CLINICAL DEVELOPMENT AND LICENSE AGREEMENT

Exhibit 10.1

 

CONFIDENTIAL TREATMENT REQUESTED

WITH RESPECT TO CERTAIN PORTIONS HEREOF

DENOTED WITH “***”

 

EXECUTION COPY

 

CLINICAL DEVELOPMENT AND LICENSE AGREEMENT

 

THIS CLINICAL DEVELOPMENT AND LICENSE AGREEMENT dated as of July 14, 2005 (the “ Effective Date ”), among Clinical Development Capital LLC (“ CDC ”), a limited liability company organized under the laws of the State of Delaware, having a business address at 47 Hulfish Street, Suite 310, Princeton, NJ 08542, BioDelivery Sciences International, Inc. (“ BioDelivery ”), a corporation organized under the laws of the State of Delaware, having a business address at 2501 Aerial Center Parkway, Suite 205, Morrisville, NC 27560, and Arius Pharmaceuticals, Inc., a Delaware corporation and wholly-owned subsidiary of BioDelivery (“ Subsidiary ”, and together with BioDelivery, the “ Company ”). CDC and Company are sometimes referred to herein individually as a “ Party ” and collectively as “ Parties ”.

 

WHEREAS, Company is developing the compound currently identified as fentanyl in conjunction with the BEMA Technology;

 

WHEREAS, Company and CDC would like to set forth the terms and conditions pursuant to which CDC shall invest in the development of the Product and, in return, upon approval of the Product by the FDA and subsequent commercialization of the Product, Company shall pay to CDC a milestone and royalties on sales of the Product, respectively; and

 

WHEREAS, simultaneously with entering into this Agreement and as a condition of entering into this Agreement, BioDelivery shall grant CDC the Warrant.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, covenants and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following terms, whether used in the singular or plural, shall have the following meanings:

 

1.1 “ Act ” means both the United States Food, Drug and Cosmetic Act, as amended, and the regulations promulgated under the foregoing.

 

1.2 “ Actual Trial Participants ” has the meaning set forth in Section 6.4.1(a).

 

1.3 “ Adverse Drug Experience ” means any of: an “adverse drug experience,” a “life-threatening adverse drug experience,” a “serious adverse drug experience,” or an “unexpected adverse drug experience,” as those terms are defined at either 21 C.F.R. § 312.32 or 21 C.F.R. § 314.80.

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1.4 “ Affiliate ” means any Person directly or indirectly controlled by, controlling or under common control with, a Party, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least fifty percent (50%) of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests. For the avoidance of doubt, neither of the Parties shall be deemed to be an “Affiliate” of the other.

 

1.5 “ Approval ” means the approval by the relevant Governmental Authority required for the initial launch, marketing and sale of the Product.

 

1.6 “ Atrix ” means Atrix Laboratories, Inc., a Delaware corporation.

 

1.7 “ Atrix License ” means that certain License Agreement dated May 27, 2004 attached hereto as Schedule 1.7 , as the same may be amended from time to time.

 

1.8 “ Average Selling Price ” means, in any particular calendar year, the average “red book” list price of a pharmaceutical product.

 

1.9 “ BEMA ” or “ BEMA Technology ” means the Know-How and Patent Rights licensed to Company pursuant to the Atrix License.

 

1.10 “ Business Da y” means a day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized by Law to remain closed.

 

1.11 “ CDC Development Expenses ” means all out of pocket costs incurred by CDC in connection with its participation in the Development Program or otherwise in carrying out its obligations under this Agreement, not to exceed Ten Thousand ($10,000.00) Dollars in any twelve month period beginning with the Effective Date; but excluding all legal and other costs and expenses incurred under Section 11.8.

 

1.12 “CDC Indemnified Parties ” has the meaning set forth in Section 9.1.

 

1.13 “ cGMP ” means the current Good Manufacturing Practices regulations promulgated by the FDA under the Act as of the time of manufacture of the applicable Products, all as amended from time to time and subject to any arrangements, additions or clarifications agreed from time to time between the Parties.

 

1.14 “ Change of Control ” shall mean a (a) change in ownership or control of a Party effected through any of the following transactions: (i) a merger, consolidation or other reorganization, unless securities representing more than fifty percent (50%) of the total combined

 

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voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned such Party’s outstanding voting securities immediately prior to such transaction, (ii) any transfer or other disposition of all or substantially all of such Party’s assets, (iii) the acquisition, directly or indirectly by any person or related group of persons (other than such Party or a person that directly or indirectly controls, is controlled by, or is under common control with, such Party), of beneficial ownership of securities possessing more than fifty percent (50%) of the total combined voting power of such Party’s outstanding securities or (b) a change in the power to direct or cause the direction of the management and policies of a Party, directly or indirectly, whether through ownership of voting securities or by contract or otherwise.

