COLLABORATION AGREEMENT

Exhibit 10.4

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

COLLABORATION AGREEMENT

THIS COLLABORATION AGREEMENT (the “Agreement”) is entered into as of the 24^th day of February, 2006 (the “Effective Date”), by and between Infinity Pharmaceuticals, Inc., a Delaware corporation having an office at 780 Memorial Drive, Cambridge, Massachusetts 02139 (“Infinity”), and Novartis Institutes for BioMedical Research, Inc., a Delaware corporation having an office at 250 Massachusetts Avenue, Cambridge, Massachusetts 02139 (“Novartis”).

WHEREAS, Infinity and Novartis are each in the business of discovering, developing and commercializing pharmaceutical products;

WHEREAS, Infinity Controls certain technology for the discovery and optimization of inhibitors directed against certain Bcl targets for the purpose of identifying potential human therapeutics;

WHEREAS, Infinity and Novartis are interested in collaborating on activities relating to certain Infinity compounds and in providing for the opportunity for Novartis to develop and commercialize such compounds and their derivatives as potential pharmaceutical products;

WHEREAS, on the Effective Date, Infinity and Novartis Pharma AG, an Affiliate of Novartis, are entering into a Series D Preferred Stock Purchase Agreement, pursuant to which Novartis Pharma AG shall purchase shares of Infinity’s Series D Convertible Preferred Stock;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Definitions. When used in this Agreement, each of the following terms shall have the meanings set forth in this Article 1:

1.1 “Abandoned Profile Licensed Compounds” means, with respect to an Abandoned Profile, (a) Licensed Compounds for such Abandoned Profile specified by Novartis pursuant to Section 3.3.1, and (b) Analogs or other compounds designed, discovered or synthesized by or on behalf of Infinity that are demonstrated to have Threshold Activity against the relevant Target for such Abandoned Profile and for which Novartis has consented to their designation as Abandoned Profile Licensed Compounds pursuant to Section 3.3.1 (each of the foregoing in clauses (a) and (b), an “Abandoned Profile Licensed Compound”).

1.2 “Accounting Standards” with respect to Infinity shall mean that Infinity shall maintain records and books of accounts in accordance with US GAAP (United States Generally Accepted Accounting Principles), and with respect to Novartis shall mean that Novartis shall maintain records and books of accounts in accordance with IFRS (International Financial Reporting Standards).

1.3 “Affiliate” means any corporation, company, partnership, joint venture and/or firm that controls, is controlled by, or is under common control with a specified person or entity. For purposes of this Section 1.3, “control” shall be presumed to exist if one of the following

conditions is met: (a) in the case of corporate entities, direct or indirect ownership of more than fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of more than fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. The Parties acknowledge that in the case of certain entities organized under the Laws of certain countries outside of the United States, the maximum percentage ownership permitted by Law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such owner has the power to direct the management and policies of such entity. In the case of Novartis, “Affiliates” shall also expressly be deemed to include the Novartis Institute for Functional Genomics, Inc. and its Affiliates, and, solely with respect to Novartis’ and its Affiliates’ obligations with respect to Infinity’s Confidential Information, Friedrich Miescher Institute for Biomedical Research.

1.4 “Analog” means any compound that is modified by chemical and/or molecular-genetic means from a Research Program Active Compound or from another Analog.

1.5 “Annual Net Sales” means, with respect to a Licensed Product, Net Sales in any calendar year or portion thereof.

1.6 “Auditor” shall mean an independent internationally recognized audit firm to be engaged by Infinity to conduct a review of Novartis’ books and records regarding the sales of the Licensed Products after such auditor’s approval by Novartis, which approval shall be neither unreasonably withheld or delayed.

1.7 “Business Day” means a day other than a Saturday or Sunday or Federal holiday in Cambridge, Massachusetts or Basel, Switzerland.

1.8 “Change in Control” shall mean any transaction which results in (a) the sale or transfer of substantially all of the assets of Infinity to a Third Party or (b) a merger, consolidation or other reorganization of Infinity in which the holders of Infinity’s capital stock immediately prior to the transaction hold less than a majority of the capital stock of the surviving or continuing entity after the transaction.

1.9 “Confidential Information” means (a) all information relating to Research Program Active Compounds, and (b) all other proprietary documents, technology, Know-How or other information (whether or not patentable) actually disclosed by one Party to the other pursuant to this Agreement or the Non-Disclosure Agreement and marked as “confidential” or “proprietary” (or if disclosed orally, confirmed in writing within thirty (30) days thereafter).

1.10 “Control” or “Controlled” means with respect to any (a) material, document, item of information, method, data or other Know-How or (b) intellectual property right, the possession (whether by ownership or license, other than by a license granted pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access, ownership, a license and/or a sublicense as provided herein without violating the terms of any agreement or other arrangement with any Third Party entered into or existing as of the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, ownership, license, or sublicense.

 

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1.11 “Controlled Contractors” means, with respect to a Party, academic or non-profit research institutions, hospitals, contract research organizations, contract manufacturers, contract employees, consultants and the like which merely conduct activities on behalf of such Party and subject to such Party’s supervision and control.

1.12 “Controlling Party” means, with respect to Confidential Information, Patent Rights or Know-How, the Party that Controls such Confidential Information, Patent Rights or Know-How.

1.13 “Detail” means mean face-to-face discussions with physicians and other health care practitioners who are permitted under applicable Laws to prescribe a Licensed Product for the purpose of promoting a Licensed Product to such physicians or practitioners.

