COLLABORATION AGREEMENT

Collaboration Agreement

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ONYX PHARMACEUTICALS INC

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Title: COLLABORATION AGREEMENT
Governing Law: California Date: 5/10/2006
Industry: Biotechnology and Drugs Law Firm: Jones Day;Cooley Godward Sector: Healthcare

COLLABORATION AGREEMENT, Parties: onyx pharmaceuticals inc

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.

EXHIBIT 10.1

COLLABORATION AGREEMENT

BETWEEN

MILES INC.

AND

ONYX PHARMACEUTICALS, INC.

TABLE OF CONTENTS


	Page
CHAPTER 1		1
Article 1 — Defined Terms		1
1.1 “Advertising and Education”		1
1.2 “Advertising and Education Expense”		1
1.3 “Affiliate”		1
1.4 “Allocable Overhead Costs”		2
1.5 “Allowable Expenses”		2
1.6 “Analoging Program”		2
1.7 “Back-Up Compound”		2
1.8 “Clinical Development Period”		2
1.9 “Collaboration Compound”		2
1.10 “Collaboration Product”		3
1.11 “Collaboration Revenue”		3
1.12 “Control”		3
1.13 “Cost of Goods Sold”		3
1.14 “Co-Development”		3
1.15 “Co-Development Costs”		4
1.16 “Co-Development Plan”		4
1.17 “Co-Promote”		4
1.18 “Co-Promotion Program”		4
1.19 “Co-Promotion Product”		4
1.20 “Development Compound”		4
1.21 “Distribution Costs”		4
1.22 “Effective Date”		4
1.23 “Field”		4
1.24 “Field of Collaborative Research”		5
1.25 “Information”		5
1.26 “Joint Research and Development Committee” or “JRDC”		5
1.27 “Lead Structure”		5
1.28 “Marketing Plan”		5
1.29 “Marketing Profit or Loss”		5
1.30 “Miles Know-How”		5
1.31 “Miles Patents”		5
1.32 “Net Sales”		5
1.33 “Onyx Know-How”		6
1.34 “Onyx Patents”		6
1.35 “Patent”		6
1.36 “Preclinical Development Period”		6
1.37 “Pre-Marketing Activities”		6
1.39 “Post-Collaboration Compound”		6
1.40 “Ras Pathway”		7
1.41 “Ras Function”		7
1.42 “Regulatory Approval”		7
1.43 “Research”		7


	Page
1.44 “Research Plan”		7
1.45 “Research Term”		7
1.46 “Royalty-Bearing Product”		7
1.47 “Selling and Promotion Expenses”		8
1.48 “Sublicense Revenues”		8
1.49 “Third Party”		8
1.50 “Third Party Royalties”		8
CHAPTER 2		9
Article 2 — Initial Payment And Board Representation		9
2.1 Purchase of Series D Preferred Stock		9
2.2 Board Representation		9
3.1 Joint Research and Development Committee		10
3.2 Meetings of the JRDC		10
3.3 Functions and Powers of the JRDC		10
3.4 Obligations of Parties		11
3.5 Project Leader		11
3.6 General		11
Article 4 — Licenses		12
4.1 Research Licenses		12
4.2 Collaboration Product Commercialization Licenses		12
4.3 Limitations on Exclusivity		12
4.4 Royalty-Bearing Product Commercialization Licenses		13
4.6 Onyx License After Research Termination		13
CHAPTER 3		14
Article 5 — Collaborative Research Program		14
5.1 Program Management		14
5.2 Decision Points During Research		14
5.3 Research Efforts and Expenses		14
5.4 Annual Plan and Budget		14
5.5 Extension of Research Term		14
5.6 Termination of Research with Substitution of New Research Target		15
5.7 Consequences of Research Substitution		15
5.8 Termination of Research by Miles		16
5.9 Key Employee Departure		16
Article 6 — Specification of Research Field and Assays		18
6.1 Refinement of Field of Collaborative Research		18
6.2 Restriction of the Field of Collaborative Research		18
6.3 Specification of Ras Function Assay Standards		19
Article 7 — Allocation of Research Tasks		19
7.1 Onyx Research Obligations		19
7.2 Miles Research Obligations		19
7.3 Independent Funded Research Of Onyx Subject to Buy-Back		20
7.4 Miles Buy-Back		20
7.6 Conduct of Studies		20
Article 8 — Research Material and Information		21


	Page
8.1 Rights In Materials		21
8.2 Acquisition of Third Party Technology		21
Article 9 — Research Funding		21
9.1 Miles Financial Support		22
9.2 Minimum Level of Financial Support		22
9.3 Restriction on Government Support		22
9.4 Manner of Payments		22
9.5 Application of Funds; Reporting		22
9.6 Research Activities After Research Term		22
Article 10 — Research Reports		24
10.1 Information and Reports During Research		24
10.2 Reports After Research Term		24
CHAPTER 4		25
Article 11 — Co-Development		25
11.1 Scope of Development		25
11.2 Preclinical Investigation and Development		25
11.3 Synthesis of Preclinical Materials		25
11.4 Selection of Collaboration Compounds for Co-Development		25
11.5 Budget for Development		26
11.6 Performance of Co-Development		26
11.7 Funding of Co-Development		27
11.8 Development Payments		27
11.9 Development Diligence		28
11.10 Collaboration Product Information		28
11.11 Use of Information		28
11.12 Relationship With Chiron Product Rights		28
11.13 Manufacture of Clinical Materials		29
Article 12 — Independent Development		29
12.1 Termination of Funding of Co-Development in Japan		29
12.2 Termination of Funding of Co-Development Outside Japan		29
12.3 No Refund of Co-Development Costs		29
12.4 Independent Development		29
CHAPTER 5		31
Article 13 — Commercialization of Collaboration Products		31
13.1 Miles Exclusive Rights Outside the United States		31
13.2 Miles Marketing Plan		31
13.3 Financial Projections and Budget		31
13.4 Onyx Option To Co-Promote		31
13.5 Onyx Notice of Intent to Co-Promote		31
13.6 Co-Promotion Program		31
13.7 Co-Promotion Sales Efforts		32
13.8 Co-Promotion Costs		32
13.9 Training Program		32
13.10 Advertising and Promotional Materials		32
13.11 Onyx Marketing		32
13.12 Price Setting in the United States		32


