COLLABORATION AGREEMENT

Collaboration Agreement

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DAIICHI SANKYO CO, LTD | SEATTLE GENETICS, INC

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Title: COLLABORATION AGREEMENT
Governing Law: Washington Date: 11/7/2008
Industry: Biotechnology and Drugs Sector: Healthcare

COLLABORATION AGREEMENT, Parties: daiichi sankyo co ltd , seattle genetics inc

Exhibit 10.2

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

COLLABORATION AGREEMENT

This Agreement is entered into as of July 2, 2008 by and between:

SEATTLE GENETICS, INC. , a Delaware corporation, having its principal place of business at 21823 30th Drive S.E., Bothell, Washington 98021

(hereinafter referred to as “ SGI ”)

and

DAIICHI SANKYO CO., LTD. , a corporation organized under the laws of Japan, having its place of business at 1-2-58, Hiromachi, Shinagawa-ku,

Tokyo, Japan, 140-8710

(hereinafter referred to as “ Licensee ”).

WITNESSETH

WHEREAS, SGI owns or Controls (as defined below) intellectual property rights relating to certain technology useful for linking certain proprietary cytotoxins to other molecules, such as antibodies capable of directing such cytotoxins to specific tissues and/or cells;

WHEREAS, Licensee owns or Controls (as defined below) intellectual property rights relating to antibodies to the Designated Antigen (as defined below), and is currently conducting research and development programs to incorporate such antibodies into pharmaceutical compounds that may have activity in certain disease-related pathways, and to develop antibodies that bind to the Designated Antigen;

WHEREAS, Licensee wishes to acquire from SGI an exclusive worldwide license under SGI patent rights and know-how related to SGI’s proprietary cytotoxin and linker technology for use in conjunction with Licensee’s development, commercialization, manufacture, marketing and sale of Licensee’s antibodies that bind to the Designated Antigen; and

WHEREAS, SGI wishes to grant to Licensee an exclusive worldwide license to SGI’s cytotoxin and linker technology for use in conjunction with Licensee’s development, commercialization, manufacture, marketing and sale of Licensed Products (as defined below);

NOW, THEREFORE , in consideration of the mutual covenants and obligations set forth herein, the Parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1 - DEFINITIONS AND INTERPRETATION

1.1 Definitions : For the purposes of this Agreement the following words and phrases shall have the following meanings:

1.1.1 “ AAA ” has the meaning set forth in Section 19.3.4.

1.1.2 “ ADC ” or “Antibody-Drug Conjugate” means an Antibody that is linked to a cytotoxin or cytostatic compound and that contains, uses or is made using Drug Conjugation Technology.

1.1.3 “ ADC Access Fee ” has the meaning set forth in Section 6.1.1.

1.1.4 “ADC Data” has the meaning set forth in Section 2.6.

1.1.5 “ Affiliate ” of a Party means any corporation or other business entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party. As used herein, the term “control” means the direct or indirect ownership of [***] or more of the stock having the right to vote for directors thereof or the ability to otherwise control the management thereof.

1.1.6 “ Agreement ” means this agreement, all amendments and supplements to this Agreement and all schedules to this Agreement, including the following:

Schedule A - Research Plan.

Schedule B - SGI Patents.

Schedule C - SGI In-Licenses.

1.1.7 “ Antibody ” or “ Antibodies ” means any antibody, or fragment thereof, that has a unique amino acid sequence and that selectively binds to the Designated Antigen.

1.1.8 “ Breaching Party ” has the meaning set forth in Section 13.3.

1.1.9 “Calendar Quarter” means any of the three-month periods beginning on January 1, April 1, July 1 or October 1 of any year.

1.1.10 “Change in Control” has the meaning set forth in Article 16.

1.1.11 “Claims” has the meaning set forth in Section 14.1.1.

1.1.12 “Confidential Information” has the meaning set forth in Section 8.1.

1.1.13 “Control” means, with respect to any information or intellectual property right, possession by a Party of the ability to grant the right to access or use, or to grant a license or a sublicense to, such information or intellectual property right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

1.1.14 “Cost of Goods” shall mean with respect to Drug Conjugation Materials supplied to Licensee (a) [***]; and (b) [***].

1.1.15 “Designated Antigen” means the human DR5 antigen, encoded by the gene designated Gene ID: [***], [***] of the [***], and naturally occurring post-translational modifications thereof.