1.14 “Development” or “Develop” means, with respect to a compound, preclinical and clinical drug development activities, including, among other things: test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control procedure development and performance with respect to clinical materials, statistical analysis and report writing and clinical studies, regulatory affairs, and all other pre-Regulatory Approval activities. When used as a verb, “Develop” means to engage in Development.

1.15 “Development Costs” means auditable internal and external direct project-related costs incurred by Infinity in connection with the Development by Infinity of an Abandoned Profile Licensed Compound or a Licensed Compound pursuant to Section 3.2.2 (as applicable), not to exceed industry norms for similarly-situated companies.

1.16 “Drug Approval Applications” means an application for Regulatory Approval required before commercial sale or use of a Product as a drug in a regulatory jurisdiction.

1.17 “EMEA” means the European Medicines Evaluation Agency, or a successor agency thereto.

1.18 “Equity Agreements” means the Stock Purchase Agreement and the Investors’ Rights Agreement.

1.19 “EU Major Market Countries” means the United Kingdom, Germany, France, Italy and Spain.

1.20 “Executive Officers” means the Chief Executive Officer of Infinity (or a senior executive officer of Infinity designated by Infinity’s Chief Executive Officer) and the President of Novartis (or a senior executive officer of Novartis or its Affiliate as designated by Novartis’s President).

1.21 “FDA” means the United States Food and Drug Administration, or a successor agency thereto.

 

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1.22 “Field” means all human and veterinary health-care applications including, but not limited to, research, diagnosis, therapeutics, and prophylaxis with respect to any indication, together with all agricultural purposes.

1.23 “First Commercial Sale” means, with respect to a Licensed Product, the first shipment of such Licensed Product to a Third Party by Novartis or its Affiliate or sublicensee in a country following applicable Regulatory Approval (other than applicable governmental price and reimbursement approvals) of such Licensed Product in such country. For the avoidance of doubt, sales such as so-called “treatment IND sales”, “named patient sales”, “compassionate use sales” and “pre-license sales”, shall not be construed as a First Commercial Sale, provided that such sales do not continue for more than [**] after receipt of NDA approval in such country for such Licensed Product.

1.24 “FTE” means a full-time equivalent person year (consisting of a total of [**] hours per year) of scientific or technical work (or scientific managerial work, provided that it is specifically related to the Research Program) undertaken by Infinity or Novartis employees, as applicable, with sufficient scientific expertise to perform their duties on or related to the Research Program.

1.25 “FTE Rate” means $[**] per FTE, which may be prorated on a daily basis as necessary. For avoidance of doubt, the FTE Rate includes all travel expenses.

1.26 “Good Clinical Practices” or “GCP” means the good clinical practice standards set forth in 21 C.F.R. Parts 50, 54, 56, 312 and 314, (or in the case of foreign jurisdictions, comparable regulatory standards), and in any successor regulation.

1.27 “Good Laboratory Practices” or “GLP” means the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable regulatory standards in jurisdictions outside the United States.

1.28 “Good Manufacturing Practices” or “GMP” means current good manufacturing practices for pharmaceuticals as described in regulations promulgated by Regulatory Authorities as applicable to the manufacture of products, including those set forth in 21 C.F.R. Parts 210 and 211, as such regulations are in effect at the time of manufacturing the product.

1.29 “IND” means (a) (i) an Investigational New Drug Application, as defined in 21 C.F.R. § 312.3, and the regulations promulgated thereunder, that is required to be filed with the FDA before beginning clinical testing of a pharmaceutical product in human subjects, or any successor application or procedure or (ii) any foreign counterpart of such an Investigational New Drug Application, and (b) all supplements and amendments that may be filed with respect to the foregoing.

1.30 “Infinity Intellectual Property” means Infinity Know-How and Infinity Patent Rights.

1.31 “Infinity Know-How” means Know-How Controlled by Infinity used or developed in the Research Program that is necessary or useful for the evaluation, development or commercialization of a Licensed Compound or Licensed Product.

 

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1.32 “Infinity Patent Rights” means those Patent Rights set forth on Schedule 1.32 (as amended from time to time) and Patent Rights Controlled by Infinity that are necessary or useful for the conduct of the Research Program or to research, develop, make, have made, use, offer for sale, sell and import a Licensed Compound or Licensed Product.

1.33 “Intellectual Property Rights” shall mean patents, trade secrets, and copyrights, and other forms of proprietary or industrial rights pertaining to inventions, know-how, original works, and other forms of intellectual property.

1.34 “Inventions” shall mean all patentable inventions, discoveries, improvements and other technology and any Patent Rights based thereon, that are discovered, made or conceived during and in connection with, or during and as a result of, the Research Program or thereafter with respect to the research, Development and commercialization of a Profile until Novartis declares such Profile an Abandoned Profile in accordance with Section 3.3.1.

1.35 “Investors’ Rights Agreement” means the Investors’ Rights Agreement entered into by Infinity and Novartis Pharma AG on the Effective Date.

1.36 “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, inventions, discoveries, works of authorship, compounds and biological materials, but excluding any such information or materials publicly disclosed in Patent Rights.

1.37 “Law” or “Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

1.38 “Licensed Compounds” means: (a) Research Program Active Compounds; (b) Novartis Active Compounds; (c) salts, hydrates, solvates, esters, metabolites, intermediates, stereoisomers and polymorphs of Research Program Active Compounds or Novartis Active Compounds; and (d) prodrugs of Research Program Active Compounds or Novartis Active Compounds (any of the foregoing, a “Licensed Compound”).

1.39 “Licensed Product” means a Product comprising or containing one or more Licensed Compounds.

1.40 “Major Indication” means the following Oncology Indications: breast cancer, colorectal cancer, prostate cancer or nonl-small cell lung cancer.