	Page
Article 14 — Sales Responsibility		33
14.1 Sales and Distribution		33
14.2 Responsibility		33
14.3 Cost Allocations		33
14.4 Allocation of Co-Promotion Costs		33
Article 15 — Royalty-Bearing Products		33
15.1 Commercialization and Marketing of Royalty-Bearing Products		33
Article 16 — Compensation for Sales of Products		34
16.1 Determination and Allocation of Marketing Profit and Loss with Respect to Sales Of Collaboration Products		34
16.2 Royalty With Respect to Sales of Royalty-Bearing Products		34
16.3 Special Distribution		35
16.4 Research Termination		36
16.5 Duration of Royalty Obligations: Royalty Step-Down		36
16.6 Royalty for Post-Collaboration Compound Sales		36
16.7 Royalty Payment Reports		36
16.8 Royalty Offset		36
16.9 Taxes		37
16.10 Blocked Currency		37
16.11 Foreign Exchange		37
16.12 Payments to or Reports by Affiliates		37
16.13 Sales By Sublicensees		37
Article 17 — Information and Reports During Marketing		37
17.1 Adverse Drug Events		37
17.2 Records		38
Article 18 — Trademarks		38
18.1 Collaboration Product Trademarks		38
18.2 Royalty-Bearing Product Trademarks		39
18.3 Infringement Of Trademark		39
18.4 Costs of Defense for Collaboration Product Trademarks		39
Article 19 — Manufacturing and Supply		39
19.1 Commercial Supply of Collaboration Products		39
19.2 Labelling		39
19.3 Commercial Supply of Royalty-Bearing Products		40
19.4 Supply Shortages		40
CHAPTER 6		41
Article 20 — Inventions and Patents		41
20.1 Ownership of Research Products and Inventions		41
20.2 Disclosure of Patentable Inventions		41
20.3 Patent Prosecution		41
20.4 Confidential Treatment		42
Article 21 — Infringement		42
21.1 Infringement By Third Parties for Collaboration Compound		42
21.2 Infringement by Third Parties for Royalty-Bearing Products		42
21.3 Third Party Claims Against Collaboration Compound		43


	Page
21.4 Allocation of Expense; Collaboration Compound or Product		43
21.5 Third Party Claims Relating to Royalty-Bearing Products		43
Article 22 — Confidentiality		44
22.1 Confidentiality; Exceptions		44
22.2 Authorized Disclosure		45
22.3 Survival		45
22.4 Termination of Prior Agreement		45
22.5 Publications		45
CHAPTER 7		46
Article 23 — Federal State Tax Characterization		46
23.1 Tax Partnership		46
23.2 Tax Matters Partner		46
23.3 Tax Returns		47
23.4 Inconsistent Treatment of Partnership Items		47
23.5 Tax Partnership Elections		47
23.6 Characterization of Certain Payments and Activities		48
23.7 Capital Accounts		48
23.8 Tax Partnership Allocations		48
23.9 Liquidation		50
23.10 Internal Revenue Service Notices		50
23.11 Tax Partnership Audits and Litigation		50
Article 24 — Term and Termination		50
24.1 Term of Agreement		50
24.2 Termination for Breach		50
24.3 Termination for Other Reasons		51
24.4 Acquisition of Onyx		51
24.6 Accrued Rights: Surviving Obligations		52
Article 25 — Dispute Resolution		52
25.1 Disputes		52
Article 26 — Representations and Warranties; Exclusivity		53
26.1 Representations and Warranties		53
26.2 Performance By Affiliates		53
26.3 Exclusivity; Noncompetition Within the Field of Collaborative Research		53
Article 27 — Products Liability and Indemnification		54
27.1 Indemnification for Sales of Royalty-Bearing Products		54
27.2 Actions in Respect of Collaboration Products		54
27.3 Indemnification for Negligence		54
Article 28 — Miscellaneous		55
28.1 Assignment		55
28.2 Consents Not Unreasonably Withheld		55
28.3 Retained Rights		55
28.4 Force Majeure		55
28.5 Further Actions		55
28.6 No Trademark Rights		55
28.7 Notices		56


	Page
28.8 Waiver		57
28.9 Severability		57
28.10 Counterparts		57
28.11 Press Releases		57
28.12 Entire Agreement		57
28.13 Governing Law		57

EXHIBITS

Exhibit A — Diagram of Collaboration
Exhibit B — Field of Collaborative Research
Exhibit C — Research Plan
Exhibit D — Measured Activity Qualifying as “ras Positive” Inhibition

Exhibit 10.1

COLLABORATION AGREEMENT

This Collaboration Agreement (the “Agreement”) is dated April 22, 1994, by and between Onyx Pharmaceuticals, Inc. , a California corporation having its principal place of business in Richmond, California (“Onyx”), and Miles Inc ., an Indiana corporation having its principal place of business in Pittsburgh, Pennsylvania (“Miles”). Each of Miles and Onyx are sometimes referred to herein as the “Party” or, collectively, as the “Parties.”

In consideration of the covenants and promises contained in this Agreement, the Parties agree as follows:

CHAPTER 1

DEFINITIONS

Capitalized words used in this Agreement shall have the meanings ascribed in the following definitions, unless otherwise stated or defined in the Agreement.

Article 1 — Defined Terms

1.1 “Advertising and Education” means the advertising and promotion of Collaboration Products, and related professional education, through any means, including, without limitation,

	(i)		advertisements appearing in journals, newspapers, magazines or other media, including direct mail and electronic media,

	(ii)		seminars and conventions,

	(iii)		sample packages of Collaboration Products, promotional literature, visual aids, three dimensional promotional items, and other selling materials,

	(iv)		market research, and

	(v)		symposia and opinion leader development activities; provided, however, that such term shall exclude direct sales force activity.

1.2 “Advertising and Education Expense” means costs, [ * ] incurred by a Party or for its account which are specifically identifiable to the Advertising and Education of a Collaboration Product and consistent with the Marketing Plan.

1.3 “Affiliate” means (i) with respect to Miles, any entity that directly or indirectly Owns, is Owned by, or is under common Ownership with, it, and (ii) with respect to Onyx, any entity that directly or indirectly is Owned by it. As used in Section 1.3, “Owns” or “Ownership” means direct or indirect possession of at least 50% of the outstanding voting securities of a corporation or a comparable equity interest in any other type of entity, or, where the laws of the

jurisdiction in which such entity operates prohibits the ownership by a Party of 50 %, such ownership shall be at the maximum level of ownership allowed by such jurisdiction.

1.4 “Allocable Overhead Costs” means the overhead costs of the functions that directly support an activity under this Agreement, as determined using the same allocation methods that the Party incurring such costs uses throughout its operations. In all cases, Allocable Overhead Costs shall exclude [ * ] .

1.5 “Allowable Expenses” means those expenses incurred subsequent to the receipt of Regulatory Approval for marketing a Collaboration Product in a country and shall consist of:

	(i)		Cost of Goods Sold,

	(ii)		Distribution Costs,

	(iii)		Advertising and Education Expenses,

	(iv)		Selling and Promotion Expenses,

	(v)		Third Party Royalties,

	(vi)		*[ ]**

	(vii)		*[ ]**

1.6 “Analoging Program” means a program conducted under the Research to prepare, assay, and analyze chemical analogs to one or more specified Lead Structures or other compounds identified by the JRDC during the Research, or otherwise conducted pursuant to Section 7.3.

1.7 “Back-Up Compound” shall have the meaning described in Section 11.4.

1.8 “Clinical Development Period” means, with respect to each Product, the period of performance of the clinical and non-clinical investigations and other work necessary to and directly in support of obtaining Regulatory Approval for marketing a Product, commencing [ * ] after a party has obtained regulatory approval to conduct human clinical trials [ * ] .

1.9 “Collaboration Compound” means, except as provided below, any composition of matter:

	(i)		that is discovered, identified or synthesized by or on behalf of Onyx or Miles or an Affiliate of either of them, and is recognized for its activity for inhibiting Ras Function as provided below, *[ ]** ; or

	(ii)		as to which Onyx or Miles or an Affiliate of either of them acquires rights from a Third Party, *[ ] , and which is recognized for its activity for inhibiting Ras Function as provided below, [ * ]** . As used herein, the activity of a composition of matter for inhibiting Ras Function will be

“recognized” if it satisfies the standard for a ras positive set forth in Exhibit E, or such other specific activity in a particular assay or assays within the Field of Collaborative Research established by the JRDC from time to time pursuant to Section 6.3.