 

1.15 “ Claims ” means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands, including any losses incurred by a Party as a direct result of any such matters.

 

1.16 “ Commercially Reasonable Efforts ” means, with respect to a Party, the efforts which would be used by that Party consistent with its normal business practices, which in no event shall be less than the level of efforts and resources expended by comparable small cap biotechnology companies with respect to a product or potential product at a similar stage in its development or product life, taking into account product labeling, market potential, medical and clinical considerations, the regulatory environment, financing environment, patent and other proprietary position and competitive market conditions in the therapeutic area, all as measured by the facts and circumstances at the time such efforts are due.

 

1.17 “ Commitment ” means the aggregate of the Upfront Fees and Periodic Payments payable by CDC to Company pursuant to the terms hereof; provided, however, that in no event shall the Commitment exceed the aggregate Development Costs.

 

1.18 “ Commitment Contingency ” means: (i) the development of a final formulation of the Product with acceptable pharmacokinetic and safety properties, in particular, low inter- patient variability and a profile indicating bioequivalence to ACTIQ® (generally determined by (A) meeting the FDA’s requirement for showing bioequivalence (i.e., 80% to 125% of Cmax and AUC) and (B) showing no greater inter patient variability compared to Actiq by measurement of Cmax and AUC); (ii) the Company shall have delivered to the FDA and CDC (A) a report confirming acceptability of the synthesis steps, physicochemical characteristics and impurity profile for each API selected by the Company, and (B) complete CMC documentation describing changes in the Product formulation and scientific justification for such changes in the formulation components selected by the Company for its Phase III studies; (iii) the initiation (first patient treated) of a Phase III Clinical Trial by the Company on or prior to February 28, 2006; (iv) the Company shall have (A) obtained a binding and enforceable license to any Patents and other related Know-How owned, Controlled by or licensed by any third party which may impact the method of making, use or sale of the Product, the terms and condition of which license (including the scope, term and consideration with respect to such license) shall be in a form and substance satisfactory to CDC in its sole and absolute discretion; or (B) entered into a binding and enforceable agreement which would preclude any third party from enforcing Patents against the Company or its successors, assigns and sublicensees in connection with the use,

 

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manufacture and sale of Product; (v) the Company shall have entered into supply agreements for both clinical and commercial supply of the Product, pursuant to terms and conditions which shall be satisfactory in both form and substance to CDC, in its sole and absolute discretion, and (vi) the Company and Subsidiary shall have entered into a Security Agreement substantially in the form attached hereto as Schedule 1.18 , and CDC shall have obtained a valid and enforceable first priority lien on all assets related to the Product, and all third parties shall have released any and all liens on assets related to the Product (provided, however, that the liens in favor of Laurus Master Fund, Ltd. shall only be required to be subordinated to the lien of CDC rather than released) in accordance with terms and conditions satisfactory to CDC, and CDC shall have obtained a legal opinion from Company counsel to such effect.

 

1.19 “ Company Agreements ” has the meaning set forth in Section 8.2.16.

 

1.20 “ Company Intellectual Property ” means Company Know-How and Company Patent Rights, collectively.

 

1.21 “ Company Know-How ” means any Know-How with respect to the Product that either (a) is Controlled by Company on the Effective Date, or (b) comes within Company’s Control during the term of this Agreement, including, without limitation, the BEMA Technology.

 

1.22 “ Company Patent Rights ” means the Patent Rights Controlled by the Company to the extent that they cover Company Know-How, Compound or Product, including without limitation the Patent Rights set forth in Schedule 1.22 .

 

1.23 “ Competing Product ” means any transmucosal formulation of fentanyl which has obtained Approval in an indication for the treatment of break through cancer pain management; provided, however, that a Competing Product shall not include a generic formulation of ACTIQ®, sugar-free ACTIQ® or OraVescent®.

 

1.24 “ Compound ” means fentanyl including without limitation metabolites or prodrugs thereof, and any hydrates, conjugates, salts, esters, isomers, polymorphs or analogues of any of the foregoing.

 

1.25 “ Confidential Information ” has the meaning set forth in Section 7.2.

 

1.26 “ Control ” means, when used in reference to intellectual property, the possession of the ability to grant a license or sublicense as provided for herein without (i) requiring the consent of a third party or (ii) violating the terms of any agreement or other arrangement with any third party.

 

1.27 “ Debarred Entity ” has the meaning set forth in Section 8.2.14.

 

1.28 “ Development Budget ” means a budget to complete the development activities set forth in the Development Program.

