COLLABORATION AGREEMENT

Exhibit 10.39

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

COLLABORATION AGREEMENT

T HIS C OLLABORATION A GREEMENT (this “ Agreement ”) is made and entered into as of December 22, 2006 (the “ Effective Date ”) by and between E XELIXIS , I NC . , a Delaware corporation having its principal place of business at 170 Harbor Way, P.O. Box 511, South San Francisco, California 94083-0511 (“ Exelixis ”), and G ENENTECH , I NC ., a Delaware corporation having its principal place of business at 1 DNA Way, South San Francisco, California 94080 (“ Genentech ”). Exelixis and Genentech are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

R ECITALS

A. Genentech is a health care company that has expertise and capability in researching, developing and marketing human pharmaceuticals.

B. Exelixis is a drug discovery company that has expertise and proprietary technology relating to therapeutics that modulate signal transduction pathways involved in oncology and other disease areas.

C. Genentech and Exelixis desire to establish a collaborative development and commercialization program under which Genentech would sponsor certain programs at Exelixis for the generation, screening and research validation of therapeutics directed against a signal transduction pathway target important to oncology. In return, Genentech would have the ability to jointly develop such therapeutics with Exelixis, and to commercialize such therapeutics either on its own or, in the United States, through a co-promotion arrangement with Exelixis.

N OW , T HEREFORE , the Parties agree as follows:

ARTICLE 1

D EFINITIONS

Capitalized terms used in this Agreement (other than the headings of the Sections or Articles) shall have the following meaning set forth in this Article 1, or, if not listed in this Article 1, the meaning as designated in the text of this Agreement.

1.1 “Actual Sales” has the meaning set forth in Exhibit A .

1.2 “Affiliate” means, with respect to a Party, any person, corporation, partnership or other entity that directly or indirectly controls or is controlled by or is under common control with such Party. For purposes of this definition, the term “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power,

 

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

either directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity, whether by the ownership of fifty percent (50%) or more of the voting stock of such entity, or by contract or otherwise. In the case of Genentech, for purposes of this Agreement, the term “Affiliate” shall not include Roche Holdings Ltd., Roche Holdings Inc., F. Hoffman-La Roche Ltd., F. Hoffman-La Roche Inc. or any of their Affiliates that is not a Genentech Affiliate.

1.3 “Back-Up Compound” means each of the following: (a) the Existing Back-Ups; and (b) any Program Back-Ups.

1.4 “Back-Up Period” means the period of time beginning on the Effective Date and ending on the later of: (a)  [ * ] after the [ * ] (as defined in Section  [ * ] ; or (b)  [ * ] after the [ * ] ; provided, however, if [ * ] , then such Back-Up Period shall be [ * ] after the [ * ] .

1.5 “Back-Up Set” has the meaning set forth in Section 3.3(c).

1.6 “Collaboration” means the program established under this Agreement, which includes collaborative research and certain collaborative development of Collaboration Compounds and Licensed Products, and which may include co-promotion of Licensed Products containing those Collaboration Compounds.

1.7 “Collaboration Compounds” means: (a) the Existing Compound (such Existing Compound shall cease to be a Collaboration Compound if and when Genentech fails to exercise its Opt-In rights with respect to such Existing Compound pursuant to Section 3.4(b)); and (b) Back-Up Compounds (such Back-Up Compounds shall cease to be Collaboration Compounds if and when Genentech fails to exercise its Opt-In rights with respect to such Back-Up Compound pursuant to Section 3.4(c)).

1.8 “Collaborative Development Period” means the period of time beginning as of the Effective Date and ending on the latest to occur of: (a) Genentech’s Opt-In under Section 3.4; (b) the end of the Back-Up Period; and (c) Exelixis’ completion or cessation of all activities under any Exelixis Work Plan.

1.9 “Competing Product” means any product that contains, as its active ingredient, [ * ] identified or optimized [ * ] .

1.10 “Competing Program” has the meaning set forth in Section 3.7.

1.11 “Confidential Information” has the meaning set forth in Section 10.1.

1.12 “Control” means ownership or other legal authority or right of a Party or any of its Affiliates to grant a license or sublicense of intellectual property rights to another Party or its Affiliates, without the grant or such license or sublicense alone constituting a material breach of an agreement between that Party (or its Affiliates) and a Third Party.

1.13 “Cover” means, with respect to a particular Patent and a particular Licensed Product (or a Collaboration Compound, as applicable), that the manufacture, use, sale, offer for sale or importation of such Licensed Product (or Collaboration Compound, as applicable) in a country would infringe a Valid Claim of such Patent in that country.

 

2.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

1.14 “DC” or “Development Criteria” means the set of characteristics agreed upon by the Parties prior to the Effective Date and attached to this Agreement as Exhibit B .

1.15 “Derived Inventions” has the meaning set forth in Section 8.5(b).

1.16 “Derived Patents” has the meaning set forth in Section 8.5(b).

1.17 “Development Costs” means the costs actually incurred by or on behalf of a Party for [ * ] .

1.18 “Development End-Point” means a set of characteristics agreed upon by the Parties prior to the Effective Date and attached to this Agreement as Exhibit D.

1.19 “Development Plan” has the meaning set forth in Section 3.5.

1.20 “Diagnostic Product” means a product or service, including analysis of human blood or tissue samples, developed or used for the purpose [ * ] .

1.21 “Diligent Efforts” means: (a) where applied to carrying out specific tasks and obligations under this Agreement, means deploying appropriate resources [ * ] ; and (b) where applied to development or commercialization of a product, the use of efforts and deployment of resources, [ * ] .

1.22 “Excluded Compound” means (a) EXEL-5518 and [ * ] of EXEL-5518 if and when Genentech fails to exercise its Opt-In rights with respect to the Existing Compound pursuant to Section 3.4(b), and (b) the Back-Up Compounds (for clarity, including [ * ] thereto) if and when Genentech fails to exercise its Opt-In rights with respect to such Back-Up Compounds pursuant to Section 3.4(c).

1.23 “Exelixis [ * ] Patents” means all Exelixis Licensed Patents that do not Cover [ * ] , but that do Cover [ * ] : (a)  [ * ] that is [ * ] ; or (b)  [ * ] that is [ * ] and does not involve the use of a [ * ] , where, for purposes of this Section 1.21, [ * ] means that the [ * ] was [ * ] , or is otherwise [ * ] . For clarity, an Exelixis Licensed Patent Covering [ * ] shall not be considered an Exelixis Licensed Patent Covering [ * ] .

1.24 “Exelixis Diagnostic IP” means either or both: (a) all Information (excluding any Patents) Controlled by Exelixis, including Information Controlled jointly with Genentech, as of the Effective Date or during the term of this Agreement, that (i)  [ * ] for Genentech to develop, manufacture or commercialize a Diagnostic Product and (ii) was developed by Exelixis prior to the Effective Date or pursuant to this Agreement; and (b) all Patents that are Controlled by Exelixis, including Patents Controlled jointly with Genentech, as of the Effective Date or at any time during the term of this Agreement, to the extent such Patents (i) claim an invention made by Exelixis prior to the Effective Date or pursuant to this Agreement and (ii) (1) Cover a Diagnostic Product; [ * ] for Genentech to develop, manufacture or commercialize any Diagnostic Product.

 

3.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

1.25 “Exelixis Licensed Know-How” means all proprietary Information (excluding any Patents) and all proprietary Material Controlled by Exelixis, including proprietary Information and proprietary Material Controlled jointly with Genentech, as of the Effective Date or at any time during the term of this Agreement, that is (a) related to a Collaboration Compound (or a composition containing that Collaboration Compound or the manufacturing or use of that Collaboration Compound) [ * ] for Genentech to exercise the rights licensed to it under this Agreement or to perform its obligations under this Agreement.

1.26 “Exelixis Licensed IP” means the Exelixis Licensed Know-How and the Exelixis Licensed Patents.

1.27 “Exelixis Licensed Patents” means all Patents that are Controlled by Exelixis, including Patents Controlled jointly with Genentech, as of the Effective Date or at any time during the term of this Agreement, that: (a) Cover a Collaboration Compound; [ * ] for Genentech exercise the rights licensed to it under this Agreement or to perform its obligations under the Agreement.

1.28 “Exelixis Work Plan” means any written plan agreed by the Parties with respect to, or used by the Parties as the basis of engaging in, any of the following activities: (a) pre-clinical studies and Phase I Clinical Trials of the Existing Compound; and (b) identification, discovery, optimization, research, pre-clinical studies or Phase I Clinical Trials of or related to Back-Up Compounds pursuant to Section 3.3.