Notwithstanding the foregoing, the term “Collaboration Compound” shall not include:

(a)

any composition of matter marketed by Miles or an Affiliate of Miles as of the Effective Date or as to which Miles or an Affiliate of Miles is conducting human clinical trials or have approved the commencement of preclinical development (as determined by the appropriate committee of Miles or an Affiliate of Miles), as of the Effective Date;

(b)

any composition of matter owned by Miles or Onyx or an Affiliate of either of them that would become subject to this Agreement by reason of an expansion of the Field of Collaborative Research after the Effective Date but as to which marketing rights have been granted to a Third Party prior to such expansion; or

1.10 “Collaboration Product” means a Product as to which each Party has paid or is paying one-half of the Co-Development Costs and is ready for commercialization pursuant to Article 13. The term Collaboration Product excludes Royalty-Bearing Products.

1.11 “Collaboration Revenue” means Net Sales of Collaboration Products plus Sublicense Revenue.

1.12 “Control” means possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

1.13 “Cost of Goods Sold” means

(i)

the standard unit cost of Collaboration Products in final therapeutic form, calculated in accordance with reasonable cost accounting methods of Miles, consistently applied by Miles as a manufacturer, plus

(ii)

[ * ] also calculated in accordance with reasonable cost accounting methods of Miles, consistently applied by Miles as a manufacturer, but excluding items referred to in the following sentence. Costs of Goods Sold shall exclude [ * ] .

1.14 “Co-Development” means the clinical and non-clinical development of a Development Compound into a Collaboration Product during the Preclinical and Clinical Development Periods by Miles and Onyx under the Co-Development Plan for the Development Compound worldwide excluding Japan.

1.15 “Co-Development Costs” means all costs and expenses, [ * ] identifiable to the Co-Development of a Development Compound

(i)

after having obtained regulatory approval to conduct human clinical trials (Clinical Development Period) in the country in question, within the JRDC budget approved by the Parties, and

(ii)

for the Preclinical Development Period pursuant to Section 9.6(b).

Co-Development Costs include the cost of products manufactured for Co-Development activities as determined in Section 11.13.

1.16 “Co-Development Plan” means the world-wide plan prepared and managed by the JRDC and approved by the Parties for the Preclinical and the Clinical Development Period of Development Compounds as set forth in Section 11.1.

1.17 “Co-Promote” means to promote jointly Co-Promotion Products through Miles, Onyx, and their respective sales forces under a single trademark in the United States.

1.18 “Co-Promotion Program” means the plan as set forth in Section 13.6 for Co-Promoting a Co-Promotion Product in the United States.

1.19 “Co-Promotion Product” means a Collaboration Product that is Co-Promoted and sold in the United States.

1.20 “Development Compound” means a Collaboration Compound selected by the JRDC, based upon research results showing sufficient utility as a potential Product, for entry into the Preclinical Development Period.

1.21 “Distribution Costs” means the costs, [ * ] incurred by a Party or for its account, specifically identifiable to the distribution of a Collaboration Product to a Third Party including

(i)

handling and transportation to fulfill orders (excluding such costs, if any, treated as a deduction in the definition of Net Sales),

(ii)

customer services including order entry, billing and adjustments, inquiry and credit and collection, and

(iii)

[ * ] for the storage and distribution of Collaboration Products.

1.22 “Effective Date” means February 1, 1994.

1.23 “Field” means the synthesis, discovery, use of and preclinical research upon Collaboration Compounds and the clinical development, manufacture, use and sale of Products for all human and animal therapeutic and/or prophylactic and/or diagnostic indications involving Ras Pathway or Ras Function, subject to Section 11.12.

1.24 “Field of Collaborative Research” means the specific programs, targets, and assays that are selected for discovering inhibitors of Ras Pathway and Ras Function. As of the Effective Date, the Field of Collaborative Research shall be as described on the attached Exhibit B, which shall be amended by the Parties as the specific programs, targets, and assays within the Field of Collaborative Research are modified and updated by the JRDC pursuant to Section 6.1. The Field of Collaborative Research shall not include any molecular entities, programs, targets, or assays that are not involved in the Ras Pathway or Ras Function.

1.25 “Information” means information relating to the Field and/or the Field of Collaborative Research, including, but not limited to, inventions, practices, methods, assays, know-how, test data including pharmacological, toxicological and clinical test data, analytical and quality control data, marketing, distribution, cost, sales, manufacturing, patent and legal data or descriptions.

1.26 “Joint Research and Development Committee” or “JRDC” means the committee described in Section 3.1 of this Agreement.

1.27 “Lead Structure” means a compound identified in the Research that meets a specific minimum profile established by the JRDC and that is selected by the JRDC for entry into a program conducted under the Research to prepare, assay, and analyze chemical analogs to one or more specified Lead Structures or other compounds identified by the JRDC during the Research, or otherwise conducted pursuant to Section 7.3.

1.28 “Marketing Plan” means the plan for marketing and selling Collaboration Products, described in Section 13.2.

1.29 “Marketing Profit or Loss” means Net Sales of Collaboration Products plus Sublicense Revenue less Allowable Expenses.

1.30 “Miles Know-How” means Information which

	(i)		Miles discloses to Onyx or an Affiliate of Onyx under this Agreement, and

	(ii)		is within the Control of Miles.

Miles Know-How shall exclude Miles Patents.

1.31 “Miles Patents” means all Patents owned or Controlled by Miles or an Affiliate of Miles that claim or cover Collaboration Compounds, the manufacture or use of Collaboration Compounds, or methods or materials useful for discovering, identifying, or assaying for Collaboration Compounds, where such Patents cover inventions made prior to the first anniversary of the end of the Research Term.

1.32 “Net Sales” means gross receipts and any other consideration received by the selling Party on account of sales of Products, less deductions of the following items:

(i)

trade, quantity and cash discounts or rebates, actually allowed and taken,

	(ii)		credits or allowances given for rejection or return of previously sold Product or outdated Product,

	(iii)		any tax or other governmental charge borne by the selling Party other than income tax levied on the sale, transportation or delivery of Product, and

	(iv)		any charges for packing, handling, freight, insurance and duty.

1.33 “Onyx Know-How” means Information which

	(i)		Onyx discloses to Miles or an Affiliate of Miles under this Agreement and

	(ii)		is within the Control of Onyx.

Onyx Know-How shall exclude Onyx Patents.

1.34 “Onyx Patents” means all Patents owned or Controlled by Onyx or an Affiliate of Onyx that claim or cover Collaboration Compounds, the manufacture or use of Collaboration Compounds, or methods or materials useful for discovering, identifying, or assaying for Collaboration Compounds, where such Patents cover inventions made prior to the first anniversary of the end of the Research Term.

1.35 “Patent” means

(1) valid and enforceable Letters Patent in any and all countries relating to the Field and/or the Field of Collaborative Research, including any extension (SPC), registration, confirmation, reissue, continuation, division, continuation-in-part, re-examination or renewal thereof, and

(2) pending applications for any of the foregoing.