 

1.29 “ Development Committee ” has the meaning set forth in Section 2.1.

 

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1.30 “ Development Costs ” means the costs set forth in the Development Budget in relation to the development of Products in order to obtain Approval of the NDA, or other costs incurred by Company in connection with obtaining Approval of the NDA, including without limitation, direct and indirect Out-of-Pocket Costs and direct and indirect internal costs and capital expenditures related to clinical trial requirements, including without limitation such costs associated with manufacturing clinical drug substances, process development, project management, data analysis, preparation and filing of an NDA for the Product and studies needed to obtain Approval of the NDA. The term “Development Costs” shall also include all CDC Development Expenses.

 

1.31 “ Development Program ” means the clinical program and studies and associated support activities to be conducted by or on behalf of Company to obtain and/or maintain Approval, including, without limitation, Approval from the FDA, such program, studies and activities being more fully described in the Development Program. The Development Program shall be set forth in Schedule 1.31 and contain a list and description of clinical studies activities, timelines for the performance of Product studies in support of the development activities for Product and the Development Budget.

 

1.32 “ Development Program Termination ” has the meaning set forth in Section 10.4.1.

 

1.33 “ Development Term ” means the period of time from the commencement of the Development Program until the earlier of (a) the payment by Company of the Approval Milestone, or (b) the Trigger Date.

 

1.34 “ FDA ” means the United States Food and Drug Administration and any successor agency thereto.

 

1.35 “ First Tier Royalty ” has the meaning set forth in Section 1.35.

 

1.36 “ Funding Termination Event ” shall mean the occurrence of any of the following:

 

(a) a drug safety monitoring board or safety officer of the Company recommends stopping a clinical trial or the Development Program, including, without limitation as a result of the occurrence of an Adverse Drug Experience with respect to the Product;

 

(b) If the Company does an interim analysis of the Phase III Clinical Trial, then either (i) it is determined in good faith by a drug safety monitoring board that in order to achieve statistical significance for the planned endpoints of such clinical trial, the clinical trial will require an increase in the patient pool participating in such clinical trial by ten percent (10%) or more over the number of patients originally projected to take part in such clinical trial (as set forth in the Development Program), and the resulting increase in the patient pool is reasonably likely to extend the planned completion of the clinical trial by more than six (6) months; or (ii) CDC reasonably determines that the data generated to date under such Phase III Clinical Trial would not support approval of an NDA for the Product;

 

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(c) the FDA or other Governmental Authority recommends stopping a clinical trial or the Development Program or otherwise places a clinical hold or prohibition on a clinical trial or the Development Program; or

 

(d) Company becomes insolvent or it is reasonably determined by CDC that the Company does not have sufficient funds to continue the planned Development Program despite the financing provided by CDC hereunder.

 

1.37 “ GAAP ” means US generally accepted accounting principles.

 

1.38 “ GCP ” means the scientifically recognized Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses, and reporting of clinical trials, including the requirements in 21 C.F.R. Parts 11, 50, 54, 56, 312, and 314, that provide assurance that the data and reported results are credible and accurate, and that the rights, integrity, and confidentiality of trial subjects are protected.

 

1.39 “ Governmental Authority ” means any court, tribunal, arbitrator, agency, department, legislative body, commission or other instrumentality of (a) any government of any country, (b) any foreign, federal, state, county, city or other political subdivision thereof or (c) any supranational body.

 

1.40 “ Know-How ” means any information and materials, whether proprietary or not and whether patentable or not, including without limitation ideas, concepts, formulas, methods, procedures, designs, compositions, plans, documents, data (including all pre-clinical and clinical data), inventions, discoveries, works of authorship, compounds and biological materials.

 

1.41 “ Laws ” means all laws, statutes, rules, codes, regulations, orders, judgments and/or ordinances of any Governmental Authority.

 

1.42 “ Litigation Conditions ” has the meaning set forth in Section 9.2.2.

 

1.43 “ Milestone ” has the meaning set forth in Section 6.5.

 

1.44 “ Minimum Royalty Commencement Date ” means the earlier of (i) the first full calendar quarter following the one year anniversary of the first commercial sale of the Product anywhere in the world; and (ii) the first full calendar quarter following the eighteen (18) month anniversary of the Approval of the NDA.

 

1.45 “ NDA ” means a New Drug Application with respect to a Product filed with and accepted by the FDA including any supplements or amendments thereto.