1.29 “Existing Back-Ups” means [ * ] , and [ * ] .

1.30 “Existing Compound” means any or all of the following: (a) EXEL-5518 (or XL-518); and (b) all [ * ] of EXEL-5518 (or XL-518).

1.31 “FDA” means the U.S. Food and Drug Administration, or any successor entity thereto.

1.32 “Field” means all human prophylactic and therapeutic uses.

1.33 “Financial Appendix” means Exhibit A to this Agreement, which sets forth certain terms and conditions related to sharing of costs, expenses and profits for Licensed Product(s) in the Profit-Share Territory.

1.34 “First Commercial Sale” means, for any Licensed Product, and on a country-by-country basis in each country in which that Licensed Product is sold, the first arm’s-length sale to a Third Party for use or consumption by an end-user of that Licensed Product in that country, after obtaining Regulatory Approval for sale of that Licensed Product in that country. A First Commercial Sale shall not include a sale of any Licensed Product for use in clinical trials, for research or for other non-commercial uses, or supply of a Licensed Product as part of a compassionate use or similar program.

1.35 “FTE” means the equivalent of a full-time employee’s work time over a twelve (12) month period (including normal vacations, sick days and holidays). [ * ] .

 

4.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

1.36 “GAAP” means United States generally accepted accounting principles, consistently applied.

1.37 “Genentech Know-How” means all proprietary Information (excluding any Patents) and any proprietary Material Controlled by Genentech, including proprietary Information and proprietary Material Controlled jointly with Exelixis, as of the Effective Date or at any time during the term of this Agreement that is: (a) related to an Excluded Compound or Collaboration Compound (or a composition containing that Excluded Compound or Collaboration Compound, or the manufacturing or use of that Excluded Compound or Collaboration Compound); [ * ] for Exelixis to exercise the rights licensed to it under this Agreement or to perform its obligations under this Agreement, but only to the extent such Information is created, or such Material is synthesized or first produced, by or on behalf of Genentech (solely or jointly with Exelixis) pursuant to performing Genentech’s obligations or exercising Genentech’s rights under the Agreement (including performing Genentech Research).

1.38 “Genentech Licensed IP” means the Genentech Know-How and the Genentech Licensed Patents.

1.39 “Genentech Licensed Patents” means any and all Patents that are Controlled by Genentech, including Patents Controlled jointly with Exelixis, as of the Effective Date or at any time during the term of this Agreement, that: (a) Cover a Collaboration Compound or an Excluded Compound; [ * ] for Exelixis to exercise the rights licensed to it under the Agreement or to perform its obligations under the Agreement, but only, under each of (a) and (b), such Patents claiming inventions conceived and reduced to practice by or on behalf of Genentech pursuant to performing Genentech’s obligations or exercising Genentech’s rights under the Agreement (including performing Genentech Research).

1.40 “Genentech Research IP” means any and all: (a) Patents that are Controlled by Genentech, including Patents Controlled jointly with Exelixis, as of the Effective Date or at any time during the Collaborative Development Period that are [ * ] for Exelixis to perform its obligations under Article 3 or Section 4.1 or the Co-Promotion Agreement, and (b) Information and Materials provided by Genentech to Exelixis for the purpose of Exelixis performing its obligations under Article 3 or Section 4.1 or the Co-Promotion Agreement.

1.41 “Genentech Research” has the meaning set forth in Section 3.2(c).

1.42 “[ * ]” has the meaning set forth in Section [ * ] .

1.43 “IND” means an Investigational New Drug Application filed with the FDA or the equivalent application in any country outside the U.S. where a regulatory filing is required or obtained to conduct a clinical trial.

1.44 “Information” means information (including results and data), in any tangible or intangible form, including without limitation, inventions, databases, methods, techniques, assays, processes, specifications, formulations, formulae, skills, experience, manufacturing information, financial data, test data including pharmacological, biological, models, designs, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, quality assurance data, stability data, studies and procedures, and legal information or descriptions.

 

5.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

1.45 “Joint Patent” has the meaning set forth in Section 9.1.

1.46 “Joint Project Team” or “JPT” means the subcommittee described in Section 2.2.

1.47 “Joint Promotion Plan” has the meaning set forth in Section 2.3(b).

1.48 “Joint Steering Committee” or “JSC” means the committee described in Section 2.1.

1.49 “Licensed Product” means any product that contains a Collaboration Compound.

1.50 “Major Market Countries” means Germany, France, United Kingdom, Spain, Italy and Japan.

1.51 “Manufacture” means the development of manufacturing process for, and the manufacture and supply (including formulation, packaging and finishing when applicable) of, active pharmaceutical ingredient, bulk drug substance, drug product and/or placebos to support pre-clinical or clinical development or commercialization, as the case may be.

1.52 “Material” means physical and biological material of any type, including excipients, active pharmaceutical ingredient, bulk drug substance, drug product and/or placebos, cell media, cell lines, chemical compounds and reagents.

1.53 “MEK” means the gene for the mitogen-activated protein kinase kinase 1 (also known as MAP2K1) for any mammalian species, and the protein (or fragment or epitope thereof) encoded by such gene, and naturally occurring variants and fragments thereof.

1.54 “MEK Compound” means any small molecule compound that inhibits the Program Target at or below the Target Potency Threshold.

1.55 “NDA” means a New Drug Application filed pursuant to the requirements of the FDA, or the equivalent application or filing in country other than the United States (as applicable).

1.56 “Net Sales” means, with respect to a particular time period, the gross amount invoiced by Genentech, its Affiliates and its sublicensees for sales of Licensed Products (such products being in final form intended for use by the end user) in arms length transactions with Third Parties during such time period, less the following charges or expenses, to the extent each is actually incurred and included in the invoiced gross sales price: (a) trade, cash and quantity discounts; (b) credits or allowances given or made for rejection or return of previously sold Licensed Products or for retroactive price reductions (including rebates similar to Medicare and/or Medicaid); (c) sales tax, VAT taxes, and other taxes, duties or other governmental charges levied on or measured by the billing amount, as adjusted for rebates or refunds, that are borne by the seller thereof and that are not refundable and to the extent noncreditable; (d) charges for

 

6.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

freight and insurance directly related to the distribution of the Licensed Products (to the extent not paid by the Third Party customer); and (e) discounts pursuant to indigent patient programs and patient discount programs, including the impact of price caps and patient assistance programs. Sales between Genentech and its Affiliates or sublicensees shall be disregarded for purposes of calculating Net Sales, so long as each sale of a Licensed Product in final form intended for use by the end user is otherwise included in “Net Sales.” Notwithstanding anything herein to the contrary, in all cases Net Sales shall be determined in accordance with GAAP.

In the event a Licensed Product is sold in combination with one or more other active pharmaceutical ingredients (as used in this definition of Net Sales, a “Combination” ), then Net Sales shall be calculated by multiplying the Net Sales of such Combination by the fraction A/B, where A is the gross selling price of the Licensed Product sold separately and B is the gross selling price of the Combination. In the event that no such separate sales are made, Net Sales for royalty determination shall be made by the Parties in good faith, based on the market price (or if the market price is not available, the relative value) for each component of the Combination.

Genentech and Exelixis agree that for purposes of this definition, [ * ] shall not be deemed to be “active pharmaceutical ingredients” , the presence of which in a Licensed Product would be deemed to create a Combination subject to the terms of the preceding paragraph.

If a Licensed Product is sold under a bundled or capitated arrangement with other products of a Party and its sublicensees, then, solely for the purpose of calculating Net Sales, any [ * ] shall be [ * ] , than [ * ] .

1.57 “Operating Profit (Loss)” has the meaning set forth in the Financial Appendix.

1.58 “Other Territory” means worldwide, excluding the Profit-Share Territory.

1.59 “Patents” means all: (a) U.S. issued patents, re-examinations, reissues, renewals, extensions and term restorations, inventors’ certificates and foreign counterparts thereof; (b) pending applications for U.S. patents, including provisional applications, continuations, continuations-in-part, continued prosecution, divisional and substitute applications; and (c) non-U.S. counterparts or equivalents of the foregoing in subsection (a) and (b).

1.60 “Phase I Clinical Trial” means a human clinical trial with a principal purpose of preliminarily determining the safety of a pharmaceutical product in healthy individuals or patients as required in 21 C.F.R. §312.21(a), or similar clinical study in a country other than the United States, and for which there are no primary endpoints related to efficacy.

