COLLABORATION AGREEMENT

Collaboration Agreement

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This Collaboration Agreement involves

ARIAD GENE THERAPEUTICS, INC | ARIAD PHARMACEUTICALS, INC | MERCK & CO, INC

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Title: COLLABORATION AGREEMENT
Governing Law: New York Date: 11/9/2007
Industry: BIOTRX Law Firm: Mintz Levin Sector: Healthcare

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a554089ex10_1.htm

Exhibit 10.1

COLLABORATION AGREEMENT

AMONG

ARIAD PHARMACEUTICALS, INC.

ARIAD GENE THERAPEUTICS, INC.

and

MERCK & CO., INC.

July 11, 2007

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

TABLE OF CONTENTS

Page

1 DEFINITIONS		5
2 ADMINISTRATION OF THE COLLABORATION		25
	2.1 Joint Steering Committee.	25
	2.2 Dispute Resolution	26
	2.3 Joint Commercialization Committee.	29
	2.4 Joint Manufacturing Committee.	32
	2.5 Alliance Managers.	34
	2.6 Appointment of JSC, JDC, JMC and JCC Members and Alliance Managers	35
3 DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS		35
	3.1 Implementation of Development Program.	35
	3.2 Identification of Back-up Compounds.	39
	3.3 Supply of Proprietary Materials	39
	3.4 Opt-Out Right; Limitations on Opt-Out.	40
	3.5 Product Commercialization.	41
	3.6 Supply of Products for Development and Commercialization	42
	3.7 Development and Commercialization Diligence	43
	3.8 Compliance	44
	3.9 Cooperation	44
	3.1 Exchange of Reports; Information; Updates.	44
	3.11 Product Recalls	47
	3.12 Reconciliation and Auditing of Development Costs.	47
	3.13 Co-Promotion Right.	49
	3.14 Labeling	50
4 PAYMENTS		50
	4.1 Upfront Fee	50
	4.2 Development Cost Advances	50
	4.3 Operating Income Payments.	51
	4.4 Milestone Payments.	52
	4.5 Payment of Royalties; Royalty Rates; Accounting and Records.	56
5 TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY; NON-SOLICITATION.		61
	5.1 Confidentiality.	61

	5.2 Publicity	62
	5.3 Publications and Presentations	62
6 LICENSE GRANTS; EXCLUSIVITY; STANDSTILL AGREEMENT		63
	6.1 Licenses.	63
	6.2 Right to Sublicense.	66
	6.3 No Other Rights	67
	6.4 Exclusivity.	69
	6.5 Standstill Agreement.	69
7 INTELLECTUAL PROPERTY RIGHTS		69
	7.1 ARIAD Intellectual Property Rights	69
	7.2 MERCK Intellectual Property Rights	69
	7.3 Joint Technology Rights.	70
	7.4 Product Technology and Product Patent Rights	70
	7.5 Patent Coordinators	70
	7.6 Inventorship	70
8 FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS		70
	8.1 Patent Filing, Prosecution and Maintenance.	70
	8.2 Legal Actions.	72
	8.3 Trademark Prosecution and Registration.	74
9 TERM AND TERMINATION		75
	9.1 Term	75
	9.2 Termination	75
	9.3 Consequences of Termination of Agreement	77
	9.4 Surviving Provisions	79
10 REPRESENTATIONS AND WARRANTIES		79
	10.1 Mutual Representations and Warranties	79
	10.2 Additional Representations of ARIAD	80
11 INDEMNIFICATION		81
	11.1 Indemnification of MERCK by ARIAD	81
	11.2 Indemnification of ARIAD by MERCK	81
	11.3 Conditions to Indemnification	82
	11.4 Warranty Disclaimer	82
	11.5 Limited Liability	82

12 MISCELLANEOUS		83
	12.1 Arbitration	83
	12.2 Notices	84
	12.3 Governing Law	85
	12.4 Binding Effect	85
	12.5 Headings	85
	12.6 Counterparts	85
	12.7 Amendment; Waiver	85
	12.8 No Third Party Beneficiaries	86
	12.9 Purposes and Scope	86
	12.1 Assignment and Successors	86
	12.11 Force Majeure	86
	12.12 Interpretation	86
	12.13 Integration; Severability	87
	12.14 Further Assurances	87
	12.15 Authority of ARIAD Pharmaceuticals, Inc	87
	12.16 HSR Filing	87

iii

List of Exhibits and Schedules

Exhibit A	Form of Promissory Note
Schedule 1	Description of AP23573
Schedule 2	Licensed Patent Rights
Schedule 3	Calculation of Operating Income (Loss)
Schedule 4	Form of Press Release
Schedule 5	Material Terms to be Included in Form of Co-Promotion Agreement

COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT (this “Agreement”) is entered into as of July 11, 2007 (the “Effective Date”), by and among ARIAD Pharmaceuticals, Inc. and ARIAD Gene Therapeutics, Inc., both Delaware corporations with offices at 26 Landsdowne Street, Cambridge, Massachusetts 02139 (collectively, “ARIAD”), and Merck & Co., Inc., a Corporation organized under the laws of New Jersey with offices at One Merck Drive, Whitehouse Station, NJ 08889-0100 (“MERCK”). Each of MERCK and ARIAD is sometimes referred to individually herein as a “Party” and collectively as the “Parties.”

WHEREAS, ARIAD has developed and controls certain technology and proprietary materials related to mTOR inhibitor compounds, including its proprietary compound AP23573; and

WHEREAS, MERCK is engaged in the research, development and commercialization of human therapeutics; and

WHEREAS, the Parties desire to enter into a collaboration for the purpose of developing and commercializing certain products containing or derived from such mTOR inhibitor compounds for the prevention, delay and treatment of certain cancer and, upon further agreement, non-cancer indications.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the Parties hereto, intending to be legally bound, hereby agree as follows:

1. DEFINITIONS

Whenever used in this Agreement with an initial capital letter, the terms defined in this Section 1 and in Schedule 3 attached hereto shall have the meanings specified.

1.1 “AAA” means the American Arbitration Association.

1.2 “Achievement of Clinical Proof of Concept” means demonstration that a Collaboration Compound has efficacy in a Phase 1 and/or Phase 2 Clinical Trial, as evidenced by clinical endpoints and/or by validated Biomarkers(s) that are jointly agreed-upon by both Parties, and that provide a statistically significant indication of clinical efficacy.

1.3 “Adverse Event” means any unfavorable and unintended change in the structure (signs), function (symptoms), or chemistry (laboratory data), of the body temporally associated with the use of a Product, whether or not considered related to the use of the Product. Changes resulting from normal growth and development which do not vary significantly in frequency or severity from expected levels are not to be considered adverse experiences. Examples of changes that are not adverse events may include, but are not limited to, teething, typical crying in infants and children, and onset of menses or menopause occurring at a physiologically appropriate time.

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1.4 “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means (a) ownership of more than fifty percent (50%) of the shares of stock entitled to vote for the election of directors in the case of a corporation, or more than fifty percent (50%) of the equity interests in the case of any other type of legal entity, (b) status as a general partner in any partnership, or (c) any other arrangement whereby a Person controls or has the right to control the board of directors of a corporation or equivalent governing body of an entity other than a corporation.

1.5 “Annual Global Development Plan” means, with respect to each Product and Calendar Year, the written plan for the Development Program to be conducted for such Product for such Calendar Year, as such written plan may be amended, modified or updated in accordance with Section 3.1.2(b); provided, however, that the initial Annual Global Development Plan shall cover the period from the Effective Date through December 31, 2008.

1.6 “Annual Net Sales” means, with respect to any Calendar Year, the aggregate amount of the Net Sales for such Calendar Year.

1.7 “AP23573” means the compound Controlled by ARIAD and described more fully on Schedule 1 attached hereto.

1.8 “API” means the active pharmaceutical ingredient known as AP23573 or any other Collaboration Compound being Developed and Commercialized hereunder.

1.9 “Applicable Laws” means any Federal, state, local, national and supra-national laws, statutes, rules and regulations, including any rules, regulations, guidance, guidelines or requirements of Regulatory Authorities, national securities exchanges or securities listing organizations, that are in effect from time to time during the Term and applicable to a particular activity hereunder.

