COLLABORATION AGREEMENT

Collaboration Agreement

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EXELIXIS INC | BRISTOL-MYERS SQUIBB COMPANY

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Title: COLLABORATION AGREEMENT
Governing Law: Delaware Date: 2/27/2007
Industry: Biotechnology and Drugs Law Firm: Cooley Godward Kronish LLP Sector: Healthcare

COLLABORATION AGREEMENT, Parties: exelixis inc , bristol-myers squibb company

Exhibit 10.38

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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.

COLLABORATION AGREEMENT

T HIS C OLLABORATION A GREEMENT (the “ Agreement ”) is made and entered into as of December 15, 2006 (the “ Execution 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 B RISTOL -M YERS S QUIBB C OMPANY , a Delaware corporation headquartered at 345 Park Avenue, New York, New York, 10154 (“ BMS ”). Exelixis and BMS are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

R ECITALS

A. BMS is a multinational 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. BMS and Exelixis desire to establish a collaboration to apply such Exelixis technology and expertise to the discovery, lead optimization and characterization of small molecule compounds that directly bind and modulate certain targets, with a goal of filing an Investigational New Drug applications for small molecule compounds in [ * ] , and to provide for the development and commercialization of novel therapeutic and prophylactic products based on such compounds.

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

1.	DEFINITIONS

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

1.1 “Affiliate” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party. For the purposes of the definition in this Section 1.1 , the word “ control ” (including, with correlative meaning, the terms “ controlled by ” or “ under the common control with ”) means the actual power, either directly or indirectly through one (1) or more intermediaries, to direct or cause the direction of the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

1.2 “Allowable Expenses” means those expenses that are specifically attributable to a Co-Promotion Product in the U.S. and that consist of: [ * ] .

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1.3 “ANDA” means an Abbreviated New Drug Application submitted to the FDA in conformance with applicable laws and regulations, or the foreign equivalent of any such application in any other country.

1.4 “Appealable Matter” means any dispute between the Parties (or their respective designees or Committees) concerning: (a) whether the [ * ] have or may [ * ] have [ * ] the [ * ] of any [ * ] ; (b) [ * ] have or may [ * ] have a [ * ] the [ * ] of any [ * ] . For clarity, any dispute regarding whether [ * ] shall be an Appealable Matter.

1.5 “Approved Plan” means, with respect to a Product, any one or more of the Global Development Plans, each Annual Development Plan, the Global Commercialization Strategy, and the U.S. Commercialization Plan, in each case as adopted or approved under the terms of this Agreement.

1.6 “BMS [ * ]” or “[ * ]” means [ * ] which the [ * ] (or a successor thereto) ( “[ * ]” ) [ * ] , including [ * ] (typically, [ * ] ) and [ * ] to that effort. At [ * ] , the following have been established: (a) one or more [ * ] (through BMS [ * ] ); (b) [ * ] to BMS; (c) [ * ] at [ * ] ; (d) [ * ] ; (e) assay [ * ] for the [ * ] assays; (f) assays for [ * ] ; and (g) [ * ] assays.

1.7 “BMS [ * ]” or “[ * ]” means [ * ] which [ * ] for a compound that has [ * ] and a [ * ] made to [ * ] . For clarity, [ * ] .

1.8 “BMS [ * ]” or “[ * ]” means [ * ] which [ * ] one or more compounds [ * ] to [ * ] . [ * ] , the [ * ] for [ * ] information needed [ * ] . [ * ] is [ * ] . This [ * ] is typically made about [ * ] prior to [ * ] . At [ * ] there will be evidence of [ * ] , [ * ] , which will include [ * ] . There will be [ * ] , and [ * ] . Not all [ * ] testing ( [ * ] ) will be [ * ] at [ * ] , but [ * ] be [ * ] reached. The [ * ] will be [ * ] .

1.9 “BMS [ * ]” or “[ * ]” means [ * ] which the BMS [ * ] based [ * ] . An [ * ] follows [ * ] . BMS [ * ] once it contains [ * ] .

1.10 “BMS Licensed Know-How” means all Information (other than Patents) Controlled by BMS and its Affiliates, including Information Controlled jointly with Exelixis, as of the Effective Date and during the term of the Agreement that: (a) covers a Collaboration Compound, a composition containing a Collaboration Compound (e.g., a formulation containing a Collaboration Compound), or the manufacture or use of a Collaboration Compound; and (b) is [ * ] for Exelixis to exercise the rights licensed to it under the Agreement or to perform its obligations to the Collaboration under the Agreement.

1.11 “BMS Licensed Patents” means all Patents Controlled by BMS and its Affiliates, including Patents Controlled jointly with Exelixis, as of the Effective Date and during the term of this Agreement that: (a) cover a Collaboration Compound, a composition containing a Collaboration Compound (e.g., a formulation containing a Collaboration Compound), or the manufacture or use of a Collaboration Compound; and (b) are [ * ] for Exelixis to exercise the rights licensed to it under the Agreement or to perform its obligations to the Collaboration under the Agreement.

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1.12 “Change of Control” means any transaction in which a Party: (a) sells, conveys or otherwise disposes of all or substantially all of its property or business; or (b)(i) merges, consolidates with, or is acquired by any other Person (other than a wholly-owned subsidiary of such Party); or (ii) effects any other transaction or series of transactions; in each case of clause (i) or (ii), such that the stockholders of such Party immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving Person following the closing of such merger, consolidation, other transaction or series of transactions. As used in this Section 1.12 , “ Person ” means any corporation, firm, partnership or other legal entity.

1.13 “Clinical Costs” means the costs incurred by a Party or for its account, during the term and pursuant to this Agreement, in connection with clinical studies of a Co-Developed Product in the Co-Development Territory, including the following: (a) the preparation for and conduct of clinical trials (except for related Manufacturing Costs otherwise included in Development Costs); (b) data collection and analysis, and report writing; and (c) clinical laboratory work. The Clinical Costs shall exclude costs incurred in connection with [ * ] .

1.14 “Co-Developed Product” shall mean a Product for which: (a) Exelixis has exercised an Exelixis Co-Development Option; and (b) Exelixis has not opted-out pursuant to Section 4.7(a) .

1.15 “Co-Development Territory” shall mean [ * ] .

1.16 “Collaboration” means the collaborative research, development, and commercialization program between the Parties that is contemplated by this Agreement.

1.17 “Collaboration Compounds” means the Lead Compound and Program Backups in each Lead Op Program, Provisional Collaboration Program or Collaboration Program.

1.18 “Commercialize” means to promote, market, distribute, sell (and offer for sale or contract to sell) or provide product support for a Product, including by way of example: (a) detailing and other promotional activities in support of a Product; (b) advertising and public relations in support of a Product, including market research, development and distribution of selling, advertising and promotional materials, field literature, direct-to-consumer advertising campaigns, media/journal advertising, and exhibiting at seminars and conventions; (c) developing reimbursement programs and information and data specifically intended for national accounts, managed care organizations, governmental agencies (e.g., federal, state and local), and other group purchasing organizations, including pull-through activities; (d) co-promotion activities not included in the above; (e) conducting medical education activities and journal advertising; and (f) [ * ] . For clarity, “Commercializing” and “Commercialization” have a correlative meaning.

1.19 “Committee” means the JEC, JRC, JDC, JCC, or JFC, as the case may be.

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1.20 “Committee-Governed Product” means: (a) any Co-Promotion Product; (b) any Co-Developed Product; and (c) any Product with respect to which Exelixis exercised its Product-Opt-Out option pursuant to Section 4.7(a) [ * ] .

1.21 “ Completed Screening Program ” means a Screening Program for which there exists a lead molecule that has completed the following activities (as applicable to such lead molecule): (a) [ * ] ; (b) [ * ] ; (c) [ * ] ; (d) completion of [ * ] ; (e) completion of [ * ] ; (f) [ * ] .

1.22 “Controlled” means, with respect to any compound, material, Information or intellectual property right, that the Party owns or has a license to such compound, material, Information or intellectual property right and has the ability to grant to the other Party access, a license or a sublicense (as applicable) to such compound, material, Information or intellectual property right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party existing at the time such Party would be first required hereunder to grant the other Party such access, license or sublicense.

1.23 “Co-Promotion Product” means a Product for which Exelixis has exercised its option to Co-Promote in the U.S. as set forth in Section 6.4 .

1.24 “Core Program” shall mean, with respect to a Product, [ * ] for which any [ * ] or any [ * ] first [ * ] with respect to such Product.

1.25 “Development” means, with respect to a Product, those activities, including research, pre-clinical development activities, clinical trials, supporting manufacturing activities and related regulatory activities, that are [ * ] to: (a) obtain the approval by the applicable Regulatory Authorities of the Drug Approval Application with respect to such Product in the applicable regulatory jurisdiction, whether alone or for use together, or in combination, with another active agent or pharmaceutical product; (b) maintain such approvals; or (c) obtain or maintain compendia listings with respect to such Product. For clarity, “ Co-Develop ”, “Develop” and “Developing” have a correlative meaning.

1.26 “Development Candidate” means a [ * ] that has met Exelixis’ internal developability criteria, which criteria are consistent with Exelixis’ internal developability criteria for all Exelixis programs (including programs outside of the Collaboration), and that has been approved by Exelixis to transition from [ * ] to [ * ] .

1.27 “Development Costs” means the costs incurred by a Party or for its account, during the term and pursuant to this Agreement, that are specifically identifiable (or reasonably allocable) to the Development of a Co-Developed Product in the Co-Development Territory and that are directed to achieving or maintaining Regulatory Approval of such Co-Developed Product in the Co-Development Territory. The Development Costs shall include amounts that a Party pays to Third Parties involved in the Development of a Co-Developed Product ( [ * ] ), and all internal costs incurred by a Party in connection with the Development of such Co-Developed Product. Development Costs include the following: (a) preclinical costs such as toxicology and formulation development, test method development, delivery system development, stability testing and statistical analysis; (b) Clinical Costs; (c) expenses related to adverse event reporting;

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(d) Manufacturing Costs for a Co-Developed Product for use in preclinical and clinical activities including the manufacture, purchase or packaging of comparators or placebo for use in Clinical Trials (with the manufacturing costs for comparators or placebo to be determined in the same manner as Manufacturing Costs are determined for any Product), as well as the direct costs and expenses of disposal of drugs and other supplies used in such Clinical Trials and any associated release testing and QA/QC development costs; (e) [ * ] incurred in connection with [ * ] , to the extent provided therein; and (f) development of the Manufacturing process for a Co-Developed Product (including with respect to any excipients or any active pharmaceutical ingredient included in such Co-Developed Products) and related scale-up, manufacturing process validation, manufacturing process improvements, and qualification and validation of Third Party contract manufacturers; (g) regulatory expenses relating to Development activities for the purpose of obtaining Regulatory Approval for an indication for a Co-Developed Product; (h) costs of real property rented specifically for Development activities (to the extent actually used); and (i) other out-of pocket development expenses including, without limitation institutional and advisory review boards, investigator meetings, quality of life studies, epidemiology and outcomes research.

1.28 “Diligent Efforts” means the carrying out of obligations or tasks in a sustained manner consistent with the efforts a Party devotes to a product or a research, development or marketing project of similar market potential, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing. Diligent Efforts requires that the Party: (a) [ * ] , (b) [ * ] , and (c) [ * ] with respect to such [ * ] .

1.29 “Distribution Costs” means the costs, [ * ] , incurred by a Party or for its account, during the term and pursuant to the Agreement that are reasonably allocable (as determined by the JFC) to the distribution of a Co-Promotion Product in the U.S., including: (a) handling and transportation to fulfill orders (excluding such costs to the extent they are treated as a deduction in the definition of Net Sales); (b) customer services, including order entry, billing and adjustments, inquiry and credit and collection; and (c) direct costs of storage and distribution of Co-Promotion Products.