1.61 “Phase II Clinical Trial” means a human clinical trial with a principal purpose of determining efficacy and dosing of a pharmaceutical products in patients with the disease being studied as described in 21 C.F.R. §312.21(b), or similar clinical study in a country other than the United States.

1.62 “Phase III Clinical Trial” means a human clinical trial with a principal purpose of establishing safety and efficacy of a pharmaceutical product in patients with the disease being

 

7.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

studied as required in 21 C.F.R. §312.21(c) or similar clinical study in a country other than the United States. A Phase III Clinical Trial shall also include any other human clinical trial intended as a pivotal trial for Regulatory Approval purposes, or that results in data actually used to support the filing of a Marketing Approval Application, whether or not such trial is a traditional Phase III Clinical Trial.

1.63 “Profit-Share Territory” means the fifty (50) states of the United States, Puerto Rico, and the District of Columbia.

1.64 “Program Back-Up” means each small molecule compound that: (a) is identified, optimized and/or developed by Exelixis pursuant to Article 3 of this Agreement; and (b) is a MEK Compound, including all of such MEK Compound.

1.65 “Program Target” means MEK.

1.66 “Regulatory Approval” means all necessary approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Medicines Evaluation Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, have been obtained for the manufacture, distribution, use or sale of that product in a regulatory jurisdiction.

1.67 “[ * ]” has the meaning set forth in Section [ * ] .

1.68 “Subsequent Opt-In Expiration Date” has the meaning set forth in Section 3.4(c)(ii).

1.69 “Target Potency Threshold” means, if a compound is “at or below the Target Potency Threshold,” the compound in question [ * ] the [ * ] of the Program Target with [ * ] in [ * ] TPT Assays.

1.70 “Target Candidate Profile” or “TCP” means a set of characteristics agreed upon by the Parties prior to the Effective Date and attached to this Agreement as Exhibit C .

1.71 “Third Party” means any entity other than a Party or a Party’s Affiliate.

1.72 “TPT Assays” means: (a) the [ * ] Assay as described on [ * ] for EXEL-5518 dated [ * ] Assay as described on [ * ] .

1.73 “Transfer Plan” has the meaning set forth in Section 3.5(c).

1.74 “Valid Claim” means any claim of an issued Patent that has not: (a) expired or been abandoned: (b) been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period: or (c)  [ * ] .

 

8.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

ARTICLE 2

G OVERNANCE

2.1 Joint Steering Committee.

(a) Membership. Within [ * ] after the Effective Date, the Parties shall establish a Joint Steering Committee, or JSC, to coordinate activities on which the Parties collaborate under this Agreement with respect to Licensed Product(s) in the Profit-Share Territory. The JSC shall consist of two (2) representatives from each Party. Each Party shall designate one (1) of its representatives as the co-chairperson of the JSC. Each Party may replace its appointed JSC representatives or co-chairperson at any time upon reasonable written notice to the other Party.

(b) Responsibilities. The responsibilities of the JSC shall be:

(i) to communicate regarding the overall strategy for the development and commercialization of Licensed Product(s) in the Profit-Share Territory and in the Field;

(ii) to facilitate the exchange of Information between the Parties with respect to the activities hereunder and to establish procedures for the efficient sharing of Information and Materials necessary for development and commercialization of the Licensed Product(s) hereunder;

(iii) to share and discuss the Parties’ performance against the Development End-Point, Exelixis’ performance on an Exelixis Work Plan, and Genentech’s progress on a Development Plan, in each case at least on a [ * ] basis;

(iv) to share and discuss the data generated by or on behalf of the Parties in the course of performance (1) towards the Development End-Point, (2) under the Development Plan or any Exelixis Work Plan, and (3) of Genentech Research;

(v) to create subcommittees as the JSC may find necessary or desirable from time to time for implementation of the research, development and commercialization hereunder, including without limitation the JPT and the JCC;

(vi) to oversee the activities of subcommittees created under this Agreement, and to seek to resolve any issues that such subcommittees cannot resolve, including without limitation issues referred to it from the JPT or the JCC; and

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

(c) Guiding Principles. The JSC shall perform its responsibilities under this Agreement based on the principles of diligence, prudence and good scientific and business judgment. The JSC shall have only the powers assigned expressly to it under this Article 2 and elsewhere in this Agreement, and the JSC shall not have any power to amend, modify or waive compliance under this Agreement.

 

9.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

(d) Decision Making. The JSC shall make decisions unanimously, with each Party’s representatives collectively having one (1) vote and at least one (1) representative from each Party present. In the event the JSC cannot reach an agreement regarding a decision within the JSC’s authority for a period of [ * ] , then, for the Collaboration: (i) Exelixis shall make the final determination in its sole discretion if such decision is regarding the [ * ] of Collaboration Compound(s) [ * ] , provided that Genentech shall make the final determination in its sole discretion if such decision is regarding whether Exelixis [ * ] with respect to [ * ] ; and (ii) Genentech shall make the final determination in its sole discretion if such decision is regarding the [ * ] of Licensed Product(s) [ * ] (although notwithstanding Genentech’s sole discretion under this Section, Genentech continues to be subject to [ * ] ). When either Party makes final determinations under this Section, that final determination shall be consistent with the terms of this Agreement. Disputes regarding matters not within the responsibilities of the JSC shall be resolved pursuant to Section 15.3.

(e) JSC Meetings. JSC meetings shall be held [ * ] , or on another schedule agreed by the Parties, with ad hoc meetings as necessary, particularly to address issues described in Section 3.2(d). With the consent of the representatives of each Party serving on the JSC, other representatives of each Party may attend meetings as nonvoting observers (provided such nonvoting observers have confidentiality obligations to such Party that are at least as stringent as those set forth in this Agreement). A JSC meeting may be held by audio, video or internet teleconference with the consent of each Party, but at least half (1/2) of the minimum number of meetings shall be held in person, in South San Francisco, California. Meetings of the JSC shall be effective only if at least one (1) representative of each Party is present or participating. Each Party shall be responsible for all of its own expenses of participating in the JSC meetings. The Parties will alternate hosting the meeting, and the Party hosting is responsible for preparing and circulating the minutes of the JSC meetings.

(f) No Decisions. Notwithstanding anything to the contrary in this Agreement, no decision by either Party would be effective if such decision requires the other Party to breach any obligation or agreement with a Third Party, or to perform any activities that are materially different or greater in scope than those provided for specifically under this Agreement.

2.2 Joint Project Team.

(a) Membership. The JSC shall establish a JPT as a subcommittee to coordinate activities to be performed by Exelixis, or jointly by Exelixis and Genentech during the Collaborative Development Period. The JPT shall consist of two (2) representatives from each Party. Each Party may replace its appointed JPT representatives at any time upon reasonable written notice to the other Party. Each Party shall designate one (1) of its representatives as the co-chairpersons of the JPT.

(b) Responsibilities. The responsibilities of the JPT shall include:

(i) to serve as the ongoing liaison between the Parties during the Collaborative Development Period;

 

10.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

(ii) to collect the data generated by the Parties in the course of activities during the Collaborative Development Period;

(iii) to coordinate efforts related to research and development during the Collaborative Development Period; and

(iv) to perform such other functions as appropriate to further the purposes of this Agreement as directed by the JSC.

The JPT shall not have the right to amend this Agreement.

(c) Decision Making. The JPT shall make decisions unanimously, and each Party’s representatives shall collectively have one (1) vote. In the event the JPT cannot reach an agreement regarding a decision within the JPT’s authority for a period of [ * ] , the JPT shall refer such matter to the JSC for resolution pursuant to Section 2.1(d).

(d) JPT Meetings. JPT meetings shall be held at least [ * ] during the Collaborative Development Period prior to an Opt-In by Genentech and, after Opt-In by Genentech but before the end of the Collaborative Development Period, at the request of the JSC. Other representatives of each Party may attend meetings as nonvoting observers (provided such nonvoting observers have confidentiality obligations to such Party that are at least as stringent as those set forth in this Agreement). A JPT meeting may be held by audio, video or internet teleconference with the consent of each Party, but at least half (1/2) of the minimum number of meetings in each year shall be held in person, in South San Francisco, California. Meetings of the JPT shall be effective only if at least one (1) representative of each Party is present or participating. Each Party shall be responsible for all of its own expenses of participating in the JPT meetings. The Parties will alternate hosting the meeting, and the Party hosting is responsible for preparing and circulating the minutes of the JPT meetings.