 

1.46 “ Net Sales ” means the gross amounts billed or invoiced by Company and its Affiliates, sublicensees and distributors, and each of their successors and assigns, for sales of the Products throughout the world, less the following deductions to the extent included in the gross invoiced sales price:

 

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(a) bona fide discounts (including but not limited to cash discounts, trade discounts, quantity discounts, and prompt payment discounts), credits, rebates, refunds, allowances, cost of free goods, adjustments, rejections, recalls and returns, including rebates, refunds, allowances, or credits granted with respect thereto, and charge-back payments granted to managed health care organizations or to Governmental Authorities, their agencies, and purchasers and reimbursers or to trade customers, including but not limited to wholesalers and chain and pharmacy buying groups, provided that such items relate to the Product and only the portion of such items related to the Product shall be deducted; and

 

(b) taxes, tariffs and similar obligations, duties or other governmental charges (other than income or corporation taxes) levied on, absorbed or otherwise imposed on sales of the Product;

 

If any such sales to third parties are made in transactions that are not at arm’s length between the buyer and the seller, then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been invoiced had the transaction been conducted at arm’s length, subject to deductions set forth in subparagraphs (a) and (b) above. Such amount that would have been invoiced shall be determined, wherever possible, by reference to the average selling price of the relevant Product in arm’s-length transactions in such country. Notwithstanding the foregoing, amounts received by Company or its Affiliates, sublicensees or distributors for the sale of Products among Company and its Affiliates, sublicensees or distributors for resale shall not be included in the computation of Net Sales hereunder. Net Sales shall be determined from books and records maintained in accordance with GAAP, consistently applied throughout the organization and across all products of the entity whose sales of Product are giving rise to Net Sales.

 

Net Sales of a Combination Product (as defined below) shall be calculated as if the invoiced sales price for a Product included within the Combination Product is (i) the average sales price at which Company, its Affiliate, or a sublicensee or distributor thereof sells, in the calendar quarter of the applicable sale, the Product alone and not as a part of the Combination Product in the applicable country or, if the Product is not offered in a country except as part of the Combination Product, the average sales price at which the Product is sold alone across all countries in which such Product is sold, or (ii) to the extent the applicable Product has not been sold other than in a Combination Product, the amount reasonably specified between Company or its Affiliate, sublicensee, or distributor and any other party to an agreement regarding that Combination Product as the portion of the sales price attributable to the Product. In the event that Company includes a Product as part of a single bundled sale of separate products with separately stated prices, the Net Sales attributable to such Product shall be the higher of (i) the separately stated price stated for such Product sold in such bundled sale or (ii) the average price at which such Product is sold in the applicable country in a non-bundled sale or, if not sold in the applicable country in a non-bundled sale, the average price at which such Product is sold in a non-bundled sale across all countries in which such Product is sold. For purposes of this paragraph, “Combination Product” means a Product that is sold together with any other products and/or services at a unit price, whether packaged together or separately with another pharmaceutical product or other device, equipment, instrumentation, or other components (other than solely containers or packaging exclusively for the Product).

 

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1.47 “ Out-of-Pocket Costs ” means costs and expenses paid to third parties by either Party.

 

1.48 “ Patent Rights ” means patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any country.

 

1.49 “ Periodic Payments ” has the meaning set forth in Section 6.4.1.

 

1.50 “ Person ” means any natural person or any corporation, company, partnership, joint venture, firm or other entity, including without limitation a Party.

 

1.51 “ Phase III Clinical Trial ” means a clinical trial conducted in accordance with the specifications determined in connection with the preparation of the Development Program and whose primary objective is to obtain a definitive evaluation of the therapeutic efficacy and safety of the Product in patients for the particular indication in question that is needed to evaluate the overall risk-benefit relationship of Product and to provide adequate basis for obtaining requisite regulatory approval(s) and product labeling, as more fully defined in 21 C.F.R. § 312.21(c).

 

1.52 Intentionally omitted.

 

1.53 “ Product ” means any product that contains the Compound either alone or in combination with one or more other substances.

 

1.54 “ Program Data ” has the meaning set forth in Section 5.1.

 

1.55 “ Projected Trial Participants ” has the meaning set forth in Section 6.4.1(a).

 

1.56 “ Qualified Collaboration Partner ” means a company which (i) has its own or controls a marketing and sales organization for pharmaceutical products or devices and (ii) has annual revenues from sales of pharmaceutical products similar to or related in any manner to the Product in the United States of at least One Hundred Million Dollars ($100,000,000) in the calendar year immediately preceding the year in which the transaction or event necessitating the determination is consummated.

 

1.57 “ Second Tier Royalty ” has the meaning set forth in Section 6.6.1(b).

 

1.58 “ Shortfall Amount ” has the meaning set forth in Section 6.6.1.

 

1.59 “ Third Party Claim ” has the meaning set forth in Section 9.2.1.

