COLLABORATION AGREEMENT

 

 

ARTICLE 1:	DEFINITIONS	1
ARTICLE 2:	GOVERNANCE OF THE PROGRAM	12
2.1	Steering Committee	12
2.2	Decisions	14
ARTICLE 3:	DEVELOPMENT ACTIVITIES	15
3.1	Prochymal Development Activities	15
3.2	Chondrogen Development Activities	19
3.3	Development Plans	19
3.4	Development Costs	20
3.5	Consideration of Resources	22
3.6	Primary Contact Persons	22
3.7	Visit of Facilities	22
3.8	Records	23
3.9	Ownership and Use of Data	23
ARTICLE 4:	REGULATORY AND MANUFACTURING	23
4.1	Regulatory	23
4.2	Regulatory Expenses	24
4.3	Safety Reporting	24
4.4	Product Supply	25
ARTICLE 5:	COMMERCIALIZATION	26
5.1	Osiris Territory	26
5.2	Genzyme Notification Right Regarding Distribution Outsourcing	27
5.3	Genzyme Responsibilities in the Genzyme Territory	27
ARTICLE 6:	CONSIDERATION	27
6.1	Upfront Payments	27
6.2	Prochymal Development Milestones	27
6.3	Prochymal Sales Milestones	29
6.4	Chondrogen Development Milestones	30
6.5	Chondrogen Sales Milestones	31
6.6	Royalties Payable to Osiris	31
6.7	Royalties Payable to Genzyme	33
6.8	Records; Audits	33
6.9	Calculation of Payment	34
6.10	Late Payments	34
6.11	FIN 46 Cooperation	34
ARTICLE 7:	GRANT OF RIGHTS	34
7.1	License to Genzyme	34
7.2	Covenant Not to Sue Osiris	35
7.3	Additional Rights	36
7.4	No Other Rights	36
7.5	Rights to Exploit Intellectual Property Outside of Collaboration	36
7.6	Rights to Exploit Joint Patent Rights and Joint Technology	36
7.7	Exclusivity	36
7.8	Right of Notification	37
ARTICLE 8:	INTELLECTUAL PROPERTY RIGHTS	37
8.1	Ownership of Technology and Patent Rights; Prosecution of Patent Rights	37

 

 

8.2	Filing, Prosecution, Maintenance and Enforcement of Patent Rights	39
ARTICLE 9:	CONFIDENTIALITY	42
9.1	Nondisclosure Obligations	42
9.2	Exceptions	43
9.3	Disclosures Required by Law	43
9.4	Disclosure of Agreement; Use of Name	44
9.5	Publications	44
ARTICLE 10:	REPRESENTATIONS AND WARRANTIES	45
10.1	Representations of the Parties	45
10.2	Additional Representations of Osiris	45
ARTICLE 11:	INDEMNITY AND INSURANCE	46
11.1	Indemnification by Genzyme	46
11.2	Indemnification by Osiris	47
11.3	Indemnification Procedure	47
11.4	Limitation of Liability	48
11.5	Insurance	48
ARTICLE 12:	TERM AND TERMINATION	48
12.1	Term of Agreement	48
12.2	Termination	48
12.3	Effect of Termination by Osiris for Breach by Genzyme or at Genzyme’s Election	49
12.4	Effect of Material Breach by Osiris	50
12.5	Effects of Bankruptcy	50
12.6	Effects of Termination upon Mutual Agreement	51
12.7	Effects of Termination Generally	51
ARTICLE 13:	MISCELLANEOUS	51
13.1	Interpretation	51
13.2	Force Majeure	51
13.3	Successors in Interest	52
13.4	Severability	52
13.5	Notices	53
13.6	Applicable Law	53
13.7	Compliance with Applicable Laws	53
13.8	Dispute Resolution	53
13.9	Entire Agreement	56
13.10	Independent Contractors	56
13.11	Waiver	56
13.12	Counterparts	56
13.13	Further Assurances	56

 

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COLLABORATION AGREEMENT

 

THIS COLLABORATION AGREEMENT (the “Agreement”) dated this 31st day of October, 2008 (the “Effective Date”) is made by and between Genzyme Corporation, a Massachusetts corporation having its principal place of business at 500 Kendall Street, Cambridge, Massachusetts 02142 (“Genzyme”) and Osiris Therapeutics, Inc., a Delaware corporation having its principal place of business at 7015 Albert Einstein Drive, Columbia, Maryland 21046 (“Osiris”).

 

RECITALS

 

A.                                  Osiris is a recognized stem cell therapeutic leader focused on developing and marketing products to treat medical conditions and possesses broad scientific and clinical leadership in the field of human mesenchymal stem cells (“MSCs”) and know-how, expertise and intellectual property rights pertaining to MSCs, including its Prochymal product and Chondrogen product.

 

B.                                    Genzyme is a recognized biotechnology industry leader with broad scientific capabilities, including but not limited to expertise in the area of cell therapy, and commercial expertise engaged in the research, development, marketing, manufacturing and distribution of bio-pharmaceutical products.

 

C.                                    Genzyme and Osiris desire to collaborate to develop and commercialize Prochymal and Chondrogen, subject to the terms and conditions set forth below.

 

NOW THEREFORE, in consideration of the promises and of the covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto mutually agree as follows:

 

ARTICLE 1:   DEFINITIONS

 

For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below, whether used in their singular or plural form:

 

1.1                                “Accepted Indication” shall have the meaning set forth in Section 3.1.4(b).

 

1.2                                “Additional Clinical Trial” shall have the meaning set forth in Section  3.1.3.

 

1.3                                “Additional Rights” shall have the meaning set forth in Section 7.3.

 

1.4                                “Affiliate” shall mean any corporation or other entity which controls, is controlled by, or is under common control with a Party to this Agreement.  A corporation or other entity shall be regarded as in control of another corporation or entity if it directly or indirectly owns or controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other entity.

 

 

1.5                                “Articulating Orthopedic Indication” shall mean the use of Chondrogen for preventing or treating diseases, defects or conditions of articulating joints, including cartilage and meniscus repair, osteoarthritis, osteochondral defect repair, and the treatment of acute and chronic orthopedic pain within an articulating joint.  For clarity, the term Articulating Orthopedic Indication shall not include indications for bone growth such as fracture repair and fusion procedures.