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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1.1.16 “ Drug Conjugation Materials ” means (a) the compounds [***] and [***] and [***] thereof, (b) compounds that are useful in attaching such compounds to [***] and (c) any related raw materials and reagents SGI provides to Licensee pursuant to the Research Program, in each case to the extent included in or covered by the SGI Technology. Drug Conjugation Materials shall also include Improvements to Drug Conjugation Materials and any additional [***] compounds that are included in New Technologies and that the Parties agree to include under this Agreement pursuant to Section 3.3.2.

1.1.17 “ Drug Conjugation Technology ” means (a) [***] compounds such as [***] and [***] and certain [***] and [***] thereof, and methods of making and using such [***] compounds (b) compositions and methods useful for attaching the foregoing [***] compounds to [***] and (c) any related assays and methods SGI provides to Licensee pursuant to the Research Program.

1.1.18 “ Effective Date ” means the date set forth in the first line of this Agreement.

1.1.19 “ Events of Force Majeure ” has the meaning set forth in Article 15.

1.1.20 “ Exclusive License ” has the meaning set forth in Section 3.1.

1.1.21 “Exclusive License Renewal Fee” has the meaning set forth in Section 6.2.

1.1.22 “ Existing Third Party Royalties ” has the meaning set forth in Section 6.4.1.

1.1.23 “FD&C Act” means the federal Food, Drug & Cosmetic Act, as amended.

1.1.24 “FDA” means the United States Food and Drug Administration, and any successor agency thereto.

1.1.25 “ Field ” means monoclonal antibody targeting applications for the treatment and diagnosis of conditions and diseases in humans and animals.

1.1.26 “ First Commercial Sale ” means, in each country of the Territory, the first commercial sale of a Licensed Product by Licensee, its Affiliates or Sublicensees to a Third Party following, if required by law, Regulatory Approval and, when Regulatory Approval is not required by law, the first commercial sale in that country, in each case for use or consumption of such Licensed Product in such country by the general public.

1.1.27 “Fiscal Year” means any twelve-month period beginning on April 1st and ending on March 31 ^st of succeeding year.

1.1.28 “ FTE Fees ” has the meaning set forth in Section 6.1.2.

1.1.29 “GAAP” means generally accepted accounting principles in the United States.

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1.1.30 “Generic Product” means, on a country-by-country basis, an ADC using or incorporating SGI Technology that binds selectively to the Designated Antigen: (i) the manufacture, use or sale of which [***] in such country (provided that an enforcement action is not currently proceeding pursuant to Section 9.3 based on such ADC); and (ii) [***].

1.1.31 “Good Laboratory Practices” means the then current standards for laboratory activities for pharmaceuticals, as set forth in the FD&C Act and applicable regulations and guidances promulgated thereunder, including without limitation the Code of Federal Regulations, as amended from time to time.

1.1.32 “ Improvements ” means all patentable or non-patentable inventions, discoveries or other know-how developed and Controlled by either Party after the Effective Date that utilize, incorporate, derive directly from, directly relate to, are made using or are based directly on the SGI Technology; provided that Improvements shall not include any of the foregoing developed by SGI that, within a reasonable time period after such inventions, discoveries or know-how are made or identified, [***].

1.1.33 “IND” means (a) an Investigational New Drug Application filed with the FDA or its equivalent in any country outside the United States where a regulatory filing is required or obtained to conduct a clinical trial; or (b) with respect to any country where a regulatory filing is not required or obtained to conduct a clinical trial, the first enrollment of a patient in the first trial involving the first use of a Licensed Product in humans.

1.1.34 “ Indemnitee ” has the meaning set forth in Section 14.2.

1.1.35 “ Indemnitor ” has the meaning set forth in Section 14.2.

1.1.36 “ Initiation ” means, with respect to a human clinical trial, the dosing of the first patient with a Licensed Product pursuant to the clinical protocol for the specified clinical trial.

1.1.37 “ Joint Patents ” has the meaning set forth in Section 9.2.2.

1.1.38 “ Liabilities ” has the meaning set forth in Section 14.1.1.

1.1.39 “ Licensed Product ” means any and all products utilizing or incorporating an ADC: (a) the manufacture, use, sale, offer for sale, export or import of which [***]; or (b) [***].

