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EXHIBIT 10.27
*** TEXT OMITTED AND FILED SEPARATELY
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST
UNDER 17 C.F.R. SECTION 200.80(b)(4)
AND RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
CONFIDENTIAL
COLLABORATION AGREEMENT
THIS
COLLABORATION AGREEMENT (the "AGREEMENT") is made and entered into
as
of December 1, 2003 (the "EFFECTIVE DATE")
by and between STRUCTURAL GENOMIX,
INC. a Delaware corporation located at
10505 Roselle Street, San Diego, CA
92121, U.S.A., ("SGX"), and UROGENE, S.A.,
a corporation incorporated under the
laws of France with a principal place of
business at 4 Rue Pierre Fontaine -
Genopole, 91058 Evry, Cedex, France,
("UG"). SGX and UG may be referred to
herein individually as a "Party" and
collectively as the "Parties".
BACKGROUND
WHEREAS,
SGX has expertise in the field of structure directed drug
discovery;
WHEREAS,
UG has research and development programs in the area of
urology;
WHEREAS,
the Parties wish to collaborate in the development of
therapeutic
products directed at inhibiting the protein
kinase RON, primarily for
application in the field of bladder
cancer;
NOW,
THEREFORE, in consideration of the foregoing and the covenants
and
promises contained in this Agreement, the
Parties hereby agree as follows:
1. DEFINITIONS
1.1
"Active Party" has the meaning ascribed to such term in Section
6.1.
1.2
"Affiliate" means, with respect to a Party hereto, a
corporation,
company or other entity that is owned or
controlled by such Party by virtue of
such Party's direct or indirect ownership
or control of fifty percent (50%) or
more of the outstanding shares or
securities (representing the right to vote for
the election of directors or other managing
authority) of such corporation,
company or other entity, but such
corporation, company or other entity shall be
deemed to be an Affiliate only so long as
such ownership or control exists.
1.3
"Clinical Development" means development activities conducted on
a
Collaboration Product commencing upon the
filing of an IND, up to and including
generation of an International Registration
Dossier.
1.4
"Collaboration" means the activities conducted by the Parties
under
the Research Plan and the Development
Plan.
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1.5
"Collaboration Product" means any product that comprises or
contains
or is developed or manufactured based on a
Safety Assessment Candidate, and is
directed at inhibiting, modulating or
altering the activity of the Target.
Collaboration Products do not include SGX
Products or UG Products.
1.6
"Collaboration Technology" means Patent Rights and Know-How which
are
conceived or reduced to practice or
otherwise developed by or on behalf of UG or
SGX, or jointly by UG and SGX, in each case
during and in the performance of the
Collaboration, including without
limitation, Collaboration Products and
Information but excluding SGX Compounds, UG
Compounds, SGX Background
Technology, and UG Background
Technology.
1.7
"Collaboration Term" means the period commencing on the Effective
Date
and ending on a Collaboration
Product-by-Collaboration Product and
country-by-country basis, upon Registration
of each such Collaboration Product.
1.8
"Competing Product" means a product developed outside of the
Collaboration for application in the
Therapeutic Field, which has activity in an
[...***...] against the Target.
1.9
"Controls" or "Controlled" means possession of the ability to
grant
the licenses or sublicenses as provided for
herein, without violating the terms
of any agreement or other arrangement with
a Third Party.
1.10
"Development Budget" has the meaning ascribed to such term in
Section
3.7.
1.11
"Development Plan" means, with respect to a particular
Collaboration
Product, the plan prepared by the JDC and
approved by the Parties pursuant to
Section 3.7 setting forth the detailed
plan, Development Budget and process for
the Parties' collaborative efforts to
conduct development of, and seek
Registration for, such Collaboration
Product in the UG Territory and SGX
Territory.
1.12 "Drug
Candidate" means a Safety Assessment Candidate selected by the
JDC for Clinical Development under Section
3.2(b).
1.13
"Excess Expenses" means, with respect to a particular
Collaboration
Product, the costs and expenses associated
with such Collaboration Product that
the Parties have agreed pursuant to Section
3.9 shall be creditable against
certain royalty payments in accordance with
Section 4.3.
1.14
"Expanded Therapeutic Field" means the Therapeutic Field,
[...***...]
cancer, [...***...] carcinomas, and
[...***...] cancer.