 

1.6                                “At-Risk Indication” shall have the meaning set forth in Section 3.1.4(c).

 

1.7                                “Audited Party” shall have the meaning set forth in Section 6.8.

 

1.8                                “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from time to time.

 

1.9                                “BLA” shall mean a biologics license application (or any successor application) filed with the FDA after completion of human clinical trials to obtain Marketing Approval of a Product for an Indication in the United States.

 

1.10                          “Business Day” shall mean each day of the week excluding Saturday, Sunday and U.S. federal holidays.

 

1.11                          “Cardiac Indication” shall mean the use of Prochymal to treat or prevent acute myocardial infarction.

 

1.12                          “Chairperson” shall have the meaning set forth in Section 2.1.1.

 

1.13                          “Change of Control” means, with respect to a Party: (a) a merger, reorganization or consolidation involving such Party in which the stockholders of such Party immediately prior to such transaction cease to own collectively a majority of the voting equity securities of the successor entity; (b) a Person or group of Persons acting in concert acquires more than fifty percent (50%) of the voting equity securities of such Party, where “Person” means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership, or other business entity; or (c) the sale of all or substantially all of the assets of such Party.

 

1.14                          “Chondrogen” shall mean (a) any formulation, dosage form or delivery system that contains culturally expanded, undifferentiated, unmodified human MSCs for local delivery for the Articulating Orthopedic Indication and (b) any Improvements thereto.

 

1.15                          “Chondrogen Development Milestone Payment” shall have the meaning set forth in Section 6.4.

 

1.16                          “Chondrogen Sales Milestone Payment” shall have the meaning set forth in Section 6.5.

 

1.17                          “Chondrogen Trial” shall have the meaning set forth in Section 3.2.2(a).

 

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1.18                          “Collaboration” shall mean generally the activities approved by the Steering Committee to execute the Development Plans.

 

1.19                          “Combination Product” shall mean a product that contains a Product as one component and at least one other functional (whether it be drug, biologic or device) component.

 

1.20                          “Commercial Manufacturing Cost” shall mean (a) where a Party is manufacturing Product on its own behalf or on behalf of the other Party, all costs actually incurred by a Party for activities associated with the manufacture of a Product including, without limitation, technology transfer costs and any royalties, fees or other consideration payable to a Third Party for a license of technology attributable to the manufacture of the Product; provided that  Manufacturing Costs shall not exceed the actual manufacturing costs that could be obtained by a Third Party manufacturer in an arms-length transaction under similar terms and conditions, or (b) where a Third Party is manufacturing Product on behalf of a Party, the costs actually paid by such Party to such Third Party for the manufacture of Product under the relevant manufacturing agreement.  All such cost determinations shall be made in accordance with GAAP.

 

1.21                          “Commercial Post-Marketing Study” shall mean any study of a Product for an Indication conducted after receipt of Marketing Approval for that Indication which is not a Phase IV Study.

 

1.22                          “Confidential Information” shall have the meaning set forth in Section 9.1.

 

1.23                          “Control” or “Controlled by” shall mean, in the context of a license to or ownership of intellectual property, possession of the ability on the part of a Party to grant access to or a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party existing at the time such Party would be required hereunder to grant the other Party such access or license or sublicense.

 

1.24                          “COPD Indication” shall mean the use of Prochymal to treat chronic obstructive pulmonary disease.

 

1.25                          “Cost of Goods Sold Percentage” or “COGS%” shall mean the per unit Commercial Manufacturing Cost (FOB shipping point) of a Product for an Indication divided by the per unit Net Sales of a Product for that same Indication.  Further, Commercial Manufacturing Cost shall be computed under GAAP and shall be lowest cost per unit to produce the Product for an Indication of the commercially available Product.

 

1.26                          “Crohn’s Indication” shall mean the use of Prochymal to treat Crohn’s disease.

 

1.27                          “Crohn’s Indication Clinical Trials” shall have the meaning set forth in Section 3.1.2(b).

 

1.28                          “Development Costs” shall mean all costs and expenses (including accruals legitimately chargeable against profits) actually incurred by a Party or a Third Party in connection with the research, development and manufacture of any Product for an Indication (all in accordance with GAAP), including without limitation the following costs and expenses to the extent such items are customary under industry practices:

 

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(a)                                   costs and expenses for research and development activities;

 

(b)                                  manufacturing costs for a Product for an Indication;

 

(c)                                   all royalties and other fees paid after the Effective Date to any Third Party;

 

(d)                                  G&A Costs as reasonably required to support the activities of the Parties hereunder; provided that during the Term, with respect to any activity for which the Parties are sharing Development Costs pursuant to Sections 3.4.5 or 3.4.8, both Parties will charge G&A Costs at the rate reasonably charged by Osiris; and

 

(e)                                   other expenses agreed to by the Steering Committee during the Term.

 

1.29                          “Development Plan” shall have the meaning set forth in Section 3.3.1.

 

1.30                          “Development Plan Budget” shall have the meaning set forth in Section 3.4.1.

 

1.31                          “Development Plan Term” shall mean, with respect to each Indication, the period commencing on the date a Development Plan for that Indication is developed pursuant to Section 3.3.1 and ending upon the earliest to occur of (a) last commercial sale with respect to the relevant Indication, (b) the termination by the Steering Committee or otherwise by mutual agreement of the Parties of the Development Plan with respect to such Indication, and (c) the termination of this Agreement.

 

1.32                          “Diabetes Indication” shall mean the use of Prochymal for the prevention or treatment of Type I diabetes.

 

1.33                          “Disclosing Party” shall have the meaning set forth in Section 9.1.

 

1.34                          “Disease Modification” shall mean a clinically meaningful delay in structural progression of a disease or condition for which treatment is indicated over a period of at least one year.  The progression must be determined by a measurement tool recognized by regulatory agencies (FDA and/or EMEA).  Disease Modification would be independent of whether or not the delay in structural progression is accompanied by significant symptom relief; provided that if a patient experienced a Statistically Significant worsening of symptoms, then the delay in structural progression shall not constitute Disease Modification.

 

1.35                          “EMEA” shall mean the European Medicines Agency or any successor agency with responsibilities comparable to those of the European Medicines Agency.

 

1.36                          “Enforcing Party” shall have the meaning set forth in Section 8.2.1(c).