1.30 “Dollars” or “$” means the legal tender of the United States.

1.31 “Drug Approval Application” or “ DAA ” means: (a) in the United States, an NDA (or a supplemental NDA for following indications), and (b) in any other country or regulatory jurisdiction, an equivalent application for regulatory approval required before commercial sale or use of a Product (or with respect to a subsequent indication) in such country or regulatory jurisdiction.

1.32 “ECN” or “Early Candidate Nomination” means a compound or other substance that has been approved [ * ] to transition from [ * ] in a [ * ] to [ * ] .

1.33 “EMEA” means [ * ] commercial territory, consisting of the following countries and regions: [ * ] . The EMEA also includes: (a) [ * ] ; and (b) exports from [ * ] not separately identified in the list. For clarity, the specific list of countries and regions may change to align with any corresponding [ * ] .

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1.34 “EU” means the European Union, as its membership may be altered from time to time, and any successor thereto. The member countries of the European Union as of the Execution Date are Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal, Finland, Sweden, the United Kingdom, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta, and Cyprus.

1.35 “Executive Officers” means: (a) in the case of Exelixis, the President and Chief Executive Officer of Exelixis; and (b) in the case of BMS, either (i) a direct report of the BMS CSO (for disputes involving development matters) or (ii) the Head of U.S. Operations (for disputes involving commercial matters).

1.36 “Exelixis Licensed Know-How ” means all Information (other than Patents) Controlled by Exelixis and its Affiliates, including Information Controlled jointly with BMS, as of the Effective Date and during the term of this Agreement that: (a) covers a Collaboration Compound, a composition containing a Collaboration Compound (e.g., a formulation containing a Collaboration Compound), or the manufacture or use of a Collaboration Compound; and (b) is [ * ] for BMS to exercise the rights licensed to it under the Agreement or to perform its obligations to the Collaboration under the Agreement.

1.37 “Exelixis Licensed Patents” means all Patents controlled by Exelixis and its Affiliates, including patents controlled jointly with BMS, as of the Effective Date and during the term of this Agreement that: (a) cover a Collaboration Compound, a composition containing a Collaboration Compound (e.g., a formulation containing a Collaboration Compound), or the manufacture or use of a Collaboration Compound; and (b) are [ * ] for BMS to exercise the rights licensed to it under the Agreement or to perform its obligations to the Collaboration under the Agreement.

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

1.39 “FTE” means the equivalent of the work of one (1) employee full time for one (1) year consisting of a total of [ * ] hours per year (or such other number as may be agreed to by the JFC) directly related to the Development or Commercialization of any Co-Developed Product or Co-Promotion Product, as the case may be, or any other activities contemplated under this Agreement. Any individual who devotes less than [ * ] hours per year (or such other number as may be agreed by the JFC) shall be treated as an FTE on a pro-rata basis upon the actual number of hours worked divided by [ * ] (or such other number as may be agreed by the JFC). Unless modified by the JFC, the [ * ] figure shall be used without regard to the Parties’ own internal definition of the number of hours that comprises an FTE.

1.40 “GAAP” means U.S. generally accepted accounting principles, consistently applied.

1.41 “[ * ]” means, with respect to a particular Product in a country, [ * ] such Product ( [ * ] ); and (b) is [ * ] or otherwise), whether [ * ] or [ * ] .

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1.42 “HSR Act” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time, and the rules, regulations, guidance and requirements promulgated thereunder as may be in effect from time to time.

1.43 “Identified Target(s)” means the set of one or more Lead Op Targets or Collaboration Targets (as applicable) that the JRC, the JDC or the Parties (as the case may be) reasonably believes [ * ] in such Lead Op Program, Provisional Collaboration Program or Collaboration Program.

1.44 “IND” means an Investigational New Drug Application submitted to the FDA in conformance with applicable laws and regulations, or the foreign equivalent of any such application in any other country.

1.45 “Information” means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including, databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures. For clarity, Information does not include any Patents.

1.46 “Initial Lead Op Programs” means the [ * ] programs conducted by Exelixis on the initial Lead Op Targets selected by the Parties pursuant to Section 3.3(a) .

1.47 “Invention” means any and all inventions and improvements thereto, invented or discovered by or on behalf of a Party (and/or its Affiliates) in the performance of its obligations under this Agreement.

1.48 “Joint Invention” means any Invention invented or discovered jointly by or on behalf of the employee(s), contractor(s) or agent(s) of both Parties (and/or their Affiliates).

1.49 “Joint Commercialization Committee” or “JCC” means the committee described in Section 2.4 .

1.50 “Joint Development and Regulatory Committee” or “JDC” means the committee described in Section 2.3 .

1.51 “Joint Executive Committee” or “JEC” means the committee described in Section 2.2 .

1.52 “Joint Finance Committee” or “JFC” means the committee described in Section 2.6 .

1.53 “Joint Research Committee” or “JRC” means the committee described in Section 2.5 .

1.54 “Knowledge” means, with respect of a Party, the good faith [ * ] facts and information in the possession of an [ * ] of such Party, or any [ * ] of, or [ * ] , such Party or its Affiliates, [ * ] execution of this Agreement. For purposes of this definition, an “[ * ]” means any person in the [ * ] of a Party.

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1.55 “Launch” means, for each Product in each country, the first arm’s-length sale to a Third Party for use or consumption by the public of such Product in such country after Regulatory Approval of such Product in such country. A Launch shall not include any Product sold for use in clinical trials, for research or for other non-commercial uses, or that is supplied as part of a compassionate use or similar program .

1.56 “Lead Compound” means, with respect to a Provisional Collaboration Program or Collaboration Program: (a) the Program Lead for such Provisional Collaboration Program or Collaboration Program; and (b) any [ * ] compound described in subsection (a).

1.57 “Lead Op Program” has the meaning described in Section 3.3 . The Lead Op Programs include: (a) Initial Lead Op Programs; and (b) any [ * ] programs that were [ * ] and that were [ * ] programs pursuant to Section 3.3(c) .

1.58 “Lead Op Target(s)” means: (a) the initial list of targets identified by the Parties pursuant to Section 3.3(a) ; and (b) any additional target(s) identified by the Parties pursuant to Sections 3.2(b) or 3.3(a) . The Lead Op Targets shall be listed in Exhibit 3.3 , which shall be updated periodically by the Parties.

1.59 “Major European Countries” means France, Germany, Spain, Italy, and the United Kingdom.

1.60 “Major Territory” means each of the following territories: (a) [ * ] .

1.61 “Manufacturing” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, inspection, receiving, holding and shipping of Lead Compounds, Program Backups, Collaboration Compounds, Products, or any raw materials or packaging materials with respect thereto, or any intermediate of any of the foregoing, including process and cost optimization, process qualification and validation, commercial manufacture, stability and release testing, quality assurance and quality control. For clarity, “Manufacture” has a correlative meaning.

1.62 “Manufacturing Costs” means costs that relate to a Co-Developed Product or a Co-Promotion Product which is: (a) supplied by a Third Party; or (b) manufactured directly by a Party or its Affiliate, in each case to the extent such costs relate to the development of a Co-Developed Product or the Commercialization of a Co-Promotion Product in the U.S., as further described below and as allocated in accordance with GAAP.

For costs in subsection (a) , Manufacturing Costs means: (i) the amount paid to such a Third Party [ * ] ; plus (ii) the relevant manufacturing Party’s reasonable direct and identifiable internal costs and out-of-pocket costs, incurred or accrued (including any prepayments) by the manufacturing Party in connection with manufacturing process improvements, storage, manufacturing scale-up, manufacturing site qualification, quality assurance and quality control (including testing), supply chain management, capital equipment, similar activities comprising the manufacturing Party’s oversight of the manufacturing process of the non-Affiliate Third Party, and any value-added tax or similar tax due for amounts paid to such Third Party.

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For costs in subsection (b) , Manufacturing Costs means the “standard cost” per unit, including variances to standard costs and inventory write-offs. This standard cost shall include the cost of raw materials, labor, and other direct and identifiable variable costs incurred or accrued by the manufacturing Party in connection with the manufacture of a Co-Promotion Product, manufacturing process improvements, storage, manufacturing scale-up, manufacturing site qualification, quality assurance and quality control (including testing), supply chain management, and costs of equipment, plant operations and plant support services necessary to produce a Co-Promotion Product. These costs of plant operations and support services shall include [ * ] and other similar activities, including [ * ] charges. Costs that cannot be identified to a specific activity supporting manufacturing of a Co-Promotion Product, such as charges for corporate overhead that are not controllable by the manufacturing plant, shall be [ * ] from the determination of Manufacturing Cost.

Subject to the preceding paragraph, “standard cost” per unit for purposes of ongoing cost accounting purposes shall be calculated in accordance with [ * ] . The Parties shall reconcile the standard cost charges and appropriate credit or payment shall be made to effect such reconciliation as directed by the JFC not less than annually against the above Manufacturing Cost definition.

Manufacturing Costs shall include costs of such activities that are undertaken at any time during the term of this Agreement (including [ * ] ).

1.63 “Medical Education Activities” means activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, a Co-Promotion Product sold in the U.S., including by way of example: (a) activities of medical sales liaisons; (b) grants to support continuing medical education, symposia, or research related to a Co-Promotion Product in the U.S. (excluding Phase IV Clinical Trials and Development activities conducted for purposes of obtaining an initial Regulatory Approval for an indication for a Co-Promotion Product in the U.S.); (c) development, publication and dissemination of publications relating to Co-Promotion Product in the U.S., as well as medical information services provided in response to inquiries communicated via sales representatives or received by letter, phone call or email; and (d) conducting advisory board meetings or other consultant programs, the purpose of which is to obtain advice and feedback related to the Development or Commercialization of a Co-Promotion Product in the U.S.

1.64 “NDA” means a New Drug Application submitted to the FDA in conformance with applicable laws and regulations.

1.65 “Net Sales” means the amount invoiced or otherwise billed by BMS or its Affiliate or sublicensee for sales or other commercial disposition of a Product to a Third Party purchaser, less the following to the extent included in such billing or otherwise actually allowed or incurred with respect to such sales: (a) discounts, including cash, trade and quantity discounts, price reduction programs, retroactive price adjustments with respect to sales of a product, charge-back payments and rebates granted to managed health care organizations or to federal,

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state and local governments (or their respective agencies, purchasers and reimbursers) or to trade customers, including but not limited to, wholesalers and chain and pharmacy buying groups; (b) credits or allowances actually granted upon rejections or returns of Products, including for recalls or damaged goods; (c) freight, postage, shipping and insurance charges actually allowed or paid for delivery of Products, to the extent billed; (d) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of a Product; (e) bad debts relating to sales of Products that are actually written off by BMS in accordance with GAAP during the applicable calculation period; (f) costs due to the factoring of receivables; and (g) taxes, duties or other governmental charges levied on, absorbed or otherwise imposed on sale of Products, including value-added taxes, or other governmental charges otherwise measured by the billing amount, when included in billing, as adjusted for rebates and refunds, but specifically excluding taxes based on net income of the seller; provided that all of the foregoing deductions are calculated in accordance with generally accepted accounting principles consistently applied throughout the Party’s organization.

Notwithstanding the foregoing, if any Product is sold under a bundled or capitated arrangement with other BMS products, then, solely for the purpose of calculating Net Sales under this Agreement, any discount on such Products sold under such an arrangement shall be [ * ] for the applicable accounting period. In case of any dispute as to the applicable [ * ] under the preceding sentence, the determination of same shall be calculated and certified by [ * ] , whose decision shall be binding.

A sale of a Product is deemed to occur upon invoicing. [ * ] .

