 30 or December 31. In the event
that the termination of this Agreement does not fall on the last
day of a Calendar Quarter, the “ Final Calendar
Quarter ” shall mean the period from the last day of
the most recent Calendar Quarter through the applicable date of
termination of this Agreement.
2
1.11 “ Calendar Year ” means each
successive twelve (12) month period commencing on January 1 and
ending on December 31. The first Calendar Year of this
Collaboration shall begin on the Effective Date and end on December
31, 2004. In the event that the termination of this Agreement does
not fall on the last day of a Calendar Year, the “
Final Calendar Year ” shall mean the period
from the last day of the most recent Calendar Year through the
applicable date of termination of this Agreement.
1.12 “ Chairman ” has the meaning set
forth in Section 2.2.
1.13 “ Change of Control ” means that
any of the following events, to the extent permitted hereunder, has
occurred: (i) any person (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “
Exchange Act ”)), other than a Party, any employee
benefit plan of a Party or any entity organized, appointed or
established by a Party for or pursuant to the terms of any such
plan, together with all “affiliates” and
“associates” (as such terms are defined in Rule 12b-2
under the Exchange Act) becomes the beneficial owner or owners (as
defined in Rule 13d-3 and 13d-5 promulgated under the Exchange
Act), directly or indirectly, of more than 50% of the outstanding
equity securities of the Party, or otherwise becomes entitled,
directly or indirectly, to vote more than 50% of the voting power
entitled to be cast at elections for directors (“ Voting
Power ”) of the Party; (ii) a consolidation or merger (in
one transaction or a series of related transactions) of a Party
pursuant to which the holders of a Party’s equity securities
immediately prior to such transaction or series of related
transactions would not be the holders, directly or indirectly,
immediately after such transaction or series of related
transactions of more than 50% of the Voting Power of the entity
surviving such transaction or series of related transactions; (iii)
the sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of
the assets of a Party; (iv) the liquidation or dissolution of a
Party or a Party ceasing to do business; and (v) a permitted
assignment pursuant to Section 15.10.
1.14 “ Clinical Plans ” means the
written plans (which shall include a detailed strategy, budget and
proposed timelines) describing the clinical Development activities
to be carried out by each Party during each Calendar Year pursuant
to this Agreement which, with respect to Palatin, shall include the
activities for which responsibility has been allocated to Palatin
and, with respect to King, shall include the activities for which
responsibility has been allocated to King. After the date hereof,
each Clinical Plan will be set forth in a written document prepared
by the Parties and approved by the JDMC and annexed as an amendment
to Exhibit C .
1.15 “ Closing ” shall mean, subject
to the satisfaction or waiver of the conditions set forth in
Section 6.1.3, the closing of the transactions contemplated by this
Agreement.
1.16 “ Closing Date ” shall mean the
earlier of: (i) the first (1 st ) day, unless the first
(1 st ) day falls on a weekend or holiday, in which case
it shall be the next business day, after the expiration or
termination of all applicable waiting periods under the HSR Act or
(ii) the first (1 st ) day, unless the first (1
st ) day falls on a weekend or holiday, in which case it
shall be the next business day, after the joint determination (by
certification from each Party to the other) that notification under
the HSR Act is not required.
1.17 “ CMC ” means chemistry,
manufacturing and controls activities related to Product and/or API
for any Product.
3
1.18 “ Collaboration ” means the
association of Palatin and King established pursuant to this
Agreement for the purpose of conducting the Development and
Marketing Program so as to accomplish the objectives of the
Development and Marketing Program, including the Marketing of
Products.
1.19 “ Collaboration Costs ” means, to
the extent approved by the JDMC, the sum of (a) Development Costs,
(b) Manufacturing/CMC Costs, (c) Marketing Costs, (d) Regulatory
and IP Costs, (e) product liability costs, as contemplated by
Section 5.4, (f) any other cost or expense expressly stated to
be a Collaboration Cost in this Agreement or under a Program Plan,
(g) quantity, trade or cash discounts, chargebacks, returns,
allowances, rebates (including without limitation any and all
federal, state or local government rebates, such as Medicaid
rebates) and costs incurred in connection with processing the
foregoing and price adjustments, to the extent actually allowed in
any invoice relating to Product (to the extent not already deducted
as part of the calculation of Net Sales), (h) sales and other
excise taxes and duties or similar governmental charges directly
related to the sale of Product (to the extent not already deducted
as part of the calculation of Net Sales), and (i) any other direct
and allocable internal costs and direct and allocable external
costs incurred in conducting the Development and Marketing Program,
all calculated in accordance with GAAP and all approved by the
JDMC. Except to the extent this Agreement expressly provides for
payments that do not require JDMC approval, and except to the
extent the JDMC has approved any payment hereunder, neither Party
shall (y) be obligated to incur any costs or expend any funds that
have not been approved by such Party or (z) have the authority to
cause the other party to incur any costs or expend any funds that
have not been approved by such other Party. Notwithstanding
anything to the contrary contained herein, Collaboration Costs
shall not include (i) indirect costs, overhead, general and
administrative costs and other similar costs, (ii) any costs which
relate to the business of a Party as a whole without specifically
referencing a Product or (iii) costs required to be paid by Palatin
under the CT License Agreement (which shall be the responsibility
of Palatin), including without limitation pursuant to the
indemnification provisions thereof except to the extent the same
are the result of the acts or omissions of King. In calculating the
Collaboration Costs, the following principles shall apply: (x)
there shall be no double counting of any costs or expenses or of
any revenues, and to the extent a cost or expense has been included
in one category or sub-category, it shall not be included in
another, and to the extent any revenue has been taken into account
in one category or sub-category, it shall not be taken into account
in another; (y) when allocating costs and expenses under this
Agreement, each Party shall utilize the same policies and
principles as it utilizes consistently within its group and
business units when making internal cost allocations; and (z) all
costs and expenses shall be determined, and all calculations shall
be made, in accordance with GAAP.
1.20 “ Collaboration License Fee ” has
the meaning set forth in Section 6.2.1.
1.21 “ Collaboration Manager ” has the
meaning set forth in Section 2.5.
1.22 “ Collaboration Revenue ” means
the sum of (a) Net Sales and (b) all other consideration or revenue
paid to or received by or on the account of a Party in connection
with this Agreement, the Collaboration or the Development and
Marketing Program (including, without limitation, any and all Net
Sales and all consideration and revenues resulting from Development
and Marketing in the ROW).
4
1.23 “ Completion of Phase II Clinical
Trials ” means achievement of clinical endpoints
agreed upon by the Clinical Committee for specific Phase II
Clinical Trials for the relevant Product for a specific indication
and the specific dosage strengths, which data enables the Parties
to proceed with Phase III Clinical Trials, without any objection
from the FDA that prevents proceeding with such Phase III Clinical
Trials, as documented by FDA contact reports. For the avoidance of
doubt, the “Completion of Phase II Clinical Trials” for
FSD and for ED shall be independent events, and the conduct of
additional Preclinical Plan and Clinical Plan activities for a
given Product for a given indication (including, without
limitation, additional Phase II Clinical Trials for such Product
and such indication) subsequent to the first Completion of Phase II
Clinical Trials for such Product shall not be deemed to and shall
not be dispositive of the prior occurrence of the Completion of
Phase II Clinical Trials for such Product and for such
indication.