 

1.37                          “FDA” shall mean the United States Food and Drug Administration or any successor agency with responsibilities comparable to those of the United States Food and Drug Administration.

 

1.38                          “Field” shall mean (a) with respect to Prochymal, all applications for the prevention or treatment of diseases, defects, or conditions in humans, and (b) with respect to Chondrogen, the Articulating Orthopedic Indication.

 

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1.39                          “First Commercial Sale” of any Product shall mean the first sale for financial consideration of such Product in a country or territory after Marketing Approval and, if required for commercial sale, Pricing Approval, has been granted by the governing health authority of such country.

 

1.40                          “FIN 46” shall have the meaning set forth in Section 6.11.

 

1.41                          “G&A Costs” shall mean any corporate overhead expenses of a Party, including without limitation expenses for general administration, business development, executive management, investor relations, legal, payroll, and general, corporate supervisory services.

 

1.42                          “GAAP” shall mean the current United States generally accepted accounting principles, consistently applied.

 

1.43                          “Genzyme Indemnitees” shall have the meaning set forth in Section 11.2.

 

1.44                          “Genzyme Intellectual Property” shall mean collectively the Genzyme Patent Rights and the Genzyme Technology.

 

1.45                          “Genzyme Opt-In Right” shall have the meaning set forth in Section 3.1.4(d).

 

1.46                          “Genzyme Patent Rights” shall mean any and all Patent Rights (other than Joint Patent Rights) Controlled by Genzyme, its Affiliates or their respective successors, as of the Effective Date or at any time during the Term, that include a Valid Claim and are necessary or useful to make, have made, use, sell, offer to sell or import Product or any component thereof for an Indication.

 

1.47                          “Genzyme Technology” shall mean any and all Technology (other than Joint Technology) Controlled by Genzyme, its Affiliates or their respective successors, as of the Effective Date or at any time during the Term, that relates to, or is useful for any component, method or aspect of the research, development, manufacture, use or commercialization of a Product for an Indication.

 

1.48                          “Genzyme Territory” shall mean all countries and territories worldwide, but excluding (i) the Osiris Territory and, (ii) with respect to the GvHD Indication, Japan, unless Japan is added pursuant to Section 7.1.3.

 

1.49                          “GvHD Indication” shall mean the use of Prochymal to treat or prevent graft versus host disease.

 

1.50                          “Improvements” shall mean modifications to a Product where the resulting Product contains culturally expanded, undifferentiated, unmodified human MSCs.  Illustrative examples of modifications that are not Improvements include deliberate genetic modifications, deliberate modifications to the cell membrane, deliberate modifications that cause significant over-expression of a specific cytokine growth factor, or other secreted factor, and other development strategies designed to deliberately change the characteristics such that the resulting Product no longer contains undifferentiated, unmodified human MSCs.  Illustrative examples of modifications that are Improvements include modifications in dosage size, substitution or

 

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addition of one or more excipients, the inclusion of a second active agent, and the identification, isolation or culture of subpopulations of the cell types found in Prochymal and Chondrogen.  For clarity, if an improvement or modification results from a change in the manufacturing process for a Product, it shall constitute an Improvement, even if the resulting Product would be deemed sufficiently different by a Regulatory Agency to require additional clinical trials prior to receipt of Marketing Approval.  If the Steering Committee cannot agree as to whether an improvement of modification to a Product constitutes an Improvement, the dispute will be resolved in accordance with Section 2.2.2, except that any arbitration resulting from the Steering Committee failing to agree shall be resolved under the arbitration provisions of Section 13.8.2 instead of the Baseball Arbitration provisions of Section 13.8.3.

 

1.51                          “IND” shall mean an investigational new drug application, as defined in Title 21, Part 312, of the Code of Federal Regulations, filed with the FDA and/or any other similar application filed with an appropriate Regulatory Agency in a country or group of countries other than the United States.

 

1.52                          “Indemnified Party” shall have the meaning set forth in Section 11.3.

 

1.53                          “Indemnifying Party” shall have the meaning set forth in Section 11.3.

 

1.54                          “Indication” shall mean (a) with respect to Prochymal, the GvHD Indication, all Major Indications and all Other Indications treated via Vascular Administration and (b) with respect to Chondrogen, the Articulating Orthopedic Indication.  For clarity, the term Indication shall not include an At-Risk Indication unless and until either (i) Genzyme is the Pursuing Party pursuant to Section 3.1.4(c), or (ii) Genzyme exercises the Genzyme Opt-In Right pursuant to Section 3.1.4(d).

 

1.55                          “Investigator Sponsored Trial” shall mean a clinical trial conducted by one or more Third Party investigators.

 

1.56                          “Joint Patent Rights” shall mean any and all Patent Rights claiming any Joint Technology.

 

1.57                          “Joint Program Data” shall mean data generated from conducting development activities under a Development Plan.

 

1.58                          “Joint Technology” shall mean any and all (a) Technology that is discovered, made, conceived or reduced to practice jointly by employees, agents or consultants of Osiris and Genzyme as a result of the performance of a Development Plan and (b) Joint Program Data.

 

1.59                          “Launch Period” shall have the meaning set forth in Section 5.1.2.

 

1.60                          “Launch Support Services” shall have the meaning set forth in Section 5.1.2.

 

1.61                          “Legal Requirements” shall mean any applicable present and future national, state, local, foreign or similar laws (whether under statute, rule, regulation or otherwise); applicable requirements under permits, orders, decrees, judgments or directives, and requirements of applicable Regulatory Agencies (including, without limitation, current good

 

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manufacturing practices); and applicable regulations pertaining to INDs (as amended or revised from time to time).

 

1.62                          “Losses” shall have the meaning in Section 11.1.

 

1.63                          “Major Indication” shall mean the following indications for Prochymal (a) Crohn’s Indication, (b) Ulcerative Colitis Indication, (c) Diabetes Indication, (d) COPD Indication, (e) Cardiac Indication, and (f) any Accepted Indication which the Steering Committee determines to have a worldwide market potential for Net Sales of Prochymal in a calendar year that could reasonably be expected to equal or exceed Five Hundred Million Dollars (US $500,000,000) on an annual basis.  Each Major Indication shall be listed on Exhibit D, which shall be updated by the Parties during the Term pursuant to a written document signed by both Parties.