For sake of clarity and avoidance of doubt, sales by BMS, its Affiliates or sublicensees of a Product to [ * ] . Any Products [ * ] considered in determining Net Sales hereunder.

In the event a Product is sold as an end-user product consisting of a combination of active functional elements or as a combined product and/or service, Net Sales, for purposes of determining royalty payments on such Product, shall be calculated by multiplying the Net Sales of the end-user product and/or service by the fraction A over A+B, in which A is the gross selling price of the Product portion of the end-user product and/or service when such Product is sold separately during the applicable accounting period in which the sales of the end-user product were made, and B is the gross selling price of the other active elements and/or service, as the case may be, of the end-user product and/or service sold separately during the accounting period in question. All gross selling prices of the elements of such end-user product and/or service shall be calculated as the average gross selling price of the said elements during the applicable accounting period for which the Net Sales are being calculated. In the event that, in any country or countries, no separate sale of either such above-designated Product or such above designated elements of the end-user product and/or service are made during the accounting period in which the sale was made or if gross retail selling price for an active functional element, component or service, as the case may be, cannot be determined for an accounting period, Net Sales allocable to the Product in each such country shall be determined by mutual agreement reached in good faith by the Parties prior to the end of the accounting period in question based on an equitable method of determining same that takes into account, on a country-by-country basis, variations in potency, the relative contribution of each active agent, component or service, as the

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case may be, in the combination, and relative value to the end user of each active agent, component or service, as the case may be. Notwithstanding the foregoing, the Parties agree that, for purposes of this paragraph, drug delivery vehicles, adjuvants, and excipients shall not be deemed to be “ active ingredients ” or “ active functional elements ”.

1.66 “Operating Profit (or Loss)” means Net Sales of Co-Promotion Products in the U.S. less Allowable Expenses in the U.S. For sake of clarity, Operating Profit (or Loss) shall be determined [ * ] , and if such terms are used individually, “ Operating Profit ” shall mean a positive Operating Profit (or Loss), and “ Operating Loss ” shall mean a negative Operating Profit (or Loss).

1.67 “Patent” means all: (a) unexpired letters patent (including inventor’s certificates and utility models) which have not 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 (and which have not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, or been abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written agreement), including any substitution, extension, registration, confirmation, reissue, re-examination, supplementary protection certificates, confirmation patents, patent of additions, renewal or any like filing thereof; (b) pending applications for letters patent which have not been canceled, withdrawn from consideration, finally determined to be unallowable by the applicable governmental authority or court for whatever reason (and from which no appeal is or can be taken), and/or abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written consent, including any continuation, division or continuation-in-part thereof and any provisional or other priority applications; and (c) any international counterparts, and counterparts in any country, to clauses (a) and (b) above.

1.68 “Phase I Clinical Trial” means a clinical trial of a Product on sufficient numbers of normal volunteers and/or patients that is designed to establish that such Product is safe for its intended use, can be delivered in a dose(s) that is therapeutically useful, and to support its continued testing in Phase II Clinical Trials.

1.69 “Phase II Clinical Trial” means a Phase IIa Clinical Trial or a Phase IIb Clinical Trial.

1.70 “Phase IIa Clinical Trial” means a controlled clinical trial of a Product that utilizes the pharmacokinetic and pharmacodynamic information obtained from one (1) or more previously conducted Phase I Clinical Trial(s) and/or other Phase IIa Clinical Trial(s) in order to confirm the optimal manner of use of such Product (dose and dose regimens) and to better determine safety and efficacy.

1.71 “Phase IIb Clinical Trial” means a clinical trial of a Product on sufficient numbers of patients that is designed to provide a preliminary determination of safety and efficacy of such Product in the target patient population over a range of doses and dose regimens.

1.72 “Phase III Clinical Trial” means a clinical trial of a Product on sufficient numbers of patients that is designed to establish that such Product is safe and efficacious for its

[ * ] =

intended use, and to define warnings, precautions and adverse reactions that are associated with such Product in the dosage range to be prescribed, and to support Regulatory Approval of such Product or label expansion of such Product.

1.73 “Phase IIIb Clinical Trial” means a clinical trial of a Product, initiated before regulatory approval and is not required for same, but which may provide data that further defines how and where the drug should be used. A Phase IIIb Clinical Trial may include epidemiological studies, modeling and pharmacoeconomic studies, and investigator-sponsored clinical trials that are approved by the JDC and that otherwise fit the foregoing definition.

1.74 “Phase IV Clinical Trial” means a product support clinical trial of a Product commenced after receipt of Regulatory Approval in the country where such trial is conducted. A Phase IV Clinical Trial may include epidemiological studies, modeling and pharmacoeconomic studies, and investigator-sponsored clinical trials studying Product that are approved by the JDC and that otherwise fit the foregoing definition.

1.75 “Product” means any therapeutic or prophylactic product (for use in animals or humans) that contains or comprises a Collaboration Compound for which BMS has exercised its Co-Development Option in accordance with the terms of this Agreement.

1.76 “Program Backups” means, with respect to a Lead Op Program, Provisional Collaboration Program or Collaboration Program any compounds, other than the Program Lead, that: (a) were created by BMS or Exelixis as part of such Lead Op Program, Provisional Collaboration Program or Collaboration Program (or Backup Program pursuant to Section 3.5 ); (b) [ * ] the applicable Lead Op Target(s) or Collaboration Target(s) [ * ] ; and (c) [ * ] Lead Op Target(s) or Collaboration Target(s), based on the [ * ] , and any [ * ] of any such compounds described in ((a), (b) and (c)) above.

1.77 “Program Lead” means, for any Lead Op Program, Provisional Collaboration Program or Collaboration Program, a small molecule compound that: (a) was created by Exelixis as part of the relevant Lead Op Program, Provisional Collaboration or Collaboration Program; (b) [ * ] the applicable Lead Op Target(s) or Collaboration Target(s) [ * ] ; (c) [ * ] Lead Op Target(s) or Collaboration Target(s), based on the [ * ] ; (d) meets Exelixis’ internal standards applicable to a Development Candidate; and (e) is [ * ] that would otherwise result in [ * ] .

1.78 “Registrational Trial” means, with respect to a given Product, either (i) a Phase III Clinical Trial with such Product or (ii) a Phase IIb Clinical Trial that, at the time of commencement, is expected to be the basis for initial Regulatory Approval of such Product.

1.79 “Regulatory Approval” means any and all approvals (including Drug Approval Applications, supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any Regulatory Authority, national, supra-national (e.g., the European Commission or the Council of the EU), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or sale of a Product in a regulatory jurisdiction.

[ * ] =

1.80 “Regulatory Authority” means the applicable national (e.g., the FDA), supra-national (e.g., the European Commission or the Council of the EU), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity that, in each case, governs the approval of a Product in such applicable regulatory jurisdiction.

1.81 “Regulatory Expenses” means costs incurred to prepare product regulatory submissions and to obtain and maintain Regulatory Approval in the U.S. and to comply with Regulatory Approvals and requirements of Regulatory Authorities, including FDA user and other fees, reporting and regulatory affairs activities, and recalls and withdrawals for Co-Promotion Product (other than costs for Co-Promotion Product that are deductible from Net Sales or that are included as Development Costs).

1.82 “Reporting-Only Product” means any Product with respect to which Exelixis exercised a Product Opt-Out pursuant to Section 4.7(a) prior to [ * ] such Product.

1.83 “Royalty-Bearing Product” means a Product: (a) with respect to which Exelixis failed to make the co-development election contemplated by Section 3.7(c) ; or (b) with respect to which: (i) Exelixis has notified BMS of a Product Opt-Out; or (ii) with respect to which Exelixis elected not to exercise its Co-Promotion Option or where such Co-Promotion Option expired unexercised.

1.84 “Royalty Territory” means the world, excluding the U.S.

1.85 “Sales and Marketing Costs” means the [ * ] costs that are [ * ] the sales and marketing of a Co-Promotion Product in the U.S., including: (a) activities directed to the advertising and marketing of a Co-Promotion Product; (b) professional education (to the extent not performed by sales representatives), including launch meetings; (c) costs of advertising, public relations and medical education agencies; (d) peer-to-peer activities, such as continuing medical education, grand rounds, and lunch and dinner meetings; (e) speaker programs, including the training of such speakers; (f) grants to support continuing medical education or research (excluding Clinical Costs); (g) development, publication and dissemination of publications relating to a Co-Promotion Product; (h) developing, obtaining and providing training packages of a Co-Promotion Product, promotional literature, promotional materials and other selling materials; (i) developing and performing market research; (j) conducting symposia and opinion leader development activities; (k) development reimbursement programs; (l) developing information and data specifically intended for national accounts, managed care organizations and group purchasing organizations; (m) [ * ] incurred in connection with [ * ] , to the extent provided therein; (n) direct expenses relating to selling by non-Affiliate Third Parties; (o) costs of transporting, housing and maintaining sales representatives for training; (p) conducting Phase IIIb Clinical Trials and Phase IV Clinical Trials, and clinical trials performed for marketing purposes and post-marketing surveillance activities; (q) administration, operation and maintenance of the sales force that promotes a Co-Promotion Product in the U.S., sales bulletins and other communications, sales meetings, specialty sales forces, consultants, call reporting and other monitoring/tracking costs, district and regional sales management, home office personnel who support the sales force; and (r) costs associated with Medical Education Activities, and other ancillary services to the foregoing (to the extent not otherwise falling within

[ * ] =

subsections (a) through (r) . Sales and Marketing Costs shall include costs of such activities that are undertaken at any time during the term of this Agreement (including prior to the initial Regulatory Approval of a Co-Promotion Product in the U.S.).

1.86 “Screening Target(s)” means any one or more targets that: (a) the Parties mutually agree becomes part of the Collaboration pursuant to Section 3.2(a) ; and (b) are not the subject of: (i) a collaboration between Exelixis and a Third Party; or (ii) discussions between Exelixis and a Third Party concerning a bona fide collaboration. The Screening Targets shall be listed in Exhibit 3.2 , which shall be updated periodically by the Parties.

1.87 “Sole Invention” means any Invention invented or discovered solely by or on behalf of a Party (or its Affiliate) and its employees, contractors and/or agents.

1.88 “Specificity Criteria” means, for each Collaboration Compound, that such Collaboration Compound: (a) demonstrates [ * ] as determined [ * ]; and (b) has a [ * ] in such [ * ].

1.89 “Target Potency Threshold” means, for each Collaboration Compound, that such Collaboration Compound [ * ].

1.90 “Territory” means the world.

1.91 “Third Party” means any entity other than: (a) Exelixis; (b) BMS; or (c) an Affiliate of either Party.

1.92 “Third Party Royalties” means royalties and other payments payable to a Third Party in consideration for rights [ * ] for the [ * ] of Co-Promotion Product.

1.93 “Trademark Costs” mean the fees and expenses paid to outside counsel and other Third Parties, direct costs of in-house counsel and filing and maintenance expenses, incurred in connection with the establishment and maintenance of rights under trademarks applicable to Co-Promotion Product in the U.S., including costs of filing and registration fees, actions to enforce or maintain a trademark and other proceedings.

1.94 “United States” or “U.S.” means the United States of America, and its territories, districts and possessions.

1.95 “Unrelated Compound” means, with respect to a Lead Op Program, Provisional Collaboration Program or Collaboration Program, any Program Backups that: (a) were created by BMS or Exelixis as part of such Lead Op Program, Provisional Collaboration Program or Collaboration Program (or Backup Program pursuant to Section 3.5 ); and (b) either: (i) [ * ] applicable Lead Op Target(s) or Collaboration Target(s) [ * ] ; or (ii) are [ * ] Lead Op Target(s) or Collaboration Target(s), based on the [ * ] .