1.41 “Marketing Plan” means the plan for commercializing a Licensed Product, including the specifics regarding promotional effort, promotional spend and marketing materials.

1.42 “MHLW” means the Japanese Ministry of Health, Labour and Welfare or any successor agency with responsibilities comparable to the Japanese Ministry of Health, Labour and Welfare.

1.43 “Minor Indication” means any Oncology Indication which is not a Major Indication.

 

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1.44 “NDA” means (a) (i) a New Drug Application submitted to the FDA, or any successor application or procedure, as more fully defined in 21 C.F.R. § 314.50 et. seq., or (ii) any foreign counterpart of such a New Drug Application, and (b) all supplements and amendments, including supplemental New Drug Applications (and any foreign counterparts) that may be filed with respect to the foregoing.

1.45 “Net Sales” means, with respect to any Licensed Product, the gross amount invoiced by or on behalf of Novartis and any Novartis Affiliate or sublicensee for that Licensed Product sold to Third Parties (other than sales to sublicensees for resale) in bona fide, arm’s-length transactions, less the following deductions, determined in accordance with the Accounting Standards as generally and consistently applied by Novartis, to the extent included in the gross invoiced sales price of any Licensed Product or otherwise directly paid or incurred by Novartis, its Affiliates or sublicensees with respect to the sale of such Licensed Product:

(a) Normal and customary trade and quantity discounts actually allowed and properly taken directly with respect to sales of such Licensed Product;

(b) Amounts repaid or credited by reason of defects, rejection, recalls, returns, rebates and allowances of goods, or because of retroactive price reductions specifically identifiable to such Licensed Product;

(c) Chargebacks and other amounts paid on the sale or dispensing of such Licensed Product;

(d) Amounts payable resulting from governmental (or agency thereof) mandated rebate programs;

(e) Third Party cash rebates and chargebacks related to sales of such Licensed Product, to the extent actually allowed;

(f) Tariffs, duties, excise, sales, value-added, and other taxes (other than taxes based on income);

(g) Retroactive price reductions that are actually allowed or granted;

(h) Cash discounts for timely payment;

(i) Delayed ship order credits;

(j) Discounts pursuant to indigent patient programs and patient discount programs, including, without limitation, “Together Rx” and coupon discounts;

(k) All freight, postage and insurance included in the invoice price;

(l) Amounts repaid or credited for uncollectible amounts on previously sold units of such Licensed Product; and

 

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(m) Deduction of [**] percent ([**]%) for distribution and warehousing expenses.

all as determined in accordance with Novartis’ usual and customary accounting methods and the Accounting Standards, as consistently applied at Novartis. Sales from Novartis to its Affiliates and sublicensees for resale shall be disregarded for the purpose of calculating Net Sales. Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to Third Parties shall not be deducted from the invoice price in the calculation of Net Sales.

Furthermore:

(i) In the case of any sale or other disposal of a Licensed Product between or among Novartis and its Affiliates, and sublicensees for resale, Net Sales shall be calculated as above only on the value charged or invoiced on the first arm’s-length sale thereafter to a Third Party;

(ii) In the case of any sale which is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time of shipment or when the Licensed Product is paid for, if paid for before shipment or invoice;

(iii) In the case of any sale or other disposal for value, such as barter or countertrade, of any Licensed Product, or part thereof, otherwise than in an arm’s-length transaction exclusively for money, Net Sales shall be calculated as above on the fair market value of the non-cash consideration received as agreed by the Parties or the fair market price (if higher) of the Licensed Product in the country of sale or disposal; and

(iv) In the event that the Licensed Product is sold in a finished dosage form containing the Licensed Product in combination with one or more other active ingredients which are not themselves Licensed Compounds or Licensed Products (a “Combination Product”), the Net Sales of the Licensed Product, for the purpose of determining royalty payments, shall be determined by multiplying the Net Sales (as defined above in this Section) of the Combination Product by the fraction A/(A+B), where A is the weighted (by sales volume) average sales price in a particular country of the Licensed Product when sold separately in finished form and B is the weighted average sales price in that country of the other product(s) sold separately in finished form. In the event that such average sales price cannot be determined for both the Licensed Product and the other product(s) in combination, Net Sales for purposes of determining royalty payments shall be agreed by the Parties based on the relative value contributed by each component, and such agreement shall not be unreasonably withheld.

1.46 “Non-Disclosure Agreement” means the Confidentiality Agreement between the Parties dated as of [**], as amended [**] and [**].

1.47 “Novartis Active Compound” means an Analog which is (a) designed, discovered or synthesized by or on behalf of Novartis after the Research Term, (b) demonstrated during the Term to have Threshold Activity against a Target and (c) included on the Active Compound List.

1.48 “Oncology Indication” means the treatment or prophylaxis of a hematological cancer or a solid tumor cancer.

 

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1.49 “Party” means Novartis or Infinity. “Parties” means Novartis and Infinity.

1.50 “Patent Rights” means all existing patents and patent applications and all patent applications hereafter filed and patents hereafter issued, including without limitation any continuations, continuations-in-part, divisions, provisionals or any substitute applications, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

1.51 “Phase I Study” means a study in humans which provides for the first introduction into humans of a product, conducted in normal volunteers or patients to get information on product safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in 21 C.F.R. § 312.21(a) (or the foreign equivalent thereof).

1.52 “Phase II Study” means a study in humans of the safety, dose ranging and efficacy of a product, which is prospectively designed to generate sufficient data (if successful) to commence pivotal clinical trials, as further defined in 21 C.F.R. § 312.21(b) (or the foreign equivalent thereof).