1.1.40 “Licensee ADC Know-How” means all technical information, processes, formulae, data, inventions, methods, chemical compounds, biological or physical materials, know-how and trade secrets, other than Improvements, that are Controlled by Licensee, in each case that are not in the public domain and are developed by Licensee using SGI Technology that are necessary for identifying, developing, making, using or selling ADCs.

1.1.41 “Licensee ADC Patents” means all patent applications and patents that are Controlled by Licensee claiming inventions (other than Improvements) that are necessary for identifying, developing, making, using or selling ADCs made using SGI Technology.

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1.1.42 “Licensee Know-How” means all technical information, processes, formulae, data, inventions, methods, chemical compounds, biological or physical materials, know-how and trade secrets, in each case that are not in the public domain, that relate to (a) [***], or (b) [***].

1.1.43 “Licensee Patents” means all patent applications and patents Controlled by Licensee that claim (a) [***], or (b) [***].

1.1.44 “ Net Sales ” means, as to each calendar quarter, the gross invoiced sales prices charged for all Licensed Products sold by or for Licensee, its Affiliates and Sublicensees to independent Third Parties during such quarter, [***]:

(a) [***];

(b) [***];

(c) [***]; and

(d) [***].

All of the foregoing deductions from the gross invoiced sales prices of Licensed Products shall be determined in accordance with GAAP. In the event that Licensee, its Affiliates or Sublicensees make any adjustments to [***] after the associated Net Sales have been reported pursuant to this Agreement, the adjustments shall be reported and reconciled in the next report and payment of any royalties due.

1.1.45 “[***]” means any [***] that either: (a) [***] or (b) [***] (x) [***] existing as of the Effective Date, or (y) [***]. [***] shall include without limitation [***] compounds, other than those included in the Drug Conjugation Materials as of the Effective Date, that SGI Controls during the Research Program Term.

1.1.46 “ Notice of Dispute ” has the meaning set forth in Section 19.3.1.

1.1.47 “ Parties ” means SGI and Licensee, and “Party” means either of them.

1.1.48 “ Phase I Clinical Trial ” means a human clinical trial, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients.

1.1.49 “ Phase II Clinical Trial ” means a controlled dose clinical trial prospectively designed to evaluate the efficacy and safety of a candidate drug in the targeted patient population and to define the optimal dosing regimen.

1.1.50 “ Phase III Clinical Trial ” means a controlled, and usually multi-center, clinical trial, involving patients with the disease or condition of interest to obtain sufficient efficacy and safety data to support Regulatory Approval of a candidate drug.

1.1.51 “ Program Inventions ” has the meaning set forth in Section 9.1.1.

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1.1.52 “Program Licensee Patents” has the meaning set forth in Section 9.3.3.

1.1.53 “ Publication ” has the meaning set forth in Section 8.5.

1.1.54 “ Regulatory Approval ” means final regulatory approval (including, where applicable, pricing approval in the event that actual sales do not take place before such approval) required to market a Licensed Product for a disease or condition in accordance with the applicable laws and regulations of a given country. In the United States, its territories and possessions, Regulatory Approval means approval of a New Drug Application (“ NDA ”), Biologics License Application (“ BLA ”) or an equivalent by the FDA.

1.1.55 “ Reports ” has the meaning set forth in Section 7.1.1.

1.1.56 “ Research Fees ” has the meaning set forth in Section 6.1.2.

1.1.57 “ Research Fees Report ” has the meaning set forth in Section 6.1.2.

1.1.58 “ Research Plan ” means the plan for the Research Program agreed upon by the Parties and attached hereto as Schedule A .

1.1.59 “ Research Program ” means the research program conducted pursuant to Article 2 and the Research Plan.

1.1.60 “ Research Program Term ” means the term of the Research Program set forth in Section 2.2.

1.1.61 “ Royalty Term ” means, on a Licensed Product-by-Licensed Product and country-by-country basis, until the later to occur of: (a) [***]; or (b) [***].

1.1.62 “ SGI In-Licenses ” means the following agreements between SGI and the indicated Third Parties: (a) the License Agreement between [***] (“[***]”) and SGI dated [***], as amended (the “[***]”); (b) the License Agreement between [***] (“[***]”) and SGI dated [***], as amended (the “[***]”); and (c) any other license agreement between SGI and a Third Party covering [***] under which Licensee is granted a sublicense under this Agreement as provided in Section 3.3.2.