1.15 "FTE"
means a full time equivalent person year (consisting of
[...***...] hours per year) of scientific
or technical work carried out by or on
behalf of SGX or UG under the
Collaboration.
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1.16
"First Commercial Sale" means the first sale of a Collaboration
Product to a Third Party in a Territory
after all Registrations required to
permit such sale have been granted, or such
sale is otherwise permitted by the
regulatory authority in such country.
1.17 "IND" means
an Investigational New Drug application, as defined in
the U.S. Food, Drug and Cosmetic Act
("FDCA") and the regulations promulgated
thereunder or any corresponding foreign
application, registration or
certification.
1.18
"Inactive Party" has the meaning ascribed to such term in
Section
6.1.
1.19
"Information" means data specifically relating to research,
development, Registration, manufacture,
sale or use of Collaboration Products,
including without limitation,
pharmacological, toxicological and clinical test
data, analytical and quality control data,
regulatory submissions,
correspondence and communications, and data
relating to adverse events.
1.20
"International Registration Dossier" means the collection of
Information comprising the requirements for
applications for Registration of
Collaboration Products under the FDCA and
any regulations promulgated
thereunder, and as required by the
Committee for Proprietary Medicinal Products
representing the medicine authorities of
the European Community member states.
1.21
"Joint Research Committee" or "JRC" means the Joint Research
Committee established pursuant to Section
2.4.
1.22
"Joint Development Committee or "JDC" means the Joint
Development
Committee established pursuant to Section
3.2.
1.23
"Know-How" means all ideas, data (including without limitation
data
from clinical and preclinical studies and
test data including pharmacological,
toxicological and clinical test data),
inventions, information, (including
without limitation information related to
compounds and their structure,
function and formulation, regulatory
filings and submissions), instructions,
designs, processes, formulas, software,
materials, methods, processes and
techniques.
1.24 "Lead
Compound" means a compound with the properties designated by
the JRC as required properties for a Lead
Compound, which is designated by the
JRC as a Lead Compound in accordance with
Section 2.4(b)(v).
1.25 "Net
Sales" means the total amount received by UG or SGX or their
respective Affiliates or sublicensees, as
the case may be, for sales to third
parties (other than sublicensees) in arm's
length transactions of Products less:
(i) ordinary and customary prompt payment
and other trade or quantity discounts
actually allowed and taken; (ii) credits,
rebates and returns (including, but
not limited to, wholesaler and retailer
returns) actually extended and taken;
(iii) freight, postage and duties
(including insurance premiums) actually
incurred; (iv) excise taxes, other
consumption taxes, customs duties and
compulsory payments to governmental
authorities actually paid and separately
identified on the invoice or other
documentation maintained in the ordinary
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course of business. A "sale" shall include
any transfer or other disposition for
consideration, and Net Sales shall include
the fair market value of all other
consideration received by UG or SGX or
their respective Affiliates or
sublicensees in respect of any grant of
rights to make, use, sell or otherwise
distribute Products, whether such
consideration is in cash, payment in kind,
exchange or other form.
1.26 "NDA"
means a New Drug Application, as defined in the U.S. Food, Drug
and Cosmetic Act and the regulations
promulgated thereunder, and any
corresponding foreign application,
registration or certification.
1.27
"Patent Rights" means patent applications filed in any country
worldwide, including provisionals,
utilities, continuations (in whole or in
part), divisionals, reissues,
reexaminations and foreign counterparts thereof,
any patents issued on such applications and
any extensions of term,
registrations or confirmations of such
patents.
1.28
"Phase 1", "Phase 2", "Phase 3" and "Phase 4" means Phase 1, Phase
2,
Phase 3 and Phase 4 clinical trials,
respectively, in each case as prescribed by
the U.S. Food and Drug Administration or
any successor entity (the "FDA"), and
agencies of other governments of other
countries having similar jurisdiction
over the development, manufacturing and
marketing of pharmaceuticals.
1.29
"Phase 2A" means the Phase 2A or Phase 1/2 clinical trials, as
prescribed by the FDA and agencies of other
governments of other countries
having similar jurisdiction over the
development, manufacturing and marketing of
pharmaceuticals, designed to evaluate
efficacy and initial clinical proof of
concept.
1.30
"Preclinical Development" means drug development activities
conducted
by the Parties from the nomination by the
JRC of a Safety Assessment Candidate
for Preclinical Development, and up to but
not including filing of an IND.