1.53 “Phase III Study” means a controlled and lawful study in humans of the efficacy and safety of a product, which is prospectively designed to demonstrate statistically whether such product is effective and safe for use in a particular indication in a manner sufficient to file an NDA to obtain regulatory approval to market the product, as further defined in 21 C.F.R. § 312.21(c) (or the foreign equivalent thereof).

1.54 “Product” means any final dosage form or formulation of a compound for marketing for therapeutic or pharmaceutical use in humans.

1.55 “Profile” means either the Bcl-2 Selective Profile, the Bcl-xL Selective Profile or the Dual Profile. “Bcl-2 Selective Profile” means all Licensed Compounds whose biological activity is primarily based upon their interaction with Bcl-2 (but not Bcl-xL). “Bcl-xL Selective Profile” means all Licensed Compounds whose biological activity is primarily based upon their interaction with Bcl-xL (but not Bcl-2). “Dual Profile” means all Licensed Compounds whose biological activity is primarily based upon their interaction with both Bcl-2 and Bcl-xL.

1.56 “Regulatory Approval” means any and all approvals (including any applicable governmental price and reimbursement approvals), licenses, registrations, or authorizations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity that are necessary and sufficient for the marketing and sale of a product in a country or group of countries.

1.57 “Regulatory Authority” means, with respect to a country, the regulatory authority of such country with authority over the testing, manufacture, use, storage, importation, promotion, marketing and sale of a pharmaceutical product in such country.

1.58 “Required Third Party Payments” shall mean payments to a Third Party (including license fees, milestone payments and royalties) to license Patent Rights covering such

 

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Third Party’s Intellectual Property Rights if, in the absence of such license, Novartis’s exercise of its licenses under the Infinity Patent Rights would infringe the composition of matter or method of use claims in such Third Party’s Patent Rights.

1.59 “Research Program” means all research and drug discovery activities conducted by the Parties during the Research Term pursuant to the Research Plan with an aim to discover, identify, or design Research Program Active Compounds.

1.60 “Research Program Active Compound” means a compound demonstrated by Infinity prior to the Effective Date or by either Party in the course of the Research Program to have Threshold Activity against a Target and which is included on the Active Compound List.

1.61 “Research Term” means the period of funded research described in Section 2.1.3 (as may be extended in accordance therewith and as shall terminate if the Term earlier terminates).

1.62 “sPoC” means the selection and approval of a Licensed Compound for the clinical phase of development by Novartis’ Translational Research Translational Development board (or its successor). The specific criteria to be used by the Translational Research Translational Development board shall be set forth in the Research Plan; provided, however, that, in any event, if a Licensed Compound enters GLP toxicology testing, it shall be deemed to have achieved sPoC.

1.63 “Stock Purchase Agreement” means the Series D Preferred Stock Purchase Agreement entered into by Infinity and Novartis Pharma AG on the Effective Date.

1.64 “Targets” means (a) Bcl-2 alone (selected against Bcl-xL); (b) Bcl-xL alone (selected against Bcl-2); and (c) Bcl-2/Bcl-xL together (each of the foregoing, a “Target”).

1.65 “Territory” means worldwide.

1.66 “Third Party” means any person or entity other than a Party or any of its Affiliates.

1.67 “Threshold Activity” means, with respect to a Target, [**] activity against such Target in a biochemical displacement assay.

1.68 “Valid Patent Claim” means: (a) a claim in any unexpired patent that has not been held invalid by a decision by a court or other appropriate body of competent jurisdiction; provided, however, that, if the decision of such court or body is later reversed or otherwise becomes nonbinding, such claim shall be reinstated as a Valid Patent Claim; or (b) a claim in any pending patent application that shall not have been abandoned with no rights remaining, or has not been pending for more than [**] years; provided, however, that if such claim is later allowed, such claim shall be reinstated as a Valid Patent Claim.

 

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1.69 Additional Definitions. Each of the following definitions is set forth in the section of this Agreement indicated below:

 

 

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2. Research.

2.1 Research Program.

2.1.1 Goals. The primary objective of the Research Program shall be to discover, characterize, and optimize novel small-molecule inhibitors of the Targets suitable for development and commercialization as Licensed Products.

2.1.2 Research Plan; Recordkeeping. During the Research Term, each Party shall use commercially reasonable efforts to perform its obligations under the research plan, which shall be approved by the JRC within [**] days after the Effective Date and attached hereto as Exhibit A (as may be amended pursuant to Section 2.1.3 and/or 2.4.5, the “Research Plan”). The Research Plan shall set forth the roles and responsibilities of each Party, including the scientific personnel allocated to the Research Program. In particular, during the initial two (2) year Research Term, Novartis shall dedicate at least [**] FTEs simultaneously to seek to identify a Research Program Active Compound as a development candidate for GLP toxicology testing leading to the filing of an IND with respect to a Licensed Product. The Parties shall maintain complete and accurate records of all work, results, data, and developments made pursuant to its efforts under the Research Plan. Such records shall fully and properly reflect all work done and results in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.

2.1.3 Length and Scope of Research Program. The Research Program is initially scheduled to be in effect for two (2) years, starting on March 1, 2006. The Research Term may be extended for up to two (2) additional one (1) year periods at the discretion of Novartis, in which case the Parties shall agree upon appropriate amendments to the Research Plan and Infinity shall not be required to dedicate more than [**] Infinity FTEs to the Research Program during each such year without Infinity’s prior written consent. Thereafter, the Research Term may be amended only by mutual written agreement of the Parties.