1.10 “ARIAD Background Technology” means any Technology that is used by ARIAD, or provided by ARIAD for use, in the Development Program and that is (a) Controlled by ARIAD as of the Effective Date, or (b) conceived or first reduced to practice by employees of, or consultants to, ARIAD after the Effective Date other than in the conduct of ARIAD Development Activities and without the use, in any material respect, of any MERCK Technology, MERCK Patent Rights or MERCK Materials. For purposes of clarity, ARIAD Background Technology shall not include ARIAD Program Technology, Program Biomarker Technology or ARIAD’s interest in Joint Technology.

1.11 “ARIAD Co-Development Percentage” means (a) except with respect to any Cancer Indication for which ARIAD exercises an Opt-Out Right, fifty percent (50%), and (b) with respect to any Cancer Indication for which ARIAD exercises an Opt-Out Right, zero percent (0%).

1.12 “ARIAD Decision” means any decision with respect to the Development and/or Commercialization (other than Manufacturing) of a Product for [***] in the U.S. Territory other than Pricing, Development and Commercialization budgets or global Branding, or (iii) the commencement and prosecution of actions to address [***] in the U.S. Territory unless a U.S. Commercialization Transfer has occurred.

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1.13 “ARIAD Development Activities” means the Development activities specified to be conducted by ARIAD in any Annual Global Development Plan (or amendment thereto).

1.14 “ARIAD Materials” means any Proprietary Materials that are Controlled by ARIAD and used by ARIAD, or provided by ARIAD for use, in the Development Program.

1.15 “ARIAD Patent Rights” means any Patent Rights that contain one or more claims that cover ARIAD Technology. For purposes of clarity, ARIAD Patent Rights includes all Licensed Patent Rights and all ARIAD Program Patent Rights.

1.16 “ARIAD Program Patent Rights” means any Patent Rights Controlled by ARIAD that contain one or more claims that cover ARIAD Program Technology.

1.17 “ARIAD Program Technology” means (a) any Product Technology, and (b) any Program Technology other than Product Use Technology that is conceived or first reduced to practice by employees of, or consultants to, ARIAD, alone or jointly with any Third Party, without the use, in any material respect, of any MERCK Technology, MERCK Patent Rights, MERCK Materials or Joint Technology.

1.18 “ARIAD Revenue Sharing Percentage” means the percentage obtained by subtracting MERCK Revenue Sharing Percentage from one hundred percent.

1.19 “ARIAD Technology” means, collectively, ARIAD Background Technology and ARIAD Program Technology.

1.20 “Back-Up Compound” means any Rapamycin Derived mTOR Inhibitor within the claims of [***] or any other Rapamycin Derived mTOR Inhibitor discovered by ARIAD, or jointly by ARIAD and MERCK, and covered by a patent application filed by ARIAD and/or MERCK, in either case that is designated by the JSC for further Development as a Back-Up Compound pursuant to Section 3.2.

1.21 “Biomarker” means a specific protein, protein isoform, nucleic acid sequence, gene expression profile, single nucleotide polymorphism profile, microRNA profile, genomic alteration profile, metabolite, metabolic profile and/or other molecular feature, alone or in combination, the presence or level of which correlates with and/or predicts (a) the inhibition or activation of mTOR or the mTOR pathway, (b) the performance characteristics (including, without limitation, safety, efficacy and tolerability) of a Collaboration Compound, alone or in combination with other treatments, (c) the severity, characteristics or prognosis of a human condition or disease, or (d) the responsiveness of patients to a treatment or combination of treatments.

1.22 “Biomarker Information” means any data, information or know-how that pertains to Biomarkers and that is discovered, created, or developed (i) in the Development Program, including as a result of any pre-clinical, non-clinical or clinical testing of a Collaboration Compound in cells, animals or humans, including testing of a biological material (such as fluid, tissue or tumor samples, (ii) with the use of any biological materials, data or information developed in or resulting from the Development Program or otherwise funded by the Parties in the Collaboration, or (iii) with the use of any Biomarker Information described in the preceding clauses (i) or (ii).

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1.23 “Branding” means determining all matters relating to branding of any Product, including without limitation, brand names, product logos, branding colors, positioning and key messages to be incorporated in promotional materials.

1.24 “Calendar Quarter” means the period beginning on the Effective Date and ending on the last day of the calendar quarter in which the Effective Date falls, and thereafter each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

1.25 “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.

1.26 “Cancer Indication” means any Sarcoma Indication, Major Cancer Indication, or Other Cancer Indication.

1.27 “