1.31
"Product" means a Collaboration Product, SGX Product or UG
Product.
1.32
"Registration" means any approvals (including supplements,
amendments
and post-approvals and price approvals),
licenses, registrations or
authorizations of any national,
supra-national (e.g., the European Commission or
the Council of the European Union),
regional or local regulatory agency,
department, bureau, or other governmental
entity, necessary for the manufacture,
distribution, use, sale, pricing or
reimbursement, of Collaboration Products in
a regulatory jurisdiction.
1.33
"Research Plan" has the meaning ascribed to such term in Section
2.1
1.34
"Safety Assessment Candidate" or "SAC" means a Lead Compound with
the
properties designated by the JRC as
required properties for a SAC, which is
designated by the JRC as a SAC in
accordance with Section 2.4(b)(vi).
1.35 "SGX
Background Technology" means all Patent Rights and Know-How
which are: (a) owned or Controlled by SGX
prior to the Effective Date or during
the Collaboration Term; (b) developed by or
on behalf of SGX (i) outside the
Collaboration
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or (ii) within the Collaboration and
comprise methodologies, protocols or
technologies which have application to
targets or compounds in addition to the
Target and compounds the subject of the
Collaboration; and (c) necessary for the
conduct of the Collaboration.
1.36 "SGX
Compounds" means all Patent Rights and Know-How which are
conceived or reduced to practice or
otherwise developed by or on behalf of SGX
during and in the performance of the
Collaboration, covering compounds
identified and developed by SGX, which are
not selected by the JRC as Lead
Compounds.
1.37 "SGX
Product" means any product that comprises or contains or is
developed or manufactured based on or
utilizing or is derived from, a Lead
Compound or any part thereof which was
selected by the JRC for lead
optimization, and which has primary
application in the SGX Retained Field.
1.38 "SGX
Retained Field" means kinase inhibitors (other than MET)
developed for clinical indications other
than the Expanded Therapeutic Field.
1.39 "SGX
Territory" means the United States, Canada and Mexico.
1.40
"Sublicensee Information" has the meaning ascribed in Section
4.6.
1.41
"Sublicensing Revenue" means all amounts (including, without
limitation, payments received for the
purchase of equity in excess of the fair
market value of such equity, license fees,
milestone and other time or event
based payments and royalties on sales of
products, but excluding any research
funding payments received and actually used
for such purpose) received by a
Party under an agreement or license
attributable to Collaboration Products or
from sales of Collaboration Products to end
users less any withholding tax or
other tax related reductions.
1.42
"Target" means the human protein kinase RON.
1.43
"Territory" means UG Territory or SGX Territory.
1.44
"Therapeutic Field" means superficial and invasive bladder
cancer.
1.45
"Third Party" or "Third Parties" means any entity other that UG
or
SGX or their respective Affiliates.
1.46 "UG
Background Technology" means all Patent Rights and Know-How
which
are: (a) owned or Controlled by UG prior to
the Effective Date or during the
Collaboration Term; (b) developed by or on
behalf of UG (i) outside the
Collaboration or (ii) within the
Collaboration and comprises methodologies,
protocols or technologies which have
application to targets or compounds in
addition to the Target and compounds that
are the subject of the Collaboration;
and (c) necessary for the conduct of the
Collaboration.
1.47 "UG
Compounds" means all Patent Rights and Know-How which are
conceived or reduced to practice or
otherwise developed by or on behalf of UG
during
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and in the performance of the
Collaboration, covering compounds
identified and developed by UG, which are
not selected by the JRC as Lead
Compounds.
1.48 "UG
Product" means any product that comprises or contains or is
developed or manufactured based on or
utilizing or is derived from, a Lead
Compound or any part thereof which was
selected by the JRC for lead
optimization, and which has primary
application in the UG Retained Field.
1.49 "UG
Retained Field" means non-kinase inhibitors developed for
urological clinical application other than
the Therapeutic Field.
1.50 "UG
Territory" means the countries listed in the attached Exhibit A
("Europe")
1.51
"Valid Claim" means a claim of a pending patent application
within
the Patent Rights or an issued and
unexpired patent within the Patent Rights
which has not been held unenforceable or
invalid by a court or other
governmental agency of competent
jurisdiction, and which has not been disclaimed
or admitted to be invalid or unenforceable
through reexamination, reissue,
opposition, or otherwise.