 

1.64                          “Market Exclusivity” in a designated country shall mean the possession of a right granted by any Regulatory Agency providing the holder of such right the exclusive right to market and sell a Product for one or more Indications in that designated country, including, without limitation, data exclusivity, or the existence of a Legal Requirement in connection with a Product which precludes the Regulatory Agency in that designated country from granting Marketing Approval for another product because the application for the other product  contains the same active ingredient as that which is contained in the applicable Product.

 

1.65                          “Marketing Approval” shall mean the receipt of all approvals, licenses, registrations or authorizations of any federal, state or local Regulatory Agency, department, bureau or other governmental entity, necessary for the sale of a Product for an Indication in a country or region.

 

1.66                          “Mesenchymal Stem Cells” or “MSCs” shall mean the human formative pluripotential blast cells found inter alia in bone marrow, blood, dermis and periosteum that are capable of differentiating into any of the specific types of mesenchymal or connective tissues.

 

1.67                          “Negotiation Period” shall have the meaning set forth in Section 5.1.3(b).

 

1.68                          “Net Sales” shall mean the gross invoiced sales amount billed by Genzyme, its Affiliates licensees or sub-licensees or Osiris or its Affiliates or Third Party licensees or Third Party sub-licensees to Third Party customers, including Third Party distributors, as applicable, in each case less the following items (“Net Sales Adjustments”) to the extent such items are actually taken or incurred and customary under industry practices:

 

(a)                                   credits or allowances granted upon returns, rejections or recalls (due to spoilage, damage, expiration of useful life or otherwise), retroactive price reductions, or billing corrections;

 

(b)                                  invoiced freight, postage, shipping and insurance, handling and other transportation costs actually incurred;

 

(c)                                   taxes (including without limitation sales, value-added or excise taxes, but excluding withholding taxes), tariffs, customs duties, surcharges and other governmental charges

 

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1.77                          “Osiris Patent Challenge” shall have the meaning set forth in Section 8.1.5.

 

1.78                          “Osiris Patent Rights” shall mean any and all Patent Rights (other than Joint Patent Rights) Controlled by Osiris, its Affiliates and their respective successors, as of the Effective Date or at any time during the Term, that include a Valid Claim and are necessary or useful to make, have made, use, sell, offer to sell, or import Product or any component thereof for an Indication.

 

1.79                          “Osiris Technology” shall mean any and all Technology (other than Joint Technology) Controlled by Osiris, its Affiliates and their respective successors, as of the Effective Date or at any time during the Term, that relates to, or is useful for, any component, method or aspect of the research, development, manufacture, use or commercialization of a Product for an Indication.

 

1.80                          “Osiris Territory” shall mean the United States and Canada, and their respective territories and possessions.

 

1.81                          “Other Indication” shall mean any Accepted Indication which the Steering Committee determines to have worldwide market potential for Net Sales of Prochymal in a calendar year that could reasonably be expected to be less than Five Hundred Million Dollars (US $500,000,000) on an annual basis.  The term Other Indication shall not include the GvHD Indication or any Major Indication.  Each Other Indication shall be listed on Exhibit E, which shall be updated by the Parties during the Term pursuant to a written document signed by both Parties.

 

1.82                          “Pain Therapeutic” shall mean use of Chondrogen for the mitigation or relief of orthopedic pain with a Statistically Significant duration of relief of at least one (1) year.

 

1.83                          “Participation Decision” shall have the meaning set forth in Section 3.2.2(a).

 

1.84                          “Party” shall mean Osiris or Genzyme.

 

1.85                          “Patent Rights” shall mean any United States or foreign patent applications, provisional patent applications, and any patents issuing therefrom anywhere in the world, together with any extensions, registrations, confirmations, reissues, continuations, divisions, continuations-in-part, reexamination certificates, certificates of invention and applications for certificates of invention, revalidations, renewals, substitutions, supplementary protection certificates, additions, or term restorations thereof.

 

1.86                          “Phase II Clinical Trial” shall mean a clinical trial as defined in 21 C.F.R. 312.21(b), as may be amended from time to time, or any foreign equivalent thereto.  Unless otherwise agreed by the Steering Committee, a Phase I/II clinical trial shall not be considered a Phase II Clinical Trial.

 

1.87                          “Phase III Clinical Trial” shall mean a clinical trial as defined in 21 C.F.R. 312.21(c), as may be amended from time to time, or any foreign equivalent thereto, that is designed to seek Marketing Approval.

 

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1.88                          “Phase IV Study” shall have the meaning set forth in 21 C.F.R. 312.85, as may be amended from time-to-time, or any foreign equivalent thereto.  For clarity, any post-marketing study that is not conducted at the request of, and with the agreement of, a Regulatory Agency shall be a “Commercial Post-Marketing Study” and not a “Phase IV Study”.

 

1.89                          “Pricing Approval” shall mean, with respect to any country in which the price at which Genzyme or its Affiliate or sublicensee sells Product must be approved by a governmental or Regulatory Agency for reimbursement or payment purposes, the receipt of the approval by the applicable authority with respect to such price.

 

1.90                          “Primary Contact Person” shall have the meaning set forth in Section 3.6.

 

1.91                          “Prochymal” shall mean (a) any formulation, dosage form or delivery system suitable for Vascular Administration that contains culturally expanded, undifferentiated, unmodified human MSCs , and (b) any Improvements thereto.

 

1.92                          “Prochymal Development Milestone Payment” shall have the meaning set forth in Section 6.2.1.

 

1.93                          “Prochymal Sales Milestone Payment” shall have the meaning set forth in Section 6.3.

 

1.94                          “Product” shall mean, collectively and individually, Prochymal and Chondrogen.

 

1.95                          “Proposal Notice” shall have the meaning set forth in Section 7.8.2.

 

1.96                          “Proposed Indication” shall have the meaning set forth in Section 3.1.4(a).

 

1.97                          “Proposing Party” shall have the meaning set forth in Section 3.1.4(a).

 

1.98                          “Publishing Party” shall have the meaning set forth in Section 9.5.

 

1.99                          “Pursuing Party” shall have the meaning set forth in Section 3.1.4(c).

 

1.100                    “Receiving Party” shall have the meaning set forth in Section 9.1.