1.24 “ Completion of Phase III Clinical
Trials ” means achievement of clinical endpoints
agreed upon by the Clinical Committee for Phase III Clinical
Trials, which data enables the Parties to file for Regulatory
Approval on the relevant Product for the relevant indication.
1.25 “ Confidential Information ”
means (a) all Technology produced or developed by either Party in
the Development and Marketing Program, (b) all information
exchanged by the Parties prior to the date hereof, and (c) with
respect to a Party (the “ Receiving Party ”),
all information, Technology and Proprietary Materials which are
disclosed by the other Party (the “ Disclosing Party
”) to the Receiving Party hereunder or to any of its
employees, Consultants, Affiliates or Sublicensees, except to the
extent that any such information (i) as of the date of disclosure
is demonstrably known to the Receiving Party or its Affiliates, as
demonstrated by credible written documentation; (ii) as of the date
of disclosure is in, or subsequently enters, the public domain,
through no fault or omission of the Receiving Party; (iii) is
obtained from a Third Party having a lawful right to make such
disclosure free from any obligation of confidentiality to the
Disclosing Party; or (iv) is independently developed by or for the
Receiving Party without reference to or reliance upon any
Confidential Information of the Disclosing Party as demonstrated by
credible written documentation. All Palatin Technology, King
Technology and Joint Technology that is used in or, in the judgment
of the JDMC, reasonably likely to be used in the Development and
Marketing Program shall be considered, during the Term and, if the
Agreement terminates earlier pursuant to Article 11, for so long as
any Product is being Developed or Marketed, Confidential
Information of both Parties, regardless of which Party provided or
developed same; provided , however, that (x) during the
Term hereof, neither Party shall be restricted from using any of
its own Confidential Information outside the Field, provided, and
only to the extent, that such use outside the Field does not, and
would not reasonably be expected to adversely impact any
intellectual property rights or commercial interests of the
Collaboration, including without limitation the Development and
Marketing Program; and (y) after termination of this Agreement
pursuant to Section 11.2, (i) the Party with the right to Develop
and Market Product after termination shall be permitted to use any
of either party’s Confidential Information as reasonably
required in connection with such Development and Marketing and (ii)
neither Party shall be restricted from using any of its own
Confidential Information outside the Field, provided, and only to
the extent, that such use outside the Field does not, and would not
reasonably be expected to adversely impact any intellectual
property rights or commercial interests of the Party with the right
to Develop and Market Product after termination, with respect to
such Development and Marketing.
5
1.26 “ Consultant ” means a third
party who has entered into or hereafter enters into a written
agreement with Palatin or King or both to provide consulting
services that are material or are reasonably likely, in the
judgment of the JDMC, to become material to the Development and
Marketing Program, which written agreement, (a) includes an
assignment of all right, title and interest in and to all work
product and all inventions arising from the performance of such
agreement, and all intellectual property rights attaching thereto,
to Palatin or King, as applicable and (b) binds the relevant third
party by obligations of confidentiality and non-use with respect to
all such work product, inventions, Confidential Information and
intellectual property rights that are at least as stringent as
those set forth herein.
1.27 “ Control ” or “
Controlled ” means (a) with respect to
Technology (other than Proprietary Materials) and/or Patent Rights,
the possession by a Party of the ability to grant a license or
sublicense of such Technology and/or Patent Rights as provided
herein without the payment of additional consideration (other than
any additional consideration to be paid pursuant to the CT License
Agreement) and/or without violating the terms of any agreement or
arrangement between such Party and any Third Party and (b) with
respect to Proprietary Materials, the possession by a Party of the
ability to supply such Proprietary Materials to the other Party as
provided herein without the payment of additional consideration and
without violating the terms of any agreement or arrangement between
such Party and any Third Party.
1.28 “ Copromote ” or “
Copromotion ” means the right of Palatin,
consistent with the allocation of responsibilities under the
Marketing Plan, to the extent amended pursuant to Section 5.1, to
copromote with King, Product in any legal manner in the Territory
to the urology specialty only.
1.29 “ Copromotion Option ” has the
meaning set forth in Section 5.1.
1.30 “ CT License Agreement ” means
the License Agreement dated as of March 31, 1998 by and between
Palatin and Competitive Technologies, Inc. ( “ CT
” ), a copy of which has been provided to King, as it may
be amended from time to time hereafter, with the consent of King,
to the extent required pursuant to Section 7.4.
1.31 “ CTM ” or “ Clinical
Trial Materials ” means any Product manufactured,
packaged and labeled as required by Applicable Law to be used as
investigational drug or placebo for use in the conduct of clinical
trials in humans.
1.32 “ Default ” means (a) a material
breach, default or violation, (b) the occurrence of an event that
with or without the passage of time or the giving of notice, or
both, would constitute a material breach, default or violation or
cause any material mortgages, liens, security interests, charges,
covenants, options, claims, restrictions and encumbrances of any
kind to arise, or (c) respect to a contract, the occurrence of an
event that with or without the passage of time or the giving of
notice, or both, would give rise to a right of termination,
renegotiation or acceleration or a material right to receive
damages or a payment of material monies or penalties of or under
such contract by a party other than a Party.
6
1.33 “ Defaulting Party ” has the
meaning set forth in Section 3.10.
1.34 “ Developing Party ” has the
meaning set forth in Section 11.2.2(d).
1.35 “ Development ” or “
Develop ” means, with respect to a Product, all
research, preclinical, pharmaceutical and clinical activities and
other activities undertaken in order to obtain Regulatory Approval
of such Product in accordance with this Agreement prior to
Regulatory Approval of such Product. These activities shall include
preclinical and clinical drug development activities, including,
among other things: research, test method development and stability
testing, toxicology, animal studies, statistical analysis and
report writing, clinical trial design and performance prior to
obtaining Regulatory Approvals, obtaining Regulatory Approvals, and
regulatory affairs related to the foregoing.
“Development” shall also include relevant formulation,
process development, manufacturing, manufacturing scale-up, CMC,
development-stage manufacturing, quality assurance, and quality
control development. All of the items in the immediately preceding
sentence shall be subject to King’s final decision-making
authority to the extent set forth in Section 2.10.2 hereof,
notwithstanding the inclusion of any or all of the foregoing
activities in the Preclinical Plans or Clinical Plans.
1.36 “ Development and Marketing Program
” means the collaborative development and marketing program
in the Field commencing on the date hereof and conducted by Palatin
and King pursuant to this Agreement and the Preclinical Plans,
Clinical Plans, Manufacturing/CMC Plans, Regulatory Plans,
Marketing Plans, and Accounting and Finance Plans.
1.37 “ Development Costs ” means, with
respect to a Product, all costs incurred by a Party directly
attributable to Development of such Product, but not including
applicable Manufacturing/CMC Costs and Regulatory Costs.
1.38 “ Discretionary Funding ” has the
meaning set forth in Section 2.8.2.
1.39 “ ED ” means erectile dysfunction
and all related sub-indications.
1.40 “ Effective Date ” has the
meaning set forth in the first paragraph of this Agreement.
1.41 “ Event of Bankruptcy ” has the
meaning set forth in Section 11.2.4.
1.42 “ Expense Payment ” has the
meaning set forth in Section 6.2.2.
1.43 “ FAMC ” means the fully absorbed
manufacturing costs which includes direct costs and allocated
costs, but not indirect and overhead costs.
1.44 “ FDA ” means the United States
Food and Drug Administration or any successor agency.