2. RESEARCH
COLLABORATION.
2.1
Research Collaboration. Subject to the terms and conditions of
this
Agreement UG and SGX will use commercially
reasonable efforts to perform under
the Research Plan attached to this
Agreement as Exhibit B ("Research Plan"),
based on the budget attached as Exhibit B1
("Research Budget"). Research Plan
activities will be overseen by the JRC. The
JRC will review the Research Plan on
an ongoing basis and may make changes to
the Research Plan then in effect,
provided that the JRC may not increase the
applicable Research Budget without
the written approval of each Party. On an
annual basis commencing on the first
anniversary of the Effective Date and
continuing until the conclusion of the
Parties' activities under the Research
Plan, the JRC shall review the Research
Budget to ensure that the number of full
time equivalent personnel (FTEs) of
each Party engaged under the Research Plan
and the other costs of the Research
Plan activities, are being shared between
the Parties on a 50/50 basis, and
shall make adjustments to each Party's
responsibilities under the Research Plan
in order to effect such sharing to the
greatest extent possible, taking into
account each Party's experience and
expertise in the various Research Plan
activities.
2.2
Performance Standards; Records. Each Party shall conduct its
activities under the Collaboration in good
scientific manner, and in compliance
in all material respects with the
requirements of applicable laws and
regulations, to attempt to achieve its
objectives efficiently and expeditiously.
Each Party shall maintain laboratories,
offices and other facilities reasonably
necessary to carry out the activities to be
performed by such Party pursuant to
the Collaboration. In conformity with
standard pharmaceutical and biotechnology
industry practices and the terms and
conditions of this Agreement, each Party
shall prepare and maintain, or shall cause
to be prepared and maintained,
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complete and accurate written records,
accounts, notes, reports and data with
respect to activities conducted pursuant to
the Research Plan and Development
Plan and all results (including without
limitation any inventions, discoveries
and developments) made pursuant to its
efforts under the Collaboration, and,
upon the other Party's written request,
shall send legible copies of the
aforesaid to the other Party. 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. Upon reasonable advance notice,
each Party agrees to make its employees
and non-employee consultants reasonably
available at their respective places of
business to consult with the other Party on
issues arising in connection with
any request from any regulatory agency with
respect to activities under this
Agreement, including, without limitation,
regulatory, scientific, technical and
clinical testing issues. At least quarterly
during the performance of the
Research Plan, the Parties shall have the
obligation to prepare and provide to
the JRC written reports summarizing the
progress of the work performed by such
Party in connection with the Research Plan
during the preceding quarter.
2.3
Provision of Materials and Know-How. In the course of the
Collaboration, the Parties will provide
each other, promptly upon request, with
materials and data within Collaboration
Technology, as required for each Party
to perform its respective obligations under
the Research Plan and Development
Plan. Neither Party will have the right to
transfer or disclose materials
received from the other Party to any Third
Party other than permitted
sublicensees or approved Third Party
contractors under the Research Plan,
without the other Party's prior written
consent.
2.4 Joint
Research Committee
(a)
Membership; Decisions. SGX and UG will establish a JRC to
oversee, review and recommend direction of
the Research Plan. The JRC shall be
comprised of six (6) members, with three
(3) members being appointed by SGX and
three (3) members being appointed by UG.
Additional representatives of each
Party (for example the members of the
individual project teams or consultants)
may attend JRC meetings at the election of
each Party. The Parties may
subsequently agree to change the size of
the JRC as appropriate to meet the
needs of the Parties' collaborative efforts
under this Agreement. Each Party may
replace its JRC representatives at any
time, with written notice to the other
Party. Each representative of SGX and UG
shall have one vote on the JRC, which
vote may be cast by proxy. Decisions of the
JRC shall be made by unanimous vote.
Any matter upon which the JRC is unable to
agree shall be submitted to a senior
executive officer designated by each Party
for such purpose.