2.3 Joint Commercialization Committee.

(a) Membership. Within [ * ] after [ * ] , the Parties shall establish a JCC to coordinate the co-promotion of Licensed Product(s) in the Profit-Share Territory. The JCC shall consist of two (2) representatives from each Party. Each Party may replace its appointed JCC representatives at any time upon reasonable written notice to the other Party. Each Party shall designate one (1) of its representatives as the co-chairpersons of the JCC. The JCC shall exist only during the period in which Exelixis is performing co-promotion activities with respect to a Licensed Product under this Agreement.

(b) Responsibilities. The responsibilities of the JCC shall include:

(i) within [ * ] after the establishment of the JCC, to prepare and approve a joint promotion plan governing the Parties’ promotional activities with respect to the Licensed Products in the Profit-Share Territory (the “Joint Promotion Plan” );

(ii) to coordinate activities designed to create, provide training for, deploy and manage a sales force for any Licensed Product;

 

11.

[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

(iii) to coordinate regarding sales force responsibilities, and to communicate adjustments in sizing of those sales forces for each Licensed Product as appropriate (subject to Section 5.2);

(iv) to communicate and coordinate regarding promotion of Licensed Products;

(v) to communicate and coordinate regarding integration of Licensed Products into the managed care system;

(vi) to perform such other functions as appropriate to further the purposes of this Agreement as directed by the JSC.

(c) Decision Making. The JCC shall make decisions unanimously, and each Party’s representatives shall collectively have one (1) vote. In the event the JCC cannot reach an agreement regarding a decision within the JCC’s authority for a period of [ * ] , Genentech shall have the final authority to make the determination, so long as that determination is consistent with this Agreement and the Co-Promotion Agreement.

(d) JCC Meetings. JCC meetings shall be held at least [ * ] . With the consent of the representatives of each Party serving on the JCC, other representatives of each Party may attend meetings as nonvoting observers (provided such nonvoting observers have confidentiality obligations to such Party that are at least as stringent as those set forth in this Agreement). A JCC meeting may be held by audio, video or internet teleconference with the consent of each Party, but at least half (1/2) of the minimum number of meetings in each year shall be held in person, in South San Francisco, California. Meetings of the JCC shall be effective only if at least one (1) representative of each Party is present or participating. Each Party shall be responsible for all of its own expenses of participating in the JCC meetings. The Parties will alternate hosting the meeting, and the Party hosting is responsible for preparing and circulating the minutes of the JCC meetings.

ARTICLE 3

D EVELOPMENT

3.1 DC, TCP and Development End-Point. The Parties have agreed on the DC and TCP, which are attached as Exhibit B and Exhibit C to this Agreement, respectively. The Parties have also agreed on the Development End-Point, which is described in Exhibit D to this Agreement. The DC, TCP and Development End-Point criteria may be amended only by the Parties’ mutual written agreement. The Parties agree that the Existing Compound meets the DC and TCP. For other Collaboration Compounds, the JSC shall determine whether such Collaboration Compound has met the DC or TCP based on meeting all of the objective criteria set forth in Exhibit B or Exhibit C , respectively.

 

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3.2 Research and Development Activities for Existing Compound Prior to Opt-In.

(a) Development by Exelixis for Existing Compound. Exelixis shall, [ * ] , use Diligent Efforts to reach the Development End-Point set forth on Exhibit D (Development End-Point) for the Existing Compound, by conducting and completing the clinical development activities set forth on Exhibit D .

(b) Exelixis’ Provision of Existing Compound. If Genentech will be engaging in Genentech Research pursuant to Section 3.2(c), then Exelixis shall make available to Genentech, at [ * ] , any amount that may be required to perform the Genentech Research. Exelixis shall use all reasonable efforts to make such amounts available within [ * ] after Genentech’s request. Prior to exercising its Opt-In right, Genentech shall only have the right to use the Existing Compound for the purpose of performing the Genentech Research as described in Section 3.2(c) below.

(c) Pre-Opt-In Studies.

(i) The Parties agree that, prior to Genentech’s exercise of its Opt-In (A) the studies set forth in Exhibit E ( “ Planned Pre-Opt-In Studies ”) are planned to be performed for the Existing Compound, and (B) other studies mutually agreed by the Parties (“ Other Pre-Opt-In Studies ”) may be performed for the Existing Compound (collectively, the “ Pre-Opt-In Studies ”). The Planned Pre-Opt-In Studies shall be performed by Exelixis [ * ] , upon written request of Genentech (which request may be made on a study-by-study basis, and need not be for all such Planned Pre-Opt-In Studies, and further where such request is provided more than [ * ] after the Effective Date, the last sentence of Section 3.4(a) applies), with the exception that Genentech shall be the Party (either by itself or through a Third Party contractor selected by Genentech) performing the [ * ] as set forth on Exhibit E [ * ] (such [ * ] , the “ Genentech Research ”). Unlike the Planned Pre-Opt-in Studies, which Exelixis shall undertake if so requested by Genentech, whether the Other Pre-Opt-In Studies will be performed, by whom, and the protocols for those studies are all subject to mutual agreement of the Parties, through the JSC without either Party having the trump vote over the matter. For the Planned Pre-Opt-In Studies requested by Genentech, Exelixis shall submit the proposed protocols for Genentech’s review, and shall incorporate all reasonable comments made by Genentech to the extent reasonable and practical, and provided that such comments are provided to Exelixis in a timely manner. If the Parties cannot agree on any such protocol, then the matter shall be referred to [ * ] of Exelixis and Genentech’s [ * ] , and such executives shall resolve the [ * ] . If such matter cannot be resolved by such executives within such [ * ] period, [ * ] .

(ii) If Genentech engages a Third Party to perform any Other Pre-Opt-In Studies, then the Parties shall mutually agree upon a Third Party for the performance of such Other Pre-Opt-In Studies. Genentech shall engage any Third Party to perform the Genentech Research or any Other Pre-Opt-In Studies only pursuant to an agreement which sets forth such Third Party’s confidentiality and non-use obligations at least as stringent as those set forth in this Agreement for Exelixis proprietary Information and Exelixis proprietary Materials transferred to such Third Party by Genentech, and which requires that all inventions and intellectual property made by the Third Party in the course of those activities shall be Controlled by Genentech and included within the definition of “Genentech Licensed IP” as if developed by Genentech.

 

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(iii) If Genentech undertakes Genentech Research, Other Pre-Opt-In Studies or otherwise obtains the Existing Compound prior to exercising its Opt-In right, then Genentech shall not, prior to exercise of its Opt-In right: (A) perform any research in connection with that Existing Compound other than the Genentech Research; (B) use the Existing Compound in [ * ] Collaboration Compound; (C) perform tests with such Existing Compound [ * ] Collaboration Compound; (D) transfer the Existing Compound to any Third Party except as specified above in this Section 3.2(c); or (E) attempt to elucidate the chemical structure of the Existing Compound; or (F) use, prior to Genentech’s exercise of its Opt-In, any: (1) data or results arising from such Genentech Research or Other Pre-Opt-In Studies; or (2)  [ * ] , in each case in any manner outside the Collaboration, including without limitation in connection with the Competing Program. Genentech may use data and results from the Genentech Research for decision-making regarding [ * ] generally, and Genentech may use data and results from the Genentech Research and Other Pre-Opt-In Studies for decision-making regarding development decisions of a Collaboration Compound or Licensed Product. For clarity, the provisions of Section 7.4 apply to the performance of the Genentech Research, any Other Pre-Opt-In Studies, or other delivery of Existing Compound prior to exercising Genentech’s Opt-In right.

(d) Sharing of Data. During the Collaborative Development Period, at each meeting of the JPT and each meeting of the JSC: (i) Exelixis shall deliver to Genentech an update on any ongoing Phase I Clinical Trial, and other Information regarding research or pre-clinical studies, with respect to the Existing Compound or any other Collaboration Compound (including any Pre-Opt-In Study), provided, however, that Exelixis is not required to provide [ * ] except as set forth in Section [ * ] ; and (ii) Genentech shall deliver to Exelixis an update on the data and results generated on any Genentech Research conducted by Genentech or a Third Party contractor pursuant to Section 3.2(c) above. Each Party shall have the right to use the data and results received from the other Party under this Section 3.2(d) solely to perform its obligations under this Agreement or to exercise its rights under this Agreement, and, prior to Genentech exercising its Opt-In right, neither Party shall have the right to publish such data and results without the other Party’s prior written consent; provided however that the restrictions set forth in this sentence shall not apply to Exelixis with respect to its development and commercialization of any Excluded Compound, Reversion Compound or product containing any of the foregoing, and further, after Genentech exercises its Opt-In right, shall not apply to Genentech with respect to its development and commercialization of any Collaboration Compound or product containing any of the foregoing.