2.1.4 Active Compound List. Attached hereto as Exhibit B is a list of the Research Program Active Compounds existing as of the Effective Date. From time to time during the Research Term, the Parties shall revise such list (such list, as revised from time to time, the “Active Compound List”) to specify the compounds demonstrated in the course of the Research Program to have Threshold Activity against a Target. Following the Research Term but during the Term, Novartis shall revise the Active Compound List to specify the Analogs designed, discovered or synthesized by or on behalf of Novartis after the Research Term and demonstrated during the Term to have Threshold Activity against a Target.

2.2 Exclusivity. Provided that Novartis is performing its obligations diligently with respect to any Profile in accordance with Section 3.3, Infinity shall not, directly or indirectly, research, Develop or commercialize any compounds or products in connection with any Target, other than in accordance with this Agreement, during the Research Term and thereafter until the later of (a) five (5) years after the end of the Research Term or (b) Infinity’s termination or waiver of all rights with respect to (i) the Development and Co-Detailing Rights of all Profiles and (ii) the research, Development and commercialization of any Profile as an Abandoned Profile; provided, however, that, if Infinity conducts research, Development and/or commercialization of any

 

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Profile as an Abandoned Profile in accordance with this Agreement, then such period shall be extended until the later of (A) five (5) years after the end of Infinity’s research, Development and commercialization activities with respect to such Abandoned Profile or (B) Infinity’s termination or waiver of all rights with respect to such Abandoned Profile. Furthermore, following the end of the Research Term, Infinity shall not modify by chemical and/or molecular-genetic means any Licensed Compound then on the Active Compound List, other than in accordance with this Agreement.

2.3 Novartis Opt-In Rights on Abandoned Licensed Compounds. If, as a result of any research and development activities conducted pursuant to Section 3.3.1 with respect to an Abandoned Profile, Infinity plans to initiate a Phase III Study with respect to an Abandoned Profile Licensed Compound for such Abandoned Profile, then Infinity shall provide written notice thereof to Novartis including: (a) the rationale for the decision to conduct such Phase III Study; and (b) the estimated date of the first dosing of the first patient in such Phase III Study; (c) all data and information supporting such Phase III Study; (d) a summary of the Development Costs incurred to that point. In no event shall there occur the first dosing of the first patient in a Phase III Study prior to Infinity having delivered such notice to Novartis and expiration of Novartis’ opt-in rights contemplated by this Section 2.3. Novartis shall have a period of [**] days from the date it receives Infinity’s notice to audit the Development Costs incurred to that point and exercise its opt-in rights by providing written notice thereof to Infinity (such [**] day period, the “Pivotal Opt-In Period”). Infinity shall provide reasonable assistance to Novartis in connection with such audit. If Novartis so exercises its opt-in rights, the Abandoned Profile and the related Abandoned Profile Licensed Compounds shall, from and after such exercise, again become a Profile and Licensed Compounds, respectively, hereunder, and Novartis shall pay Infinity an amount equal to the sum of: (i) all Development Costs incurred by Infinity directly in connection with its Development of such Abandoned Profile Licensed Compound multiplied by [**]; and (ii) any Milestone Payment for each of the milestones pursuant to Section 7.4.2 (each, a “Development Milestone”) achieved by Infinity with respect to such Abandoned Profile Licensed Compound that would have been otherwise due if such compound was a Licensed Compound and such milestone had been achieved by Novartis; and (iii) an opt in fee of $[**]. Notwithstanding the foregoing, Infinity may, at its discretion, provide written notice to Novartis prior to commencing a Phase II Study with respect to such Abandoned Profile Licensed Compound, which notice shall include the following: (a) the rationale for the decision to conduct such Phase II Study; and (b) the estimated date of the first dosing of the first patient in such Phase II Study; (c) all data and information supporting such Phase II Study; and (d) a summary of the Development Costs incurred to that point. Novartis shall have a period of [**] days from the date it receives Infinity’s notice to audit the Development Costs incurred to that point and exercise its opt-in rights by providing written notice thereof to Infinity. Infinity shall provide reasonable assistance to Novartis in connection with such audit. If Novartis exercises its opt-in rights, the Abandoned Profile and the related Abandoned Profile Licensed Compounds shall, from and after such exercise, again become a Profile and Licensed Compounds, respectively, hereunder, and Novartis shall pay Infinity an amount equal to the sum of: (i) all Development Costs incurred by Infinity directly in connection with its Development of such Abandoned Profile Licensed Compound multiplied by [**]; and (ii) any Milestone Payment for each of the Development Milestones achieved by Infinity with respect to such Abandoned Profile Licensed Compound that would have been otherwise due if such compound was a Licensed Compound and such milestone had been achieved by Novartis; and (iii) an opt in fee of

 

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$[**]. Notwithstanding the foregoing, Novartis may opt in at any time prior to the commencement by Infinity of a Phase III Study with respect to such Abandoned Profile Licensed Compound by paying to Infinity an amount equal to the sum of: (i) all Development Costs incurred by Infinity directly in connection with its Development of such Abandoned Profile Licensed Compound multiplied by [**]; and (ii) any Milestone Payment for each of the Development Milestones achieved by Infinity with respect to such Abandoned Profile Licensed Compound that would have been otherwise due if such compound was a Licensed Compound and such milestone had been achieved by Novartis; and (iii) an opt in fee of $[**]. In any event, if Novartis does not exercise its opt-in rights pursuant to this Section 2.3 on or before the end of the Pivotal Opt-In Period, then Infinity shall have no further obligation to Novartis with respect to such Abandoned Profile and related Abandoned Profile Licensed Compounds.