1.45 “ Field ” means the palliative,
prophylactic or therapeutic treatment of human sexual dysfunction,
including ED and FSD.
7
1.46 “ Filing Party ” has the meaning
set forth in Section 9.1.2.
1.47 “ First Commercial Sale ” means,
with respect to any Product, the first sale for end-use or
consumption, including any sale to a wholesaler or distributor, of
such Product in a country after the applicable Regulatory Authority
has granted Regulatory Approval. For purposes of this definition,
any sale to an Affiliate or Sublicensee will not constitute a First
Commercial Sale.
1.48 “ Force Majeure ” means an event
beyond the reasonable control of a Party that prevents the
performance, in whole or in part, by the Party of any of its
obligations hereunder, including by reason of any act of God,
flood, fire, explosion, earthquake, breakdown of plant, shortage of
critical equipment, loss or unavailability of manufacturing
facilities or material, strike, lockout, labor dispute, casualty or
accident, or war, terrorist act, revolution, civil commotion, acts
of public enemies, blockage or embargo, or any injunction, law,
order, proclamation, regulation, ordinance, demand or requirement
of any government or of any subdivision, authority or
representative of any such government, if and only if the Party
affected shall have used commercially reasonable efforts to avoid
the effects of such occurrence and to remedy it promptly if it has
occurred.
1.49 “ FSD ” means female sexual
dysfunction and all related subindications.
1.50 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION UNDER RULE 24b-2.]
1.51 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION UNDER RULE 24b-2.]
1.52 “ GAAP ” means United States
generally accepted accounting principles.
1.53 “ Good Clinical Practices ” means
the international ethical and scientific quality standards for
designing, conducting, recording, and reporting trials that involve
the participation of human subjects. Good Clinical Practices are
established through FDA guidances (including but not limited to ICH
E6).
1.54 “ Good Laboratory Practices ”
means the minimum standards for conducting nonclinical laboratory
studies that support or are intended to support applications for
research or marketing permits for products regulated by the FDA,
including food and color additives, animal food additives, human
and animal drugs, medical devices for human use, biological
products, and electronic products. Good Laboratory Practices are
established through FDA regulations (including but not limited to
21 CFR Part 58), FDA guidances, FDA current review and inspection
standards and current industry standards.
1.55 “ Good Manufacturing Practices ”
means the minimum standards for methods to be used in, and the
facilities or controls to be used for, the manufacture, processing,
packing, or holding of a drug to assure that such drug meets the
requirements of the Federal Food, Drug and Cosmetic Act of 1938, as
amended, as to safety, and has the identity and strength and meets
the quality and purity characteristics that it purports or is
represented to possess. Good Manufacturing Practices are
established through FDA regulations (including but not limited to
21 CFR Parts 210-211), FDA guidance and FDA current review and
inspection standards and current industry standards.
8
1.56 “ HSR Act ” means the
Hart-Scott-Rodino Act of 1976, as amended.
1.57 “ IND ” means (a) an
Investigational New Drug Application (as defined in 21 CFR
§ 312.3) that is required to be filed with the FDA before
beginning clinical testing of a Product in human subjects, or any
successor application or procedure or (b) any counterpart of a U.S.
Investigational New Drug Application that is required in any other
country or region in the Territory before beginning clinical
testing of a Product in human subjects in such country or
region.
1.58 “ Indemnified Party ” has the
meaning set forth in Section 13.3.
1.59 “ Indemnifying Party ” has the
meaning set forth in Section 13.3.
1.60 “ Infringement ” has the meaning
set forth in Section 9.2.1.
1.61 “ Infringement Notice ” has the
meaning set forth in Section 9.2.1.
1.62 “ Initial Share Payment ” has the
meaning set forth in Section 6.2.3.
1.63 “ Initial Shares ” has the
meaning set forth in Section 6.2.3.
1.64 “ IRB ” has the meaning set forth
in Section 12.8.
1.65 “ Joint Decision ” means any
decision which must be made by the JDMC after appropriate
consultations with, and discussions concerning the same by, the
JDMC representatives of Palatin and King. Joint Decisions shall
include any decisions expressly identified as such hereunder and
any other decisions not specifically reserved to either Party
hereunder.
1.66 “ Joint Development and Marketing
Committee ” or “ JDMC ”
means the committee of Palatin and King representatives established
pursuant to Section 2.1 to administer the affairs of the
Collaboration.
1.67 “ Joint Patent Rights ” means
Patent Rights claiming Joint Technology.
1.68 “ Joint Technology ” means any
Technology or Proprietary Materials (a) jointly developed or
conceived by employees of King or Palatin, or Consultants to both
King and Palatin, during the conduct of the Development and
Marketing Program or (b) developed or conceived by one Party during
the conduct of the Development and Marketing Program as a result of
its material use of the Technology or Proprietary Materials of the
other Party.
1.69 “ King Activities ” means those
activities to be performed by King pursuant to this Agreement or
the Program Plans.
9
1.70 “ King Background Technology ”
means any Technology useful in the Field that is (a) Controlled by
King as of the Closing Date or (b) developed or conceived by
employees of, or Consultants to, King on and after the Closing Date
in the conduct of activities outside the Development and Marketing
Program and without the material use of any Palatin Technology,
Palatin Proprietary Materials or Joint Technology.
1.71 “ King Indemnitees ” has the
meaning set forth in Section 13.1.
1.72 “ King Patent Rights ” means all
Patent Rights claiming King Technology.
1.73 “ King Program Technology ” means
any Technology developed or conceived by employees of, or
Consultants to, King, alone or jointly with Third Parties, in the
conduct of the Development and Marketing Program without the
material use of any Palatin Technology, Palatin Proprietary
Materials or Joint Technology.
1.74 “ King Proprietary Materials ”
means any Proprietary Materials that are useful in the Field that
are (a) Controlled by King as of the Closing Date or (b) developed
or conceived by employees of, or Consultants to, King on and after
the Closing Date in the conduct of activities outside the
Development and Marketing Program and without the material use of
any Palatin Technology, Palatin Proprietary Materials or Joint
Technology.
1.75 “ King Technology ” means,
collectively, King Background Technology and King Program
Technology. 1.76 “ License Fees ” means
all upfront payments, milestone payments, license fees, royalties
or other payments, payable to any Third Party by either Party under
any Third Party license agreement or other similar agreement or
arrangement (including the existing Third Party agreements utilized
as part of the Collaboration, other than the CT License Agreement
which shall be the sole responsibility of Palatin) to the extent
such payments are attributable to the Development or Marketing of
Product. If the rights under any Third Party license agreement are
also attributable to products other than Products, then only an
equitable portion of any amounts payable under it shall be
allocated to Products as License Fees.
1.77 “ Losses ” has the meaning set
forth in Section 13.1.
1.78 “ Manufacturing/CMC Costs ” means
FAMC attributable to the manufacture of a Product and consistent
with the Manufacturing/CMC Plan and includes, without limitation,
the costs of all Third Party manufacturing, direct material, direct
labor, direct services costs and manufacturing overhead consumed
(including depreciation), provided or procured by manufacturing
facilities in the manufacture of a Product and any other direct
and/or allocated costs of all goods manufactured.