(e) Genentech Guidance. Genentech may provide to Exelixis assistance and guidance regarding analysis and interpretation of clinical data, trial design, or other preclinical and clinical development activities undertaken by Exelixis under this Agreement, including the Phase I Clinical Trial undertaken with respect to the Existing Compound. To maximize the likelihood of that a Collaboration Compound will successfully reach the TCP or Development End-Point, Exelixis shall consider such guidance, and implement such guidance if it is reasonable to do so.

(f) Regulatory. Exelixis shall file and own all INDs for Collaboration Compounds that are the subjects of clinical trials to be carried out by Exelixis under this Agreement, subject to Section 3.5(b), and shall be responsible for the filing of any additional necessary regulatory documents in the Profit-Share Territory for such Collaboration Compounds

 

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during the period [ * ] for those Collaboration Compounds. If Genentech exercises its Opt-In right pursuant to Section 3.4, Exelixis shall [ * ] , and [ * ] for, any additional regulatory documents or filings, including any NDAs, with respect to any Licensed Product.

3.3 Back-Up Work.

(a) Back-Up Work. In addition to the activities in Section 3.2(a) with respect to the Existing Compound, Exelixis shall engage in research, preclinical and/or clinical development activities regarding any Back-Up Compound(s) pursuant to this Section 3.3.

(i) Request by Genentech. [ * ] , Genentech may request, through the JSC, that Exelixis perform back-up work, with the goal of advancing one Back-Up Compound [ * ] for each Exelixis Work Plan (as described below), [ * ] (the “ Back-Up Work ”). Such Back-Up Work may involve the [ * ] . During [ * ] , Genentech shall have the right to make a subsequent request for Back-Up Work to be performed by Exelixis on any additional Back-Up Compound [ * ] of the activities set forth in the Exelixis Work Plan (as described below) [ * ] . Genentech shall specify the number of Exelixis FTEs to be engaged in such Back-Up Work at the time of making each such request.

(ii) Work Plan. As soon as possible after receiving a request from Genentech, but within no more than [ * ] , Exelixis shall, in consultation with Genentech, create a draft Exelixis Work Plan that includes the following:

(1) summary of planned activities to reach the goal identified by Genentech; provided that if Exelixis concludes that it is impractical to reach the goal identified by Genentech prior to the end of the Back-Up Period using the number of FTEs specified by Genentech, then Exelixis shall so inform Genentech and the Parties may revise the goal accordingly; provided further that if [ * ] , then Exelixis shall have the right, after consultation with Genentech, to [ * ] , [ * ] ;

(2) the estimated timeline to complete the Back-Up Work using the number of FTEs requested by Genentech;

(3) the estimated budget for costs and expenses in connection with the engagement of any Third Party contractor pursuant to Section 3.9; and

(4) at Exelixis’ option, [ * ] the number of FTEs [ * ] the timeline and budget for Genentech’s [ * ] .

(iii) Approval of Exelixis Work Plan. Each draft Exelixis Work Plan provided by Exelixis pursuant to Section 3.3(a)(ii) is subject to approval by Genentech, through the JSC. In approving the Exelixis Work Plan, Genentech shall have the right to make the final decision as to [ * ] (subject to Section [ * ] ) and the [ * ] for the project on such Exelixis Work Plan. Exelixis, however, shall have the right to make the final decision as to the [ * ] such Exelixis Work Plan that are directed to [ * ] , and as to whether Exelixis will [ * ] for such Back-Up Compound. Exelixis shall begin Back-Up Work within [ * ] after approval of an Exelixis Work Plan.

 

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(iv) Performance by Exelixis; Limits on Genentech Request. Exelixis shall use Diligent Efforts to reach the goal of that Back-Up Work as set forth in the Exelixis Work Plan. Subject to the other provisions under this Section 3.3(a) and Section 3.3(b), Exelixis shall undertake Back-Up Work requested by Genentech, so long as Genentech makes its request [ * ] and so long as the total number of Exelixis FTEs for all Back-Up Work is between [ * ] , inclusive.

(v) Payment for Back-Up Work. Genentech shall (i) pay Exelixis for the FTEs that have engaged in Back-Up Work, provided that the number of such FTEs is within the number requested by Genentech; and (ii) reimburse Exelixis for actual Third Party expenses incurred under an Exelixis Work Plan, pursuant to Section 3.10, up to a maximum of the amount of expenses that are within the scope of the Exelixis Work Plan approved pursuant to Section 3.3(a)(iii).

(vi) [ * ] under an Exelixis Work Plan. Subject to Section 3.3(a)(iv), Genentech shall have the right to [ * ] under a particular Exelixis Work Plan by [ * ] , or to [ * ] under a particular Exelixis Work Plan by [ * ] , provided that such [ * ] , and the [ * ] in Genentech’s [ * ] under such Exelixis Work Plan, shall not [ * ] . Any [ * ] an Exelixis Work Plan will result in [ * ] such Exelixis Work Plan. The Parties will [ * ] the Exelixis Work Plan to [ * ] .

(b) Completion of Work under the Exelixis Work Plan. Exelixis shall only have the obligation to perform Back-Up Work during the Back-Up Period. If at the end of the Back-Up Period, Exelixis has not completed the planned activities set forth in an Exelixis Work Plan, then Exelixis shall have the choice of [ * ] .

(c) Exelixis Provision of Back-Up Compounds. After Genentech exercises its Opt-In right under Section 3.4 below, Exelixis shall continue to use Diligent Efforts to deliver to Genentech a Back-Up Compound meeting the goal for the Exelixis Work Plan for such Back-Up Compound: (i) after reaching the goal specified in that approved Exelixis Work Plan; or (ii) when Exelixis stops work pursuant to Section 3.3(b) above if the Back-Up Compound then under development has [ * ] , as the case may be. If the goal of an Exelixis Work Plan has been met prior to Genentech exercising its Opt-In right, then Exelixis shall deliver that Back-Up Compound upon Genentech exercising its Opt-In right. In the event Exelixis stops work pursuant to Section 3.3(b) above and the Back-Up Compound then under development has [ * ] , then, after Genentech exercises its Opt-In right under Section 3.4 below, Exelixis shall [ * ] , that [ * ] , [ * ] (such [ * ] ). Exelixis shall [ * ] is made based on [ * ] of the same [ * ] whether a compound [ * ] , and shall [ * ] . For clarity, Exelixis shall have no obligation to deliver any Back-Up Compound [ * ] .

3.4 Opt-In Right.

(a) Delivery of Data. Exelixis shall use Diligent Efforts to reach the Development End-Point for the Existing Compound. After Exelixis reaches the Development End-Point for such Existing Compound, Exelixis shall deliver to Genentech, for Genentech’s review, a data package including [ * ] generated from the studies on Exhibit D [ * ] performed by Exelixis that have not been previously disclosed to Genentech by Exelixis; provided that, for those [ * ] after the Effective Date, Exelixis shall only [ * ] deliver to Genentech [ * ] that have been [ * ] the Development End Point.

 

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(b) Initial Opportunity for Opt-In.

(i) Within [ * ] days after receiving a complete data package from Exelixis pursuant to Section 3.4(a) above for such Existing Compound (the last day of such period, the “Initial Opt-In Expiration Date” ), Genentech shall notify Exelixis in writing of its decision as to whether it would exercise its right to obtain a license for the development and commercialization of Licensed Product(s) containing any Collaboration Compound ( “Opt-In” ).

(ii) If, as of the Initial Opt-In Expiration Date, Genentech notifies Exelixis in writing of its decision to exercise its Opt-In right with respect to such Existing Compound, then: (A) Genentech shall obtain a license, pursuant to Section 7.1, to develop and commercialize such Existing Compound and any other Collaboration Compounds; and (B) all [ * ] Existing Compound will [ * ] , but will [ * ] . The Parties shall conduct further development activities and commercialization activities with respect to such Collaboration Compounds and the associated Licensed Products pursuant to this Agreement, with Genentech being the Party responsible for the further clinical development (after the completion or termination of Exelixis Work Plans being conducted by Exelixis on or after the date Genentech exercises its Opt-In rights) of all Collaboration Compound(s) and the commercialization of any Licensed Product(s) containing such Collaboration Compound(s).