2.4 Joint Research Committee.

2.4.1 JRC Formation. The Parties shall establish a joint research committee (the “Joint Research Committee” or “JRC”), comprised of three (3) representatives of Infinity and three (3) representatives of Novartis, each of whom shall have experience and seniority sufficient to enable him or her to make decisions on behalf of the Party he or she represents. The initial representatives of each Party to the JRC are specified in Exhibit C. Each Party may change any one or more of its representatives to the JRC at any time upon written notice to the other Party. The number of representatives appointed by each Party to the JRC may be modified by mutual agreement of the Parties; provided, that at all times the number of representatives from each Party shall be equal.

2.4.2 Schedule and Minutes. The JRC shall meet within thirty (30) days after the Effective Date and, thereafter, at least quarterly. The representatives of the JRC will mutually agree on the schedule for meetings. A representative of the Party hosting a meeting of the JRC shall serve as secretary of that meeting. The secretary of the meeting shall prepare and distribute to all members of the JRC minutes of the meeting for review and comment. Such minutes shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations approved by the JRC. Minutes of the JRC meeting shall be approved or disapproved, and revised as necessary, at the next meeting of the JRC.

2.4.3 Location and Attendance. The location of meetings of the JRC shall alternate between the offices of each party in Cambridge, MA, or as otherwise agreed by the Parties. The JRC may also meet by means of telephone conference call or videoconference, except that at least one (1) meeting per calendar year will be held in person. Each Party shall use reasonable efforts to cause its representatives to attend the meetings of the JRC. If a Party’s representative to the JRC is unable to attend a meeting, such Party may designate an alternate to attend such meeting in place of the absent representative. In addition, each Party may, at its discretion, invite non-voting employees, and, with the consent of the other Party, consultants or scientific advisors, to attend the meetings of the JRC.

2.4.4 Decision Making Process. Each Party, acting through its representatives to the JRC, shall have one vote on the JRC. Any decision of the JRC shall require the affirmative vote of both Parties, through their representatives to the JRC. Any dispute at the JRC

 

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shall be referred to the Chief Scientific Officer of Infinity and the Head of Oncology Research of Novartis for good faith resolution. In the event that the dispute is not resolved, Novartis shall have the deciding vote. No such decisions shall obligate Infinity to spend money or devote resources outside those previously agreed to in the mutually-agreed Research Plan, in no event may the JRC or Novartis amend the terms of this Agreement or override Infinity’s rights specified in Sections 2.4.5(b) or 12.3 and in no event may Novartis unilaterally (a) determine that a Licensed Compound shall be recategorized into a Profile as set forth in Section 2.4.6, (b) change the criteria for the Profiles without compelling and convincing data that indicates that the criteria are unlikely to result in clinical differentiation (provided, however, that if there is a dispute over whether such data is compelling and convincing, Novartis shall have the deciding vote), or (c) determine that it has fulfilled any obligations hereunder or that Infinity has breached any obligations hereunder.

2.4.5 Responsibilities. The JRC shall be responsible for: (a) developing, approving and revising the Research Plan; (b) overseeing the research activities pursuant to the Research Plan, including the research budget (provided that no fewer than [**] Infinity FTEs shall be funded in each year during the first two (2) years of the Research Term); (c) attempting to resolve disputes with respect to such activities; (d) approving the Controlled Contractors to be utilized by Infinity in the Research Program; and (e) assuming such other responsibilities as are expressly set forth in this Agreement.

2.4.6 Assignment of Licensed Compounds to a Profile. Within [**] days after the Effective Date, the JRC shall establish the criteria (which may be amended from time to time by mutual agreement of the Parties) for the Selective Profiles and the Dual Profile which shall include the following: (i) potency against Bcl-2 and Bcl-xL in both biochemical and cellular assays; (ii) level of selectivity for Bcl-2 and Bcl-xL in both biochemical and cellular assays; (iii) determining appropriate in-vivo experiments to differentiate between the Profiles; (iv) minimum criteria for determining an acceptable expected clinical differentiation between the Profiles (including, without limitation, differential safety and efficacy) that warrant further development efforts; and (v) any other criteria that the JRC, in its reasonable judgment, deems relevant; provided, however, that if, at the time GLP toxicology is completed for the second Profile, (A) the clinical differentiation criteria as described above has not been realized, or (B) the clinical differentiation criteria as described above has been realized but additional compelling and convincing data indicates that the criteria are unlikely to result in clinical differentiation, then in either of case (A) or (B), the relevant Licensed Compounds shall be recategorized into the first Profile; and provided, further, however, that once a Licensed Compound enters clinical Development, the Profile for such Licensed Compound shall not change.

2.4.7 Independence. Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity.

3. Development.

3.1 Selection of Licensed Compounds for Development. Novartis shall have the sole right to select Licensed Compounds for development into Licensed Products, to discontinue development of Licensed Products, to substitute new or back-up Licensed Products for

 

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discontinued ones, to control the Development thereof, and to hold all Drug Approval Applications and obtain and hold all Regulatory Approvals with respect thereto on a worldwide basis, subject to the obligations of diligence set forth in this Section 3.