(b) Responsibilities. The JRC will review, direct and supervise
the
performance of the Research Plan. The JRC
will be responsible for (i)
coordinating, monitoring and reporting
research progress and ensuring open
exchange between the Parties with respect
to Collaboration activities; (ii)
determining the research strategy, budget
and time lines for the Research Plan;
(iii) determining whether to obtain
licenses from Third Parties with respect to
intellectual property useful for the
conduct of the Research Plan; (iv)
determining the required properties for
compounds to be deemed
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Lead Compounds, including without
limitation, potency, selectivity, in vivo
efficacy and bioavailability; and (v)
selecting Lead Compounds for entry into
lead optimization; provided that no more
than four (4) Lead Compound series will
be pursued in lead optimization under the
Collaboration at any one time; and
(vi) determining the required properties
for Lead Compounds to be deemed Safety
Assessment Candidates and selecting Safety
Assessment Candidates for entry into
Preclinical Development.
(c) Meetings. During the term during which the Parties are
performing under the Research Plan, the JRC
shall meet quarterly, in person or
via video-conference, or as the JRC may
otherwise agree, to discharge its
responsibilities, with the expectation that
meetings will alternate between
appropriate offices of each Party. Each
Party will be responsible for paying its
own expenses in connection with
participating in the meetings of the JRC. The
JRC shall prepare written minutes of each
meeting and a written record of all
JRC decisions, whether made at a JRC
meeting or otherwise.
3. DEVELOPMENT
3.1
Overview. SGX and UG agree that they will collaborate on
development
of Collaboration Products pursuant to the
terms of this Agreement, in a
coordinated international program aimed at
producing an International
Registration Dossier and obtaining
Registration of Collaboration Products in the
UG Territory and SGX Territory. All such
collaborative development efforts of
the Parties, or either Party, shall be in
accordance with the Development Plan
for each Collaboration Product. Except as
otherwise provided in this Agreement,
each Party agrees that neither Party may
conduct Preclinical Development or
Clinical Development on a Collaboration
Product for sale or distribution, or
license any Third Party to do so, except
collaboratively with the other Party or
as permitted by this Agreement. However, as
discussed further in Article 6, it
is agreed that, if one Party determines
that it does not wish to proceed with
such joint development of a particular
Collaboration Product, the other Party
shall be permitted to do so on its own
pursuant to the terms of Article 6.
3.2 Joint
Development Committee. On a Collaboration Product-by-
Collaboration Product basis, once a Safety
Assessment Candidate is selected by
the JRC for progression to Preclinical
Development, the Parties shall form a JDC
for the development of such SAC, comprised
of six (6) members, with three (3)
members being appointed and replaced by SGX
and three (3) members being
appointed and replaced by UG. Additional
representatives of each Party (for
example members of the individual project
teams or consultants) may attend JDC
meetings at the election of each Party. The
Parties may subsequently agree to
change the size of each JDC, as appropriate
to meet the needs of the Parties in
managing the joint efforts under this
Agreement. The JDC shall (a) prepare the
Development Plan for the Preclinical
Development of the SAC, and modify or amend
it as appropriate, based on the results of
the development efforts on such SAC,
during the development process; (b) select
one or more SACs for Clinical
Development and prepare the Development
Plan for such Clinical Development, (c)
determine whether and when to commence
Phase 1, Phase 2 and Phase 3 for each
Collaboration Product; (d) oversee the
Parties' activities under the Development
Plan, including supervision of
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regulatory activities and (e) perform such
other duties and obligations as the
Parties specifically delegate to it in
writing by mutual written agreement of
the Parties.
3.3 JDC
Meetings. JDC meetings shall take place at such mutually
convenient times and places as determined
by the JDC, with the expectation that
meetings will alternate between appropriate
offices of each Party. Each Party
will be responsible for paying its own
expenses in connection with participating
in JDC meetings. The JDC shall determine
the frequency of its meetings and how
such meetings will be conducted and
recorded.
3.4
Decision-Making and Issue Resolution. All decisions of the JDC
shall
be unanimous by the members of such
committee. If the JDC fails to reach
unanimous agreement on an issue needing
resolution, the matter shall be referred
for good faith discussion and resolution by
a senior executive officer
designated by each Party for such
purpose.