1.1.63 “ SGI Know-How ” means any and all technical information, processes, formulae, data, inventions, methods, chemical compounds, biological or physical materials, know-how and trade secrets, in each case that are not in the public domain, that relate to or are useful to practice the Drug Conjugation Technology and that have been, or hereafter are during the Research Program Term, Controlled by SGI. SGI Know-How shall include Improvements Controlled by SGI but shall exclude New Technologies unless included pursuant to Section 3.3.2.

1.1.64 “SGI Patents” means:

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(a) any existing patents and patent applications listed in Schedule B to this Agreement, which shall be amended from time to time to reflect any other patents and patent applications;

(b) any patents and patent applications covering Improvements and, solely to the extent the parties so agree pursuant to Section 3.3.2, New Technologies, in each case that are Controlled by SGI;

(c) any future patents issued from any patent applications referred to above and any future patents issued from any continuation, continuation-in part (to the extent Controlled by SGI), or divisional of any of the foregoing patent applications or any patent applications from which the foregoing patents issued, in each case to the extent Controlled by SGI; and

(d) any reissues, reexaminations, confirmations, renewals, registrations, substitutions, extensions, or counterparts of any of the foregoing, in each case to the extent Controlled by SGI.

For clarification, SGI’s interest in any Joint Patents shall not be considered SGI Patents.

1.1.65 “ SGI Technology ” means the SGI Patents and the SGI Know-How.

1.1.66 “ Sublicensee ” means any person or entity that is granted a sublicense under the SGI Technology by Licensee or its Affiliates in accordance with the terms of this Agreement.

1.1.67 “Supply Fees” has the meaning set forth in Section 6.1.2.

1.1.68 “ Term ” has the meaning set forth in Article 13.

1.1.69 “ Territory ” means all countries in the world.

1.1.70 “ Third Party ” means any person or entity other than Licensee, SGI and their respective Affiliates.

1.1.71 “ Valid Patent Claim ” means an unexpired claim of an issued patent which has not been found to be unpatentable, invalid or unenforceable by an unreversed and unappealable decision of a court or other authority in the subject country.

1.2 Certain Rules of Interpretation in this Agreement and the Schedules.

1.2.1 Unless otherwise specified, all references to monetary amounts are to United States of America currency (U.S. Dollars);

1.2.2 The preamble to this Agreement and the descriptive headings of Articles and Sections are inserted solely for convenience of reference and are not intended as complete or accurate descriptions of the content of this Agreement or of such Articles or Sections;

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1.2.3 The use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or circumstances as the context otherwise permits;

1.2.4 The words “include” and “including” have the inclusive meaning frequently identified with the phrases “without limitation” and “but not limited to”;

1.2.5 Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next business day following if the last day of the period is not a business day in the jurisdiction of the Party to make such payment or do such act; and

1.2.6 Whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a business day, such payment shall be made or action taken on the next business day following such day to make such payment or do such act.

ARTICLE 2 - RESEARCH PROGRAM

2.1 Objective and Conduct of the Research Program . Licensee intends to conduct a Research Program, with SGI’s support, to evaluate ADCs for research, development and commercialization under this Agreement. Licensee acknowledges that, in addition to the licenses to the SGI Patents granted hereunder, the SGI Know-How transferred to Licensee during the Research Program contains valuable information that is critical to Licensee’s development of ADCs hereunder. All research work performed by Licensee and SGI hereunder shall be performed in a good scientific manner and in compliance with all applicable laws.

2.2 Term of the Research Program . The term of the Research Program shall initially be for a period of two (2) years after the Effective Date (the “ Research Program Term ”), unless terminated earlier in accordance with Article 13. Licensee shall have a one-time right to extend the Research Program Term for an additional year by providing written notice to SGI not less than [***] prior to the expiration of the initial Research Program Term. SGI shall submit, within [***] from the expiration of the Research Program Term (in the case that the Research Program Term is extended by Licensee as set forth above, within [***] from the expiration of such extended term), a written report to Licensee which describes the research activities conducted by SGI during such Research Program Term.

2.3 Delivery of Drug Conjugation Materials . In support of the Research Program, during the Research Program Term, SGI will (a) deliver Drug Conjugation Materials to Licensee in accordance with the Research Plan; and (b) at Licensee’s request, provide Licensee with the [***] provided to the Licensee to enable [***]. All Drug Conjugation Materials and other information provided by SGI to Licensee hereunder will be deemed Confidential Information of SGI pursuant to Article 8.