1.79 “ Manufacturing/CMC Plans ” means
the written plans (which shall include a detailed strategy, budget
and proposed timelines) describing the API, synthesis, choice of
Manufacturers and third party suppliers, expected manufacturing
scale-up, manufacture, formulation, process development,
development-stage manufacture, quality assurance/quality control
development, filling and/or shipping requirements for each Product
(in accordance with customary standards for a product of comparable
market potential), including all CMC, and the activities to be
carried out by each Party during the applicable Calendar Year
which, with respect to Palatin, shall include the activities for
which responsibility has been allocated to Palatin and, with
respect to King, shall include the activities for which
responsibility has been allocated to King. After the date hereof,
each Manufacturing/CMC Plan will be set forth in a written document
prepared by the Parties and approved by the JDMC and annexed as an
amendment to Exhibit D .
10
1.80 “ Manufacturing Party ” has the
meaning set forth in Section 11.2.2(d).
1.81 “ Market ” or “
Marketing ” means any and all activities
directed to the marketing, detailing and promotion of a Product for
commercial sale and shall include pre-launch and post-launch
marketing, promoting, detailing, distributing, offering to sell and
selling a Product, importing a Product for sale, and any and all
clinical and marketing studies conducted after obtaining marketing
approval for any Product (but not including any preclinical
studies), including, without limitation, all Phase IV trials that
are not performed as a condition to obtaining any Regulatory
Approval for a Product (which Phase IV trials shall be Development
activities), and interacting with Regulatory Authorities regarding
the foregoing. If a Phase IV trial is performed as a condition to
obtaining any Regulatory Approval for a Product, such trial shall
be considered a Development activity.
1.82 “ Marketing Costs ” means the sum
of (a) all reasonable out-of-pocket costs and expenses incurred by
a Party directly attributable to the following functions for the
sale, promotion and marketing of a Product in the Territory: (i)
market research on such Product or relevant indications, (ii)
marketing communications, (iii) corporate accounts, (iv) managed
care, (v) sales force training, (vi) product hotlines, (vii)
reimbursement support, (viii) contracting, (ix) pricing, (x)
telemarketing services, (xi) distribution costs, including freight,
insurance, warehousing, order entry and billing, (xii) the cost of
Product detailing of a Party’s sales force plus reasonable
out-of-pocket costs and expenses paid to Third Parties for product
details provided by such Third Parties, (xiii) patient registries,
if required, (xiv) the cost of Product samples, and (xv) all
reasonable out-of-pocket costs and expenses incurred by a Party and
directly attributable to the promotion of a Product in the
Territory and (b) Personnel Costs incurred by a Party directly
attributable to marketing personnel and support staff working
(either full time or part of the time) on the Marketing of Products
in the Territory. Examples of functions that would be included in
the marketing headcount cost are: Marketing, marketing
communications, clinical research and educational managers,
clinical support managers, corporate accounts, managed care,
product hotlines, sales forecasting, reimbursement support
(government economic managers), marketing research, contracting and
pricing.
1.83 “ Marketing Plans ” means the
written plans (which shall include a detailed strategy, budget and
proposed timelines and the pre-launch and launch activities to be
undertaken) describing the Marketing activities to be carried out
by each Party during each applicable Calendar Year pursuant to this
Agreement which, with respect to Palatin, shall include the
activities for which responsibility has been allocated to Palatin
and, with respect to King, shall include the activities for which
responsibility has been allocated to King. After the date hereof,
each Marketing Plan will be set forth in a written document
prepared by the Parties and approved by the JDMC and annexed hereto
as an amendment to Exhibit F .
11
1.84 “ Merger ” means the merger
contemplated by the Agreement and Plan of Merger by and among Mylan
Laboratories Inc., Summit Merger Corporation and King, dated as of
July 23, 2004.
1.85 “ NA ” means the countries and
jurisdictions in North America, including Canada, Mexico, and
Puerto Rico, and any other US protectorates, territories and
possessions.
1.86 “ NDA ” means a New Drug
Application to market the Product in the Territory or similar
application submitted to the FDA, or its foreign equivalent
submitted to any Regulatory Authority in the ROW, and all
supplements and amendments thereto.
1.87 “ Net Sales ” means the gross
amount invoiced to non-Affiliate Third Parties for sale of
Products, less, to the extent deducted from or on such invoice
consistent with GAAP, the following items: (i) quantity, trade or
cash discounts, chargebacks, returns, allowances, rebates
(including without limitation any and all federal, state or local
government rebates, such as Medicaid rebates) and price
adjustments, to the extent actually allowed; (ii) sales and other
excise taxes and duties or similar governmental charges directly
related to such sale, to the extent such items are included in the
gross invoice price; (iii) amounts actually refunded due to
rejected, spoiled, damaged, outdated or returned Product; and (iv)
freight, shipment and insurance costs actually incurred in
transporting Product to a Third Party purchaser. If any Products
are sold to Third Parties in transactions that are not at
arm’s length between the buyer and seller, then the gross
amount to be included in the calculation of Net Sales for such
sales shall be the amount that would have been invoiced had the
transaction been conducted at arm’s length, which amount
shall be determined, whenever possible, by reference to the average
selling price of the relevant Product in arm’s-length
transactions in the country of sale at the time of sale. If any
Products are sold to Third Parties for consideration other than
cash or for consideration that is not readily ascertainable, then
the gross amount to be included in the calculation of Net Sales for
such sales shall be determined based on the reasonable value of the
consideration given, taking into account the average selling price
of the relevant Product in arm’s-length transactions in the
country of sale at the time of sale. Any goods or services provided
in exchange of the supply, disposal of Product for, or use of
Product, in clinical or preclinical trials or as free samples (such
samples to be in quantities common in the industry for this sort of
Product) shall not give rise to any deemed sale under this
Section.
1.88 “ Non-Defaulting Party ” has the
meaning set forth in Section 3.10.
1.89 “ Non-Proceeding Party ” has the
meaning set forth in Section 11.2.3(g).
1.90 “ Non-Target Party ” has the
meaning set forth in Section 5.5.2.
1.91 “ Palatin Activities ” means
those activities to be performed by Palatin pursuant to this
Agreement and the Program Plans.
1.92 “ Palatin Background Technology ”
means any Technology that is used or useful in the Field and that
is (a) Controlled by Palatin as of the Closing Date or (b)
developed, acquired or conceived by employees of, or Consultants
to, Palatin on and after the Closing Date in the conduct of
activities outside the Development and Marketing Program and
without the material use of any King Technology, King Proprietary
Materials, Joint Technology or Palatin Program Technology.
12
1.93 “ Palatin Indemnitees ” has the
meaning set forth in Section 13.2.
1.94 “ Palatin Patent Rights ” means
all Patent Rights claiming Palatin Technology. For the avoidance of
doubt, the Palatin Patent Rights are understood to include, without
limitation, United States Patent No. 6,579,968 and United States
Patent Application Nos. 10/040,547 and 10/638,071, including any
patents issuing from such applications, along with all patent
rights included in the CT License Agreement.
1.95 “ Palatin Program Technology ”
means any Technology developed or conceived by employees of, or
Consultants to, Palatin, alone or jointly with Third Parties, in
the conduct of the Development and Marketing Program, without the
material use of any King Technology, King Proprietary Materials or
Joint Technology.
1.96 “ Palatin Proprietary Materials ”
means any Proprietary Materials that are useful in the Field and
that are (a) Controlled by Palatin as of the Closing Date or (b)
developed or conceived by employees of, or Consultants to, Palatin
on and after the Closing Date in the conduct of activities outside
the Development and Marketing Program and without the material use
of any King Technology, King Proprietary Materials, or Joint
Technology.