3.5 Joint
Development. For each SAC selected by the JRC for joint
development as a Collaboration Product
hereunder by mutual written agreement,
SGX and UG agree that they will collaborate
to generate an International
Registration Dossier, and will conduct, or
have conducted, all Preclinical
Development and Clinical Development on
such Collaboration Product in accordance
with the Preclinical and Clinical
Development Plans developed by the JDC for
such Collaboration Product. The Parties
will work together to develop a common
brand name for each Collaboration Product
to be marketed under worldwide. Each
Party agrees not to incur any expenses or
costs in excess of the Development
Budget (as defined below) within such
Development Plan except as mutually agreed
in writing by the Parties. The
collaborative development program will follow the
most expeditious path to the production of
an International Registration Dossier
and Registration of Collaboration Products
in the UG Territory and SGX
Territory, provided however it is
understood that unless otherwise agreed by the
Parties, all commercialization activities
with respect to such Collaboration
Product once Registration has been
obtained, will be conducted by the Parties
independently, in each Party's respective
Territory for such Collaboration
Product and that each Party will bear its
own costs of such commercialization
activities. On a Collaboration
Product-by-Collaboration Product basis, each
Party will be primarily responsible for
regulatory activities in its applicable
Territories after Registration in such
Territory, comprising regulatory
compliance, safety surveillance, adverse
event reporting and all other necessary
support services, however the Parties will
keep each other informed of such
activities and will work together in the
conduct of such activities where
necessary or useful. The Parties will
mutually agree on (i) the
commercialization strategy for countries
outside of the Territories, including
outlicensing as necessary; and (ii) the
engagement of a Third Party(ies) to
manufacture and supply bulk drug substance
for Collaboration Product
development, and Collaboration Products for
commercialization purposes, in the
Territories.
3.6 Access
to Information. During the term of this Agreement each Party
(the "Providing Party") will provide the
other Party (the "Recipient") in
English, for use in the Recipient's
development and commercialization efforts
relating to a Collaboration
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Product, all Information that the Providing
Party owns or Controls regarding
such Collaboration Product (including,
without limitation, Sublicensee
Information), necessary or useful for
making regulatory filings and seeking and
maintaining Registration, for Collaboration
Products in the Recipient's
Territory for such Collaboration Product,
as such Information becomes available.
The Recipient will have a right of access,
and the right to use and incorporate
all Information provided by the Providing
Party in regulatory filings for such
Collaboration Products in the Recipient's
Territory. The Parties will report and
take other actions in relation to, adverse
events with Collaboration Products,
to each other in accordance with a
reporting protocol in a form to be agreed by
the JDC. Each Party will be entitled to
receive copies of all correspondence
with regulatory authorities and will be
entitled to be present at all meetings
with regulatory authorities in any
Territory related to Collaboration Products.
3.7
Development Plans and Budgets. Promptly after the selection by the
JRC
of a SAC for development as a Collaboration
Product by the Parties, the JDC
shall prepare and provide to each Party for
final approval a development plan
for such SAC (the "Development Plan"). The
Development Plan shall include all
needed details regarding the Preclinical
and Clinical Development, and other
work to be undertaken to develop and
produce the International Registration
Dossier for such Collaboration Product,
including an allocation of all such work
as appropriate to each Party (or to
selected Third Party contractors, as
agreed), and shall establish a budget (the
"Development Budget") for all costs
and expenses to be incurred by each Party
in conducting the work allocated to it
under such Development Plan. The budget
will be based on (i) an allocation of
Full Time Equivalent (FTE) personnel of
each Party working under the Development
Plan, with each FTE costed at an annualized
rate of U.S.$[...***...] (which rate
will be increased on each anniversary of
the Effective Date by [...***...]%);
(ii) the actual extraordinary direct costs
approved by the JDC, and (iii) the
actual costs of work performed by Third
Parties as approved by the JDC. Each
Party shall diligently review the proposed
Development Plan and shall either
approve the plan or provide the JDC any
requested changes and comments. If a
Party provides such requested changes or
comment to a proposed Development Plan,
the JDC shall review the proposed changes
within thirty (30) days, and as
appropriate, thereafter prepare a revised
draft of the Development Plan,
accommodating such changes and comments,
and resubmit such revised Development
Plan for approval by the Parties as
provided above. Once the Parties have agreed
on the Development Plan proposed by the
JDC, such Development Plan shall be
effective and shall control and govern the
Parties' development effort with
respect to the applicable Product, subject
to any subsequent amendments or
modifications to such Development Plan as
provided below. From time to time
during the development of such
Collaboration Product, the JDC shall review the
Development Plan in light of the results of
the development work and any other
relevant Information and shall amend or
modify the Development Plan as
appropriate, provided that the JDC may not
increase the applicable Development
Budget without the written approval of each
Party. At least sixty (60) days
prior to January 1 of any year in which the
Parties are developing a particular
Collaboration Product hereunder, the JDC
shall review the applicable Development
Budget for such Collaboration Product and
shall submit a revised and updated
Development Budget for the coming calendar
year to each of the Parties for
approval as provided above. Upon such
approval, the Development Budget shall be
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effective for the development of such
Collaboration Product during such calendar
year, subject further to amendment of the
applicable Development Plan.