 

1.101                    “Regulatory Agency” shall mean, with respect to the United States, the FDA, and, in the case of a country other than the United States, such other appropriate regulatory agency or authority with similar responsibilities, including, without limitation, the EMEA.

 

1.102                    “Regulatory Approval” shall mean any approval from Regulatory Agencies in any country or region required to lawfully conduct clinical trials or to manufacture and market a Product for an Indication in such country or region, including, without limitation, any approved IND or Marketing Approval.

 

1.103                    “Regulatory Expenses” shall mean all costs and expenses actually incurred by a Party in direct connection with obtaining Marketing Approval or in connection with conducting any Commercial Post-Marketing Study.  Regulatory Expenses shall not include any Development Costs.

 

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1.104                    “Response Period” shall have the meaning set forth in Section 5.1.3(a).

 

1.105                    “Reviewing Party” shall have the meaning set forth in Section 9.5.

 

1.106                    “Right of Negotiation” shall have the meaning set forth in Section 5.1.3(b).

 

1.107                    “Right of Notification” shall have the meaning set forth in Section 7.8.1.

 

1.108                    “Secretary” shall have the meaning set forth in Section 2.1.1.

 

1.109                    “Statistical Significance” shall mean, with respect to (i) each of the Osiris Funded Trials and the Chondrogen Trial, the achievement of the endpoint(s) set forth next to each such clinical trial’s name on Exhibit C hereto, and (ii) each Additional Clinical Trial, the achievement of each mutually agreed upon  endpoint from a Phase II Clinical Trial or Phase III Clinical Trial, as applicable, in each case at a significance level of p<0.05 as determined under a statistical analysis plan prepared by the Parties and deemed acceptable by the FDA, and in both (i) and (ii) above, the absence of any clinical event that FDA determines would preclude initiation of the next phase of development.

 

1.110                    “Steering Committee” shall mean the body organized and acting pursuant to Section 2.1 hereof.

 

1.111                    “Technology” shall mean any and all ideas, trade secrets, information, know-how, data (including preclinical and clinical data), research results, writings, inventions, discoveries, modifications, improvements and other technology (including without limitation any proprietary biological or other materials, compounds or reagents and computer software), whether or not patentable or copyrightable and any intellectual property rights therein (other than Patent Rights).

 

1.112                    “Term” shall have the meaning set forth in Section 12.1.

 

1.113                    “Territory” shall mean the Genzyme Territory with respect to Genzyme and the Osiris Territory with respect to Osiris.

 

1.114                    “Third Party” shall mean any entity other than Osiris, Genzyme or their respective Affiliates.

 

1.115                    “Ulcerative Colitis Indication” shall mean the use of Prochymal for the treatment or prevention of ulcerative colitis.

 

1.116                    “Valid Claim” shall mean a claim of (a) an issued and unexpired patent which has not been withdrawn, cancelled, abandoned, disclaimed, or held revoked, unenforceable or invalid by a final decision of a court or other governmental agency of competent jurisdiction and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise, or (b) any patent application which shall not have been cancelled, withdrawn, or abandoned, or been pending for more than six (6) years from the priority date from which such claim takes priority, unless and until such claim becomes an issued claim of an issued patent.  For the avoidance of doubt, any issued or granted claim which is revoked or held invalid or

 

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unenforceable, or any patent application which is pending for more than six (6) years, shall cease to be a Valid Claim, unless and until such holding is reversed or such claim is reinstated on appeal, or until such patent application becomes an issued patent.  If any such issued or granted claim which is revoked or held invalid or unenforceable is thereafter reinstated on judicial appeal, back royalties, if any, shall become due upon such reinstatement.

 

1.117                    “Vascular Administration” shall mean (a) administration by any means to the circulatory system, or (b) administration by any means through vasculature to an organ.

 

1.118                    “Verifying Party” shall have the meaning set forth in Section 6.8.

 

ARTICLE 2:   GOVERNANCE OF THE PROGRAM

 

2.1                                Steering Committee.

 

2.1.1                       Establishment of Steering Committee.  The Parties shall establish a Steering Committee to oversee, review and coordinate each Party’s responsibilities pursuant to the Development Plans.  The Steering Committee shall consist of a total of six (6) members, with three (3) members from each Party, two of the members shall be designated by the applicable Party as the chairperson (“Chairperson”) and the secretary (“Secretary”).  The initial members of the Steering Committee are set forth on Exhibit A attached hereto and incorporated herein by reference.  Members of the Steering Committee may be represented at any meeting by a designee appointed by such member for such meeting; provided that any person attending the Steering Committee (whether a member, designee, employee or contractor of a Party) shall be subject to written obligations of confidentiality at least as stringent as those set forth in Section 9.1 of this Agreement; and provided further that any non-employee designee of either Party must be pre-approved in writing by the other Party (such pre-approval not to be unreasonably withheld, delayed or conditioned).  For the first year, the Chairperson shall be a person designated by Osiris and identified on Exhibit A.  Thereafter, the Chairperson shall alternate every calendar year, beginning with a person designated by Genzyme.  The Chairperson shall have the rights and responsibilities as set forth in Section 2.1.2.  For the first year, the Secretary shall be a person designated by Genzyme and identified on Exhibit A.  Thereafter, the Secretary shall alternate every calendar year, beginning with a person designated by Osiris.  Each Party shall be free to change its members, on prior written notice to the other Party.  Each Party may, in its discretion, invite non-Steering Committee employees of such Party to attend any Steering Committee meeting.  The Steering Committee may, in its discretion, establish subcommittees consisting of individuals from Genzyme and Osiris with expertise in particular areas relevant to the development of a Product for an Indication.  Each Party shall have the right to have at least one (1) representative serve on any subcommittee that is formed.  The Steering Committee shall remain in place until the expiration or termination of its responsibilities under any Development Plan.

 

2.1.2                       Responsibilities of the Chairperson.  The Chairperson of the Steering Committee shall have the following roles and responsibilities:  (a) to call meetings of the Steering Committee, send notice of each such meeting and designate the time, date and place of each such meeting, subject to the right of either Party to call a meeting; (b) to convene or poll the members of the Steering Committee by other permitted means; (c) to establish the agenda for

 

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each meeting of the Steering Committee, subject to the right of any member of the Steering Committee to add additional agenda items at any meeting; (d) to prepare comments to the draft minutes prepared by the Secretary of the Steering Committee and communicate with the Secretary to finalize the draft minutes prior to circulation to all members of the Steering Committee; and (e) to execute, along with the Secretary of the Steering Committee, the final minutes of the meetings of the Steering Committee.