1.96 “Valid Claim” means (a) a claim in an issued Patent that has not: (i) expired or been canceled; (ii) been declared invalid by an unreversed and unappealable or unappealed decision of a court or other appropriate body of competent jurisdiction; (iii) been admitted to be

[ * ] =

invalid or unenforceable through reissue, disclaimer or otherwise; or (iv) been abandoned in accordance with or as permitted by the terms of this Agreement or by mutual written agreement of the Parties; or (b) a claim under an application for a Patent that has been pending for [ * ] for [ * ], and, in any case, which has not been canceled, withdrawn from consideration, finally determined to be unallowable by the applicable governmental authority or court for whatever reason (and from which no appeal is or can be taken), or abandoned.

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Additional Definitions

The following table identifies the location of definitions set forth in various Sections of the Agreement.


Definition		Location (Section)
Alliance Manager		2.8(a)
Annual Development Plan		4.2(a)
Backup Program		3.5(b)(i)
*[ ]**		*[ ]**
BMS Rejected Lead Op Target		3.3(d)
Co-Development Option		3.1(b)
Collaboration Program		3.4(b)(i)
Collaboration Target		3.3(b)
*[ ]**		*[ ]**
*[ ]**		*[ ]**
Co-Promotion Agreement		6.4(a)
Co-Promotion Notice		6.4(b)
Co-Promotion Option		6.4(a)
DCP		3.3(b)
*[ ]**		*[ ]**
Effective Date		13.6
Exelixis Co-Development Option		3.7(c)
*[ ]**		*[ ]**
Global Commercialization Strategy		6.2(a)
Global Development Plan		4.1(a)
Indication Opt-Out		4.7(b)
JAMS		3.6(b)(iii)
Lead Op Candidate		3.2(b)
*[ ]**		*[ ]**
Party Implementation Matter		2.7(c)(ii)
Party Vote		2.7(c)(i)
Pharmacovigilance Agreement		5.7
Product Opt-Out		4.7(a)
Provisional Collaboration Program		3.4(a)
Rejected Lead Op Target		3.3(c)
*[ ]**		*[ ]**
Rejected Screening Target		3.2(b)
Research Term		3.10
ROC		1.6
Royalty Term		9.11
Screening Program		3.2
*[ ]**		*[ ]**
*[ ]**		*[ ]**
Term		12.1
U.S. Commercialization Plan		6.2(a)
Working Group		2.7(f)

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2.	MANAGEMENT OF COLLABORATION

2.1 General.

(a) Role of Committees. Subject to Section 2.1(b) and the other terms and conditions of this Agreement, the Parties shall establish: (i) a joint executive committee (the “ Joint Executive Committee ” or “ JEC ”) that will oversee the Collaboration and facilitate communications between the Parties with respect to the Development, Regulatory Approval, and Commercialization of Committee-Governed Products hereunder; and (ii) four (4) specialized joint committees consisting of one to focus on each of the following areas arising out of the Collaboration: (A) discovery efforts in connection with Screening Programs, Lead Op Programs, Provisional Collaboration Programs and Collaboration Programs, as described in Article 3 (such committee, the “Joint Research Committee” or “JRC” ); (B) Development and Regulatory Approval and other regulatory matters (such committee, the “ Joint Development and Regulatory Committee ” or “ JDC ”); (C) Commercialization (such committee, the “ Joint Commercialization Committee ” or “ JCC ”); and (D) financial issues (such committee, the “ Joint Finance Committee ” or “ JFC ”). Each Committee shall have the responsibilities and authority allocated to it in this Article 2 and elsewhere in this Agreement. It is contemplated that: (X) all significant matters (other than Party Implementation Matters, as defined in Section 2.7(c)(ii) ) relating to: (I) the discovery and pre-clinical Development of Collaboration Compounds; and (II) the clinical Development of Committee-Governed Products and the Commercialization of Co-Promotion Products, in each case under this Agreement will be addressed by the applicable first-tier Committees ( i.e ., the JRC, the JDC, the JCC, or the JFC) and, if appropriate, by the JEC, as contemplated by Section 2.7(c) ; and (Y) the Parties’ respective activities under this Agreement (including Party Implementation Matters) will be reported to the relevant Committees in a reasonable and appropriate level of detail. Each of the JRC (to the extent applicable), JDC, JCC, and the JFC shall provide, on a [ * ] basis (unless otherwise requested by the JEC), updates on its activities and achievements to the JEC for review and comment. The Parties intend that their respective organizations will work together to assure the success of the Collaboration.

(b) Limitations on the Authority of Committees. Notwithstanding the Committee structure established pursuant to Section 2.1(a) to oversee the Collaboration, each Party shall retain the rights, powers and discretion granted to it under this Agreement, and no such rights, powers, or discretion shall be delegated to or vested in a Committee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing. Without limiting the generality of the foregoing, no Committee shall have any authority or jurisdiction to: (i) amend, modify, or waive compliance with this Agreement, any of which shall require mutual written agreement of the Parties; (ii) interpret this Agreement, or determine whether or not a Party has met its diligence or other obligations under the Agreement or whether or not a breach of this Agreement has occurred; (iii) require Exelixis to [ * ] (other than [ * ] , [ * ] that are carried out in accordance with the [ * ] , and any [ * ] obligations with respect to [ * ] that are set forth in the applicable [ * ] ) without Exelixis’ express written consent ( [ * ] ); (iv) require Exelixis to [ * ] (other than [ * ] , [ * ] that are carried out in accordance with [ * ] , and any [ * ] with respect to [ * ] that are set forth in the applicable [ * ] )

[ * ] =

without Exelixis’ express written consent (which [ * ] ); (v) require BMS to [ * ] (other than [ * ] ) without BMS’ express written consent (which [ * ] ); (vi) make any decision on any matter that this Agreement expressly states is an option or election to be made by a Party; (vii) make any retroactive updates, amendments and modifications to, or waivers of provisions of, an Approved Plan, any which shall require the mutual agreement of the Parties; and (viii) such other matters as are reserved to the consent, approval, agreement or other decision-making authority of one or both Parties in this Agreement and that are not required by this Agreement to be considered by one or more Committees prior to the exercise of such consent, approval or other decision-making authority. For clarity, a Party’s right to cast a deciding vote on a matter in a Committee pursuant to Article 2 shall not, in and of itself, subject such matter to the preceding sentence. Notwithstanding the foregoing, neither Party shall be restricted from bringing before any appropriate Committee for discussion any matter relating to the Collaboration that it believes warrants discussion between the Parties through the Committees, provided that the consideration of any such matter by any Committee shall not infringe or limit the exercise of a Party’s right of consent or approval or other decision-making authority granted to it by this Agreement nor shall any such consideration, as contemplated by this sentence, subject any such right of consent or approval or other decision-making authority to any dispute resolution mechanism provided for in Section 2.7(c) or Article 15 or elsewhere in this Agreement.

2.2 Joint Executive Committee.

(a) Formation and Purpose. Exelixis and BMS shall establish the JEC within [ * ] after the first exercise by BMS of its Co-Development Option pursuant to Section 3.4(b) . Subject to Sections 2.1(b) and 2.7(c) , the JEC shall have overall responsibility for the success of the Collaboration, and its general areas of responsibility shall be: (a) to determine the global Development, regulatory, Commercialization, and manufacturing strategy for the Collaboration; (b) to coordinate the Parties’ activities hereunder; and (c) as applicable, to review, comment on, approve, and resolve disputes with respect to, plans and budgets for, and the implementation of, the Collaboration, including the specific responsibilities of the JEC outlined below, in each case (clauses (a), (b) and (c) above) solely with respect to Committee-Governed Products. The JEC shall have the membership and shall operate by the procedures set forth in Section 2.7 .

(b) Specific Responsibilities of the JEC. In addition to its overall responsibility for the Collaboration, but subject to Sections 2.1(b) and 2.7(c) , the JEC shall, in particular, have the following specific responsibilities with respect to Committee-Governed Products:

(i) approve the global development, regulatory and commercialization strategies for the Collaboration;

(ii) coordinate the Parties’ activities hereunder;

(iii) approve plans and budgets for the Collaboration proposed by the JDC or JCC;

[ * ] =

(iv) review all significant and strategic issues within the purview of the various Committees;

(v) manage and oversee the development and commercialization of each Product pursuant to the terms of the Agreement;

(vi) review and approve any material amendments to the Approved Plans and any other items submitted to the JEC by the JDC or JCC;

(vii) oversee life cycle management of, and intellectual property protection for, a Product;

(viii) provide a forum for dispute resolution; and

(ix) such other responsibilities as may be assigned to the JEC pursuant to the Agreement or as may be agreed between the Parties from time to time.

2.3 Joint Development and Regulatory Committee.

(a) Formation and Purpose. Exelixis and BMS shall establish the JDC within [ * ] after the earlier of: (i) [ * ] ; or (ii) [ * ] . Subject to Sections 2.1(b) and 2.7(c) , the JDC shall oversee, coordinate and expedite the Development of, and the making of regulatory filings for, each Committee-Governed Product worldwide in order to obtain Regulatory Approvals (or compendia listings, as applicable). The JDC will also facilitate the flow of information with respect to Development activities being conducted for each Product and oversee Development activities required to support Regulatory Approvals (or compendia listings, as applicable). The JDC shall have the membership and shall operate by the procedures set forth in Section 2.7 .

(b) Specific Responsibilities of the JDC. In support of its responsibility for overseeing, coordinating and expediting the Development of, and regulatory filings for, each Committee-Governed Product, but subject to Sections 2.1(b) and 2.7(c) , the JDC shall, in particular, and solely with respect to Committee Governed Products:

(i) monitor Development activities;

(ii) prepare the Global Development Plan and each Annual Development Plan;

(iii) review all material information generated in the course of implementing the Global Development Plan and the Annual Development Plans;

(iv) assist in coordinating scientific interactions and division of responsibilities with respect to Development Activities, and resolving disagreements during the course of implementing the Global Development Plan and the Annual Development Plans;

[ * ] =

(v) design, in collaboration with the JCC, pharmacoeconomic studies or Phase IV Clinical Trials;

(vi) monitor and coordinate all regulatory actions, communications and submissions for Products, including establishing the schedule and implementation strategy for all regulatory filings for Products;

(vii) provide on a quarterly basis updates on its activities and achievements to the JEC for review and comment;

(viii) pursuant to Section 3.6(b) , review and determine whether the definition of Identified Target(s) for each applicable Lead Op Program, Provisional Collaboration Program and Collaboration Program need to be modified; and

(ix) such other responsibilities as may be assigned to the JDC pursuant to the Agreement or as may be agreed between the Parties from time to time.

2.4 Joint Commercialization Committee.

(a) Formation and Purpose. Exelixis and BMS shall establish the JCC within [ * ] after [ * ] , which Committee shall, subject to Sections 2.1(b) and 2.7(c) , oversee: (i) the Commercialization strategy of each Co-Promotion Product in the Co-Development Territory; and (ii) the Commercialization of Co-Promotion Products in the U.S. including the marketing, sales and distribution of each Co-Promotion Product in the U.S. The JCC shall have the membership and shall operate by the procedures set forth in Section 2.7 .