3.8 Costs
of the Collaboration. All costs and expenses incurred or
expended by a Party hereunder under the
Research Budget and Development Budget
("Collaboration Costs") shall initially be
borne by the Party incurring such
costs and expenses, subject to
creditability of Excess Expenses as provided in
Section 4.3, provided however, on a
Collaboration Product-by-Collaboration
Product basis, the costs of any country
specific regulatory requirement (outside
of the International Registration Dossier
and any Phase 4 studies required by a
regulatory body in a Territory), will be
borne by the Party whose Territory for
such Collaboration Product includes such
country. Each Party shall calculate and
maintain records of all the Collaboration
Costs incurred or expended by the
Party during its performance of development
on a Collaboration Product, in
accordance with generally accepted
accounting procedures consistently applied
throughout such Party's organization and
such other procedures to be agreed upon
between the Parties. Commencing on the
formation of the JDC, each Party shall
report quarterly to the other on the
Collaboration Costs it has incurred in each
calendar quarter, on a Collaboration
Product-by- Collaboration Product basis,
and the purpose (referencing the activities
within the applicable Development
Plan) for which such costs were incurred or
expended, with such reports to be
submitted within sixty (60) days after the
end of each of the first three (3)
calendar quarters and ninety (90) days
after the end of the calendar year. The
Parties shall seek to resolve promptly and
in good faith any questions or issues
related to such accounting statements, and
in any event within ninety (90) days
following receipt.
3.9 Excess
Expenses.
(a) For each particular calendar year during which
Collaboration
Costs are incurred hereunder, and promptly
following the First Commercial Sale
of each Collaboration Product hereunder,
each Party shall review the
Collaboration Costs report submitted by the
other Party and compare such
submission to the applicable Research
Budget and Development Budget. The Parties
will then meet, if necessary, via
designated senior officers from each Party
with financial accounting responsibility,
to discuss the reports and reach
agreement on the total amount of
Collaboration Costs that each Party may
properly apply to the Collaboration
activities hereunder. It is understood and
agreed that a Party will not be entitled to
obtain credit for any Collaboration
Costs incurred by the Party in excess of
the amount set forth in the applicable
Research Budget or Development Budget for
accomplishing the relevant task or
objective unless approved by the JRC or
JDC. If such officers cannot reach
agreement promptly, the matter will be
submitted to senior executive officers of
each Party for prompt resolution, with the
understanding that each Party will
provide access to any information relating
to the Collaboration activities
undertaken by such Party, and the actual
calculation of costs and expenses
incurred therefor, with respect to
Collaboration Products during such calendar
year for which such Party seeks credit
hereunder for the related Collaboration
Costs .
(b) UG and SGX will share the total amount of Collaboration
Costs
incurred by the Parties within the
applicable Research Budget and Development
Budget
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for each Collaboration Product, up to and
including the costs of Clinical
Development, on a 50/50 basis. Any
Collaboration Costs incurred by a Party in
excess of [...***...]% of the total amount
of Collaboration Costs incurred by
both Parties, will be deemed Excess
Expenses of such Party (the "First Party")
and in the event that the Party which has
not incurred Excess Expenses (the
"Second Party") does not elect to pay the
First Party the amount of the Excess
Expenses in cash within [...***...]
([...***...]) months of the First Commercial
Sale of a Collaboration Product, the First
Party may credit such Excess Expenses
in accordance with Section 4.3.
3.10 Audit
Rights. Each Party shall have the right to have an independent
accounting firm audit the other Party's
relevant records to determine the
accuracy of the Collaboration Costs
reported by such other Party under Section
3.8 above. Such audit right shall be
exercised under the terms of the audit
provisions set forth in Section 4.11
below.