3.2 Conduct of Development Activities.

3.2.1 Generally. Novartis shall conduct and lead the Development of the Licensed Products according to a written plan consistent with the terms of this Agreement (the “Development Plan”). Novartis shall have responsibility for preparing the Development Plan, which may be amended by Novartis from time to time based on the results achieved in the Development of Licensed Products. Infinity will participate in the design and execution of clinical trials under the Development Plan, in accordance with Section 3.2.2 and consistent with Infinity’s capabilities and subject to Novartis’s approval, not to be unreasonably withheld. Both Parties shall conduct their development activities in good scientific manner, and in compliance with applicable Laws (including any governing GLP, GCP, or GMP requirements). Any dispute between the Parties with respect to the conduct of such Development activities shall be referred to the Vice President, Clinical Development and Medical Affairs of Infinity and the Head of Development of Novartis Oncology for good faith resolution. In the event that the dispute is not resolved, Novartis shall make the final decision. No such decisions shall obligate Infinity to spend money or devote resources outside those previously agreed to in the mutually-agreed Research Plan, in no event may Novartis amend the terms of this Agreement or override Infinity’s rights specified in Sections 2.4.5(b) or 12.3 and in no event may Novartis unilaterally (a) determine that a Licensed Compound shall be recategorized into a Profile as set forth in Section 2.4.6, (b) change the criteria for the Profiles without compelling and convincing data indicates that the criteria are unlikely to result in clinical differentiation (provided, however, that if there is a dispute over whether such data is compelling and convincing, Novartis shall have the deciding vote) or (c) determine that it has fulfilled any obligations hereunder or that Infinity has breached any obligations hereunder.

3.2.2 Infinity Participation in Development. If Infinity wishes to initiate any development activity (including any clinical trial) under the Development Plan for any Licensed Product, it shall submit a request to Novartis and provide a draft protocol for any proposed development activity that it wishes to undertake as well as an implementation plan and budget for such activities. Novartis shall consider such request in good faith and may approve in its sole discretion, but shall have no obligation to agree to such a request. In the event that Novartis agrees to permit Infinity to conduct any development activities, (a) Infinity shall conduct such activities under the Development Plan pursuant to the written implementation plan and budget approved by Novartis, and (b) Novartis shall reimburse Infinity’s Development Costs incurred in accordance therewith, monthly in arrears, with payment due to Infinity forty-five (45) days after the receipt of an invoice and Infinity may submit such invoice at the end of the relevant month. Novartis will not be responsible for cost overruns of the budget approved by Novartis in excess of [**] percent ([**]%) of the budget approved. Infinity shall promptly report to Novartis all inventions developed by Infinity under the Development Plan.

 

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3.3 Diligence.

3.3.1 Development Diligence and Abandoned Profile. If, at any time after the end of the Research Term, Novartis provides written notice of its intention to have itself, its Affiliates and sublicensees terminate all research, Development and commercialization activities hereunder with respect to a Profile (but not all Profiles), Novartis may declare such Profile an “Abandoned Profile” by providing written notice thereof to Infinity, and shall specify in writing to Infinity the Abandoned Profile Licensed Compound(s) with respect to such Abandoned Profile for which Infinity may conduct research, development and commercialization activities, in which case, subject to Section 2.3, Infinity may, at its sole expense, conduct research, development and commercialization activities with respect to such Abandoned Profile and all related Abandoned Profile Licensed Compounds, and, except as provided in Section 8.4, such Abandoned Profile shall no longer be a Profile and such Abandoned Profile Licensed Compounds shall no longer be Licensed Compounds. Infinity may design, discover and synthesize Analogs of such Licensed Compounds or other compounds directed to the relevant Target, which Analogs and other compounds shall be considered Abandoned Profile Licensed Compounds subject to Novartis’ written consent.

3.3.2 Development Diligence. Novartis shall dedicate commercially reasonable efforts, during each [**] month period, necessary to continue the advancement of Licensed Compounds and Licensed Products with respect to at least one Profile towards the next clinical Development milestone or approval milestone, as described in Sections 7.4.2 or 7.4.3, respectively. If Novartis (itself or through its Affiliates or sublicensees) fails to dedicate commercially reasonable efforts, during any [**] month period, necessary to continue the advancement of Licensed Compounds and Licensed Products with respect to at least one Profile towards such next milestone, then any dispute regarding Novartis’ failure of development diligence with respect to such Profile shall be resolved in accordance with Article 13.

3.3.3 Commercialization Diligence. Novartis shall dedicate commercially reasonable efforts, during each [**] month period, necessary to commercialize a Licensed Product for a Profile, after receipt of Regulatory Approval therefor, in any of the U.S., Japan or the EU Major Market Countries. If Novartis commercializes a Licensed Product for a Profile, after receipt of Regulatory Approval therefor, in any of the U.S., Japan or the EU Major Market Countries, Novartis will be deemed to satisfy all diligence obligations with respect to such Profile.

3.4 Development Reports. Novartis shall provide Infinity with a copy of the Development Plan, as well with updates thereto, promptly after they become available, and shall meet with Infinity at least quarterly to deliver a written and verbal summary of progress under the Development Plan. Specifically, Novartis shall provide Infinity with: (a) strategies for the development of any Licensed Products; (b) progress against the Development Plan and any amendments thereto; and (c) summaries of the results and data related to Development of Licensed Products. Novartis shall consider any comments or suggestions of Infinity regarding the Development Plan.

3.5 Protection of Research Program Materials. In order to facilitate the testing or development of one or more Licensed Compounds, each Party may provide to the other Party

 

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certain biological materials or chemical compounds Controlled by the supplying Party, including Licensed Compounds, for use by the other Party in furtherance of this Agreement. The receiving Party shall use all such materials only as permitted under the applicable license rights granted under this Agreement and subject to all other restrictions and obligations under this Agreement. Except as otherwise provided under this Agreement, all such materials delivered to the other Party will remain the sole property of the supplying Party, will be used only in furtherance of and in accordance with this Agreement, will not be used or delivered to or for the benefit of any Third Party without the prior written consent of the supplying Party, and will be used in compliance with all applicable laws, rules and regulations. The materials supplied under this Agreement shall be used with prudence and appropriate caution in any experimental work because not all of their characteristics may be known. THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

3.6 Development Records. Novartis and Infinity shall maintain complete and accurate records of all development work and all results, data, and developments made pursuant to its efforts under the Development Plan. Such records shall fully and properly reflect all work done and results achieved in the performance of development activities in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.