1.36 “Preclinical Development Period” means the period of preclinical investigations and other work performed on Development Compounds necessary to generate the data for clinical development as set forth in Section 11.2.

1.37 “Pre-Marketing Activities” means activities undertaken prior to Regulatory Approval in preparation for the commercial launch of a Collaboration Product in a particular country, including Advertising and Education, trademark prosecution and enforcement as provided in Article 18, training as provided in Section 13.9, and pre-marketing clinical studies conducted to support the Collaboration Product and not as part of an application for Regulatory Approval.

1.38 “Product” means any pharmaceutical form or dosage of, or diagnostic product based upon, a Collaboration Compound.

1.39 “Post-Collaboration Compound” means any composition of matter synthesized, identified or discovered by Onyx or Miles:

(a) that is contained within a chemical genus as defined in any pending or issued claim of any unexpired Miles Patent or Onyx Patent filed in [ * ] and as to which at least one member of such chemical genus is a Collaboration Compound, and

(b) that is recognized for its activity for inhibiting Ras Function, as defined in Section 1.11, by Onyx or Miles during the [ * ] period after [ * ] of the end of the Research Term pursuant to Section 9.6 (d) (at a royalty rate pursuant to Section 16.6).

1.40 “Ras Pathway” means all molecular entities that are part of or that regulate signal transduction through [ * ] ras. This includes but is not restricted to ras, [ * ] . Ras Pathway also includes molecules that directly or indirectly regulate the aforementioned [ * ] . Ras Pathway also includes [ * ] . Ras Pathway shall not include (by way of example and not limitation) [ * ] .

1.41 “Ras Function” means [ * ] . Ras Function includes without restriction [ * ] .

1.42 “Regulatory Approval” means any approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other government entity, necessary for the manufacture, use, storage, import, transport or sale, of Products in a country.

1.43 “Research” means all work performed by the Parties

	(a)		within the Field of Collaborative Research during the Research Term; or

	(b)		with respect to Collaboration Compounds pursuant to Section 9.6.

1.44 “Research Plan” means the plan setting forth the research objectives and the Parties’ respective obligations in conducting the Research, as described in Section 5.1.

1.45 “Research Term” means the period commencing on February 1, 1994 and continuing until January 31, 1999, unless extended under Sections 5.5 or 5.6, or earlier terminated pursuant to Section 5.8, 5.9, 24.2, 24.3 or 24.4.

1.46 “Royalty-Bearing Product” means a Product

(a) that was not selected for Co-Development by the JRDC and that was independently developed by a Party pursuant to Section 12.4 (at a rate pursuant to Section 16.2(c));

(b) that is sold in a country in which one Party did not participate in paying its entire one-half share of the Co-Development Costs in that country pursuant to Section 12.1 and 12.2 (at a rate pursuant to Section 16.2 (a) and (b) respectively); or

1.47 “Selling and Promotion Expenses” means costs, [ * ] incurred consistent with the budget in the Marketing Plan, and specifically identifiable to the sales and/or promotion of Collaboration Products to all markets and to the operation and maintenance of the sales personnel [ * ] .

1.48 “Sublicense Revenues” means all revenues received from Third Parties as consideration for the sublicensing of the manufacture, use and/or sale of Collaboration Products.

1.49 “Third Party” means any entity other than Onyx or Miles and their respective Affiliates.

1.50 “Third Party Royalties” means royalties payable to a Third Party in respect of the sale or manufacture of Collaboration Products.

* * * *

CHAPTER 2

OVERVIEW OF COLLABORATION

Proteins and other effectors in the Ras Pathway are directly involved in control of cell growth. Changes or mutations to components in the Ras Pathway have been shown to cause abnormal cell growth, including certain cancers. Onyx has technology, materials, and expertise relating to the modulation of Ras Function and to assays that can identify compounds having activities useful in inhibiting Ras Function. Miles has an extensive library of chemical substances and natural materials, and expertise in the research, development, and commercialization of pharmaceutical compounds. The Parties desire to establish a broad collaboration in the Field to perform research towards identifying and investigating substances that inhibit Ras Function and to develop and commercialize substances identified in such process as pharmaceutical products for the treatment of cancer and other human conditions and diseases. The Parties intend that this Agreement shall establish such collaboration and determine the rights and obligations of each Party in conducting all of the research, development, and marketing of products, and all other related activities, under the collaboration. Attached as Exhibit A is a flowchart depicting in schematic form, the various activities of the collaboration and the decision points in the progress of identifying, researching, and developing Collaboration Products.

Article 2 — Initial Payment And Board Representation

2.1 Purchase of Series D Preferred Stock. Miles agrees to purchase, and Onyx agrees (subject to the last sentence of this paragraph) to sell, 6,750,000 shares of Onyx Series D Preferred Stock at a purchase price of Two Dollars ($2.00) per share pursuant to a Stock Purchase Agreement of even date herewith, with the execution and performance of such Stock Purchase Agreement and the closing of such purchase and sale to occur within thirty (30) days after the execution of this Agreement. Promptly following execution of this Agreement, the parties shall cooperate to effect the closing of such transaction. The parties recognize that to effect such sale of stock, Onyx is required to obtain certain stockholder consents, and the parties shall cooperate to make such modifications to the form of Stock Purchase Agreement as such stockholders may reasonably request, provided that Miles shall not be obligated to approve any modifications which it deems adverse in the reasonable exercise of its sole discretion.

2.2 Board Representation.

(a) Subject to the provisions of paragraph (b) below, Miles shall be entitled, commencing on the date hereof, to appoint a representative to serve on the Onyx Board of Directors, with the Miles representative to be approved in advance by the Onyx Board of Directors. If the Miles representative is unable to attend one or more meetings of the Onyx Board of Directors, he may designate an alternative Miles representative acceptable to Onyx to attend such meeting(s) in a nonvoting, observer capacity. All information received by such individuals from Onyx shall be subject to the non-disclosure obligations of Article 22 of this Agreement. The expenses of such Miles representative associated with attendance at Onyx Board of Directors meetings will be borne by [ * ] .

(b) The rights of Miles under this Section 2.3 shall expire upon the later to occur of

(i) the end of the Research Term, or, if the Parties then have Collaboration Compound in clinical development, such later date on which the Partes do not have a Collaboration Compound in clinical development, or

(ii) such date on which Miles owns less than twelve and one-half percent (12.5%) of the then outstanding capital stock of Onyx on an as-converted, fully-diluted basis.

Article 3 — Management of Collaboration

3.1 Joint Research and Development Committee. The collaboration between Miles, Onyx, and their respective Affiliates under this Agreement shall be managed by a Joint Research and Development Committee (the “JRDC”). The size of the JRDC may be determined from time to time; initially it shall consist of six members, three each appointed by Onyx and Miles within ten days after the Effective Date. Members of the JRDC shall be composed of senior officers or representatives of each party authorized to make decisions with respect to matters within the scope of the JRDC’s authority. An alternate member designated by a Party may serve temporarily in the absence of a permanent member designated by such Party. Each Party shall appoint and replace its representatives to the JRDC, as appropriate during the collaboration. The JRDC shall operate by consensus. Any deadlock shall be referred to the designated executive officers of Miles and Onyx pursuant to Article 25 of this Agreement.