1.97 “ Palatin Technology ” means,
collectively, Palatin Background Technology and Palatin Program
Technology.
1.98 “ Patent Coordinator ” has the
meaning set forth in Section 8.3.
1.99 “ Patent Rights ” means the
rights and interests in and to issued patents and pending patent
applications (which for purposes of this Agreement shall be deemed
to include certificates of invention and applications for
certificates of invention and priority rights) in any country,
including all provisional applications, substitutions,
continuations, continuations-in-part, divisions, and renewals, all
letters patent granted thereon, and all reissues, reexaminations
and extensions thereof, Controlled by a Party.
1.100 “ Personnel Costs ” means the
reasonable costs of employment of personnel employed by or under
contract to a Party, including, but not limited to, salaries,
benefits (including the costs of cars or allowances therefor),
travel, lodging, meals and office and computing supplies.
1.101 “ Phase II Clinical Trial ”
means a human clinical trial in any country that is intended to
evaluate the effectiveness of the drug for a particular indication
or indications in patients with the disease or condition under
study and to determine the common short-term side effects and risks
associated with the drug or that would otherwise meet the
definition of 21 CFR 312.21(b), or its foreign equivalent.
1.102 “ Phase III Clinical Trial ”
means a human clinical trial in any country that would otherwise
meet the definition of 21 CFR 312.21(c), or its foreign
equivalent.
13
1.103 “ Preclinical Plans ” means the
written plans (which shall include a detailed strategy, budget and
proposed timelines) describing the preclinical Development
activities to be carried out by each Party during each Calendar
Year pursuant to this Agreement which, with respect to Palatin,
shall include the activities for which responsibility has been
allocated to Palatin and, with respect to King, shall include the
activities for which responsibility has been allocated to King.
After the date hereof, each Preclinical Plan will be set forth in a
written document prepared by the Parties and approved by the JDMC
and annexed as an amendment to Exhibit B .
1.104 “ Proceeding Party ” has the
meaning set forth in Section 11.2.3(g).
1.105 “ Product ” means (1) any
product for use in the Field (including without limitation, any
composition of matter, procedure, process or method) (a) the
manufacture, use or sale of which infringes any claim included
within the Palatin Patent Rights, (b) which incorporates, is
discovered as a result of the use of, or is otherwise derived from,
PT-141 or any fragment or variant thereof or any analog thereof or,
to the extent applicable, any pro-drug, metabolite, isomer,
enantiomer, salt or ester thereof or any combination of any of the
foregoing, including the use of PT-141 in combination with one or
more other actives and in any formulation including, without
limitation, in any delivery method, or (c) which incorporates,
is derived from or is discovered as a result of the use of
melanocortin agonists and (2) any other product the JDMC agrees to
Develop or Market pursuant to this Agreement and (3) any device
containing any of the foregoing.
1.106 “ Product Trademark(s) ” means
any trademarks and trade names, whether or not registered, and any
trademark applications, renewals, extensions or modifications
thereto in the Territory together with all goodwill associated
therewith, trade dress and packaging which are applied to or used
with Products, and any promotional materials relating thereto.
1.107 “ Program Plans ” means the
Preclinical Plans, the Clinical Plans, the Manufacturing/CMC Plans,
the Regulatory Plans, the Marketing Plans, and the Accounting and
Finance Plans.
1.108 “ Proprietary Materials ” means
any tangible chemical, biological or physical research materials
that are furnished by or on behalf of one Party to the other Party
in connection with this Agreement, regardless of whether such
materials are specifically designated as proprietary by the
transferring Party.
1.109 “ PT-141 ” means the peptide
sequence Ac-Nle-cyclo(-Asp-His-D-Phe-Arg-Trp-Lys)-OH.
1.110 “ Recipient ” has the meaning
set forth in Section 3.9.
1.111 “ Regulatory Approval ” means
approval by the FDA or other Regulatory Authority to market a
Product in a regulatory jurisdiction.
1.112 “ Regulatory Authority ” means
the FDA or any counterpart of the FDA outside the United States, or
other national, supra-national, regional, state or local regulatory
agency, department, bureau, commission, council or other
governmental entity with authority over the distribution,
importation, exportation, manufacture, production, use, storage,
transport or clinical testing, pricing and/or sale of a Product,
including any device incorporating the Product.
1.113 “ Regulatory Filings ” means,
collectively, any and all INDs and drug master files (
DMFs ), NDAs, applications for any device
incorporating the Product, applications for designation of a
Product as an “ Orphan Product(s) ” under the
Orphan Drug Act or any other similar filings (including any foreign
equivalents and further including any related correspondence and
discussions), and all data contained therein, as may be required by
or submitted to any Regulatory Authority for the Regulatory
Approval.
1.114 “ Regulatory and IP Costs ”
means Personnel Costs, reasonable out-of-pocket costs and expenses
(e.g., filing fees, user fees, annual product and facility
registration fees, permit fees and the like) incurred by a Party
directly attributable (i) to obtaining or maintaining Regulatory
Approvals for a Product (including any device incorporating the
Product) (including, for example, communications and meetings with
Regulatory Authorities) and satisfying all registration and other
requirements of Regulatory Authorities within the Territory
(including, for example, adverse event reporting and Product
pricing approvals) in connection with each Party’s activities
under the Development and Marketing Program, and (ii) to preparing,
filing, prosecuting, maintaining, enforcing and defending Patent
Rights or Technology as contemplated in Section 9 hereof.
14
1.115 “ Regulatory Plans ” means the
written plans (which shall include a detailed strategy, budget and
proposed timelines) describing the regulatory activities, including
the timing and conduct of meetings, discussions and correspondence
with Regulatory Authorities, to be carried out by each Party during
the applicable Calendar Year which, with respect to Palatin, shall
include the activities for which responsibility has been allocated
to Palatin and, with respect to King, shall include the activities
for which responsibility has been allocated to King, and the
expected Regulatory Filings to be completed and maintained by the
Collaboration, for each Product. After the date hereof, each
Regulatory Plan will be set forth in a written document prepared by
the Parties and approved by the JDMC and annexed as an amendment to
Exhibit E .
1.116 “ ROW ” means all countries and
jurisdictions in the world, other than NA.
1.117 “ Securities Purchase Agreement
” has the meaning set forth in the recitals to this
Agreement.
1.118 “ Sublicensee ” means any Third
Party (other than an Affiliate) to which a Party or both Parties
grant a sublicense of some or all of the rights granted to one
another under this Agreement as permitted by this Agreement.
1.119 “ Supply ” has the meaning set
forth in Section 11.2.2(d).
1.120 “ Surviving Entity ” has the
meaning set forth in Section 5.5.1.
1.121 “ Target Party ” has the meaning
set forth in Section 5.5.1.
1.122 “ Technology ” means and
includes all inventions, discoveries, improvements, trade secrets
and proprietary methods and materials, whether or not patentable,
relating to the Field, including but not limited to (a) samples of,
methods of production or use of, and structural and functional
information pertaining to, chemical compounds, proteins or other
biological substances and (b) data, formulations, techniques and
know-how (including any negative results).
15
1.123 “ Term ” means the term of this
Agreement as set forth in Section 11.1.
1.124 “ Terminated Region ” has the
meaning set forth in Section 11.2.