(b) Specific Responsibilities of the JCC. In support of its responsibilities as described in clause (a) above, the JCC shall, subject to Sections 2.1(b) and 2.7(c) , perform the following activities solely with respect to Co-Promotion Products:

(i) prepare the Global Commercialization Strategy and the U.S. Commercialization Plan, and any updates thereto;

(ii) review the allocation of Commercialization responsibilities between the Parties to ensure consistency with the terms of this Agreement, the Global Commercialization Strategy, and the U.S. Commercialization Plan;

(iii) coordinate and oversee the Parties’ plans for labeling, branding and selecting trademarks for each Product;

(iv) review life cycle management opportunities;

(v) review pricing and reimbursement strategies with respect to Products in the Royalty Territory and

(vi) With respect to Co-Promotion Products in the U.S. only:

(1) review and approve advertising materials and strategies and promotional materials developed by a Party for the Parties’ Sales Representatives;

[ * ] =

(2) approve the selection of major or key marketing vendors (e.g., public relations and advertising agencies and medical education agencies) ;

(3) approve pricing and reimbursement, patient assistance, vendor return and co-pay strategies;

(4) design, in collaboration with the JDC, pharmacoeconomic studies or Phase IV Clinical Trials;

(5) approve market research plans;

(6) approve and coordinate all sales force activities, including training, number, proportion of time to be devoted to promotion, and territory alignment;

(7) approve packaging designs, and oversee educational and professional symposia, and speaker and peer-to-peer activity programs;

(8) discuss a range of suggested prices at which a Co-Promotion Product will be sold to unaffiliated Third Parties and any discount strategies for such Co-Promotion Product (it being understood that BMS will determine all pricing and reimbursement terms for Co-Promotion Products sold to customers);

(9) review of each Party’s reports pertaining to its Sales and Marketing Costs; and

(10) review early access and compassionate use programs.

(c) Available Resources. Except as otherwise provided in Article 6 or any applicable Co-Promotion Agreement, the JCC shall, in allocating responsibilities between the Parties with respect to Commercialization activities for Co-Promotion Products under this Agreement in the United States: (i) endeavor to take advantage of the respective resources, capabilities and expertise of Exelixis and BMS; and (ii) endeavor to: (A) maintain, to the extent reasonably practical and commercially appropriate, continuity in functions and commitments of personnel and physical resources of the Parties; (B) avoid duplication of efforts by the Parties; and (C) foster efficient use by the Parties of resources and personnel, consistent with this Agreement and the applicable Global Commercialization Strategy and the applicable U.S. Commercialization Plan. For clarity, BMS shall be solely responsible for the Commercialization of each Product in the Royalty Territory and for each Royalty-Bearing Product in the United States.

2.5 Joint Research Committee. Exelixis and BMS shall establish the JRC within [ * ] after the Effective Date, which Committee shall, subject to Sections 2.1(b) and 2.7(c) , oversee the discovery efforts with respect to Screening Programs, Lead Op Programs, Provisional Collaboration Programs and Collaboration Programs, as described in Article 3 , including work

[ * ] =

performed by BMS on Provisional Collaboration Programs in accordance with Section 3.4(a) . The JRC shall have the membership and shall operate by the procedures set forth in Section 2.7 , and shall disband subsequent to the Research Term or otherwise at the direction of the JEC. Without limiting the generality of the foregoing, the JRC shall have the specific responsibilities set forth below:

(a) provide a forum to allow BMS to review and comment with respect to discovery and pre-clinical Development activities and for Exelixis to report progress with respect to discovery and pre-clinical Development activities;

(b) make decisions with respect to: (i) which targets will become Screening Targets, Lead Op Candidates and Lead-Op Programs; (ii) which Screening Targets, Lead Op Candidates, Lead-Op Targets and Collaboration Candidates will be terminated; and (iii) which compounds will become Program Leads;

(c) review [ * ] proposed by BMS, and discuss the progress of Lead-Op Candidates, Development Candidates and Collaboration Candidates in relation to those [ * ] ; and

(d) pursuant to Section 3.6(b) , review and determine whether the definition of Identified Target(s) for each applicable Lead Op Program, Provisional Collaboration Program and Collaboration Program need to be modified.

2.6 Joint Finance Committee. Exelixis and BMS shall establish a JFC within forty-[ * ] subsequent to the [ * ]. The JFC shall provide support to all other Committees with respect to accounting and financial matters relating to Committee-Governed Products. The JFC shall have the membership and shall operate by the procedures set forth in Section 2.7.

2.7 General Committee Membership and Procedures.

(a) Membership. Each Committee shall be composed of such number of representatives as may be agreed by the Parties. Each of BMS and Exelixis shall designate representatives with appropriate expertise to serve as members of each Committee, and each representative may serve on more than one Committee as appropriate in view of the individual’s expertise. Each Party may replace its Committee representatives at any time upon written notice to the other Party. Each Committee shall have co-chairpersons. BMS and Exelixis shall each select from their representatives a co-chairperson for each of the Committees, and each Party may change its designated co-chairpersons from time to time upon written notice to the other Party. The Alliance Managers shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting of such Committee, and preparing and issuing minutes of each meeting within [ * ] thereafter; provided that a Committee co-chairperson shall call a meeting of the applicable Committee promptly upon the written request of the other co-chairperson to convene such a meeting. The minutes of each meeting shall, among other things, record all matters acted upon and approved or disapproved by the Committee, actions to be taken, and any matters the Committee failed to resolve. Such minutes will not be finalized until both Alliance Managers review and confirm in writing the accuracy of such minutes.

[ * ] =

(b) Meetings. Each Committee shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once every [ * ] for the JRC and once every [ * ] for the JDC, the JCC, and the JFC, and once every [ * ] for the JEC. Each Committee shall meet alternately at Exelixis’ facilities in South San Francisco, California, and BMS’ facilities in Princeton, New Jersey, or at such other locations as the Parties may agree. The Alliance Managers shall, and other employees of each Party involved in the Development, Manufacture or Commercialization of any Product may as needed, attend meetings of each Committee (as nonvoting participants unless they are members of such Committee), and consultants, representatives or advisors involved in the Development, Manufacture or Commercialization of any Product may attend meetings of each Committee as nonvoting observers; provided that such Third Party representatives are under obligations of confidentiality and non-use applicable to the Confidential Information of each Party that are at least as stringent as those set forth in Article 11 , and in the case of non-employees of a Party, subject to the consent of the other Party, which shall not be unreasonably withheld or delayed. Each Party shall be responsible for all of its own expenses of participating in any Committee (including in any Working Group). Meetings of any Committee may be held by audio or video teleconference with the consent of each Party, which shall not be unreasonably withheld or delayed; provided that at least [ * ] per year of such Committee shall be held in person. No action taken at any meeting of a Committee shall be effective unless a representative of each Party is participating.

(c) Decision-Making .

(i) Voting on Committee Decisions. Subject to Section 2.1(b) , each Party’s designees on a Committee shall, collectively, have one (1) vote (the “ Party Vote ”) on all matters brought before the Committee, which Party Vote shall be determined by [ * ] of such Party’s designees present (in person or otherwise) at the meeting. Except as expressly provided in this Section 2.7(c) and subject to Section 2.1(b) , each Committee shall operate as to matters within its jurisdiction by unanimous Party Vote. All decisions of a Committee shall be documented in writing in the minutes of the applicable Committee meeting by the Alliance Managers, and, to the extent applicable, included on the target status list described in Section 3.9 .

(ii) Operational Decisions. Before selection by BMS of a Collaboration Program pursuant to exercise of BMS’ Co-Development Option, day-to-day operational level decisions concerning the identification, optimization, non-clinical development and clinical development (up through IND submission) of Collaboration Compound shall be made by Exelixis, except as expressly stated in this Agreement. Following selection by BMS of a Collaboration Program pursuant to exercise of BMS’ Co-Development Option, day-to-day operational level decisions concerning the Development and Commercialization of Products in such Collaboration Program shall be made by the Party to which responsibility for such decisions has been allocated under the Agreement (each such decision, a “ Party Implementation Matter ”). Unless otherwise directed by the appropriate Committee(s), [ * ] shall be the lead Party, and shall be primarily responsible for, all Development, regulatory activities and Manufacturing and, subject to [ * ] , Commercialization activities with respect to a Product. Any disputes with respect to a Party Implementation Matter shall first be referred to the Alliance Managers, and, if the dispute is not resolved within [ * ] after such referral to the Alliance

[ * ] =

Managers, then it shall, upon written notice by a Party to the other, be referred for resolution as follows: (A) disputes between designees of BMS and Exelixis with respect to Development and Regulatory Approval matters shall be referred to the JDC for resolution; and (B) disputes between designees of BMS and Exelixis with respect to Commercialization shall be referred to the JCC for resolution. In each case, except for Appealable Matters, the Committee to which such matter is referred shall have final decision-making authority with respect to such matter, and [ * ] shall [ * ] with respect to such matter, [ * ] .

(iii) Disagreements on Committees. Except for: (A) matters outside the jurisdiction and authority of the Committees as provided in Section 2.1(b); and (B) any Party Implementation Matter (other than Appealable Matters), and in any event without limiting the other rights and obligations of the Parties under this Agreement, any disagreement between the designees of BMS and Exelixis on the JDC, JCC, JRC or JFC as to matters within such Committee’s jurisdiction shall, at the election of either Party, be addressed, first, with the Alliance Managers, and, if the dispute is not resolved within [ * ] after such referral to the Alliance Managers, then it shall, upon written notice by a Party to the other, be submitted to the JEC for resolution (except that (1) any disputes arising from the JFC shall be submitted to the Committee to which such dispute relates (i.e., the JRC, JDC, or the JCC), and (2) prior to the creation of the JEC, disputes at the JRC shall be referred to management of the Parties as set forth in the following sentence). If the JEC (or JRC, prior to the creation of the JEC) does not resolve any such matter submitted to it for resolution within [ * ] after such submission, or in the event of any disagreement between the designees of BMS and Exelixis on the JEC (or JRC, prior to the creation of the JEC) with respect to any other matter within its jurisdiction, then, subject to Section 2.1(b) , the JEC (or JRC, prior to the creation of the JEC) shall submit the respective positions of the Parties with respect to such matter for discussion in good faith by the Chief Executive Officer of Exelixis and either the Head of R&D or Head of U.S. Operations of BMS (depending on the nature of the dispute). If such individuals are not able to mutually agree upon the resolution to such matter within [ * ] after submission of the matter to them, then: (X) [ * ] , the [ * ] , subject to Section [ * ] ; [ * ] (Y) [ * ] , the [ * ] , subject to Section [ * ] .

(iv) [ * ] Decisions. [ * ] right to [ * ] pursuant to Section [ * ] ( “[ * ] Decisions” ) shall be subject to the following limitations:

(1) All [ * ] Decisions shall be made in good faith, with due regard for the impact of such decisions on Collaboration Compounds. No such decision by [ * ] shall violate or breach any term or condition of this Agreement. [ * ] shall make all [ * ] Decisions only after [ * ] (through its JEC or JRC members, as applicable) on such matters and the proposed [ * ] Decision.

(2) [ * ] shall [ * ] : (A) on matters that would [ * ] ; (B) on any decision that would [ * ] ; (C) any decision that would [ * ] ; (D) on [ * ] ; (E) on which [ * ] (F) on [ * ] ; (G) on [ * ] for Collaboration Compounds within the associated [ * ] ; (H) on [ * ] ; (I) to [ * ] ; (J) on [ * ] in [ * ] ; (K) whether to [ * ] ; or (J) decisions described in Section [ * ] . Resolution of disputes relating to the foregoing matters shall [ * ] (except as otherwise expressly set forth in this Agreement).

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(v) [ * ] Decisions. [ * ] right to [ * ] ( “[ * ] Decisions” ) shall be subject to the following limitations:

(1) All [ * ] Decisions shall be made in good faith, with due regard for the impact of such decisions on Products [ * ] , and, consistent in all material respects with the applicable Approved Plan and the terms of this Agreement. No such decision [ * ] shall violate or breach any term or condition of this Agreement. [ * ] shall make all [ * ] Decisions only after [ * ] (through its JEC or JRC members, as applicable) on such matters and [ * ] , and in the case of [ * ] Decision made pursuant to Section [ * ], only after [ * ] and the [ * ] on such matters.