3.2 Meetings of the JRDC. The JRDC shall hold meetings at such times as shall be determined by a majority of the membership of the Committee, at least once a quarter. Notice of meetings shall be given 30 days in advance to each member, stating the date, time and place of such meeting and describing the proposed agenda of items to be discussed at such meeting. Either Party may place items on the proposed agenda. Responsibility for arranging meetings will alternate between the Parties, with Onyx having responsibility for the first meeting. The JRDC may conduct meetings in person or by telephone conference; shall keep minutes reflecting actions taken at meetings; may act without a meeting if prior to such action a written consent thereto is signed by all members of the committee; and may amend or expand upon the foregoing procedures for its internal operation by unanimous written consent. At each committee meeting all members shall review and sign the then-current version of Exhibit B, and the Committee will retain copies of all such signed versions of Exhibit B generated during the term of the Agreement.

3.3 Functions and Powers of the JRDC. The activities of the Parties under this Agreement shall be supervised and managed by the JRDC. The JRDC shall perform the specific functions set forth in Chapters 2-7 of the Agreement if not stated otherwise, and in addition shall perform the following general tasks in managing the collaboration:

(a) determine the overall strategy for the collaboration in the manner contemplated by this Agreement;

(b) coordinate the activities of the Parties hereunder;

(c) prepare the Annual Plan for the Research (defined in Section 5.4) for each year during the Research Term, including modifications and amendments to the Research Plan;

(d) review all work done under and results of the Research;

(e) determine the scope of the Field of Collaborative Research and establish the assay standards used to determine Collaboration Compounds, under Article 6;

(f) review compounds under investigation in the Research for selection as Lead Structures, and select Collaboration Compounds for Co-Development as Development Compounds;

(g) approve any agreements with Third Parties to be made by either or both Parties regarding the subject matter of this Agreement (except with respect to Royalty-Bearing Products and as otherwise expressly provided in this Agreement); and

(h) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.

3.4 Obligations of Parties. Onyx and Miles shall provide the JRDC and its authorized representatives with reasonable access during regular business hours to all records, documents, and Information relating to this collaboration which it may reasonably require in order to perform its obligations hereunder, provided that if such documents are under a bona fide obligation of confidentiality to a Third Party, then Onyx or Miles, as the case may be, may withhold access thereto to the extent necessary to satisfy such obligation. During the Research Term, neither party shall knowingly receive information which is relevant to the Field and/or the Field of Collaborative Research under conditions which would preclude disclosure by reason of this Section 3.4.

3.5 Project Leader. Each Party shall designate an overall project leader within ten days of the execution of this Agreement. Such project leaders will be responsible for the day-to-day worldwide coordination of the collaboration contemplated by this Agreement and will serve to facilitate communication between the Parties relating to the collaboration. The project leaders shall attend all meetings of the JRDC.

3.6 General. In all matters related to the collaboration established by this Agreement, the Parties shall be guided by standards of reasonableness in economic terms and fairness to each of the Parties, striving to balance as best they can the legitimate interests and concerns of the Parties and to realize the economic potential of the Products. In conducting research, development, and commercialization activities under this Agreement neither Party shall prejudice the value of a Product by reason of such Party’s activities outside of the Field.

Article 4 — Licenses

4.1 Research Licenses.

(a) Onyx hereby grants Miles and its Affiliates a fully paid-up, worldwide license, without the right to sublicense, under the Onyx Patents and Onyx Know-How

(i) to conduct the Research during the Research Term, and

(ii) to conduct research and development of Products under Section 9.6 following the Research Term, provided, however, in each case that Miles and its Affiliates may only practice the Onyx Know-How and Onyx Patents that relate directly to the Field of Collaborative Research as defined at the time of such use.

Such license shall be exclusive except as to Onyx and its Affiliates.

(b) Miles hereby grants Onyx and its Affiliates a fully paid-up, worldwide license, without the right to sublicense, under the Miles Patents and Miles Know-How

(i) to conduct the Research during the Research Term, and

(ii) to conduct research and development of Products under Section 9.6 following Research Term, provided, however, in each case that Onyx and its Affiliates may only practice the Miles Know-How and Miles Patents that relate directly to the Field of Collaborative Research as defined at the time of such use.

Such license shall be exclusive except as to Miles and its Affiliates.

4.2 Collaboration Product Commercialization Licenses.

(a) Onyx hereby grants Miles and its Affiliates a worldwide, fully paid-up license, with the right to grant sublicenses, under the Onyx Patents and the Onyx Know-How to develop, make, have made, use, have used, sell and have sold Collaboration Products, subject to the terms and conditions of this Agreement. Such license shall be exclusive except as to Onyx and its Affiliates.

(b) Miles and its Affiliates hereby grants Onyx a fully paid-up license in the United States, without the right to grant sublicenses, under the Miles Patents and Miles Know-How to develop, use and sell Collaboration Products, subject to the terms and conditions of this Agreement. Such license shall be exclusive except as to Miles and its Affiliates.

4.3 Limitations on Exclusivity.

(a) As used in Sections 4.1 and 4.2, a license that is “exclusive except as to” the granting Party means that the Party granting the license shall not grant any other entity (other than its Affiliates) any license under such intellectual property rights with the right to practice within the licensed field, but that otherwise such Party retains all its rights of ownership in such

licensed rights, including without limitation the right to practice such property rights, subject only to the license granted.

(b) With respect to the Onyx Patents and Onyx Know-How that Onyx Controls pursuant to that certain Technology Transfer Agreement between Onyx and Chiron Corporation dated April 24, 1992, as amended (the “Chiron Agreement”), the exclusive licenses granted to Miles and its Affiliates by Onyx under such Onyx rights pursuant to this Article 4 shall be exclusive or co-exclusive only to the extent Onyx holds exclusive or co-exclusive rights under the Chiron Agreement.

4.4 Royalty-Bearing Product Commercialization Licenses.

(a) Onyx hereby grants Miles and its Affiliates an exclusive, royalty-bearing license, with the right to grant sublicenses, under the Onyx Patents and the Onyx Know-How solely to develop, make, have made, use, have used, sell and have sold Royalty-Bearing Products of Miles in such countries where such products are deemed hereunder to be Royalty-Bearing Products, subject to the terms and conditions of this Agreement.

(b) Miles hereby grants Onyx and its Affiliates an exclusive, royalty-bearing license, with the right to grant sublicenses, under the Miles Patents and Miles Know-How solely to make, have made, use, have used, sell and have sold Royalty-Bearing Products of Onyx in such countries where such products are deemed hereunder to be Royalty Bearing Products, subject to the terms and conditions of this Agreement.

4.5 Know-How Licenses Following The Research Term . Each Party hereby grants the other Party and its Affiliates a non-exclusive, world-wide, fully paid-up license to use the Know-How of the Party granting such license for any purpose relating to the Ras Pathway or Ras Function.

4.6 Onyx License After Research Termination. Miles hereby grants Onyx and its Affiliates an exclusive royalty-bearing, worldwide license (the “Termination License”), with the right to grant sublicenses, under the Miles Patents, and Miles Know-How at a rate pursuant to Section 16.4 solely to discover and develop substances with activity in the Field of Collaborative Research and to make, use and sell such substances; provided, however, that this Termination License may be exercised by Onyx only in the event that Miles terminates the Research on or before [ * ] under Section 5.6, 5.7 or 5.8. In the case of termination of Research and substitution under Sections 5.6 and 5.7, this license covers the Field of Collaborative Research as defined prior to such substitution.