 

1.60 “ Transaction Expenses ” means any and all costs and expenses incurred by CDC in connection with: (i) the preparation of this Agreement and related documents; (ii) any and all due diligence related to this transaction; and (iii) all other costs and expenses incurred by CDC in

 

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connection with consummating the transactions contemplated herein; provided, however, such costs and expenses shall not exceed one hundred seventeen thousand five hundred dollars ($117,500) Dollars.

 

1.61 “ Trigger Date ” means the date of the earlier to occur of (i) a Development Program Termination or (ii) a Funding Termination Event.

 

1.62 “ Upfront Amount ” has the meaning set forth in Section 6.3.

 

1.63 “ Warrant ” means that certain Warrant, the form of which is attached hereto as Schedule 1.63 , granted by BioDelivery to CDC for the purchase of Five Hundred Thousand (500,000) shares of Company’s common stock.

 

ARTICLE 2

DEVELOPMENT COMMITTEE

 

2.1 Committee . Within thirty (30) days following the Effective Date, CDC shall appoint one person and BioDelivery shall appoint one or more persons from their respective organizations to serve on a development committee (“ Development Committee ”). Each of CDC and BioDelivery may replace any or all of its representatives on the Development Committee at any time upon written notice to the other Party. The purpose of the Development Committee will be to facilitate an effective exchange of information from Company to CDC with respect to the development of the Product, filing of the NDA, the launch of the Product and such other purposes as agreed upon between the Parties, as well as to make decisions with respect to the Product and have overall responsibility for the matters set forth in Section 2.3. All decisions or other determinations of the Development Committee shall be made with the approval from at least one representative of each Party on the Development Committee, provided, however, in the event that the Parties are unable to agree on any decision or other determination, the Development Committee shall promptly refer the matter to the Chief Executive Officer of each Party for resolution. Each CEO shall exercise good faith efforts and the Parties shall work diligently to reach a mutually agreeable resolution of such issue. If for any reason, however, the Chief Executive Officers are unable to resolve the decision or other determination within ten (10) Business Days after notification of such issue, then neither Party shall have the sole right to make the final decision, and no action shall be taken with respect to such issue or other determination except as and to the extent agreed upon by the Parties or as specifically set forth in the Agreement or the Development Plan. Notwithstanding the foregoing, to the extent the parties are deadlocked for more than thirty (30) days following notification of each CEO of such issue (the “ Resolution Period ”), then: (i) to the extent such unresolved issue directly impacts the timing of the filing and Approval of the NDA, and (ii) provided Company is acting in good faith in resolving such issue, the April 30, 2008 deadline set forth in Section 6.6.2 shall be extended by the number of days such issue remains deadlocked beyond the Resolution Period. CDC shall be permitted to have observers attend each Development Committee meeting whether by phone or person.

 

2.2 Development Efforts . The Company will use Commercially Reasonable Efforts to execute the development of the Product in accordance with the Development Plan, as

 

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amended from time to time. Unanimous consent of the Parties (with consent of a Party’s designees to the Development Committee constituting consent by such Party) shall be required for any decision to (a) continue the Development Program in the event that a drug safety monitoring board or safety officer of the Company recommends stopping a clinical trial or the Development Program or (b) amend or modify the Development Plan (including, without limitation an amendment or modification which may reasonably be expected to materially impair, delay, result in the cessation of or otherwise materially effect, the development of the Product).

 

2.3 Responsibilities . The Development Committee shall be responsible for:

 

2.3.1 Managing, making decisions with respect to, and overseeing the development of the Products in accordance with the Development Program;

 

2.3.2 Decisions related to the life cycle management of, and intellectual property protection for, the Products;

 

2.3.3 Monitoring progress of all Product and associated support studies in accordance with the Development Program (including reviewing costs and activities against the Development Budget);

 

2.3.4 Facilitating the exchange of all development and regulatory information and data relating to all Product studies;

 

2.3.5 Proposing and overseeing a regulatory strategy and plan for obtaining Approvals for the Products; and

 

2.3.6 Have such other responsibilities as may be assigned to the Development Committee pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

 

The obligation of the Parties to maintain a Development Committee shall terminate simultaneously with the expiration of the Development Term.

 

2.4 Meetings . During the Development Term, the Development Committee shall call meetings as reasonably requested by one of the Parties, but in no event less than quarterly. Meetings may be held in person, by telephone, or by video conference call, and the location of each meeting shall be held at the corporate offices of the Company or such other location as may be mutually agreed upon. Each Party may permit such visitors to such meetings as the Parties mutually agree; provided, however, that any such visitors (to the extent they are not employees of CDC) shall have executed confidentiality agreements, reasonably acceptable to Company.