(2) [ * ] shall [ * ] : (A) on any decision that would [ * ] ; (B) any decision that would amend, violate or breach any provision of this Agreement; (C) on which [ * ] within the associated [ * ] ; (D) on the decision to [ * ] (except to the extent provided for in Section [ * ] ); (E) to adjust the [ * ] ; (F) on the [ * ] ; (G) on matters related to the determination of [ * ] ; or (H) whether [ * ] . Resolution of disputes relating to the foregoing matters shall [ * ] (except as otherwise expressly set forth in this Agreement).

(d) Meeting Agendas and Minutes. Each Party shall disclose to the other proposed agenda items along with appropriate information at least [ * ] in advance of each meeting of the applicable Committee; provided that under exigent circumstances requiring Committee input, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as such other Party consents to such later addition of such agenda items or the absence of a specific agenda for such Committee meeting.

(e) Multiple JDCs and JCCs at the Discretion of the JEC . The JEC may determine that a separate JDC and/or JCC be formed for each Provisional Collaboration Program or Collaboration Program. In such event, the Parties will appoint representatives to such additional committees and such committees will be subject to the all of the applicable terms and conditions of this Agreement with respect to the JDC and the JCC, in each case, solely with respect to the Provisional Collaboration Program or Collaboration Program to which such Committees relate.

(f) Working Groups. From time to time, the JEC, JDC, JCC, JRC or JFC may establish and delegate duties to other committees, sub-committees or directed teams (each, a “ Working Group ”) on an “as-needed” basis to oversee particular projects or activities, which delegation shall be reflected in the minutes of the meetings of the applicable Committee. Each such Working Group shall be constituted and shall operate as the JEC, JDC, JCC, JRC or JFC, as the case may be, determines. The Working Groups may be established on an ad hoc basis for purposes of a specific project, for the life of a Product, or on such other basis as the applicable Committee may determine. Each Working Group and its activities shall be subject to the oversight, review and approval of, and shall report to, the Committee that established such Working Group. In no event shall the authority of the Working Group exceed that specified for the relevant Committee in this Article 2 . Any disagreement between the designees of BMS and Exelixis on a Working Group shall be referred to the applicable Committee for resolution.

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(g) Interactions Between Committees and Internal Teams. The Parties recognize that each Party possesses an internal structure (including various committees, teams and review boards) that will be involved in administering such Party’s activities under this Agreement. Each Committee shall establish procedures to facilitate communications between such Committee or Working Group and the relevant internal committee, team or board of each of the Parties in order to maximize the efficiency of the Collaboration, including by requiring appropriate members of such Committee to be available at reasonable times and places and upon reasonable prior notice for making appropriate oral reports to, and responding to reasonable inquiries from, the relevant internal committee, team or board.

2.8 Alliance Managers.

(a) Appointment. Each of the Parties shall appoint a single individual to act as a single point of contact between the Parties to assure a successful Collaboration (each, an “ Alliance Manager ”). Each Party may change its designated Alliance Manager from time to time upon written notice to the other Party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the other Party.

(b) Responsibilities. The Alliance Managers shall use good faith efforts to attend all Committee meetings and support the co-chairpersons of each Committee in the discharge of their responsibilities. Alliance Managers shall be nonvoting participants in such Committee meetings, unless they are also appointed members of such Committee pursuant to Section 2.7(a) . An Alliance Manager may bring any matter to the attention of any Committee if such Alliance Manager reasonably believes that such matter warrants such attention. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the Committees. In addition, each Alliance Manager: (i) will be the point of first referral in all matters of conflict resolution; (ii) will coordinate the relevant functional representatives of the Parties in developing and executing strategies and plans for the Products in an effort to ensure consistency and efficiency throughout the world; (iii) will provide a single point of communication for seeking consensus both internally within the respective Parties’ organizations and between the Parties regarding key strategy and plan issues; (iv) will identify and bring disputes to the attention of the appropriate Committee in a timely manner; (v) will plan and coordinate cooperative efforts and internal and external communications (including the preparation of the target status list described in Section 3.9 ); and (vi) will take responsibility for ensuring that governance activities, such as the conduct of required Committee meetings and production of meeting minutes, occur as set forth in this Agreement, and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed.

2.9 Collaboration Guidelines.

(a) General. Each Party, in working with the other to Develop and Commercialize each Product and otherwise as set forth herein, shall assign responsibilities for the various operational aspects of the Collaboration to those portions of its organization that have the appropriate resources, expertise and responsibility for such functions and, consistent with this Agreement, treat each Product as if it were a proprietary product solely of its own organization. In all matters related to the Collaboration, the Parties shall strive to balance as best they can the legitimate interests and concerns of the Parties and to realize the full economic potential of each Product (taking into account the risks and costs of further Development and Commercialization).

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(b) 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. The relationship between Exelixis and BMS is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner.

2.10 Reports Relating to Reporting-Only Products. Beginning [ * ] after the first existence of a Reporting-Only Product or a Royalty-Bearing Product, and every [ * ] thereafter during the term of the Agreement, BMS shall submit to Exelixis a written progress report [ * ] the research and development performed by BMS on Reporting-Only Products. If reasonably [ * ] for Exelixis to exercise its rights under this Agreement, Exelixis may request that BMS provide more detailed information and data regarding such reports by BMS, and BMS shall promptly provide Exelixis with information and data as is reasonably related to such request, at Exelixis’ expense. All such reports shall be considered Confidential Information of BMS.

2.11 Overview of Accounting.

(a) Development Costs and Allowable Expenses. For purposes of determining Development Costs and Allowable Expenses, any expense allocated by either Party to a particular category under Development Costs or Allowable Expenses for a particular Co-Promotion Product shall not be allocated to another category under Development Costs or Allowable Expenses for such Co-Promotion Product. Each Party agrees to determine Development Costs and Allowable Expenses for Co-Promotion Products using its standard accounting procedures, consistently applied, to the maximum extent practical as if such Co-Promotion Product were a solely owned Product of such Party, except as specifically provided in this Agreement. The Parties also recognize that such procedures may change from time to time and that any such changes may affect the definition of Development Costs or Allowable Expenses. The Parties agree that, where such changes are economically material to either Party, and consistent with GAAP, adjustments shall be made to compensate the affected Party to preserve the same economics as reflected under this Agreement under such Party’s accounting procedures in effect as of the date on which the activity in question (e.g., Development, Commercialization or Manufacturing) first commences under this Agreement. Where the change is or would be material to the other Party, the Party proposing to make the change shall provide the other Party with an explanation for the proposed change and an accounting of the effect of the change on the relevant expense category. Should the Parties disagree on the adjustment, the matter shall be placed before the JFC to resolve. Transfers between a Party and its Affiliates (or between its Affiliates) shall not have effect for purposes of calculating revenues, costs, profits, royalties or other payments or expenses under this Agreement.

(b) Affiliates. If either Party enters into any agreement with any of its Affiliates for the provision of materials or services pursuant to this Agreement, all costs incurred for the provision of such materials or services that are shared by the Parties under this Agreement shall be accounted for on the basis of the cost thereof to such Affiliate and not on the basis of any higher transfer price in effect between such Party and such Affiliate.

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2.12 Compliance with Law. Each Party hereby covenants and agrees to comply with applicable law in performing its activities connected with the Development, manufacture and Commercialization (as applicable) of each Product.

2.13 Records. Each Party shall maintain complete and accurate records of all work conducted under the Collaboration and all results, data and developments made pursuant to its efforts under the Collaboration. Such records shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of the Collaboration in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Each Party shall maintain such records for a period of [ * ] after such records are created; provided that the following records may be maintained for a longer period, in accordance with each Party’s internal policies on record retention, provided that in no case shall such period be shorter than [ * ] from the date of creation of such records: (a) scientific notebooks; and (b) any other records that the other Party reasonably requests be retained in order to ensure the preservation, prosecution, maintenance or enforcement of intellectual property rights. Either Party shall have the right to review and copy such records of the other Party at reasonable times to the extent [ * ] for it to conduct its obligations or enforce its rights under this Agreement

3.	DISCOVERY PROGRAM

3.1 Overview.

(a) Programs. During the Research Term, Exelixis shall be responsible for conducting the [ * ] . Exelixis will devote to each program similar resources (including comparably qualified and experienced personnel) and funding as it does to internal programs at a similar stage of discovery or pre-clinical development, with the goal of delivering not less than six (6) Provisional Collaboration Programs for possible exercise by BMS of up to three (3) of its Co-Development Options.

(b) BMS Co-Development Option . BMS shall have the [ * ] option to select each Provisional Collaboration Program as a Collaboration Program for collaborative Development and Commercialization under this Agreement (the “Co-Development Option” ); provided, however , that in no event would BMS be permitted to select more than three (3) Collaboration Programs pursuant to this Co-Development Option. The Co-Development Option shall be exercisable solely in accordance with the remainder of this Article 3 .

3.2 Screening Programs.

(a) In General. During each year of the Research Term, as described in more detail below, Exelixis shall conduct programs as part of the Collaboration (“ Screening Programs ”) in which Exelixis will [ * ] . As of the Execution Date, the Parties shall mutually agree to the initial prioritized list of up to [ * ] Screening Targets for the [ * ] Research Term, which shall be listed in Exhibit 3.2 . No later than at the last JRC meeting prior to the [ * ] ,

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Exelixis will share its list of planned screening targets for the [ * ] Research Term and, within [ * ] subsequent to the date upon which such planned screening targets are shared, BMS shall select up to [ * ] such prioritized targets as Screening Targets for the [ * ] Research Term, which shall be added to the table described in Section 3.9 ; provided that BMS may [ * ] Screening Targets and up to [ * ] such targets [ * ] Screening Targets by mutual agreement of the Parties. If at the start of the [ * ] Research Term, or during any quarter thereafter, and subject to Section 3.2(c) , the number of Lead Op Candidates has dropped below [ * ] , then Exelixis shall conduct at least [ * ] Screening Programs in each subsequent calendar quarter, with the Screening Targets for such new Screening Programs [ * ] or, [ * ] added to the table described in Section 3.9 . Such [ * ] shall continue until such time as either: (A) [ * ] ; or (B) there [ * ] . Each quarter during the [ * ] Research Term, the JRC (by mutual agreement) may [ * ] , in which case the Alliance Managers shall reflect such [ * ] pursuant to Section 3.9 .

(b) Completion of Screening; Lead Op Candidates. After a given Screening Program has become a Completed Screening Program, [ * ] (such Completed Screening Program, if [ * ] , becomes a “ Lead Op Candidate ”). If the [ * ] , then the target(s) associated with such Lead Op Program shall become a “ Lead Op Target(s) .” If the [ * ] , not to maintain such Lead Op Candidate(s) within the Collaboration, then the Screening Target(s) associated with such advanced Screening Program shall no longer be Screening Target(s) but shall instead be “ Rejected Screening Target(s) ”, subject to Section 8.6(b) . Otherwise, such Lead Op Candidate(s) shall remain Lead Op Candidate(s) (pending a future decision by: (i) [ * ] . For clarity, Exelixis may, [ * ] , [ * ] (s) into a [ * ] , provided that: (I) Exelixis will maintain an [ * ] (by mutual agreement) [ * ] ; and (II) [ * ] will remain subject to the terms and conditions of this Agreement, including without limitation Section [ * ] ; provided that BMS may [ * ] at any time prior to the [ * ] , and (for clarity) [ * ] be deemed to be either (1) [ * ] a Lead Op Program pursuant to Section [ * ] , or (2) [ * ] with respect to such Lead Op Program for purposes of Section [ * ] and or Section [ * ] .