3.11
Diligence. Each Party shall use commercially reasonable
diligent
efforts to (i) develop and bring Safety
Assessment Candidates nominated by the
JRC for Preclinical Development, to the
market as Collaboration Products in such
Party's applicable Territory as soon as
reasonably practicable, (ii) obtain such
Registrations as may be necessary to market
such Collaboration Products in such
Territory, and (iii) after obtaining
Registration for any such Collaboration
Products, launch such Collaboration
Products and promote and meet the market
demand therefore. In connection with the
above, each Party shall use efforts not
less than those efforts made by similarly
situated companies in the
biotechnology industry with respect to
comparable products of comparable
commercial potential, stage of development
and patent protection.
3.12 Lack
of Diligence. In the event that either Party fails to use or
continue to use diligent efforts to
actively develop and commercialize a
Collaboration Product in accordance with
Section 3.11 above (the "First Party"),
and the First Party fails to initiate
diligent efforts within sixty (60) days of
receipt of notice from the other Party (the
"Second Party") of such failure,
then the Second Party may terminate the
First Party's rights under this
Agreement with respect to such
Collaboration Product and, in such event, the
Second Party shall have the exclusive right
to commercialize any such
Collaboration Product in the First Party's
Territory and the Second Party shall
make payments to the First Party in
accordance with Section 6.3.
3.13
Competing Products. During the period from the Effective Date to
the
tenth anniversary of the Effective Date,
each Party agrees not to, and to cause
its Affiliates not to, directly or
indirectly, develop and commercialize a
Competing Product in any country in the
other Party's Territory for the
applicable Collaboration Product. In the
event that a Party (an "Acquiring
Party") purchases or otherwise takes
control of a Third Party ("Acquisition")
which has developed or commercialized (and
is continuing to produce or sell), or
is developing or commercializing a
Competing Product (directly or indirectly) in
any such case, within the other Party's
Territory for the applicable
Collaboration Product, the Parties will
negotiate in good faith to agree on the
appropriate sharing between the Parties of
the Acquiring Party's rights and
obligations in connection with the
development and commercialization of the
Competing Product, and in the event
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that such agreement is not reached within
twelve months after such Acquisition,
the Acquiring Party shall divest, or cause
its applicable Affiliate to divest,
the Competing Product.
4. ROYALTY PAYMENTS
4.1
Royalties on Net Sales of Collaboration Products. No later than
six
(6) months prior to the filing of the
International Registration Dossier for the
first Collaboration Product, the Parties
will negotiate in good faith a
commercialization plan for Collaboration
Products including an agreement on the
appropriate royalty payments and shares of
Sublicensing Revenue due to each
Party, recognizing the guiding principle of
a 50/50 collaboration with equal
sharing of expenses and returns. In the
event that no agreement is reached by
the Parties by the date that is six (6)
months prior to the First Commercial
Sale of the first Collaboration Product,
(i) UG will pay to SGX a royalty of
[...***...]% of Net Sales of Collaboration
Products by or on behalf of UG in the
UG Territory or [...***...]% of
Sublicensing Revenue received by UG in
connection with Collaboration Products; and
(ii) SGX will pay to UG a royalty of
[...***...]% of Net Sales of Collaboration
Products by or on behalf of SGX in
the SGX Territory or [...***...]% of
Sublicensing Revenue received by SGX in
connection with Collaboration Products.
4.2
Royalties on Net Sales of UG Products and SGX Products. In
consideration of the rights granted
hereunder:
(a) SGX shall pay to UG [...***...]% of Net Sales of SGX Products
by
or on behalf of SGX in the SGX Territory or
[...***...]%] of Sublicensing
Revenue received by SGX in connection with
SGX Products; and
(b) UG shall pay to SGX [...***...]% of Net Sales of UG Products
by
or on behalf of UG worldwide or
[...***...]% of Sublicensing Revenue received by
UG in connection with UG Products.
4.3
Creditable Payments. Each Party may credit any Excess Expenses
(including interest calculated at the rate
equal to the prime rate as reported
by the Chase Manhattan Bank, New York, New
York, plus [...***...] percent
([...***...]%), compounded annually) it has
incurred, as determined in
accordance with Section 3.9, against any
royalty payments it is required to make
under Section 4.1, up to a maximum of
[...***...]% of the royalties due from
such Party in any calendar quarter. In the
event that a Collaboration Product
has been registered in one Party's
Territory but the First Commercial Sale of a
Collaboration Product in the other Party's
Territory is delayed or likel