 

2.5 Meeting Minutes . Minutes of all Development Committee meetings shall be prepared by Company and circulated to the Development Committee members no later than ten (10) Business Days after the meeting to which the minutes pertain by the secretary of the meeting. Such minutes shall include a brief summary of key discussion points, decisions made and a record of the rationale for the Parties’ positions on issues and provide a list of any issues

 

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yet to be resolved. The secretary of the meeting and chairperson of the Development Committee shall each sign and date the final minutes after incorporating any comments from the Development Committee members and after the minutes have been approved by a representative of each Party on the Development Committee.

 

ARTICLE 3

PRODUCT DEVELOPMENT; INTELLECTUAL PROPERTY

 

3.1 Development Diligence . Company shall use Commercially Reasonable Efforts to develop the Product in accordance with the terms of this Agreement and the Development Program, as amended from time to time in accordance with this Agreement. Company believes that the Development Budget shall be sufficient to fund all necessary studies and related activities necessary to obtain Approval.

 

3.2 Right to Observe Development Activities . Representatives from CDC shall be entitled to attend, on an observer basis, meetings of Company’s internal working groups responsible for the development of the Products. Company shall ensure that CDC’s authorized representatives may, during regular business hours, (a) examine and inspect Company’s facilities or, subject to any third party confidentiality restrictions or obligations, the facilities of any subcontractor or any investigator site used by Company in the performance of development of a Product, and (b) inspect and copy all data, documentation and work products relating to the Product activities performed by it or, subject to any third party confidentiality restrictions or obligations, the subcontractor or investigator site related to the Product, including, without limitation, the medical records of any patient participating in any clinical study related to the Product. This right to inspect and copy all data, documentation, and work products relating to a Product may be exercised at any time during the term of this Agreement (subject to each Party’s record retention policies then in effect), or such longer period as shall be required by applicable Law. Notwithstanding the foregoing, nothing herein shall be construed to grant CDC the right to access any data or information the disclosure of, or access to which would violate applicable Laws protecting the privacy of study subjects or confidentiality of study subject data or information or other third party confidential matters to which Company may not have access.

 

3.3 Right to Information Regarding Development Activities . Company shall periodically, and at least quarterly, provide CDC with comprehensive and complete reports regarding activities undertaken by or on behalf of Company with respect to the development of the Product, and specifically on activities and studies/trials undertaken by Company pursuant to the Development Program, including their progress, status and outcome as well as major findings and major decision points, as applicable, so as to keep CDC fully advised of Company’s development activities with respect to the Product. In addition to the quarterly reports, Company shall provide CDC with a monthly report as to the progress and status of the Development Program, including any reports produced by Company regarding the level of patient recruitment in the clinical trials conducted pursuant to the Development Program. In addition to the foregoing, Company shall provide CDC with monthly and quarterly financial and operational reports with respect to the development of the Product (including, without limitation, an analysis of any variances from the Development Budget).

 

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treatment are being requested are denoted with “*****”.

 

 

3.4 Intellectual Property . Company shall prepare, file, prosecute and maintain Patent Rights to cover Company inventions and Company Intellectual Property where such Patent Rights, Company inventions and Company Intellectual Property are owned by Company. Where such Patent Rights, Company inventions and Company Intellectual Property are not owned by Company, Company shall enforce its intellectual property rights in accordance with the terms of the instrument or agreement granting Company such rights. Company shall keep CDC informed of the status of each such Patent Right. Company shall give reasonable consideration to any suggestions or recommendations of CDC concerning the preparation, filing, prosecution and maintenance of any Company inventions. Although the Parties do not expect to generate intellectual property in connection with the Development Program, to the extent that intellectual property is generated, and the Development Committee, in its reasonable discretion determines that a formal patent filing is necessary or desirable to protect commercialization of the Product, Company shall prosecute and file patent claims to protect such intellectual property in accordance with its standard procedures. At the request of CDC, Company shall provide CDC with copies of the file histories of all Company Patent Rights and shall update such file histories promptly upon receipt of any additional communications from any patent offices and patent counsel or agents pertaining thereto. Company shall also provide CDC with copies of any material communications from any patent offices and patent counsel or agents pertaining to any Company Patent Rights. Company, at CDC’s request, shall file patent claims related to the Products or Compound proposed by CDC. The Parties shall cooperate reasonably in the prosecution of all Patent Rights under this Section 3.4 and shall share all material information relating thereto promptly after receipt of such information. If, during the term of this Agreement, Company intends to allow any Company Patent Rights owned by Company to expire or intends to otherwise abandon any Company Patent Rights owned by Company, Company shall notify CDC of such intention at least sixty (60) days prior to the date upon which such Company Patent Rights shall expire or be abandoned, and CDC shall thereupon have the right, but not the obligation, to assume responsibility for the preparation, filing, prosecution or maintenance thereof.