1.125 “Territory” means NA.
1.126 “ Third Party ” means any person
or entity other than King and Palatin and their respective
Affiliates.
1.127 “ Third Party Agreements ” has
the meaning set forth in Section 3.10.
1.128 “ Transferor ” has the meaning
set forth in Section 3.9.
1.129 “ Vice Chairman ” has the
meaning set forth in Section 2.2.
2.
ADMINISTRATION OF THE COLLABORATION
2.1 Establishment and Function of JDMC . Palatin
and King shall establish the JDMC within thirty (30) days of the
Closing Date to plan, administer and monitor the Development and
Marketing Program, including all activities set forth in the
Program Plans. In particular, the JDMC shall review and approve, or
recommend revisions to, the Program Plans, review and monitor the
progress of the Development and Marketing Program and recommend
necessary adjustment to the Development and Marketing Program. In
planning, administering and monitoring the Development and
Marketing Program, the JDMC shall allocate tasks and
responsibilities, taking into account each Party’s respective
specific research and development capacities and expertise in order
to avoid duplication and to enhance synergies, as well as comply
with the requirements of this Agreement.
2.2 Membership . Each Party shall appoint, in its
sole discretion, three (3) members to the JDMC (which members shall
be employees of such Party). Unless otherwise agreed by the members
of the JDMC, the chairmanship and vice chairmanship of the JDMC
shall rotate between the Parties. The first appointment period
shall begin on the date hereof and end on December 31, 2005. For
such period, in light of the fact that Palatin has solely developed
the Product prior to the date hereof, Palatin shall designate the
chairman (the “ Chairman ”) and King shall
designate the vice chairman (the “ Vice Chairman
”). Thereafter, appointments of Chairman and Vice Chairman
shall rotate on a Calendar Year basis. Each Party shall have the
right at any time to substitute individuals, on a permanent or
temporary basis, for any of its previously designated
representatives to the JDMC, by giving written notice thereof to
the other Party.
16
2.3 Committees . The JDMC will appoint an
Accounting and Finance Committee Preclinical Committee, Clinical
Committee, Manufacturing/CMC Committee and the Marketing Committee
pursuant to Section 2.4 (each of whose members shall be employees
of such Party). Otherwise, the JDMC shall have the right and power
to appoint and delegate its responsibilities to other committees as
reasonably needed to accomplish their work and the composition and
eligibility requirements for the same shall be agreed by the
members of the JDMC. Such committees may include, for the oversight
and administration of each Program Plan, the Regulatory Committee.
Except as otherwise mandated by the JDMC in its minutes, each
committee established by the JDMC shall be governed by the rules
and guidelines applicable to the JDMC set forth in this Agreement.
The JDMC shall set forth clearly each such committee’s
decision making responsibilities that have been delegated to it by
the JDMC. Any member of a committee may send a designee to observe
a committee if such member is unable to attend, but such observer
shall not vote in such member’s place unless given a written
proxy from such member of the committee. Each Party shall have the
right at any time to substitute individuals, on a permanent or
temporary basis, for any of its previously designated
representatives to any committee, by giving written notice thereof
to the other Party. If an issue to be addressed by a committee
appears to fall within the oversight and administration of more
than one committee, such committees shall confer with each other to
determine which committee shall oversee and administer such
issue.
2.4
Appointment of Committees.
2.4.1 Accounting and Finance Committee . Promptly after
the appointment of the JDMC, the JDMC will appoint an Accounting
and Finance Committee composed of two (2) members designated by
each Party, both of whom shall be employees of the relevant Party.
The JDMC shall delegate to the Accounting and Finance Committee its
responsibility for making all decisions, subject to final JDMC
review and approval, relating to accounting, budgets, Collaboration
Cost allocation, Collaboration Revenue allocation and all other
matters related to accounting and finance. Except as otherwise
mandated by the JDMC in its minutes, the Accounting and Finance
Committee shall otherwise be governed by the rules and guidelines
applicable to the JDMC set forth in this Agreement.
2.4.2 Preclinical Committee . Promptly after the
appointment of the JDMC, the JDMC will appoint a Preclinical
Committee comprised of two (2) members designated by each Party,
both of whom shall be employees of the relevant Party. The JDMC
shall delegate to the Preclinical Committee its responsibility for
making all decisions, subject to final JDMC review and approval,
relating to the Preclinical Plans. Except as otherwise mandated by
the JDMC in its minutes, the Preclinical Committee shall otherwise
be governed by the rules and guidelines applicable to the JDMC set
forth in this Agreement.
2.4.3 Clinical Committee . Promptly after the appointment
of the JDMC, the JDMC will appoint a Clinical Committee comprised
of two (2) members designated by each Party, both of whom shall be
employees of the relevant Party. The JDMC shall delegate to the
Clinical Committee its responsibility for making all decisions,
subject to final JDMC review and approval, relating to the Clinical
Plans. Except as otherwise mandated by the JDMC in its minutes, the
Clinical Committee shall otherwise be governed by the rules and
guidelines applicable to the JDMC set forth in this Agreement.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24b-2.]
17
2.4.4 Manufacturing/CMC Committee . Promptly after the
appointment of the JDMC, the JDMC will appoint a Manufacturing/CMC
Committee comprised of two (2) members designated by each Party,
both of whom shall be employees of the relevant Party. The JDMC
shall delegate to the Manufacturing/CMC Committee its
responsibility for making all decisions, subject to final JDMC
review and approval, relating to the Manufacturing/CMC Plans.
Except as otherwise mandated by the JDMC in its minutes, the
Manufacturing/CMC Committee shall otherwise be governed by the
rules and guidelines applicable to the JDMC set forth in this
Agreement.
2.4.5 Marketing Committee . Promptly after the
appointment of the JDMC, the JDMC will appoint a Marketing
Committee comprised of two (2) members designated by each Party,
both of whom shall be employees of the relevant Party. The JDMC
shall delegate to the Marketing Committee its responsibility for
making all decisions, subject to final JDMC review and approval,
relating to the Marketing Plans. Except as otherwise mandated by
the JDMC in its minutes, the Marketing Committee shall otherwise be
governed by the rules and guidelines applicable to the JDMC set
forth in this Agreement.
2.5 Collaboration Manager . Promptly after the
Effective Date, each Party shall appoint a collaboration manager
(the “ Collaboration Manager ”). The
Collaboration Managers shall be the primary contact between the
JDMC and all committees appointed by the JDMC. The Collaboration
Managers shall regularly consult with the heads of each such
committee and each Party will cause each such committee head to
cooperate fully with each Collaboration Manager. The Collaboration
Managers shall timely address all issues and concerns raised by any
member of the JDMC or any committee, as well as collect and provide
to the JDMC or to any committee all information requested by the
JDMC or such committee concerning any aspect of the Development and
Marketing Program. Each Party shall have the right, upon prior
written notice to the other Party, to substitute for its current
Collaboration Manager another of its employees, on a permanent or
temporary basis.