* * * *

CHAPTER 3

RESEARCH

Article 5 — Collaborative Research Program

5.1 Program Management. Miles and Onyx will conduct the Research on a collaborative basis with the goal of discovering, synthesizing, and performing preclinical investigations on Collaboration Compounds for clinical development into Products as rapidly as possible. The Research will be supervised and managed by the JRDC. The Parties have agreed to the two-year Research Plan attached as Exhibit C. The Parties will update the Research Plan for subsequent years of the collaboration at least 120 days before the beginning of each calendar year. The Research Plan also may be amended and updated by the JRDC at any time in view of the results of the Research performed up to that time.

5.2 Decision Points During Research. During the Research, the JRDC shall direct compounds and other materials, including Collaboration Compounds, through the program of research investigation and preclinical development work towards selection of Collaboration Compounds for Co-Development as Development Compounds. The initial stage of this process shall be the development of assays and the screening of compounds to determine which compounds should be selected as Lead Structures. Identified Lead Structures will be further investigated, including performing Analoging Programs on such Lead Structures, and performing needed pharmacology, drug optimization, further chemistry investigation, and toxicology and pharmacokinetic investigations, as appropriate. Compounds resulting from an Analoging Program will be further investigated under the Research to determine which of such compounds are Collaboration Compounds. The Research is intended to generate results and data sufficient to determine which compounds should be selected as Development Compounds for preclinical development investigation (see Section 11.2).

5.3 Research Efforts and Expenses. Each of the Parties will work diligently to carry out the Research, to cooperate with the other Party in the conduct of the Research, and to achieve the objectives of the Research, and shall maintain and utilize scientific staff, laboratories, offices and other facilities consistent with such undertaking. Specific funding for performing the Research is provided in Article 9. Each Party shall bear any of its own expenses incurred in connection with the Research not provided for in Article 9 or otherwise in this Agreement. Management of personnel, including their compensation and evaluation, will be the responsibility of the Party which employs or engages such personnel.

5.4 Annual Plan and Budget. At least 120 days prior to the beginning of a new calendar year during the Research Term, the JRDC shall agree upon and provide to the Parties a plan (the “Annual Plan”) setting forth each Party’s research tasks and goals under the Research for that year and setting a budget for such Research. The Parties shall approve the budget in the Annual Plan, with such changes as they deem appropriate and mutually approve.

5.5 Extension of Research Term. The Parties may agree to extend the Research Term by mutual consent on such terms and conditions as the Parties may then agree.

5.6 Termination of Research with Substitution of New Research Target. If prior to two and one-half years after the Effective Date Miles determines that the program of Research on inhibition of Ras Function is unlikely to prove successful in identifying products useful for treating cancer and/or other hyperproliferative diseases, Miles may elect to substitute, as of February 1, 1997, another Onyx research program in the field of oncology, if such program remains available for collaboration, in place of the research on inhibition of Ras Function in the Research under this collaboration. Miles may effect such substitution by giving Onyx at least six months written notice, to be effective on February 1, 1997. Upon the effective date of such notice, the Onyx research program in oncology covered by such notice shall be substituted into the collaboration covered by this Agreement in the place of the then-existing Field of Collaborative Research. The Parties shall meet in good faith to agree on a suitable amendment to this Agreement in order to reflect such substitution, including by way of example revising the definitions of Research, Field, Field of Collaborative Research, Collaboration Compound, and Post Collaboration Compound and developing a new Research Plan, in order to conform this Agreement with the new research program substituted by Miles. For purposes of determining the Research Term and the funding of the Research with respect to such substituted target, upon the election of substitution by Miles under this Section 5.6, the new Research shall be deemed to commence on February 1, 1997, with a new five-year Research Term and including an annual $5,000,000 Research payment for each year of such five year term.

5.7 Consequences of Research Substitution. If Miles terminates, pursuant to Section 5.6, the existing research project under the Research and substitutes another Onyx research program in its place, then, after the effective date of the Miles notice of substitution:

(i) Miles shall no longer have any rights under Onyx Patents or Know-How, or with respect to the Field of Collaborative Research as defined prior to such substitution,

(ii) Onyx may thereafter exercise the Termination License under Miles Patents and Know-How, and granted to Onyx under Section 4.6;

(iii) Miles shall promptly return to Onyx or destroy all copies of Onyx Information and any other confidential information belonging to Onyx (except to the extent such information relates to the Field of Collaborative Research as newly defined after the substitution). [ * ] shall use due diligence in prosecuting and maintaining all [ * ] Patents arising from inventions in the Research. In the event [ * ] declines to prosecute or maintain any such [ * ] Patent, [ * ] shall give [ * ] notice of such decision at least [ * ] prior to any deadline or due date with respect to such patent. [ * ] shall then have the right to prosecute and maintain any such [ * ] Patent at its own expense. [ * ] shall authorize, transfer and assign to [ * ] the right to enforce and defend all such [ * ] Patents within the Field of Collaborative Research. [ * ] agrees to perform all acts deemed necessary or desirable by [ * ] to permit and assist [ * ] , at [ * ] expense, in enforcing its rights throughout the world in the [ * ] Patents arising from inventions in the Research and other intellectual property rights arising from this collaboration. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in the enforcement, including litigation or other legal proceedings, of applicable patents.

5.8 Termination of Research by Miles. Except for termination of the Agreement under Section 23.2, Miles may terminate the Research only

(a) on the date [ * ] after the Effective Date, by giving Onyx at least [ * ] written notice in advance of such termination, or

(b) pursuant to the provisions of Section 5.9.

If Miles terminates the Research hereunder, then:

	(i)		Onyx may thereafter exercise the Termination License under Miles Patents and Know-How granted to Onyx under Section 4.6;

	(ii)		Miles shall promptly return to Onyx or destroy all copies of Onyx Information and any other confidential information belonging to Onyx; and

	(iii)		this Agreement, including all licenses granted to Miles under Article 4, shall terminate effective as of such termination, subject to the survival of this Section, Section 4.6, and the portions of this Agreement referred to in Section 24.5.

[ * ] shall use due diligence in prosecuting and maintaining all [ * ] Patents arising from inventions in the Research. In the event [ * ] declines to prosecute or maintain any such [ * ] Patent, [ * ] shall give [ * ] notice of such decision at least [ * ] prior to any deadline or due date with respect to such patent. [ * ] shall then have the right to prosecute and maintain any such [ * ] Patent at its own expense. [ * ] shall authorize, transfer and assign to [ * ] the right to enforce and defend all such [ * ] Patents within the Field of Collaborative Research. [ * ] agrees to perform all acts deemed necessary or desirable by [ * ] to permit and assist [ * ] , at [ * ] expense, in enforcing its rights throughout the world in the [ * ] Patents arising from inventions in the Research and other intellectual property rights arising from this collaboration. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in the enforcement, including litigation or other legal proceedings, of applicable Patents.