 

2.1.3                       Responsibilities of the Steering Committee.  In addition to the responsibilities expressly described elsewhere in this Agreement, the Steering Committee shall:

 

(a)                                   design, prepare and finalize Development Plans for development of a Product for an Indication, including formulating the clinical development strategy, designing each clinical trial protocol and any modification thereto and agreeing upon the primary and secondary endpoints for all clinical trials of Product for all Indications conducted as part of the Collaboration;

 

(b)                                  on an annual basis during any Development Plan Term, no later than October 1 of the relevant calendar year, review, amend, and approve each Development Plan and respective budget;

 

(c)                                   oversee and monitor each Development Plan and coordinate and direct the strategy and management of the Development Plans;

 

(d)                                  review and evaluate progress under any Development Plan; provided that the Steering Committee shall not have the authority to make any determination that either Party is in breach of its obligations under the Development Plan;

 

(e)                                   serve as the initial forum for discussion of and resolution of any dispute or disagreement between the Parties relating to any Development Plan that is unresolved by the Primary Contact Persons;

 

(f)                                     except with respect to intellectual property matters set forth in Article 8, decide how the Parties shall resolve or defend against disputes or claims of any kind with Third Parties relating to the Collaboration;

 

(g)                                  establish any subcommittees pursuant to Section 2.1.1 and resolve any dispute or disagreement arising in any such subcommittee; and

 

(h)                                  perform any other activities related to the Collaboration as the Parties may agree from time to time, other than deciding that a Party is in breach of an obligation under this Agreement.

 

2.1.4                       Meetings.  During a Development Plan Term, the Steering Committee shall meet at least quarterly, and more frequently as the Parties mutually agree is appropriate.  At least two of the four quarterly meeting shall be in person, alternating between the offices of the Parties unless the Parties otherwise agree.  All meetings shall be on such dates and at such times as the Parties shall agree.  Either Party may call a meeting of the Steering Committee upon reasonable notice to the other Party.  The Chairperson shall, if practicable, send notice of all

 

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meetings to all members of the Steering Committee no less than ten (10) Business Days before the date of the meeting (or such other times as the Parties may agree).  The Steering Committee may also convene or be polled or consulted from time to time by means of telecommunications, video conferences or correspondence, as deemed necessary or appropriate in order to fulfill its obligations under this Agreement.

 

2.2                                Decisions.

 

2.2.1                       Voting.  The Steering Committee shall decide by vote on any subject matter within the Steering Committee’s decision-making authority.  Each Party shall have only one (1) vote on matters voted on in the Steering Committee.  Such decisions shall require that at least two (2) members of each Party are present (in person or by phone) at such meeting.  Subject to Section 2.2.2 below, all decisions of the Steering Committee must be made by the unanimous vote of the Parties and each Party’s vote shall be cast by the member(s) (or their designee(s)) present at any meeting.  The Parties shall use their commercially reasonable efforts to make decisions related to the Collaboration (including on the Steering Committee) promptly.  In the event that a proposing Party has put a matter to the other Party in writing for a decision, and the other Party does not provide a decision within thirty (30) days of receipt, then the matter shall be deemed to have been approved in the manner proposed.

 

2.2.2                       Dispute Resolution.  If after good faith discussion, the Steering Committee is unable to reach a unanimous decision on any matter that is subject to the Steering Committee’s decision-making authority within thirty (30) days after the Steering Committee first fails to reach consensus regarding such matter (or such later date as may be mutually acceptable to the Parties), then such matter shall be resolved in accordance with the provisions of Section 13.8.  Notwithstanding the foregoing, the Parties agree that Osiris shall make the final determination, and such determination shall be binding upon both Parties, in the event of any disagreement regarding (a) the design or modification of, or conduct of activities under, an Osiris Funded Trial or an At-Risk Trial where Osiris is the Pursuing Party, and (b) the conduct of activities under all clinical trial protocols for Prochymal except At-Risk Trials where Genzyme is the Pursuing Party and for Chondrogen until a Participation Decision; provided , however, that in no event shall Osiris make a final determination that increases the Development Plan Budget when the Parties are sharing Development Costs pursuant to Sections 3.4.5 or 3.4.8; such dispute shall be resolved in accordance with the provisions of Section 13.8.  For clarity, Osiris shall not have the final determination under this Section in the event of any disagreement regarding the design or significant modification of any clinical trial protocol for a Product for an Indication other than the protocols used in conducting the Osiris Funded Trials, including, but not limited to, a modification of an end point or a significant modification in the scope of a trial.

 

2.2.3                       Reports to Steering Committee.  Each Party shall provide the Steering Committee with quarterly written reports within twenty (20) Business Days after the end of each calendar quarter regarding the status of its activities under each Development Plan.  Each Party shall provide the other Party with a final written report of its activities under each Development Plan within twenty (20) Business Days after expiration of a Development Plan Term, or expiration or termination of this Agreement.

 

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2.2.4                       Minutes.  Promptly after each Steering Committee meeting, the Secretary of the Steering Committee shall prepare and distribute to the Chairperson draft minutes of the meeting, which shall provide a description in reasonable detail of the discussions conducted at the meeting and a list of any actions, and decisions or determinations made by the Steering Committee.  The Chairperson may then comment on the draft minutes.  The Secretary shall discuss with the Chairperson any comments of the Chairperson and circulate a draft of the minutes to all members of the Steering Committee within ten (10) Business Days of the meeting.  The draft minutes will be submitted for comment and approval of the members of the Steering Committee at the following Steering Committee meeting.  The Secretary and Chairperson shall each sign and date the final minutes.  The signature of the Chairperson and the Secretary on the final minutes shall indicate each Party’s assent to the minutes.

 

2.2.5                       Expenses.  Each Party shall be responsible for all travel and related costs and expenses for its members, designees and non-Steering Committee invitees to attend meetings of, and otherwise participate on, the Steering Committee.