2.6 Meetings.
2.6.1 Schedule of Meetings . The JDMC shall
establish a schedule of times for meetings, taking into account,
without limitation, the planning needs of the Development and
Marketing Program and the need of the JDMC to consult and/or render
decisions with respect to any Joint Decisions. Meetings shall also
be convened upon the determination of any member, by prior written
notice thereof of not less than three (3) business days to the
remaining members of the JDMC, that a meeting of the JDMC is
required to discuss and/or resolve any matter or matters with
respect to the Collaboration. In no event shall the JDMC meet less
frequently than quarterly. Meetings shall alternate between the
respective offices of the Parties in Cranbury, New Jersey; Bristol,
Tennessee; Princeton, New Jersey, or Cary, North Carolina; or
another mutually agreed upon location; provided, however, that the
Parties may mutually agree to meet by teleconference or video
conference or may act by a written memorandum executed by the
members of the JDMC.
18
2.6.2 Quorum; Voting; Decisions . At each JDMC
meeting, one member designated by each Party shall constitute a
quorum. Each Party’s JDMC members present at any meeting
shall together have one vote on all matters before the JDMC. All
decisions of the JDMC shall be made by unanimous vote. Whenever any
action by the JDMC is called for hereunder during a time period in
which the JDMC is not scheduled to meet, the Chairman shall cause
the JDMC to take the action in the requested time period by calling
a special meeting or by causing the JDMC to take such action
without a formal meeting by written memorandum, as provided in
Section 2.6.1. The Chairman shall provide prior written notice of
not less than three (3) business days of the same to all JDMC
members. Representatives of each Party or of its Affiliates who are
not members of the JDMC, may attend JDMC meetings or committee
meetings as non-voting observers at the invitation of either Party
with the prior approval of the other Party, which approval shall
not be unreasonably withheld. In the event that the JDMC is unable
to resolve any matter before it, such matter shall be resolved as
set forth in Section 2.10 hereof.
2.6.3 Agenda and Minutes . An agenda for each JDMC
meeting shall be circulated no less than three (3) days prior to
the meeting, to the extent practicable. The JDMC shall keep
accurate minutes of its deliberations which record all proposed
decisions and all actions recommended or taken. Drafts of the
minutes shall be delivered to the members of the JDMC within a
reasonable time, not to exceed ten (10) days after the meeting. The
Party not filling the Chairmanship of the JDMC shall have
responsibility for the preparation and circulation of the draft
minutes. Draft minutes shall be then be edited by the Chairman and
Vice Chairman and shall be issued in final form within a reasonable
time not to exceed fourteen (14) days after the meeting.
2.6.4 Expenses . Palatin and King shall each bear
all expenses of their respective JDMC members related to their
participation on the JDMC and attendance at JDMC meetings.
2.7 Decision-Making Responsibilities . The JDMC
shall be solely responsible for making all decisions specified as
Joint Decisions hereunder and all decisions not specifically
reserved to either Party hereunder, including, but not limited to,
decisions with respect to the following matters:
2.7.1 the definition, review, approval and amendment (not less
than annually) of each Program Plan and all related strategy and
objectives (but not the actual conduct of such plans);
2.7.2 definition, review and approval of and changes to the
strategy and objectives (but not the actual conduct) of the
Collaboration;
2.7.3 management and allocation of resources of the
Collaboration;
2.7.4 management and oversight of all Patent Rights and
Technology used in connection with Product;
2.7.5 proposal of all budgets for the Collaboration;
19
2.7.6 review and approval of all subcontracts, sublicenses and
Third Party licenses (other than the CT License Agreement and
expressly including, without limitation, any and all supply and
manufacturing agreements) and other agreements required or entered
into in connection with the Collaboration, and any and all
amendments thereto, including without limitation a determination,
with respect to each such subcontract, sublicense, license or
agreement, regarding whether it is appropriate to require the
inclusion of the bankruptcy-protection provision set forth in
Section 3.10 hereof;
2.7.7 performance of such other functions as appropriate to
further the purposes of this Agreement and the Collaboration as
determined from time to time by the Parties.
2.8
Collaboration Costs Overruns and Additional
Expenditures.
2.8.1 The Accounting and Finance Plans shall set forth a budget
with respect to all material tasks required to be conducted by the
Parties pursuant to the other Program Plans. Each Party shall use
commercially reasonable efforts to complete all tasks assigned to
it pursuant to the Program Plans in accordance with the funding
allocated to such tasks in the Accounting and Finance Plans. In the
event either Party anticipates or becomes aware that the actual
costs of any given task assigned to it may or will likely exceed
the funds allocated to such task, such Party shall promptly notify
the JDMC. The Accounting and Finance Committee, and the committee
charged with primary oversight responsibility for the task in
question, shall work together in good faith for up to thirty (30)
days to determine whether to readjust the budget to allocate
additional funds to such task, to revise the scope of such task to
permit satisfactory completion at the then-budgeted funding level,
or both. In the event no decision is reached, the matter shall be
subject to the provisions of Section 2.10 hereof.
2.8.2 Notwithstanding the foregoing, either Party may, in its
discretion, spend additional amounts above and beyond those
allocated in the Accounting and Finance Plans (“
Discretionary Funding ”) on any task assigned to such
Party pursuant to the other Program Plans or on any other task the
JDMC has approved. In such event, the Party wishing to expend
Discretionary Funding shall first inform the other Party of its
intent to do so. If such other Party consents to such Discretionary
Funding being deemed a Collaboration Cost, such Discretionary
Funding shall constitute a Collaboration Cost, and the rights and
obligations of the Parties with respect to such Collaboration
Costs, and any Collaboration Revenues and intellectual property,
regulatory or other intangible rights derived from or generated by
such Discretionary Funding, shall be determined in accordance with
the terms and conditions of this Agreement as they apply to the
Collaboration. If such other Party does not consent, then such
Discretionary Funding shall not constitute a Collaboration Cost,
but shall be borne solely by the Party undertaking the
Discretionary Funding, and the Parties shall negotiate in good
faith, prior to the expenditure of the Discretionary Funding, the
rights and obligations of the Parties with respect to such
Discretionary Funding and any Collaboration Revenues and
intellectual property, regulatory or other intangible rights
derived therefrom or generated thereby.
2.8.3 Except to the extent this Agreement expressly provides for
payments that do not require JDMC approval, and except to the
extent the JDMC has approved any payment hereunder, neither Party
shall (i) be obligated to incur any costs or expend any funds that
have not been approved by such Party or (ii) have the authority to
cause the other party to incur any costs or expend any funds that
have not been approved by such other Party.
20
2.9 Interests of the Parties . Notwithstanding any
other provisions of this Agreement, all decisions made and all
actions taken by the JDMC, by Palatin or by King with respect to
any Collaboration matter, shall be made or taken in the best
interest of the Collaboration, subject in all respects to the
fiduciary duties of the Parties to their respective
shareholders.
2.10 Dispute
Resolution.
2.10.1 In the event any committee shall not be able to reach a
decision or take an action appointed to it, then such decision or
matter shall first be referred for resolution to the JDMC. In the
event that the JDMC shall not be able to reach a decision or take
an action on any matter referred by a committee, any Joint Decision
or any other matter which is reserved to the JDMC or the Accounting
and Finance Committee or any other committee delegated
decision-making authority by the JDMC hereunder, then such Joint
Decisions or such other unresolved matters shall first be referred
for resolution to the Chief Executive Officer of each Party for
attempted resolution by good faith negotiation. Such good faith
negotiation may include the appointment by either Party of an
unaffiliated Consultant, who shall be a scientific expert chosen
based on such person’s experience and expertise in the
particular type of issue which is unresolved to advise such
officers on the matter.