5.9 Key Employee Departure. If prior to two and one-half years after the Effective Date Dr. Frank McCormick or Dr. Peter Myers ceases to be employed by Onyx, Onyx shall use diligent efforts to find a research scientist to replace the departed employee. If Onyx is unable. to find such replacement who is reasonably satisfactory to Miles within 180 days after Dr. McCormick or Dr. Myers ceases to be employed by Onyx, then Miles may terminate this Agreement by giving Onyx 60 days written notice.

If Miles terminates the Agreement under this Section, Onyx may thereafter exercise the Termination License under Miles Patents and Know-How granted to Onyx and its Affiliates under Section 4.6. In such a case, however, the Termination License is non-exclusive, and at a rate pursuant to Section 16.4.

After termination Miles may continue the preclinical research and development work in the Field of Collaborative Research as defined at the date of termination. For this reason, Onyx hereby grants to Miles and its Affiliates a non-exclusive, royalty-bearing worldwide license

under the Onyx Patents and Know-How, solely to discover and develop substances with activity in the Field of Collaborative Research and to make, use and sell such substances, at a royalty rate pursuant to Section 16.4.

Such work by Miles after termination is deemed to be work under Section 7.3 such that Onyx provides Information and Miles provides reports on results, may elect to prepare and file an IND and to proceed with clinical trials, etc. Compounds thus independently investigated and developed by Miles shall be deemed Royalty-Bearing Products of Miles; however, Onyx has an option for buy-back pursuant to the provisions of Section 7.4. This paragraph applies only to compounds that were physically available at the time of termination.

* * * *

Article 6 — Specification of Research Field and Assays

6.1 Refinement of Field of Collaborative Research. In executing this Agreement, the Parties recognize that scientific understanding of Ras Function is still developing and will continue to develop during the term of the Research. Further, the Parties recognize that a principal objective of the Research, particularly in its early stages, is to develop further assays to identify compounds which may be useful for inhibiting Ras Function. The JRDC shall periodically review the definition of the Field of Collaborative Research and determine, with specific reference to programs, targets, and assays then in existence or under development, which programs, targets, and assays shall comprise the best areas for Research for discovering inhibitors of Ras Function. Such programs, targets, or assays shall then be selected and included in the Field of Collaborative Research, and any programs, targets, or assays determined no longer to be useful in identifying compounds that inhibit Ras Function shall be removed from the Field of Collaborative Research by the JRDC. Any changes to such Field of Collaborative Research by the JRDC shall be effected by modification of the attached Exhibit B. In the event the JRDC expands the Field of Collaborative Research to include other programs, targets, or assays, such expansion shall not affect any rights or obligations of either Party with respect to Third Parties pursuant to agreements entered into prior to such expansion. If Miles elects to substitute a different Onyx cancer program for the Ras Function inhibition program, pursuant to Section 5.6, this Field of Collaboration Research will be modified to reflect the new programs, targets, and assays included in the program covered by such substitution, including revision of the attached Exhibit B.

6.2 Restriction of the Field of Collaborative Research. If, under Section 6.1, the JRDC removes certain programs, targets, or assays from the definition of Field of Collaborative Research, then the licenses under the Patents and Know-How relating to such programs, targets, or assays granted under Article 4 shall then terminate with respect to such programs, targets or assays. Further, if one Party but not the other had a research program with respect to such programs, targets, or assays prior to their inclusion in the Field of Collaborative Research (and so advised the JRDC prior to such inclusion), such Party shall have the option

(a) to acquire the entire right, interest, and title in and to all know-how and Patents jointly developed by the Parties during the course of the Research that relate directly to such programs, targets, or assays removed by the JRDC from the Field of Collaborative Research; and

(b) to obtain an exclusive, worldwide license to all know-how and Patents developed solely by the other Party during the course of the Research that relate directly to such programs, targets, or assays removed by the JRDC from the Field of Collaborative Research, solely for purposes of developing and making, using and selling products based upon such programs, targets and assays. Such option shall be exercisable for [ * ] after such JRDC decision. If [ * ] is the Party exercising such option, [ * ] shall pay [ * ] for all amounts expended in the Research directly for developing or discovering such jointly-developed know-how, Patents, and inventions covered by the option exercised, and shall pay [ * ] a commercially reasonable royalty up to [ * ] negotiated in good faith for the exclusive license. If [ * ] exercises such option, it shall [ * ] .

6.3 Specification of Ras Function Assay Standards. The JRDC shall specify the assays and the level of measured activity under such assays in the Field of Collaborative Research that shall be required by the Parties to establish that a specific compound exhibits a sufficient level of activity in inhibiting Ras Function to qualify as a Collaboration Compound under Section 1.11. The initial standards of measured activity for identifying a Collaboration Compound are set forth on Exhibit E. It is anticipated that the specific assays and required level of activity established hereunder by the JRDC for qualifying compounds as Collaboration Compounds under Sections 1.11 may change by JRDC decision during the Research, as the Parties improve and refine their understanding of Ras Function. Such changes shall be reflected by amendment of Exhibit E and shall take effect on the date the amended Exhibit E is signed by both Parties. The Parties understand that if a compound or material shows activity in assays within the Field of Collaborative Research, such activity may support the Parties conducting further Research on such compound within the Field of Collaborative Research, but such compound shall not qualify as a Collaboration Compound unless it meets the requirements established by the JRDC under this Section 6.3.

Article 7 — Allocation of Research Tasks

7.1 Onyx Research Obligations. Onyx shall be primarily responsible for performing the biological research components of the Research Plan, including investigation of new targets, development of assays, and production of assay reagents. Onyx shall perform such primary screening of compounds as the JRDC determines is appropriate. Such primary screening shall include compounds and materials in the Miles and the Onyx library and collection selected by the JRDC for screening by Onyx. To the extent assays in the Field of Collaborative Research are appropriate for large-scale, high throughput primary screening of compounds, Miles shall perform such screening, with Onyx’ assistance in transferring needed assay reagents and Onyx Information. Onyx will have a right to perform [ * ] in the first year of the Research Term with [ * ] , in the second year with [ * ] and starting in the third year of the Research Term, up to [ * ] of the scientific full-time equivalents (“FTEs”) funded by Miles at Onyx during the remainder of the Research Term under the Miles funding. Onyx shall also have the right throughout the Research Term to perform [ * ] in the Field of Collaborative Research [ * ] . Onyx also will perform [ * ] and will assist Miles in performing preclinical investigations on Development Compounds in the Preclinical Development Period, at Miles’ reasonable request. Onyx shall provide the number of FTEs to conduct the Research as specified by the JRDC under the Annual Plan. Onyx may increase the size of its total research team beyond that set forth in the Annual Plan, but shall not receive any payment under Article 9 for any increase in Research effort which was not approved in advance by the JRDC.

7.2 Miles Research Obligations. Miles shall provide to Onyx samples of a sufficient number and range of materials from its library and collection, for screening by Onyx under the Research, to enable Onyx to screen the Miles prototype library, which is representative of the complexity and diversity of the Miles library and collection. Onyx shall have the right to screen any material from Miles where sampling or other data indicates likelihood of activity in the Field. Miles shall perform all pharmacology research and such biological research as the JRDC may request. Miles shall perform the chemistry required during the Research Term, except as performed by Onyx under Section 7.1. Onyx shall provide Miles such information and materials

relating to the Onyx assays as are necessary for Miles to perform its chemistry obligations under the Research. Miles shall also perform such primary screening of compounds as the JRDC determines is appropriate using assays within the Field of Collaborative Research that can be utilized efficiently in large-scale, high throughput screening.