(c) Removal of Lead Op Candidates. Notwithstanding the Parties designation of a Screening Program as a Lead Op Candidate, [ * ] may, at any time after the number of Lead Op Candidates becomes greater than [ * ] , designate a Lead Op Candidate as Rejected Screening Target, except if such designation would reduce the number of Lead Op Candidates below [ * ] .

3.3 Lead Op Programs.

(a) In General. During each [ * ] Research Term, as described in more detail below, Exelixis shall conduct programs as part of the Collaboration (“ Lead Op Programs ”) in which Exelixis will optimize lead compounds that were identified in Screening Programs for the purpose of advancing a lead compound to Development Candidate status. As of the Execution Date, the initial list of the [ * ] Lead Op Targets for the first year of the Research Term is set forth in Exhibit 3.3 . These initial Lead Op Targets shall serve as the targets for the Initial Lead Op Programs. Additional Lead Op Targets shall be added to the table described in Section 3.9 , which shall be updated by the Alliance Managers pursuant to Section 3.9 . Exelixis shall use Diligent Efforts to maintain and advance, [ * ] Lead Op Programs on behalf of the Collaboration during the Research Term [ * ] Lead Op Programs [ * ] Exelixis shall use Diligent Efforts to

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maintain and advance [ * ] during the [ * ] Research Term (such minimum Lead Op Programs, “[ * ]” ). For clarity, Exelixis may, [ * ] , advance [ * ] Lead Op Candidate(s) into lead optimization programs other than [ * ] , provided that such lead optimization programs will remain subject to the terms and conditions of this Agreement (as described in the last sentence of Section 3.2(b) ).

(b) Completion of Lead Op Programs. Once Exelixis determines that a compound in any Lead Op Program has completed lead optimization and has met the criteria of a Program Lead, Exelixis will so notify BMS in writing and provide BMS with the Development Candidate proposal including such information as included in [ * ] and documenting the properties of such Program Lead as per [ * ] (the “ DCP ”). Within [ * ] of receiving the DCP, BMS shall notify Exelixis in writing if BMS will [ * ] with respect to the Lead Op Program that generated such Program Lead. If Exelixis receives BMS’ notice stating that [ * ] , then the provisions of Section [ * ] shall apply. Otherwise, Exelixis will advance such Lead Op Program into preclinical development as a Provisional Collaboration Program, and [ * ] on [ * ] . The target(s) associated with each such Provisional Collaboration Program shall no longer be Lead Op Target(s) but shall instead automatically be a “ Collaboration Target(s) .”

(c) Termination of Lead Op Programs. If the JRC (by mutual agreement) elects to terminate a Lead Op Program before the lead compound in such Lead Op Program has completed lead optimization, then, [ * ] . If no such [ * ] , or if [ * ] , then Exelixis will [ * ] (subject to Exelixis’ obligations to a Third Party that would [ * ] ), which program shall be [ * ] ; or (ii) in the event that [ * ] . In any case, any such Lead Op Target(s) associated with such a terminated Lead Op Program shall no longer be Lead Op Target(s) but shall instead automatically be a “ Rejected Lead Op Target(s) ”, subject to Section 8.6(e) .

(d) Limited Replacement of Lead Op Programs. At any time prior to the date which is [ * ] subsequent to the delivery by Exelixis of the DCP with respect to a given Lead Op Program in accordance with Section 3.3(b) , [ * ] replace such Lead Op Program, [ * ] , with any of the following: (i) [ * ] for which Exelixis [ * ] ; (ii) [ * ] ; or (iii) a [ * ] . [ * ] shall cease after [ * ] . The target(s) associated with each such former Lead Op Program shall no longer be Lead Op Target(s) but shall instead automatically be “ Rejected Lead Op Target(s) ”, subject to Section 8.6(e) .

3.4 Provisional Collaboration Programs; Exercise of BMS’ Co-Development Option.

(a) In General. Exelixis shall conduct programs as part of the Collaboration in which Exelixis pre-clinically develops compounds (that were identified as Program Leads in Lead Op Programs) with the goal of submitting an IND on such compound where such IND meets the criteria for clinical development that is consistent with Exelixis’ internal criteria for all Exelixis programs (including programs outside of the Collaboration) and, where reasonably possible, takes into account the [ * ] (such programs, “Provisional Collaboration Programs ”). BMS [ * ] activities (for purposes of [ * ] ) that were [ * ] , including one or more of the following: [ * ] as needed to help [ * ] for Provisional Collaboration Programs [ * ] . [ * ] solely for use [ * ] described in this Section 3.4(a) .

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(b) Exercise of BMS’ Co-Development Option . Once Exelixis determines that [ * ] , Exelixis will provide to BMS written notice and a data package (containing data not already in BMS’ possession) with sufficient detail regarding such Collaboration Compound (and any Program Backups) as per Exelixis’ internal standards and incorporating data applicable to the [ * ] . Upon receipt of each such data package, BMS will have [ * ] to notify Exelixis in writing whether BMS exercised its Co-Development Option with respect to the Provisional Collaboration Program to which such Collaboration Compound relates; provided that such [ * ] . For clarity, BMS may exercise its Co-Development Option at any time prior to such date, including [ * ] .

(i) Acceptance. If Exelixis receives BMS’ notice (within the applicable [ * ] period) stating that BMS exercised its Co-Development Option for a given Provisional Collaboration Program, then such Provisional Collaboration Program shall become a “Collaboration Program” , and the provisions of Section 3.7 shall apply, and BMS shall be responsible for submitting the IND for such Collaboration Program’s Lead Compound (and other applicable regulatory and clinical documents).

(ii) Rejection. If Exelixis receives BMS’ notice (within the applicable [ * ] period) stating that BMS did not exercise its Co-Development Option for a given Provisional Collaboration Program, or if Exelixis did not receive BMS’ notice within the applicable [ * ] period, then in either case, the provisions of Section 3.8 shall apply, and BMS shall not be responsible for submitting the IND for such Provisional Collaboration Program’s Lead Compound (and other applicable regulatory and clinical documents).

(iii) [ * ]. If Exelixis receives BMS’ notice (within the applicable [ * ] period) stating that [ * ] its Co-Development Option for a given Provisional Collaboration Program, [ * ] set forth in such notice, then Exelixis may [ * ] . Alternatively, Exelixis may [ * ] . If the [ * ] for such Lead Compound, then Exelixis may elect to either (i) [ * ] or (ii) [ * ] . If the [ * ] for such Provisional Collaboration Program’s Lead Compound, then Exelixis will so notify BMS in writing. BMS will [ * ] . Upon receipt of such notice from BMS, the provisions of Section [ * ] shall apply if Exelixis received BMS’ notice (within the applicable [ * ] period) stating that [ * ] , or Section [ * ] shall apply if either (A) [ * ] , or (B) [ * ] .

3.5 Backup Compounds.

(a) Provisions Relating to BMS’ Exercise of its Co-Development Option. If BMS does not exercise its Co-Development Option with respect to a Provisional Collaboration Program by the applicable deadline, then Exelixis shall retain all right, title and interest in all compounds generated for such Provisional Collaboration Program, subject to [ * ] . If BMS does exercise its Co-Development Option with respect to a Provisional Collaboration Program, then any compounds generated for such Provisional Collaboration Program (or Lead Op Program that became such Provisional Collaboration Program) that satisfy the definition of a Program Backup shall become part of the Collaboration Program, and, subject to Section 8.1(d) , neither Party shall use any such compounds for any purpose outside of the Collaboration without the prior written consent of the other Party. The compounds generated for such Provisional Collaboration Program (or Lead Op Program that became such Provisional Collaboration Program) that do not

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satisfy the definition of Program Backups shall become Unrelated Compounds, and Exelixis shall be free to use such Unrelated Compounds outside of the Collaboration, subject to Section 8.6. For clarity, BMS shall pay Exelixis the milestone payments described in Section 9.5 for Program Backups that are Royalty-Bearing Products and that meet the applicable milestone events.

(b) Provisions Relating to Exercise of the Exelixis Co-Development Option. In the event that Exelixis has exercised the Exelixis Co-Development Option with respect to a Collaboration Program, then the following terms shall apply with respect to Backup Programs:

(i) Commencement of a Backup Program. The Parties shall determine, via the JDC, whether or not to commence a backup program (a “Backup Program” ) with respect to some or all of the Collaboration Programs, as well as the appropriate timing for such Backup Program(s). The Backup Program(s) shall be subject JDC oversight and decision making and to a Backup Research Plan to be established by the JDC prior to the start of backup work.

(ii) Exelixis Conduct of Backup Programs. Exelixis shall have the first right to conduct such backup work up until designation of a backup compound as a Development Candidate and shall promptly notify the JDC in writing whether Exelixis will conduct such Backup Program. Upon designation of a backup compound as a Development Candidate, the JDC shall determine [ * ] (with [ * ] , in any case, having the right to perform [ * ] . In the event that [ * ] work on Backup Programs for Collaboration Programs shall be [ * ] , to the extent such work is incurred and with reimbursement on a quarterly basis, up to [ * ] Dollars ($ [ * ] ) per Backup Program (such amount, the “ [ * ] Backup Funding ”); provided, however , that: (A) such [ * ] Backup Funding shall not be deemed to be [ * ] (except as set forth below); and (B) any costs associated with such Backup Program that are in excess of [ * ] shall be [ * ] . Notwithstanding clause (A) above, [ * ] , then the [ * ] Backup Funding [ * ] .

(iii) BMS Conduct of Backup Programs. If Exelixis notifies BMS that Exelixis will not conduct such Backup Program, or in the event that Exelixis opts-out of co-Development with respect to such Collaboration Program, then BMS may conduct such Backup Program and such any costs associated with such Backup Program shall be [ * ] and shall be [ * ] . Exelixis will transition to BMS any necessary [ * ] and other know-how necessary or reasonably useful for BMS to conduct such Backup Program.

(iv) Reporting and Accounting. Except as set forth in paragraph (ii) above, reporting and accounting of shared costs for the Backup Programs shall be as set forth in Section 4.6 for Development Costs.

3.6 Information Exchange; [ * ]; and Identified Targets.

(a) Information Exchange and [ * ]. BMS, through the JRC, shall be allowed to review data from Screening Programs, Lead Op Programs and Provisional Collaboration Programs on a [ * ] basis, excluding any [ * ] relating to any compounds in any

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such Screening Programs, Lead Op Programs or Provisional Collaboration Programs (unless the Parties expressly agree in writing to disclosure of such [ * ] ; [ * ] ). Once a Lead Op Program or Provisional Collaboration Program contains a Program Lead, BMS shall be notified and may at any time (or from time to time) thereafter (with reasonable prior written notice) request that Exelixis provide [ * ] with the following information solely for the purpose of [ * ] : (i) a summary describing the [ * ] such Program Lead; (ii) the [ * ] ; (iii) a list of [ * ] ; and (iv) any other information reasonably requested by BMS and in the possession of Exelixis. In the event that BMS has not provided written request for disclosure, or has only made written request for disclosure [ * ] , then Exelixis shall at all times [ * ] . BMS may make suggestions with respect to the direction or conduct of a Screening Program, Lead Op Program or Provisional Collaboration Program, but Exelixis shall retain all authority over the conduct of such program (subject to Sections 3.2(b), 3.3(c), 3.3(d), 3.4(a) and 3.5 ). To maximize the probability that a Provisional Collaboration Program will be ultimately accepted by BMS, Exelixis shall give good faith consideration to the [ * ] (the “[ * ]” ) and shall endeavor through the JRC to work with BMS to [ * ] ; provided, however, that Exelixis shall not be required to [ * ] . It is expected that both Parties will work closely together through the JRC to discuss and to endeavor to jointly establish the [ * ] .

(b) Identified Targets, Potency Threshold and Specificity Criteria.