2.4 SGI Preparation of ADCs . SGI will use reasonable commercial efforts to prepare ADCs using Antibodies supplied by Licensee to SGI which shall meet and satisfy

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specifications mutually agreed upon by SGI and Licensee, and shall deliver the resulting ADCs to Licensee in accordance with the Research Plan.

2.5 Payment . Licensee shall pay SGI the amounts set forth in Section 6.1.2 for any research efforts or other assistance provided by SGI.

2.6 Ownership of Data. Licensee shall own all right, title and interest in and to the data, research and results related specifically to ADCs arising out of activities conducted pursuant to the Research Program (“ ADC Data ”). SGI shall disclose to Licensee any ADC Data that are developed, conceived, or otherwise made, solely or jointly, by or on behalf of SGI in the course of, as a result of, or in connection with the Research Program, promptly after the same is developed, conceived or otherwise made. SGI hereby assigns to Licensee any and all right, title, and interest SGI may have in, to and under ADC Data; provided, that SGI may retain copies of, and use, all ADC Data for any purpose related to this Agreement, including but not limited to, patent prosecution and defense pursuant to [***].

2.7 Disclaimer . EXCEPT AS MAY BE OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 12 OR THE RESEARCH PLAN, SGI MAKES NO REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, REGARDING THE DRUG CONJUGATION MATERIALS OR ANY ADCs PREPARED BY SGI, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR USE OR PURPOSE.

ARTICLE 3 - EXCLUSIVE LICENSE

3.1 Exclusive License Grant .

3.1.1 Upon execution of this Agreement, subject to the terms and conditions of this Agreement, including payment of the ADC Access Fee set forth in Section 6.1.1, SGI shall be automatically deemed to grant to Licensee a worldwide, exclusive (even as to SGI), royalty-bearing license under the SGI Technology, with the right to sublicense as permitted in Section 3.2, to discover, research, develop, make, have made, import, export, use, offer for sale, and sell Licensed Products that bind selectively to the Designated Antigen within the Field in the Territory (the “ Exclusive License ”). The Exclusive License shall continue for the Royalty Term, unless earlier terminated pursuant to Article 13, subject to Licensee’s compliance with the terms and conditions of this Agreement, including payment of all applicable fees, milestones and royalties hereunder.

3.1.2 During the Term, SGI shall not carry out, by itself or in collaboration with any third parties, to discover, research, develop, make, have made, import, export, use, offer for sale, and sell any antibody-drug conjugate products that bind selectively to the Designated Antigen within the Field in the Territory.

3.2 Rights to Sublicense .

3.2.1 Licensee shall have the right to grant sublicenses of the rights granted to Licensee pursuant to this Agreement to any Affiliate or any Third Party, subject to the terms and

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conditions of the SGI In-Licenses listed on Schedule C . Licensee shall not have the right to sublicense the SGI Technology outside the scope of the license granted in Section 3.1, including to develop further Drug Conjugation Technology on a stand-alone basis or to create antibody-drug conjugates that include or are based upon any antibodies that bind selectively to an antigen other than the Designated Antigen.

3.2.2 Licensee agrees to contractually obligate any Sublicensee to make all payments due to SGI pursuant to this Agreement by reason of achievement of any fees, milestones and royalties set forth herein, as well as to comply with all terms of this Agreement applicable to Licensee (including all terms of this Agreement identified as applicable to Sublicensee). Licensee shall also require any such Sublicensee to agree in writing to keep books and records and permit SGI to review the information concerning such books and records in accordance with the terms of this Agreement.

3.2.3 Licensee shall notify SGI of each sublicense granted to Affiliates or Third Parties and shall provide SGI with the name and address of each Sublicensee and a description of the rights granted and the territory covered by each Sublicensee.

3.3 Improvements and New Technologies .

3.3.1 Improvements . In the event that, during the Term, Licensee conceives, develops or reduces to practice an Improvement that relates to the Drug Conjugation Technology, Licensee shall promptly notify SGI of the discovery of such Improvement. SGI shall own all such Improvements that relate to the Drug Conjugation Technology and, to the extent that such Improvements shall have been conceived, developed or reduced to practice by Licensee, Licensee hereby assigns all of its right, title and interest therein to SGI. SGI’s interest in any such Improvements that it Controls shall be included in the SGI Technology and made available to Licensee via the Exclusive License provided in Article 3. Licensee may use such Improvement assigned to SGI by Licensee for any purpose within the scope of the Exclusive License granted herein solely during the Term of this Agreement.