 

ARTICLE 3:   DEVELOPMENT ACTIVITIES

 

3.1                                Prochymal Development Activities.

 

3.1.1                       Clinical Trials.  Unless otherwise agreed by the Steering Committee, Osiris will coordinate and conduct all clinical trials of Prochymal for the GvHD Indication, Major Indications, Other Indications, and At-Risk Indications elected by Osiris, including the Osiris Funded Trials, as provided herein.  Any clinical trial for Prochymal for any Indication that will form the basis of an application for Marketing Approval will be designed to support registration for Prochymal for such Indication on a global basis, and Osiris shall use its commercially reasonable and diligent efforts to include clinical trial sites located in Genzyme’s Territory for (a) clinical trials that have not commenced as of the Effective Date, and (b) any extension of an Osiris Funded Trial; provided that if the inclusion of trial sites in the Genzyme Territory  would substantially increase Osiris’s costs (as provided for the relevant Development Budget) then Genzyme shall be responsible for one hundred percent (100%) of those incremental excess costs; and provided further that if the inclusion of the trial sites in the Genzyme Territory would substantially increase the estimated date of completion of the U.S. clinical trial (as provided for in the relevant Development Plan) then such sites need not be included.  Genzyme shall provide assistance to ensure the adequacy of clinical trial design in the Genzyme Territory as well as efficient execution of clinical trials conducted at sites within the Genzyme Territory.  If Osiris requests, and Genzyme agrees, expenses incurred by Genzyme on behalf of Osiris in providing such assistance shall be reimbursed by Osiris.

 

3.1.2                       Certain Prochymal Clinical Trials.  Osiris shall be solely responsible for conducting the clinical trials described in Sections 3.1.2(a) through (e) below (the “Osiris Funded Trials”) and agrees to fund one hundred percent (100%) of the Development Costs of such clinical trials through completion; provided that Osiris shall consider in good faith any input provided by Genzyme with respect to such clinical trials:

 

(a)                                 the ongoing Phase III Clinical Trials of Prochymal for the GvHD Indication entitled “A Phase III, Randomized, Double-Blind, Placebo-Controlled Study to

 

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Evaluate the Efficacy and Safety of Prochymal® ( Ex-vivo Cultured Adult Human Mesenchymal Stem Cells) Infusion for the Treatment of newly diagnosed Acute GVHD” (265) and entitled “A Phase III, Randomized, Double Blind, Placebo-Controlled Study to Evaluate the Efficacy and Safety of Prochymal® ( Ex-vivo Cultured Adult Human Mesenchymal Stem Cells) Infusion for the Treatment of Patients Who Have Failed to Respond to Steroid Treatment for acute GvHD”  (280) that were initiated by Osiris prior to the Effective Date, through completion of such clinical trial and completion of any commercially reasonable additional extension studies or modified studies necessary to file for Marketing Approval with the FDA for the GvHD Indication;

 

(b)                                the ongoing Phase III Clinical Trials of Prochymal for the Crohn’s Indication entitled “A Phase III, multicenter, placebo-controlled, randomized, double-blind study to evaluate the safety and efficacy of PROCHYMAL® (ex vivo cultured adult human mesenchymal stem cells) intravenous infusion for the induction of remission in subjects experiencing treatment-refractory moderate-to-severe Crohn’s disease” (603) and entitled “A Phase III, multicenter, placebo-controlled, randomized, double-blind retreatment study to evaluate the safety and efficacy of PROCHYMAL® (ex vivo cultured adult human mesenchymal stem cells) intravenous infusion for the re-induction of remission in subjects experiencing treatment-refractory moderate-to-severe Crohn’s disease” (610) that were initiated by Osiris prior to the Effective Date, and any commercially reasonable additional extension studies or modified studies necessary to file for Marketing Approval with the FDA for the Crohn’s Indication (the “Crohn’s Indication Clinical Trials”);

 

(c)                                 the ongoing Phase II Clinical Trial of Prochymal for the COPD Indication entitled “A Phase II, multicenter, randomized, double-blind, placebo-controlled study to evaluate the safety and efficacy of PROCHYMAL® (ex vivo cultured adult human mesenchymal stem cells) intravenous infusion for the treatment of subjects with moderate to severe Chronic Obstructive Pulmonary Disease (COPD)” (801), through completion;

 

(d)                                the ongoing Phase II Clinical Trial of Prochymal for the Diabetes Indication entitled “A Phase II, multicenter, randomized, double-blind, placebo-controlled study to evaluate the safety and efficacy of PROCHYMAL® (ex vivo cultured adult human mesenchymal stem cells) for the treatment of recently diagnosed type 1 diabetes mellitus (T1DM)” (901) through completion; and

 

(e)                                 the proposed Phase II Clinical Trial of Prochymal for the Cardiac Indication entitled “A Phase II, multi-center, randomized, double-blind, placebo-controlled study to evaluate the safety and efficacy of PROCHYMAL® (ex vivo cultured adult human mesenchymal stem cells) intravenous infusion following acute myocardial infarction” through completion.

 

Notwithstanding any provision in this Agreement to the contrary, Osiris shall have the right to suspend or terminate any clinical trial because of (i) any significant trend relating to any serious adverse event, (ii) any request from a Regulatory Agency to suspend or terminate such trial, (iii) triggering the stopping rules for the study as defined in the Indication’s protocol, or (iv) upon receipt of data or results that fail to demonstrate the Product’s potential to be safe or effective for the applicable Indication.  Premature stopping of a Clinical Trial will be performed

 

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in compliance with current Good Clinical Practices as codified in 21 C.F.R. 312, as amended from time to time.

 

3.1.3                       Additional Clinical Trials.  The Steering Committee shall determine whether to allow any Investigator Sponsored Trials or conduct any Phase II Clinical Trials, Phase III Clinical Trials, or Phase IV Studies of Prochymal for the GvHD Indication, Major Indications and Other Indications in addition to the Osiris Funded Trials (each an “Additional Clinical Trial”) that have not been initiated prior to the Effective Date; provided that in the event Genzyme makes a Prochymal Development Milestone Payment for the achievement of Statistical Significance for Prochymal for a particular Indication, then any Phase III Clinical Trial and Phase IV Study reasonably required to obtain Marketing Approval for Prochymal for such Indication shall be conducted by Osiris; and provided further that if the Steering Committee has determined to initiate any Additional Clinical Trial (other than an Investigator Sponsored Trial), such trial shall be conducted by Osiris and shall be subject to agreement by the Steering Committee on the clinical strategy and protocol design.  Nothing in this Section 3.1.3 shall prohibit a Party from pursuing an At-Risk Indication.  All Commercial Post-Marketing Studies will be one hundred percent (100%) funded by the Party conducting such Studies.