7.3 Independent Funded Research Of Onyx Subject to Buy-Back. Onyx may perform independent preclinical research and development work pursuant to Section 12.4 during the Research Term, or pursuant to Section 9.6 after the Research Term, [ * ] . In those events, upon request by Onyx, Miles shall provide all Information and materials reasonably requested by Onyx to assist in such preclinical research and development work. During such work, Onyx shall provide Miles regular reports on results, including any animal testing data and toxicology. Onyx may elect to prepare and file an IND and to proceed with clinical trials and Clinical Development Period work. Onyx shall deliver to Miles a copy of any IND packages. Subject to Miles’ rights under Section 7.4, compounds independently investigated and developed by Onyx pursuant to this Section shall be deemed Royalty-Bearing Products of Onyx. Research performed by Onyx following the Research Term shall not be subject to buy-back rights of Miles except as provided in this Section 7.3 or Section 7.4, 7.5 or 9.6(b).

7.4 Miles Buy-Back. If under Section 7.1 Onyx performs [ * ] chemistry or under Section 7.3 Onyx performs independent preclinical research and development work, Miles shall have an option to reestablish the cooperation with Onyx in preclinical research and development work. Such option may be exercised for any compound deriving from such preclinical research and development work at any time up until 30 days following [ * ] by written notice to Onyx. If Miles exercises such option, Miles shall pay Onyx, within [ * ] following notice of exercise of the option, an amount equal to [ * ] of Onyx’ expenses in performing such independent preclinical research and development work on such compound, through the date of the notice. In such a case any license pursuant to Section 4.6 shall terminate and such compound shall be a Collaboration Compound. If Miles does not exercise such option, such compounds thereafter shall be deemed Royalty-Bearing Products of Onyx, and Onyx shall have the exclusive right to develop and market such compound under Section 12.4.

7.5 Collaboration Compounds Developed After A Termination Under Section 5.9. In the event that following a termination under Section 5.9, either Party performs preclinical development of a Collaboration Compound (including for this purpose any compound that was physically available at that time and is later determined to satisfy the criteria of a Collaboration Compound) that had been identified prior to such termination, the other Party shall retain buy-back rights to reestablish a collaboration with respect to such Collaboration Compound under the terms and conditions of Section 7.4.

7.6 Conduct of Studies. All work and investigations done in connection with the Research shall be carried out in compliance with any federal, state or local laws, regulations, or guidelines governing the conduct of research at the site where such work is being conducted. Each Party agrees to provide the other with all safety and other handling information and instructions available to the disclosing Party relating to all materials transmitted to the other Party hereunder.

Article 8 — Research Material and Information

8.1 Rights In Materials .

(a) Any compounds or other materials that are tested in the Research but do not become Collaboration Compounds shall remain the sole and exclusive property of the Party that brought such materials to the collaboration, and the other Party shall have no rights therein, except as set forth in Section 8.1(c).

(b) Compounds synthesized in an Analoging Program shall be owned by the Party who conducted the Analoging Program. If any compound generated under an Analoging Program is discovered, at any time, to be a Collaboration Compound, then such Collaboration Compound may be commercialized only as provided hereunder.

(c) Miles shall have the right, exercisable until [ * ] after the end of the Research Term, to screen in any of Miles’ assays or screens any compound made by Onyx under an Analoging Program [ * ] . If Miles desires to commercialize any such compound identified in such screening as having pharmaceutical utility, Miles shall give Onyx written notice prior to [ * ] after the end of the Research Term, specifying the compound and the proposed indication to be developed. Thereafter, the Parties will meet in good faith to negotiate an exclusive license agreement, including a commercially reasonable royalty and requirement of diligence, under Onyx’ rights in such compound for such commercialization. The royalty shall only be paid if and as long as such compound is covered by a valid claim of an Onyx Patent. At [ * ] after the end of the Research Term, all rights to commercialize compounds made by Onyx under such an Analoging Program shall return solely and exclusively to Onyx, except with respect to any such compounds for which Miles gave prior written notice hereunder. Miles agrees to notify Onyx promptly upon its determination at any time that it no longer is interested in screening or commercializing any particular compound or compounds made by Onyx under an Analoging Program. All rights in such compound or compounds then shall be wholly owned by Onyx, and Miles’ option to screen with respect to such compound or compounds shall immediately expire.

8.2 Acquisition of Third Party Technology. If during the Research Term either Party becomes aware of any technology (including compounds) of a Third Party that would be valuable to the discovery, development or commercialization of Collaboration Compounds or Products, the Party will provide such information to the JRDC. Within 60 days of such notification, the JRDC will determine whether that technology should be brought into the Research. In the event that acquisition of any Third Party technology would result in payment of royalties or other license fees to a Third Party that would [ * ] , then the Parties shall decide jointly whether to acquire such technology. No consent shall be required with regard to any license for which a Party bears the entire economic burden, and which does not otherwise impair such Party’s performance under the Agreement.

Article 9 — Research Funding

9.1 Miles Financial Support. Miles shall provide financial support for Onyx’ Research efforts during the Research Term as set forth in each Annual Plan. Such support shall be provided for [ * ] scientific full-time equivalents (FTEs) annually over 5 years initially at the rate of [ * ] per calendar year for each Onyx scientific FTE working on the Research under the Annual Plan, plus such Third Party expenses to assist Onyx in performing the Research (such as in vivo animal studies) as may be approved by the JRDC. Commencing with the calendar year 1995, such reimbursement rate shall be adjusted each January 1 for inflation based on changes in the Bureau of Labor Statistics Consumer Price Index for Urban Wage-earners — San Francisco/Oakland from September 1993 to the September immediately preceding such January 1. Upon the request of either Party during the Research Term, the JRDC shall review the actual costs of Onyx incurred in connection with the Research. Any such adjustment in the reimbursement rate shall have prospective effect only.

9.2 Minimum Level of Financial Support. The minimum amount payable by Miles under Section 9.1 shall be US$ [ * ] in the first year of the Research Term, US$ [ * ] in each of the next [ * ] years of the Research Term, and [ * ] in the [ * ] year of the Research Term. These amounts reflect the total financial support for the [ * ] FTE annually over 5 years.

9.3 Restriction on Government Support. Onyx shall not obtain any new governmental or other third party support of the Research without the prior approval of Miles. Upon signing of this Agreement, Onyx shall terminate all government grants it currently is receiving that cover research in the Field of Collaborative Research. To the best of Onyx’ knowledge, none of the work done by Onyx (or its predecessors) under government grants prior to the execution of this Agreement has resulted in any Patents or patent applications owned or licensed by Onyx that claim subject matter within the Field of Collaborative Research.

9.4 Manner of Payments. Miles shall pay Onyx all funding under this Article 9 in U.S. Dollars in quarterly payments as a lump sum on or before [ * ] each calendar quarter, with payment for the period from the Effective Date through June 30, 1994 in the amount of [ * ] to be made within 10 days after the execution of this Agreement. Payment shall be made by wire transfer of immediately available funds to an account designated in writing by Onyx. Unless otherwise agreed in writin

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