3.7 Development Expenses. Novartis shall be solely responsible for the costs and expenses of Developing and commercializing Licensed Products pursuant to the terms of this Agreement, except with respect to Infinity’s research, development and commercialization activities with respect to an Abandoned Profile pursuant to Section 3.3.1 (subject to Section 2.3).

4. Licenses.

4.1 Infinity Grant. Infinity hereby grants Novartis and its Affiliates an exclusive license, with the right to sublicense (subject to Section 4.3), under Infinity Intellectual Property, to research, develop, make, have made, use, offer for sale, sell and import Licensed Compounds and Licensed Products in the Territory for use in the Field (subject to Section 7.6 and provided that Infinity retains the right to practice under the Infinity Intellectual Property to (a) perform its obligations to Novartis under this Agreement and (b) to research, develop, make, have made, use, offer for sale, sell and import Abandoned Profile Licensed Compounds for which Novartis granted Infinity the right to conduct research, development and commercialization activities pursuant to Section 3.3.1, and Products containing such compounds). Novartis shall provide written notice to Infinity promptly after granting any sublicense under the foregoing license to any Third Party (other than a Controlled Contractor). Nothing in this Agreement shall prevent Infinity from using (itself or through its Affiliates), or from licensing to a Third Party the right to use, any of Infinity’s Know-How which is not specific to the Targets or Licensed Compounds.

 

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4.2 Limited Novartis Grants.

4.2.1 Novartis hereby grants to Infinity a worldwide, non-exclusive license under Intellectual Property Rights Controlled by Novartis, without the right to grant sublicenses (except to the extent as may be permitted under the Research Plan or as otherwise approved in writing by Novartis) solely to the extent necessary or appropriate to perform Infinity’s obligations under this Agreement.

4.2.2 If Novartis makes one or more Analogs of a Research Program Active Compound, which Research Program Active Compound is on the Active Compound List as of the Effective Date or is included on the Active Compound List by Infinity during the Research Term and such Analog is added to the Active Compound List, Novartis hereby grants to Infinity a perpetual, worldwide, royalty-free, fully paid, non-exclusive license to research, develop, make, use, offer for sale, sell, import and otherwise commercialize any product containing a compound designed, discovered or synthesized by Infinity (an “Infinity Developed Compound”), under any patent claim in Patent Rights Controlled by Novartis that covers such Analogs, provided that such license does not apply to Licensed Compounds or Analogs thereof supported by structure-activity data; and, provided, further, that Novartis may revoke such license at any time with respect to any product containing an Infinity Developed Compound which is the same as any compound for which Novartis is conducting clinical development or which Novartis is commercializing (a “Novartis Independent Compound”) or an analog of a Novartis Independent Compound supported by structure-activity data (such analogs, collectively with the Novartis Independent Compounds, the “Novartis Independent Collection”), unless Infinity has a Continuing License (as defined below) with respect to such Infinity Developed Compound. Such license shall further include the right to grant sublicenses to Affiliates of Infinity and to Third Parties. Novartis shall promptly notify Infinity of the filing of any such patent claim. If Infinity at any time desires to be certain that any Infinity Developed Compound is not the same as a compound in the Novartis Independent Collection, Infinity may notify Novartis in writing of such Infinity Developed Compound and Novartis shall, within [**] days after receipt of such notice, notify Infinity in writing of whether such Infinity Developed Compound is the same as a compound then in the Novartis Independent Collection. If Novartis so notifies in Infinity that such Infinity Developed Compound is not the same as a compound then in the Novartis Independent Collection or if Novartis does not provide written notice to Infinity within such [**] day period, then Infinity shall be deemed to have a “Continuing License” with respect to such Infinity Developed Compound.

4.2.3 Novartis hereby grants Infinity an exclusive license, with the right to sublicense (subject to Section 4.3), in the Territory for use in the Field, under any Patent Rights Controlled by Novartis based on Inventions to research, develop, make, have made, use, offer for sale, sell and import Abandoned Profile Licensed Compounds for which Novartis granted Infinity the right to conduct research, development and commercialization activities pursuant to Section 3.3.1, and Products containing such compounds. Such license shall be perpetual and irrevocable, subject to the provisions of Section 2.3 during the Term.

4.3 Sublicense Rights. Wherever in this Agreement either Party is granted the right to grant sublicenses (including granting to sublicensees the right to grant further sublicenses for the purposes of having Licensed Compounds or Abandoned Profile Licensed Compounds made)

 

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which is subject to this Section 4.3, then, in the case of Novartis, Novartis may exercise such right without obtaining the prior approval of Infinity and, in the case of Infinity, Infinity must obtain the prior approval of Novartis with respect to any sublicense pursuant to (a) Section 4.2.1, and (b) Section 4.2.3 other than any sublicense to (i) a Controlled Contractor or (ii) any Affiliate or Third Party if Novartis does not exercise its opt-in rights pursuant to Section 2.3 on or before the end of the relevant Pivotal Opt-In Period, and otherwise need not obtain Novartis’ prior written approval; provided that any sublicense granted under this Agreement occurs pursuant to a written agreement that subjects such sublicensee to all relevant restrictions and limitations in this Agreement. Except as otherwise agreed to by the Parties in writing, each Party shall be jointly and severally responsible with its sublicensees to the other Party for failure by its sublicensees to comply with, and each Party guarantees the compliance by each of its sublicensees with, all such applicable restrictions and limitations in accordance with the terms and conditions of this Agreement.

4.4 Section 365(n) of The Bankruptcy Code. All righ