3.3.2 [***] . Subject to the bona fide rights of Third Parties that may exist, Licensee shall have the right to practice any New Technologies in the Research Program pursuant to the Exclusive License granted under Article 3 as follows: SGI shall [***] of any [***] to which it obtains rights (with the right to grant sublicenses thereunder) during the Research Program Term by providing to Licensee a [***] of the [***], including all [***] under which Licensee would be able to access such [***]. If Licensee is interested in practicing such [***], the Parties shall discuss in good faith modifications to this Agreement to reflect the terms governing Licensee’s access to any [***] pursuant to this Agreement, which shall include without limitation Licensee’s agreement to [***]; provided that the [***] shall be deemed to include [***] and [***] (as applicable) relating to or covering such [***] only after the Parties execute an amendment to this Agreement specifying such modified terms.

3.3.3 Amendment of Schedule B . Schedule B shall be amended from time to time to add the patents and patent applications Controlled by SGI covering New Technologies or Improvements in accordance with this Section 3.3.

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3.4 Compliance with the SGI In-Licenses .

3.4.1 Licensee, its Affiliates and Sublicensees shall comply with all obligations, covenants and conditions of the SGI In-Licenses listed in Schedule C , and any amendments thereto following written disclosure thereof to Licensee, that apply under each of the SGI In-Licenses. The Parties agree that BMS is a Third Party beneficiary to this Agreement to the extent SGI Technology includes technology sublicensed under the BMS Agreement.

3.4.2 SGI will not enter into any amendment to an SGI In-License that imposes additional monetary obligations on Licensee or materially reduces the scope of the licenses granted to Licensee hereunder without the prior written consent of Licensee.

3.5 License to SGI . Subject to the provisions of this Agreement, Licensee hereby grants to SGI, during the Research Program Term, a non-exclusive, royalty-free, sublicenseable license under the Licensee Patents and Licensee Know-How in the Territory, to enable SGI to conduct the Research Program.

ARTICLE 4 - TECHNOLOGY DISCLOSURE

4.1 Disclosure of Drug Conjugation Technology . During the Research Program Term, SGI shall (a) disclose to Licensee such SGI Know-How as is reasonably useful to enable Licensee to use the Drug Conjugation Materials and Drug Conjugation Technology as provided in the Research Plan or to practice the Exclusive License on the terms, and subject to the conditions, of this Agreement and (b) upon Licensee’s reasonable request and with adequate notice to SGI, make available to Licensee at SGI’s facilities, SGI’s personnel to provide a reasonable amount of technical assistance and training to Licensee’s personnel. Licensee shall pay to SGI for such assistance an amount equal to the FTE Fees in accordance with Section 6.1.2 for SGI employees providing such assistance.

ARTICLE 5 - DEVELOPMENT AND COMMERCIALIZATION; MANUFACTURING

5.1 Diligence . Licensee shall use commercially reasonable efforts to research, develop, commercialize and market Licensed Products, such efforts to be consistent with the exercise of prudent scientific and business judgment and comparable to the efforts Licensee applies to its other projects of similar potential and market size. Without limiting the foregoing, Licensee shall, as commercially prudent, (a) [***], (b) [***], and (c) [***].

5.2 Joint Research Meetings . During the Research Program Term, SGI and Licensee shall hold joint meetings, from time to time, in accordance with the Research Plan, to discuss and consult on research and development activities of the Research Program, by video conference, teleconference or face to face, as mutually agreed between the Parties.

5.3 Funding and Progress Reports . Except as set forth herein, as between SGI and Licensee, [***]. Licensee shall keep SGI informed in a timely manner as to the progress of the development of Licensed Products. Beginning on [***], and [***] thereafter within [***] following the end of each [***], Licensee shall provide SGI with a written report summarizing Licensee’s significant activities related to research and development of Licensed Products and status of clinical trials and applications for Regulatory Approval necessary for marketing

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Licensed Products. Such reports shall be deemed Licensee’s Confidential Information for the purposes of Article 8.

5.4 Manufacturing . Except as otherwise expressly set forth in this Agreement, Licensee shall be responsible for all manufacturing and supply of Licensed Products. Notwithstanding the foregoing, at any time during the Term of this Agreement [***]. Licensee shall [***]. In the event SGI [***], the Parties shall [***], including [***].