 

3.5 Collaboration with Qualified Collaboration Partner . Company shall have the right to enter into a partnership, collaboration, licensing agreement or other arrangement with a Qualified Collaboration Partner with respect to the development of the Product hereunder, provided, however, that (i) prior to a Change of Control of either BioDelivery or Subsidiary, such Qualified Collaboration Partner shall be subject to the prior written approval of CDC which approval shall not be unreasonably withheld and (ii) from and after a Change of Control of either BioDelivery or Subsidiary, such Qualified Collaboration Partner shall be subject to the prior written approval of CDC in its sole discretion. Company shall provide a complete and un-redacted copy of any agreements or other understandings entered into with such Collaboration Partner promptly following the execution thereof. Notwithstanding the foregoing, as a condition to entering into such partnership, collaboration, licensing agreement or other arrangement with a Qualified Collaboration Partner, the Qualified Collaboration Partner shall expressly acknowledge to CDC than any such agreement shall be subject to the rights of CDC hereunder. In addition to the foregoing, CDC shall have access to all information and documentation that is generated or otherwise resides with the Collaboration Partner to the same extent Company would have access to such information or documentation under any such agreement.

 

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***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “*****”.

 

 

ARTICLE 4

CLINICAL AND REGULATORY MATTERS;

REPORTING AND INFORMATION SHARING

 

4.1 Regulatory Matters .

 

4.1.1 Executionary Lead . Company shall be responsible for ensuring compliance with all applicable Laws and regulatory requirements relating to the Product including, without limitation, (a) filing all NDAs and applications for Approvals and supporting documentation; (b) conducting clinical trials in accordance with GCP standards; (c) serving as the designated regulatory official for purposes of receiving communications from the FDA and other Governmental Authorities and responding thereto; (d) reporting any Adverse Drug Experiences to the appropriate Government Authority and (e) advertising, labeling, supplying and handling of the Product in accordance with all cGMP requirements and GCP standards.

 

4.1.2 Ownership . All NDAs and Approvals relating to the Products shall be the property of Company and held in the name of Company or its designated Affiliates or Qualified Collaboration Partner, subject to the terms and conditions set forth in the Atrix License.

 

4.2 Advice of Counsel . If a Party is advised by its counsel that it must communicate with any Governmental Authority relating to a matter under the Development Program, then such Party shall promptly, but in no event more than two (2) Business Days, advise the other Party of the same. With respect to communications that are not time sensitive or related to Product emergencies, Company shall provide CDC in advance with a copy of any proposed written communication with such Governmental Authority and comply with any and all reasonable requests of CDC concerning any meeting or written or oral communication with such Governmental Authority.

 

4.3 Meetings with Governmental Authority . Company shall notify CDC of any meetings, conferences and discussions scheduled with or requested by a Governmental Authority relating to a Product at least five (5) Business Days prior to the event (or such lesser time if an emergent meeting has been scheduled with less than five (5) Business Days’ notice). At all such meetings, conferences or discussions, CDC shall have the right to attend and participate either in person or by telephone to the extent permitted by the Governmental Authority. Through the Development Committee, whenever possible under the circumstances, Company and CDC shall agree in advance on the attendance list and objectives to be accomplished at such meetings, conferences and discussions and the agenda for the meetings, conferences, and discussions with any Governmental Authority.

 

4.4 Inspections . Company shall promptly, but in no event more than two (2) Business Days after receipt of any inspections, proposed regulatory actions, investigations or requests by any Governmental Authority with respect to the Products, as well as any corrective actions initiated by Company with respect thereto, notify CDC in detail with respect thereto and will provide CDC with copies of all material related documentation. The parties shall cooperate to provide Governmental Authorities with access to, and copies of, any Program Data requested by such Governmental Authority.

 

- 13 -

***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “*****”.

 

 

4.5 Government Communications .

 

4.5.1 Receipt of Correspondence . Company shall promptly and in accordance with applicable Law provide to CDC copies of any documents or correspondence received from any Governmental Authority, but in no event more than two (2) Business Days after such receipt, that pertains to the Products (including without limitation any minutes from a meeting with respect thereto). In addition, Company shall provide CDC with any documents or correspondence to be submitted to any Governmental Authority that relate to the Products in time sufficient to allow for a reasonable time to comment. Company will consult in advance with, and consider in good faith any comments of, CDC with respect to any filings made or other actions taken, including without limitation any such filings or actions with respect to any changes or modification to labeling for or the indications of the Products.