(iii) If, by the Initial Opt-In Expiration Date, Genentech notifies Exelixis of its decision not to exercise its Opt-In right, or fails to notify Exelixis of its decision whether it elects to exercise its Opt-In right, then:

(1) If, as of the Initial Opt-In Expiration Date, there is no outstanding request from Genentech for Exelixis to undertake Back-Up Work, and Exelixis does not have any ongoing obligations under any Exelixis Work Plan, then this Agreement shall terminate, the Existing Compound shall become an “Excluded Compound,” and Section 11.3(c) applies. Exelixis shall have the full right (and not obligation) to research, develop, partner and commercialize the Excluded Compound without any further obligation to Genentech.

(2) If, as of the Initial Opt-In Expiration Date, there is an outstanding request from Genentech for Exelixis to undertake Back-Up Work or Exelixis has on-going obligations under any Exelixis Work Plan, then: (I) the Existing Compound shall thereupon become an Excluded Compound; (II) Genentech shall have no rights to develop or commercialize such Excluded Compound; and (III) Genentech shall retain an on-going right to Opt-In as set forth in Section 3.4(c) below. In such event:

(a) Exelixis shall retain all right, title and interest to such Excluded Compound, and shall have the full right (and not obligation) to research, develop, commercialize or partner such Excluded Compound without any obligation to Genentech.

 

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(b) Exelixis shall, subject to Section 3.2 above, continue to use Diligent Efforts to perform its obligations pursuant to the then ongoing and any future Exelixis Work Plan(s).

(c) Subsequent Opportunities for Genentech to Exercise Its Opt-In Right.

(i) Upon completion of each Exelixis Work Plan (or upon a decision to cease Back-Up Work under an Exelixis Work Plan as authorized under Section 3.3(b)), Exelixis shall deliver to Genentech, for Genentech’s review, all data and results generated under such Exelixis Work Plan not previously disclosed to Genentech ( [ * ] , which is subject to Section [ * ] ).

(ii) If Genentech has not exercised its Opt-In right under Section 3.4(b) by the Initial Opt-In Expiration Date or if the development of the Existing Compound is suspended before Genentech’s Opt-In right under Section 3.4(b) is triggered (such date on which the right is triggered under Section 3.4(b), the “Trigger Date” ), then Genentech may exercise its Opt-In right at any time prior to [ * ] days after the later of: (I) Exelixis having delivered the data package for the first completed Exelixis Work Plan pursuant to Section 3.4(c)(i) above; and (II) the Trigger Date ( “Subsequent Opt-In Expiration Date ”). On or before the Subsequent Opt-In Expiration Date, Genentech shall notify Exelixis in writing of its decision as to whether it would exercise the Opt-In (which is for a license for the development and commercialization of Licensed Product(s) containing any Back-Up Compounds that have met all the criteria for DC, [ * ] delivered by Exelixis to Genentech [ * ] ). If, as of the Subsequent Opt-In Expiration Date, Genentech notifies Exelixis in writing of its decision to exercise the Opt-In, then Section 3.4(b)(ii) shall apply to such Back-Up Compounds as if such Back-Up Compounds were the Existing Compound. If Genentech does not notify Exelixis of its decision to exercise its Opt-In right prior to the Subsequent Opt-In Expiration Date, then this Agreement shall terminate and thereupon all Collaboration Compounds shall become Excluded Compounds, and Exelixis shall have the full right (and not obligation) to research, develop, partner and commercialize all such Excluded Compounds without any further obligation to Genentech.

(iii) Exelixis shall not disclose any [ * ] to Genentech pursuant to this Section 3.4(c) except upon [ * ] .

(iv) [ * ] , each Back-Up Compound that does not reach DC pursuant to an Exelixis Work Plan shall, at the end of such Exelixis Work Plan, cease to be a Back-Up Compound or a Collaboration Compound; and, the obligations in Section [ * ] shall continue to apply to such compounds if such compounds [ * ] .

(v) For clarity, each compound shall cease to be a Collaboration Compound when it becomes an Excluded Compound.

3.5 Development of Collaboration Compounds after Genentech Opt-In.

(a) Creation of Development Plan. Promptly after Exelixis receives Genentech’s notice of its decision to Opt-In pursuant to Section 3.4, Genentech shall provide to Exelixis, through the JPT or JSC, a plan for the further development of that Collaboration

 

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Compound and the associated Licensed Product which shall be incorporated herein by reference (the “Development Plan” ). Genentech has final decision-making authority regarding any Development Plan; the Development Plan shall reflect Genentech’s responsibility for the further clinical development (after the completion of the Phase I Clinical Trial being conducted by Exelixis on the date Genentech exercises its Opt-In rights) of Collaboration Compound(s) in the Profit-Share Territory. Genentech may amend or update the Development Plan [ * ] , and shall provide such updated Development Plan to [ * ] at scheduled meetings of the JSC, but no more frequently than annually. The Development Plan is [ * ] .

(b) Regulatory. As between Genentech and Exelixis, Genentech shall be responsible for the filing of all regulatory documents, including without limitation all associated submissions (e.g., safety alerts, protocol submissions, NDAs, etc.), for responding to inquiries and correspondences from the Regulatory Authorities, and for the establishment of the safety database for the Profit Share Territory for any Licensed Products, and the monitoring of all clinical experiences and submission of all required reports throughout clinical development and commercialization of any Licensed Product, in each case in compliance with all laws and regulations. With respect to any Collaboration Compound(s) or Licensed Product(s) in the Profit Share Territory, Genentech shall provide Information to Exelixis and reasonably consult with Exelixis regarding any filings, and regarding significant or material notices, actions or requests from or by Regulatory Authorities (whether such filings, notices, questions, actions and requests are related to testing, manufacture, distribution or facilities for that Licensed Product). Exelixis shall, at Genentech’s request, review and comment on filings, submissions, and responses to Regulatory Authorities related to any Licensed Product(s) in the Profit Share Territory.

(c) Technical Assistance and Transfer Plan. Promptly after Exelixis receives Genentech’s decision to Opt-In pursuant to Section 3.4, the Parties shall also agree on a transfer plan under which Exelixis shall use Diligent Efforts to transfer to Genentech, in a timely manner: (i)  [ * ] for Collaboration Compound(s); (ii)  [ * ] in connection with the [ * ] for such Collaboration Compounds; (iii) at [ * ] , all [ * ] Exelixis [ * ] such Collaboration Compounds; (iv) technology transfer of the Information associated with Manufacturing for that Collaboration Compound, either to Genentech or a Third Party manufacturer designated by Genentech; and (v) the scope of continuing technical assistance reasonably required for Genentech to continue to develop and Manufacture such Collaboration Compound(s), and the terms under which such technical assistance will be provided (the “Transfer Plan” ). [ * ] is responsible for the [ * ] performance under items (i) through (iv) listed above.

(d) Development Costs. Genentech (or its sublicensees) shall bear one hundred percent (100%) of all Development Costs with respect to a Collaboration Compound and with respect to the associated Licensed Product after Genentech exercises its Opt-In rights under Section 3.4(b) or Section 3.4(c).

3.6 Development of Collaboration Compound(s) and Licensed Product(s) in the Other Territory. Genentech (or its Affiliates or sublicensees) shall have the sole responsibility and authority to, at its sole expense, develop Collaboration Compound(s) and/or Licensed Product(s) in the Other Territory and file for Regulatory Approvals for such Collaboration Compound(s) and/or Licensed Product(s) in the Other Territory; provided that Genentech shall use Diligent Efforts to obtain Regulatory Approvals for at least [ * ] .

 

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3.7 Competing Programs; Exclusivity.

(a) Genentech may, at its own expense and outside the scope of this Collaboration, conduct or have conducted programs for the [ * ] compounds that [ * ] (each such program, a “Competing Program” ), provided that Genentech may not use in any such Competing Program any Exelixis Licensed Know-How, Confidential Information of Exelixis, or Materials transferred from Exelixis to Genentech under Section 3.2(b) and Section 3.3(c).

(b) Exelixis’ Exclusivity Obligations.