ARTICLE 6 - FEES, MILESTONES AND ROYALTIES .

6.1 Research Fees . Licensee shall pay to SGI the following amounts in consideration of the Research Program:

6.1.1 Within [***] of the Effective Date, Licensee shall pay to SGI the sum of Four Million U.S. Dollars ($4,000,000) by wire transfer of immediately available funds (the “ ADC Access Fee ”).

6.1.2 Licensee shall pay SGI at an annual rate of [***] per FTE who performs research, development, consultation or support work as requested by Licensee pursuant to this Agreement (the “ FTE Fees ”). Commencing upon the [***] of the Effective Date and upon [***] thereafter, the FTE Fees will [***] in accordance with the [***]. The Parties agree that the total FTE Fees for the first [***] of the Research Program Term shall not exceed an amount [***] without the written consent of Licensee; provided, however, that SGI shall not be required to provide any services requested by Licensee under this Agreement if such services would exceed the limit set forth above unless Licensee provides its written consent and agrees to reimburse SGI for such excess FTE Fees. Upon renewal of the Research Program Term as provided for in Section 2.2 above, Licensee and SGI shall mutually agree upon a budget for FTE Fees to be incurred during such [***] renewal period. Licensee shall also pay SGI for all Drug Conjugation Materials supplied by SGI to Licensee hereunder at the rate of [***] of SGI’s Cost of Goods therefor (the “ Supply Fees ”). The FTE Fees and the Supply Fees are collectively referred to herein as the “ Research Fees ”. Within [***] after the end of each [***], SGI shall submit a report to Licensee supporting the calculation of the Research Fees due for such Calendar Quarter (a “ Research Fees Report ”). Licensee shall pay all Research Fees to SGI within [***] of receipt of each Research Fees Report.

6.2 License Maintenance Fees . Licensee shall be required to make a payment to SGI in the sum of [***] by wire transfer of immediately available funds (the “ Exclusive License Renewal Fee ”) on [***] of the Effective Date until Licensee receives the first Regulatory Approval for a Licensed Product in the Territory. Notwithstanding the foregoing, the Exclusive License Renewal Fee will be offset by the amount of any payments made under Section 6.5 of this Agreement during the [***] period preceding the date on which an Exclusive License Renewal Fee is due. If Licensee fails to make any payment required by this Section 6.2 within [***] after written notice thereof from SGI, then the Exclusive License will terminate immediately.

6.3 Royalties Payable by Licensee . In consideration for the Exclusive License granted to Licensee herein, during the Royalty Term, and subject to Sections 6.4.2 and 6.4.3,

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Licensee shall pay to SGI royalties on Net Sales of Licensed Products on a Licensed Product by Licensed Product basis. Such royalties shall be paid at the following rates as set forth below:

(a) [***] of the first [***] in aggregate [***] of each [***] in each [***];

(b) [***] of the portion of aggregate [***] of each [***] between [***] and [***] in each [***];

(c) [***] of the portion of aggregate [***] of each [***] in excess of [***] in each [***]; and

(d) In establishing the royalty structure of this Section 6.3, the Parties recognize, and Licensee acknowledges, the substantial value of the various actions and investments undertaken by SGI prior to the Effective Date. Such value is significant and in addition to the value of SGI’s grant to Licensee of the Exclusive License pursuant to Section 3.1, as it enables the rapid and effective development and commercialization of the Licensed Products in the Territory. Therefore, the Parties agree that the royalty payments calculated as a percentage of [***] (plus the fees and milestone payments provided for elsewhere herein) provide fair compensation to SGI for these additional benefits.

(e) If and for so long as there is a [***], then the [***]:


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6.4 Third Party Royalties .

6.4.1 Licensee shall be solely responsible for paying all royalties owed to Third Parties by either Licensee or SGI on account of sales of Licensed Products, including royalties owed due to use of the SGI Technology. SGI represents and warrants that (i) [***], (ii) it has provided Licensee with true and complete copies, except for certain redactions, of all agreements and amendments to the extent such agreements are relevant to determining the amount of royalties owed and (iii) [***].

6.4.2 If the sum of (a) the royalties payable by Licensee, its Affiliates or Sublicensees to SGI under [***], (b) the Existing Third Party Royalties payable by Licensee, its

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