2.10.2 If such officers are unable to resolve the matter within
ten (10) days, then
(a) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
(b) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
(c) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
(d) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
(e) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
(f) [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
3. DEVELOPMENT AND MARKETING
PROGRAM
3.1 Objectives of the Development and Marketing
Program . The objectives of the Development and Marketing
Program shall be the Development, manufacture and Marketing of
Products within the Field in the Territory and the joint licensing
of the rights under this Agreement to Third Parties for development
and marketing of Product in the ROW.
21
3.2 Program Plans Generally . In consultation with
the JDMC and in accordance with the strategy and objectives of the
Program Plans, each Party shall be primarily responsible for those
tasks assigned it as set forth on each Program Plan attached hereto
and such obligations set forth in this Agreement. Unless otherwise
set forth in any Program Plan, Palatin shall have the sole right
and responsibility to conduct all Palatin Activities and King shall
have the sole right and responsibility to conduct all King
Activities. Annexed hereto as Exhibit A is a preliminary
plan for the Development and Marketing Program. Within thirty (30)
days after the Effective Date and after consideration of the
Exhibit A , the JDMC shall take such actions necessary to
define, generate and approve each Program Plan for the first
Calendar Year, which Program Plans shall supplant Exhibit A
as operational documents for the conduct of the Development and
Marketing Program. The JDMC shall ensure that the Program Plans,
including without limitation all timelines set forth therein, are
consistent with each other and accurately reflect the objectives
set forth in the Development and Marketing Plan. Each Program Plan
for such first Calendar Year will then be attached hereto as
Exhibit B (Preclinical Plan), Exhibit C (Clinical
Plan), Exhibit D (Manufacturing/CMC Plan), Exhibit E
(Regulatory Plan), Exhibit F (Marketing Plan), and
Exhibit G (Accounting and Finance Plan). For each year of
the Development and Marketing Program commencing with the second
Calendar Year, the Program Plans shall be amended and updated by
Palatin and King and approved by the JDMC as directed by the JDMC
no later than thirty (30) days prior to the end of the prior
Calendar Year and shall be attached hereto as Exhibits B-1, C-1,
D-1, E-1 , etc. Each Program Plan shall be in writing and shall
set forth, with reasonable specificity, research objectives and
tasks to be performed by each of the Parties for the period covered
by the Program Plan as agreed by the JDMC and as specifically set
forth in this Agreement. Any Program Plan may be amended by the
JDMC at any time upon the unanimous request of the representatives
of the applicable committee. Except to the extent specifically
directed by the JDMC in each Program Plan, the decisions as to how
to perform the tasks assigned to Palatin and King in any Program
Plan shall be Palatin decisions and King decisions, respectively.
Although not specifically a part of a Program Plan, all issues and
activities relating to Patent Rights and Technology used in
connection with a Product shall be subject to oversight of the
JDMC.
3.3 Preclinical Plans. Unless and until otherwise agreed by the
JDMC, the following terms and conditions are hereby incorporated
into each Preclinical Plan. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
3.4 Clinical Plans. Unless and until otherwise agreed by the
JDMC, the following terms and conditions are hereby incorporated
into each Clinical Plan. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
3.5 Manufacturing/CMC Plans . Unless and until
otherwise agreed by the JDMC, the following terms and conditions
are hereby incorporated into each Manufacturing/CMC Plan.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24b-2.]
3.6 Regulatory Plans . Unless
and until otherwise agreed by the JDMC, the following terms and
conditions are hereby incorporated into each Regulatory Plan.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24b-2.]
22
3.7 Marketing Plans.
3.7.1 Unless and until otherwise agreed by the JDMC, the
following terms and conditions are hereby incorporated into each
Marketing Plan. [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE
24b-2.]
3.7.2 With respect to King’s activities under the
Marketing Plan, King shall use commercially reasonable efforts to
Develop and Market the Product commensurate with industry standards
in accordance with Section 3.13 hereof. With respect to
King’s activities under the Marketing Plan, King hereby
agrees, as part of any Marketing Plan and in a manner consistent
with Section 3.13 hereof, to establish and maintain its
infrastructure and staffing and otherwise maintain its expertise
for Marketing Product at levels (i) commensurate with industry
standards for products of similar market potential and at a similar
stage in development as the applicable Product, taking into account
the competitiveness of the marketplace, the proprietary position of
the Product, and the efforts and resources available to a company
having a comparable market capitalization (taking King and its
Affiliates together) and (ii) customary and reasonable in light of
then-current market conditions. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
3.8 Accounting and Finance Plans. Unless and until otherwise
agreed by the JDMC, the following terms and conditions are hereby
incorporated into each Accounting and Finance Plan. [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24b-2.]
3.9 Supply of Proprietary Materials . From time to
time during the Term of this Agreement, either Party (the “
Transferor ”) may supply the other Party (the “
Recipient ”) with its Proprietary Materials to the
extent the parties, the JDMC or the relevant committee reasonably
believe that such Proprietary Materials would be useful in the
Development and Marketing Program or to the extent such Proprietary
Materials are required to be so provided pursuant to any Program
Plan. In connection therewith, the Recipient hereby agrees that (a)
it shall not use Proprietary Materials for any purpose other than
exercising any rights or fulfilling any obligations granted to it
or reserved by it hereunder; (b) it shall use the Proprietary
Materials only in compliance with all applicable, federal, state,
and local laws and regulations; (c) it shall not transfer any
Proprietary Materials to any Third Party for use without the prior
written consent of the Transferor, except as expressly permitted
hereby; (d) the Transferor shall retain full ownership of all such
Proprietary Materials; and (e) upon the expiration or termination
of this Agreement, the Recipient shall at the instruction of the
Transferor either destroy or return any Proprietary Materials which
are not the subject of the grant of a continuing license hereunder.
In addition, each of Palatin and King agrees that, during the
Development and Marketing Program neither Party shall transfer to
any Third Party, without the approval of the other Party, any Joint
Technology, including without limitation any tangible embodiments
thereof.
23
3.10 Third Party Licenses and Collaborations .
Subject to Section 2.7.6, King, Palatin or both may enter into such
Third Party licenses, collaborations, and supply and manufacturing
agreements and, solely with respect to the ROW, sublicenses as are
reasonably necessary in the judgment of the JDMC to accomplish the
objectives and purposes of the Collaboration. Each such agreement
shall (a) if only one Party is a party to the agreement, name the
other Party as a third party beneficiary to such agreement, (b)
include an assignment of all right, title and interest in and to
all work product and all inventions arising from the performance of
such agreement, and all intellectual property rights attaching
thereto to the contracting Party, and (c) bind the relevant third
party by obligations of confidentiality and non-use with respect to
all such work product, inventions, and intellectual property rights
that are at least as stringent as those set forth herein. In order
to ensure the ability of a Party (“ Non-Defaulting
Party ”) to proceed with the Development and Marketing
Program notwithstanding the occurrence of any Default or Event of
Bankruptcy on behalf of the other Party (“ Defaulting
Party ”), the JDMC shall, in its discretion, require the
inclusion, in those subcontracts, sublicenses, licenses and other
agreements (including manufacturing and supply agreements) entered
into in connection with the Collaboration and subject to the
JDMC’s approval pursuant to Section 2.7.6 hereof (“
Third Party Agreements ”) that are or are likely to
become material to the conduct of the Development and Marketing
Program, of an enforceable provision granting to the Non-Defaulting
Party hereto an automatic assignment, contingent upon an Even