(i) For the term of this Agreement ( [ * ] , subject to Sections 3.7(b)(ii) and 3.7(b)(iii), Exelixis [ * ] . For the term of this Agreement ( [ * ] ), subject to Sections 3.7(b)(ii) and 3.7(b)(iii), Exelixis [ * ] with respect to, [ * ] related to, [ * ] , and [ * ] , any [ * ] except: (i) to the extent Exelixis has rights to an Excluded Compound under Sections 7.1 and 7.2, Exelixis may exercise such rights; (ii) Exelixis shall have the right to conduct research and development as set forth under an Exelixis Work Plan, pursuant to Section 3.2, or as otherwise expressly authorized by Genentech in writing; (iii) Exelixis shall have the right to conduct research within the scope of its retained rights under Section 7.1(e), [ * ] provide [ * ] to [ * ] with respect to [ * ] ; and (iv) Exelixis shall have the right to screen its libraries against targets other than MEK (either for its internal programs or in collaboration with a Third Party), [ * ] , and if [ * ] , then Exelixis shall have the right to make and use such [ * ] for the purpose of [ * ] , provided that [ * ] , or any [ * ] . Exelixis [ * ] the right to [ * ] in (A) any research or development [ * ] , or (B) engage in any other research or development activities, in either case with the purpose of [ * ] , in either case by itself or in collaboration with a Third Party, [ * ] .

(ii) Notwithstanding anything to the contrary, Section 3.7(b)(i) shall not apply to any [ * ] that, as of the Effective Date, [ * ] and has been [ * ] as a result of a [ * ] ; and (B) is directed to [ * ] .

(iii) Nothing in this Section 3.7(b) shall be interpreted as prohibiting Exelixis from performing activities intended to facilitate Exelixis’ compliance with the obligations of this Section 3.7(b).

3.8 Conduct of Development. The Parties shall use Diligent Efforts to conduct their respective tasks throughout the Collaboration in good scientific manner, and in compliance in all material respects with the requirements of all applicable laws, rules and regulations and all applicable good laboratory practices. After Genentech exercises its Opt-In right pursuant to Section 3.4, Genentech shall use Diligent Efforts to develop and commercialize one or more Licensed Products during the term of this Agreement. It is understood that activities by Genentech’s Affiliates or sublicensees will be considered as Genentech’s activities under this Agreement for purposes of determining whether Genentech has complied with its obligations under this Section 3.8, but Genentech shall be primarily liable and responsible for all such activities conducted by Genentech’s Affiliates or sublicensees. Exelixis may notify Genentech in writing if Exelixis in good faith believes that Genentech is not meeting its diligence obligations set forth in this Section 3.8 and the Parties will meet and discuss the matter in good faith. Exelixis may further request review of Genentech’s records generated and maintained as required under Article 6 below, to the extent those records relate to development and

 

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commercialization of a Licensed Product. If such matter is still not resolved to Exelixis’ satisfaction, then the matter will be considered a dispute between the Parties and subject to the dispute resolution procedures, with the associated rights and responsibilities, under this Agreement.

3.9 [ * ] Exelixis to Engage Third Parties. Exelixis [ * ] use Third Party subcontractors or any other Third Parties to perform any of its obligations under this Agreement [ * ] . [ * ] Exelixis may engage a Third Party contractor [ * ] : (a) with respect to its [ * ] , subject to the terms of Section  [ * ] ; (b) with respect to [ * ] activities such as [ * ] ; (c) with respect to [ * ] activities; or (d) as specified in [ * ] ; provided that all [ * ] by such Third Party subcontractor [ * ] and [ * ] . Notwithstanding any delegation of obligations under this Agreement, Exelixis shall remain primarily liable and responsible for the performance of all of its obligations.

3.10 Exelixis FTEs; Invoices. Exelixis shall assign FTEs for activities it is required to perform under an Exelixis Work Plan at the level set forth in the Exelixis Work Plan, subject to Section 3.3(a)(v). Genentech shall reimburse Exelixis for the number FTEs who actually performed activities under Section 3.3(a) at a rate of [ * ] per FTE per calendar quarter. Exelixis shall provide an invoice to Genentech within [ * ] days after the end of each calendar quarter setting forth: (a) the number of FTEs engaged during the preceding calendar quarter by Exelixis for such activities; and (b) the amount and underlying calculation for any other costs Genentech is required under this Agreement to reimburse directly to Exelixis. Genentech shall pay amounts due within [ * ] days after receipt of such invoice.

ARTICLE 4

M ANUFACTURE AND S UPPLY

4.1 Overview.

(a) Prior to exercise of Genentech’s Opt-In pursuant to Section 3.4, Exelixis shall be the Party responsible for the Manufacture of Collaboration Compound(s) in the Profit-Share Territory to supply the activities to be conducted prior to such Opt-In exercise or pursuant to an Exelixis Work Plan, either by itself or through one or more Third Parties (subject to Section [ * ] ); such Manufacture is [ * ] .

(b) Upon Genentech’s exercise of its Opt-In, Exelixis shall be relieved from any Manufacturing obligations for any Collaboration Compound, except for those Collaboration Compounds for which Exelixis is performing Back-Up Work under an Exelixis Work Plan. Upon being relieved of its Manufacturing obligations, Exelixis shall transfer the Manufacturing-related activities for those Collaboration Compounds for which it no longer has Manufacturing obligations to Genentech, pursuant to Section 3.5(c), within [ * ] after those obligations cease. Where Genentech has taken over the responsibility for the Manufacture of any Collaboration Compound(s) and related Licensed Product(s), Genentech may carry out such responsibilities either by itself or through one or more Third Parties. Other than costs pursuant to carrying out the Manufacturing-related activities under the Transfer Plan (which costs are borne by [ * ] pursuant to Section 3.5(c)), Fully Burdened Manufacturing Costs (as defined in the Financial Appendix, and expressly including Third Party suppliers) incurred by Genentech (including in

 

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[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

connection with engaging Third Party suppliers) for Collaboration Compound(s) and/or Licensed Product(s) with be borne as follows: (i) if the product is for use in [ * ] (including [ * ] ), such Fully Burdened Manufacturing Costs shall be [ * ] and shall be borne [ * ] ; (ii) if the product is for [ * ] , such Fully Burdened Manufacturing Costs shall be borne [ * ] ; and (iii) if the product is for [ * ] , such Fully Burdened Manufacturing Costs shall be [ * ] and [ * ] .

4.2 Engaging Third Party Manufacturers. It is understood that when a Party engages a non-licensed Affiliate or any Third Party to Manufacture any Licensed Product, that engagement may require a limited license or limited sublicense of rights obtained from the other Party under this Agreement. In addition to each Party’s respective rights to sublicense under Article 7, the Party engaging such Third Party (or non-licensed Affiliate) may disclose Confidential Information of the other Party solely as necessary to fulfill the business purposes of the engagement, and then only pursuant to terms and conditions that are substantially as protective of that Confidential Information as the terms and conditions of this Agreement. Notwithstanding any delegation of obligations under this Agreement by a Party to its Affiliates or to a Third Party, the Party shall remain primarily liable and responsible for the performance of all of its obligations under this Agreement and for causing such Affiliates or Third Parties to act in a manner consistent herewith. In addition, such Party shall assure that any intellectual property developed by its Affiliates or such Third Parties shall be Controlled by that Party and included in and subject to the licenses set forth in Article 7. The Party contracting with such Third Party shall not agree to any term that would make it unable to comply with its obligations under this Agreement.

ARTICLE 5

C OMMERCIALIZATION

5.1 Commercialization in the Profit-Share Territory. As between Genentech and Exelixis, Genentech (alone or through its Affiliates or sublicensees) shall be the Party responsible for commercialization of any Licensed Product in the Profit-Share Territory, and shall use Diligent Efforts to commercialize any and all Licensed Product(s) in the Profit-Share Territory after such Licensed Product has received Regulatory Approval in the Profit-Share Territory. If Exelixis exercises its co-promotion option pursuant to Section 5.6 below, then Exelixis shall participate in promotional activities related to such commercialization as set forth under the Co-Promotion Agreement entered into pursuant to Section 5.6, and shall use Diligent Efforts to carry out its responsibilities under that Co-Promotion Agreement and under any Joint Promotion Plan created under Section 2.3(b). As between Exelixis and Genentech, Genentech [ * ] of the Licensed Products in the Profit Share Territory, and shall have the [ * ] of the Licensed Product in the Profit-Share Territory.

5.2 Commercialization in the Other Territory. As between Genentech and Exelixis, Genentech (alone or through its Affiliate or sublicensees) shall be the Party responsible for commercialization of any Licensed Product(s) in the Other Territory, and shall do so at its own expense, using Diligent Efforts to commercialize a Licensed Product in each of the Major Market Countries after such Licensed Product has received Regulatory Approval in such country. Subject to the foregoing obligation to use Diligent Efforts, all decisions regarding such commercialization shall be [ * ] , including decisions regarding [ * ] of the Licensed Product in

 

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[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

the Other Territory. As between Exelixis and Genentech, Genentech (alone or through Affiliates or sublicensees) [ * ] the Licensed Products in the Other Territory, and shall [ * ] in connection with such commercialization in the Other Territory.