 

4.5.2 Regulatory Information . Company shall provide CDC with notice, in a sufficiently timely basis, of notification or other information which it receives (directly or indirectly) from, any Governmental Authority (and providing, as soon as reasonably possible, copies of any associated written requests) or from other persons that (i) may reflect or indicate any concerns regarding the safety or efficacy of a Product, (ii) indicates or suggests a Claim of a third party arising in connection with a Product, or (iii) may lead to a recall or market withdrawal of a Product. Information that shall be disclosed pursuant to this Section 4.5 shall include, but not be limited to:

 

(a) Inspections by a Governmental Authority of manufacturing, distribution or other related facilities concerning a Product;

 

(b) Inquiries by a Governmental Authority concerning clinical investigation activities (including without limitation inquiries regarding investigators, clinical monitoring organizations and other related parties) with respect to a Product;

 

(c) Any communication from a Governmental Authority involving the manufacture, sale, promotion or distribution of a Product, or any other Governmental Authority reviews or inquiries relating to a any event set forth in this Section 4.5;

 

(d) An initiation of any Governmental Authority investigation, detention, seizure or injunction concerning a Product;

 

(e) Any other regulatory action ( e.g. , proposed labeling or other registrational dossier changes and recalls) which would affect a Product in any country; and

 

(f) Any communication from a potential plaintiff or counsel thereof related to a potential Claim in connection with the Product.

 

4.6 Reporting and Information Sharing .

 

4.6.1 Inquiries, Adverse Events . Company shall submit reports of all Adverse Drug Experiences associated with the use of the approved Product(s) and other required safety information (e.g., PSUR’s and annual safety reports) to the FDA and other Governmental Authorities, in accordance with applicable Law. Company shall submit a copy of each such report to CDC in advance of such submission to comment on such reports.

 

- 14 -

***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “*****”.

 

 

4.6.2 Recalls and Withdrawals . Company shall immediately notify CDC of any decision to initiate a recall or withdrawal of Product. Any and all costs and expenses of in connection with such recall, market withdrawal or other corrective action shall be borne by Company.

 

ARTICLE 5

OWNERSHIP AND LICENSE

 

5.1 Program Data . Company shall timely communicate in full detail and disclose all data, information, reports, results and other work product collected, generated, prepared or derived during the course of, or as a result of, the Development Program (“ Program Data ”); provided, however, that any such disclosure shall be conducted in a manner and shall be to the extent permitted under applicable Laws in order to protect the privacy of study subjects and confidentiality of study subject data and information. All Program Data shall be the sole and exclusive property of CDC with full right, title, and interest thereto, and shall be treated as the Confidential Information of CDC and in furtherance of the foregoing, Company hereby assigns and transfers to CDC all of its right, title and interest in and to such Program Data.

 

5.2 Grant of License by Company . Company shall grant, and hereby grants to CDC, a worldwide, royalty free, exclusive right and license, with the right and license to sublicense under the ***** to conduct the ***** (including, without limitation, obtaining an NDA).

 

5.3 Grant of License by CDC .

 

5.3.1 License to Program Data During the Development Term . Subject to the terms and conditions of this Agreement, CDC hereby grants to Company during the Development Term a worldwide, exclusive right and license, with the right to sublicense to a Qualified Collaboration Partner pursuant to the terms of this Agreement, to use the ***** to conduct the *****, including, without limitation, the submission of an NDA for the Product.

 

5.3.2 License to Program Data After Payment of Milestone and Product Approval . CDC hereby grants to Company a worldwide, exclusive right and license, with the right to sublicense, to use the ***** to make, have made, use, have used, import, export, offer to sell, sell and have sold Products; provided, however that such license shall only become effective (and the Company shall only be permitted to exercise its rights under the license) upon: (i) the Company obtaining Approval of the Product by the FDA; and (ii) payment to CDC by Company of the Milestone.

 

5.3.3 License to Company Intellectual Property . Subject to the terms and conditions of this Agreement, CDC hereby grants to Company a worldwide, exclusive right and sublicense, with the right to further sublicense to a Qualified Collaboration Partner pursuant to the terms of this Agreement, under its rights in the ***** to conduct the ***** on behalf of CDC.

 

- 15 -

***CONFIDENTIAL TREATMENT REQUESTED***

Note: The portions hereof for which confidential

treatment are being requested are denoted with “*****”.

 

 

5.3.4 Sublicenses . In the event Company grants a sublicense of its rights in accordance with the terms of this Agreement, each and every such sublicense shall be subject in all respects to the same terms, conditions and provisions contained in this Agreement, and Company shall be responsible for ensuring that any sub-licensee complies with such terms and conditions.

 

ARTICLE 6

COMMERCIALIZATION AND FINANCIAL PROVISIONS

 

6.1 Commercialization Efforts .