(i) Determination. For each Lead Op Program, Provisional Collaboration Program and Collaboration Program (as applicable), the JRC or the JDC (or the Parties in the case of a Collaboration Program with respect to which Exelixis has exercised a Product Opt-Out) shall determine: (A) whether the definition of Identified Target(s) for each applicable Lead Op Program, Provisional Collaboration Program and Collaboration Program need to be [ * ] ; and/or (B) whether the definition of the Target Potency Threshold and/or Specificity Criteria need to be [ * ] . If so, the Parties shall do so by mutual agreement and in writing through a separate side letter. The JRC, JDC or the Parties (as the case may be) shall also specify [ * ] If the Parties mutually agree that the definitions of Identified Target(s), Target Potency Threshold or Specificity Criteria (as applicable) [ * ] . If the Parties mutually agree that the definitions of Identified Target(s), Target Potency Threshold or Specificity Criteria (as applicable) [ * ] , then Exelixis may [ * ] the Collaboration as [ * ] to the extent such [ * ] (as applicable), and subject to [ * ] .

(ii) Party Resolution of Disputes. If the JRC or JDC (or the Parties, as the case may be) is unable to agree on the definition of Identified Target(s), Target Potency Threshold or Specificity Criteria (as applicable) at the applicable JRC or JDC meeting (or other meetings and correspondence between the Parties), including as to whether such definition(s) need revision, then the Parties shall try to settle their differences amicably between themselves first, by referring the disputed matter to the Party’s respective Executive Officers. Either Party may initiate such informal dispute resolution by sending written notice of the dispute to the other Party, and, within [ * ] after such notice, such Executive Officers shall meet for attempted resolution by good faith negotiations. If such Executive Officers are unable to resolve such dispute within [ * ] of their first meeting for such negotiations, then the Parties shall proceed to dispute resolution pursuant to Section 3.6(c)(iii).

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(iii) Arbitration of Disputes. Any dispute not resolved internally by the Parties pursuant to Section 3.6(b)(ii) must be finally resolved through binding arbitration by JAMS (formerly, the Judicial Arbitration and Mediation Service) (“JAMS”) in accordance with its Streamlined Arbitration Rules and Procedures in effect at the time the dispute arises, except as modified in this Agreement and applying the substantive law specified in Section 15.2. Either Party may initiate arbitration under this Section 3.6(b)(iii) by written notice to the other Party of its intention to arbitrate, and such notice shall specify in reasonable detail the nature of the dispute. For each arbitration: (A) each Party shall submit to the arbitrator its proposal for resolving such dispute, such proposal based on the applicable scientific factors, and shall provide a copy of such proposal to the other Party; (B) each Party may, within [ * ] of receipt of the other Party’s proposal, provide a rebuttal to such other Party’s proposal to the arbitrator (which rebuttal shall be limited to responding to arguments or scientific evidence presented in such other Party’s proposal), and shall provide a copy of such rebuttal to the other Party; (C) the arbitrator shall select the proposal that is the most scientifically reasonable; and (D) such proposal shall become the new definition of Identified Target(s), Target Potency Threshold or Specificity Criteria (as applicable). Notwithstanding anything to the contrary, the arbitrators will not have the ability to change the terms of either Party’s proposal. The determination of the arbitrator shall be final. The arbitration proceedings shall be conducted in such location as determined by the arbitrator. The Parties agree that they shall share equally the cost of the arbitration filing and hearing fees, and the cost of the arbitrator. Each Party shall bear its own attorneys’ fees and associated costs and expenses.

3.7 Acceptance of Collaboration Programs . In the event that BMS timely exercises its Co-Development Option with respect to a Provisional Collaboration Program, then such Provisional Collaboration Program shall become a Collaboration Program, and each of the following shall apply:

(a) Payment. BMS shall pay the fee set forth in Section 9.2 .

(b) [ * ] CMC Responsibilities . If not already completed (i.e., [ * ] ), [ * ] shall: (i) complete the Chemistry, Manufacturing and Control (“ CMC ”) portion of an IND submission package for each Collaboration Compound approved for IND submission (as well as such other sections of the IND submission package as may be reasonably required of it); and (ii) complete any pre-IND toxicity testing and other testing reasonably required to file an IND for the applicable Collaboration Compound.

(c) Exelixis Co-Development Option. Exelixis shall provide written notice to BMS, within [ * ] after the acceptance of such Collaboration Program by BMS, as to whether or not Exelixis will exercise its option to Co-Develop with BMS the Lead Compound arising from such Collaboration Program (the “ Exelixis Co-Development Option ”). In the event Exelixis declines to exercise its right to Co-Develop such Lead Compound, Exelixis shall lose any right to Co-Develop and Co-Promote any Product containing such Lead Compound and any subsequent Products or Related Products generated from such Collaboration Program.

(d) Transfer. Exelixis shall use Diligent Efforts to transfer to BMS within [ * ] of BMS’ exercise of its Co-Development Option: (i) reasonable quantities of the relevant Lead

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Compound; (ii) all Information reasonably necessary for the further development and commercialization of such Collaboration Program’s Lead Compound; (iii) all regulatory filings (including any INDs, drug dossiers, and drug master files) in Exelixis’ name for such Lead Compound; (iv) any agreements with Third Parties necessary for the further development and commercialization of such Collaboration Program’s Lead Compound (including any agreements relating to the conduct of the Phase I Clinical Studies of such Lead Compound); and (v) any trademark rights Controlled by Exelixis covering such Collaboration Program’s Lead Compound, that in each case ((i) through (v)) are existing, in Exelixis’ Control, and specifically relate to such Lead Compound. The costs and expenses incurred by Exelixis in carrying out such transfer shall be either: (A) treated as Development Expenses in the event that such expenses relate to a Co-Developed Product, or (B) reimbursed one hundred percent (100%) by BMS in the in the event that such expenses relate to a Royalty-Bearing Product. For clarity, Exelixis’ transfer of Manufacturing-related rights and materials shall be governed by Section 7.3 .

3.8 Rejection of Provisional Collaboration Programs . In the event that BMS declines to exercise its Co-Development Option with respect to a Provisional Collaboration Program, or if Exelixis does not receive BMS’ notice of exercising its Co-Development Option with respect to a Provisional Collaboration Program, then each of the following shall apply:

(a) Reversion of Rights. All rights with respect to such Provisional Collaboration Program shall automatically revert to Exelixis, and BMS shall have no further rights with respect to the Development or Commercialization of any compounds (including Program Backups) by Exelixis under such Provisional Collaboration Program ( [ * ] .

(b) Expiration of Rights . Without limiting the generality of Section 3.8(a) , Exelixis’ obligations, and BMS rights, under Sections 3.1, 3.4(a) (to the extent applicable), and 3.6 shall expire with respect to such Provisional Collaboration Program.

(c) Phase I Clinical Trial Requirement. [ * ] shall be required to use Diligent Efforts to commence a Phase I Clinical Trial with respect to such Provisional Collaboration Program within [ * ] subsequent to acceptance of an IND with respect to such Provisional Collaboration Program. For purposes of this Section 3.8(c) , “ commence a Phase I Clinical Trial ” means that the first site at which such clinical trial will be conducted has received approval from the appropriate investigational review board (“ IRB ”) and is ready to enroll patients.

(d) Transfer & Transition. If BMS conducted any work on such Provisional Collaboration Program pursuant to Section 3.4(a) , then BMS shall: (i) provide to Exelixis all data generated by BMS with respect to the studies undertaken by it; (ii) grant to Exelixis the license set forth in Section 8.2(c) ; and (iii) transition over to Exelixis any ongoing studies then being conducted by BMS (with Exelixis to assume the cost therefore from and after the date that BMS transfers such studies). With the prior written agreement of the Parties, BMS may complete any of the ongoing studies described in the foregoing clause (iii) at Exelixis’ expense.

(e) [ * ]. For any compound arising out of a Provisional Collaboration Program that [ * ] (a “ [ * ] ”), if Exelixis decides to [ * ] prior to [ * ] (whichever occurs first) for such [ * ] , then [ * ] . During the [ * ] , [ * ] . If [ * ] at or before the end of such [ * ] (or at such earlier time that [ * ] ), then [ * ] .

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Nothing herein shall preclude [ * ] , including with the goal of [ * ] , and any such work shall not [ * ] , unless otherwise agreed by the Parties in writing. Additionally, if BMS declines to exercise its Co-Development Option with respect to a Provisional Collaboration Program, then any [ * ] as the Provisional Collaboration Program [ * ] shall not [ * ] .

3.9 Target Status List . Based on the applicable minutes from each JRC and JDC meeting, the respective Alliance Managers shall prepare a list that is substantially in the form of Exhibit 3.9 and that shall reflect the status of each target that is active (or was at one time) within the Collaboration. Each target shall be labeled with one of the following: Screening Target (chosen-awaiting-screening); Screening Target (screen-in-progress); Rejected Screening Target; Lead Op Candidate; Lead Op Target; Rejected Lead Op Target; or Collaboration Target. The updated target list shall be attached to all JRC and JDC minutes with written confirmation provided in a timely manner by the Alliance Managers.

3.10 Research Term. The “ Research Term ” shall commence on the Effective Date and continue until the earliest to occur of the following: (a) [ * ] ; or (b) delivery to BMS of the [ * ] for possible exercise of its Co-Development Option. The Parties may extend the Research Term upon their mutual written agreement. Following the end of the Research Term, Exelixis shall have no obligation to conduct any work under any Screening Programs, Lead Op Programs, Provisional Collaboration Programs and Collaboration Programs (other than Exelixis’ responsibilities, as set forth in the remainder of this Agreement, with respect to Co-Developed Products and Backup Programs for Collaboration Targets), and all rights with respect to Lead Op Candidates, Lead Op Targets and Collaboration Compounds, other than Collaboration Compounds included in a Collaboration Program for which BMS has exercised its Co-Development Option under Section 3.4 , and in any case subject to Section 3.8(e) , shall revert to Exelixis.

3.11 Record of Discovery Efforts; Inspection. Exelixis shall keep complete, true and accurate books of accounts and records for the purpose of determining the resources and funding that Exelixis provides pursuant to Section 3.1 . All such books, records and accounts shall be retained by Exelixis for a period of [ * ] after the end of the period to which such books, records and accounts pertain or such longer period as may be required by applicable law. BMS shall have the right to have an independent certified public accountant, reasonably acceptable to Exelixis, have access during normal business hours, and upon reasonable prior written notice, to examine only those records of Exelixis as may be reasonably necessary to determine, with respect to any calendar year ending not more than [ * ] prior to such Party’s request, Exelixis’ compliance with the requirements of Section 3.1 . The foregoing right of review may be exercised only once per year and only once with respect to any given period. Results of any such examination shall be: (i) limited to information relating to the applicable Screening Program, Lead Op Program, Provisional Collaboration Program or Collaboration Program; (ii) made available to both Parties; and (iii) subject to Article 11 . In general, BMS shall bear the full cost of the performance of any such audit. However, if such audit discloses a [ * ] to the applicable Screening Program, Lead Op Program, Provisional Collaboration Program or Collaboration Program, [ * ] (as determined by the auditor(s)), then Exelixis shall bear the full cost of the performance of such audit. The results of such audit shall be final, absent manifest error.

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4.	DEVELOPMENT OF PRODUCTS

4.1 Global Development Plans.

(a) Scope. The Development of each Co-Developed Product shall be governed by a comprehensive, multi-year, worldwide plan (each, a “Global Development Plan” ) covering the Development of such Product for use in the U.S., Canada, each of the Major European Countries and Europe as a whole, and, broken out on a region-by-region or country-by-country basis only to the extent BMS does so for its own internal oncology products, the remaining countries in the Co-Development Territory. Each Global Development Plan shall: (i) provide a planned Development p

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