5.3 Cost Sharing. All costs incurred and all revenues received by the Parties in connection with the commercialization of Licensed Products in the Profit-Share Territory shall be calculated as part of the Operating Profit (Losses) pursuant to the Financial Appendix, excluding any Development Costs, which shall be borne solely by Genentech.

5.4 Product Labeling; Promotional Materials. Genentech shall be responsible for designing and supplying the product labeling and promotional materials for the Licensed Product for the Profit-Share Territory. Genentech shall be responsible as to how and the manner in which Genentech shall be presented and described to the medical community in any promotional materials and the placement of the names and logos of the Parties therein, in each case as permitted by applicable law and with the labeling for the Licensed Product approved by the applicable Regulatory Authority.

5.5 Sales and Distribution. Genentech shall be [ * ] responsible for handling all returns, order processing, invoicing and collection, distribution, and inventory and receivables for the Licensed Product throughout the Profit-Share Territory. Genentech shall [ * ] for establishing and modifying the terms and conditions with respect to the sale of the Licensed Product, including any terms and conditions relating to or affecting the price at which the Licensed Product shall be sold, discounts available to any Third Party payers (including, without limitation, managed care providers, indemnity plans, unions, self insured entities, and government payer, insurance or contracting programs such as Medicare, Medicaid, or the U.S. Dept. of Veterans Affairs), any discount attributable to payments on receivables, distribution of the Licensed Product, and credits, price adjustments, or other discounts and allowances to be granted or refused; provided, however, that Genentech shall [ * ] when doing the foregoing.

5.6 Exelixis’ Co-Promotion Option. Exelixis has an option to co-promote Licensed Products in the Profit-Share Territory. Such co-promotion would mean that Exelixis could provide up to [ * ] of the total sales force for the Licensed Product in the Profit-Share Territory ( [ * ] ), and would call on customers and otherwise engage in promotional activities using that sales force, consistent with the terms of this Agreement and a co-promotion agreement containing commercially reasonable terms consistent with the terms and conditions outlined in Exhibit F attached hereto (such agreement, the “Co-Promotion Agreement” ). Genentech shall keep Exelixis informed of its progress [ * ] for any Licensed Product in the Profit-Share Territory. Once Genentech notifies Exelixis that [ * ] , Exelixis shall have the right but not the obligation to exercise its co-promotion option by providing notice to Genentech of its decision to so do. Exelixis’ option expires if not exercised within [ * ] months after notice from Genentech. [ * ] the foregoing option, Exelixis [ * ] the Licensed Product, including: (a) [ * ] ; and (b) an [ * ] of Exelixis, which [ * ] .

5.7 Compliance. Each Party shall comply with all applicable laws and regulations relating to activities performed or to be performed by such Party (or its Affiliates, contractor(s) or sublicensee(s)) under or in relation to the commercialization of the Licensed Product pursuant to this Agreement. Each Party represents, warrants and covenants to the other Party that, as of

 

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[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

the Effective Date and during the term of this Agreement, such Party and its Affiliates have adequate procedures in place: (a) to ensure their compliance with such laws and regulations; (b) to bring any noncompliance therewith by any of the foregoing entities to its attention; and (c) to promptly remedy any such noncompliance.

ARTICLE 6

RECORDS

6.1 Records. Each Party shall maintain complete and accurate records of: (a) all significant development, Manufacturing and commercialization events and activities conducted by it or on its behalf related to a Collaboration Compound or Licensed Product; and (b) all significant Information generated by it or on its behalf in connection with research and development of Collaboration Compounds or Licensed Products under this Agreement. Such records shall be in sufficient detail to properly reflect, in good scientific manner, all significant work done and results of studies and trial undertaken, and further shall be at a level of detail appropriate for patent and regulatory purposes.

6.2 Progress Information. Each Party shall use Diligent Efforts to keep the other Party informed of its research, development and commercialization (including promotional) activities hereunder, and shall provide to the other Party’s representatives on the JPT or JSC, as appropriate, regular summary updates at each meeting. If reasonably necessary for a Party to perform its work under this Agreement or to exercise its rights under this Agreement, that Party may request that the other Party provide more detailed information and data regarding the updates it earlier provided, and the other Party shall promptly provide the requesting Party with information and data as is reasonably available and reasonably related to the work under this Agreement. Neither Party is required to generate additional data or prepare additional reports to comply with the foregoing obligation. All such reports, information and data provided by a Party shall be considered the providing Party’s Confidential Information.

ARTICLE 7

L ICENSES

7.1 Licenses to Genentech.

(a) Research License. Subject to the terms of this Article 7 and Sections 3.2(c), 3.2(d) and 3.7(a), Exelixis hereby agrees to grant and hereby grants (on behalf of itself and its Affiliates) Genentech a worldwide, non-exclusive, royalty-free license (with the right to grant and authorize sublicenses solely to mutually agreed Affiliates and Third Party contractors in accordance with Section 3.2(c)(ii)), under the Exelixis Licensed IP, to use the Existing Compound for purposes of engaging in the Genentech Research (as defined in Section 3.2(c)) or Other Pre-Opt-In Studies. The foregoing license shall expire on the Initial Opt-In Expiration Date if Genentech has not exercised its Opt-In right by such date.

(b) Development and Commercialization License. Subject to the terms of this Article 7 and Section 3.7(a), Exelixis agrees to grant and hereby grants (on behalf of itself and its Affiliates) Genentech and its Affiliates, effective upon Genentech’s exercise of its Opt-In

 

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[ * ] = 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 24B-2 of the Securities Exchange Act of 1934, as amended.

right pursuant to Section 3.4(b) or Section 3.4(c), an exclusive, worldwide, revenue-bearing license (with the right to grant and authorize sublicenses pursuant to Section 7.1(d)) under the Exelixis Licensed IP, to make, have made, use, and import Collaboration Compound(s) in the Field and to make, have made, use, sell, offer for sale, and import Licensed Products in the Field; provided, however, that with respect to the [ * ] , such license [ * ] (other than a Collaboration Compound). Notwithstanding the limitation to the Field, the foregoing license expressly includes the right to test Collaboration Compounds in animals for the sole purpose of developing and commercializing Licensed Products in the Field.

(c) License for Diagnostic Products. Subject to the terms of this Article 7 and Section 3.7(a), Exelixis agrees to grant and hereby grants (on behalf of itself and its Affiliates) Genentech and its Affiliates, effective upon Genentech’s exercise of its Opt-In right pursuant to Section 3.4(b) or 3.4(c), a worldwide, royalty-free license (with the right to grant and authorize sublicenses pursuant to Section 7.1(d) below), under the Exelixis Diagnostic IP, to make, have made, use, sell, offer for sale and import Diagnostic Products solely for the purposes of supporting the development and commercialization of Licensed Products. The foregoing license is [ * ] Collaboration Compound, and [ * ] . For clarity, the right to sell Diagnostic Products under the foregoing license shall be limited to those times and countries in which Licensed Products are sold by Genentech or its Affiliates or sublicensees.

(d) Sublicensing. For those licenses granted under this Section 7.1 that grant Genentech the right to grant and authorize sublicenses, Genentech shall grant such sublicenses in a manner consistent with the terms and conditions of this Agreement. Genentech shall also provide to Exelixis [ * ] . Genentech shall remain responsible for each of its permitted sublicensees’ compliance with the material and applicable terms and conditions of this Agreement. Notwithstanding the foregoing, Genentech shall not grant to any Third Party any sublicense of its license under Section 7.1(b) that includes the right to [ * ] , except: (i) when the Third Party is [ * ] ; (ii) when notwithstanding the sublicense, Genentech [ * ] marketing and commercialization of such Licensed Product; or (iii)  [ * ] .

(e) Exelixis Retained Rights. Notwithstanding the licenses granted in this Section 7.1, Exelixis shall retain all rights under the Exelixis Licensed IP: (i) to make, have made, use and modify Collaboration Compounds solely: (1) for purpose of [ * ] (including [ * ] performed by Exelixis pursuant to [ * ] ); (2) to perform Exelixis’ obligations under this Agreement; and (3) to the extent subcontracting is authorized under this Agreement, to grant subcontractors the right to perform Exelixis’ obligations under this Agreement; and (ii) to make, have made, use, sell, offer for sale and import any Excluded Compounds and products containing Excluded Compounds (provided that such products do not also contain Collaboration Compounds). The foregoing rights retained by Exelixis with r