 

3.1.4                       Additional Indications for Prochymal.

 

(a)                                 Proposed Indications.  Either Party (the “Proposing Party”) may propose to the Steering Committee that one or more indications (other than the GvHD Indication, Crohn’s Indication, Ulcerative Colitis Indication, COPD Indication, Diabetes Indication and Cardiac Indication) for Prochymal (each, a “Proposed Indication”) be considered for development activities as part of a Development Plan.  The Steering Committee may request such additional information or research with respect to such Proposed Indication as is reasonably required to evaluate such Proposed Indication and the Proposing Party shall be solely responsible for the costs associated with such additional information or research other than as set forth in Section 3.1.4(f).  The Steering Committee shall determine in good faith whether (i) the Proposed Indication, if accepted, is a Major Indication or an Other Indication, and (ii) development activities for such Proposed Indication shall be developed pursuant to a Development Plan.

 

(b)                                Accepted Indications.  In the event the Steering Committee agrees upon a clinical trial strategy and determines to proceed with development activities for Prochymal for a Proposed Indication (each, an “Accepted Indication”) as part of the Collaboration, then the Steering Committee shall determine whether the Accepted Indication is a Major Indication or an Other Indication and shall approve a Development Plan.  The Development Plan shall include a description of the activities to be conducted by each Party during the time period covered by such Development Plan, a budget for the relevant period and timeline for the performance of activities.  The Development Costs for any development work for Prochymal for the Accepted Indication shall be the responsibility of Osiris or the Parties in accordance with Section 3.4.3, 3.4.4 or 3.4.5, as applicable.

 

(c)                                 At-Risk Indication.  In the event the Steering Committee does not agree upon a clinical trial strategy and declines to recommend acceptance of any Proposed Indication for Prochymal as part of a Development Plan, then either Party (the “Pursuing Party”) may pursue the development of Prochymal for such Proposed Indication (each, an “At-Risk

 

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3.2                                Chondrogen Development Activities.

 

3.2.1                         Clinical Trials.  Unless otherwise agreed by the Steering Committee, Osiris will coordinate and conduct all clinical trials of Chondrogen.  Any clinical trial for Chondrogen that will form the basis of an application for Marketing Approval will be designed to support registration of Chondrogen on a global basis.  Genzyme shall provide assistance to ensure the adequacy of trial design in the Genzyme Territory as well as efficient execution of clinical trials conducted at sites within the Genzyme Territory.  Expenses incurred by Genzyme on behalf of Osiris in providing such assistance and approved in advance by Osiris shall be reimbursed by Osiris.

 

3.2.2                       Chondrogen Participation Decision.

 

(a)                                   Results.  Upon completion of the two-year study report for the ongoing Phase II/III clinical trial for the Articulating Orthopedic Indication (560) entitled “A Phase II/III, multicenter, randomized, double-blind, placebo-controlled study to evaluate the safety and efficacy of CHONDROGEN® (ex vivo cultured adult human mesenchymal stem cells) delivered by intra-articular injection for the treatment of subjects with moderate to severe osteoarthritis of the knee” (the “Chondrogen Trial”), Osiris shall promptly provide all data, results and analysis from such Chondrogen Trial to Genzyme.  Within sixty (60) days of receipt of all data, results and analysis from the Chondrogen Trial, Genzyme shall, in its sole discretion, elect to either (i) participate in the further development of Chondrogen (a “Participation Decision”), or (ii) not participate in the further development of Chondrogen (a “No Participation Decision”).

 

(b)                                  Participation Decision.  If Genzyme makes the Participation Decision, then Genzyme shall make Chondrogen Development Milestone Payments due under Section 6.4 and shall be responsible for Development Costs in accordance with Section 3.4.8.

 

(c)                                   No Participation Decision.  If Genzyme makes the No Participation Decision, Genzyme shall so notify Osiris in writing and, from the date of receipt of such notice by Osiris (or the expiration of the sixty (60) day period set forth in Section 3.2.2(a) if Genzyme fails to notify Osiris of its decision), the Parties agree that (i) Genzyme shall have no obligation to make any Chondrogen Development Milestone Payments under Section 6.4, and (ii) all rights under Osiris Intellectual Property to make, use, sell, and import Chondrogen in the Genzyme Territory shall revert to Osiris, with no further payment obligation by either Party to the other Party.

 

3.3                                Development Plans.

 

3.3.1                         Development Plans.  The Steering Committee shall design a comprehensive plan for the conduct of development and pre-clinical and clinical research of the Product for each Indication, including the design of protocols for clinical studies (the “Development Plan”).  The Development Plan shall include, without limitation, (a) a description of the activities to be conducted by each Party and any Third Party during the time period covered by such Development Plan, which description shall take into consideration the responsibilities and obligations of the Parties set forth in this Agreement, (b) a Development Plan Budget for the relevant period, (c) an estimated timeline for the performance of activities, in each case to be agreed in good faith, and (d) an allocation of responsibility among the Parties and any Third Party for each of the activities described therein.  In addition to designing the Development Plan, the Steering Committee shall be responsible for monitoring the work being performed

 

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under the Development Plan.  Notwithstanding anything in this Agreement to the contrary, the Steering Committee shall accept the design and plan for the Osiris Funded Trials and shall not cause such trials to be revised without the consent of Osiris.

 

3.3.2                         Initial Development Plan.  The initial Development Plan is attached to this Agreement as Exhibit F.

 

3.3.3                         Development Plan Updates.  Following the initiation of a Development Plan for a Product for an Indication, the Development Plan shall be amended or updated on at least an annual basis no later than October 1 of the relevant calendar year, and more often as the Steering Committee may reasonably determine, during a Development Plan Term.  Each amended or updated Development Plan shall cover the three (3) calendar year period following its approval by the Steering Committee.  All updated or amended Development Plans shall be filed with the minutes of the Steering Committee upon approval by the Steering Committee.  Until a new or amended Development Plan is approved by the Steering Committee, the previous Development Plan shall remain in effect.

 

3.4                                Development Costs.

 

3.4.1                         Development Plan Budget.  Each Development Plan shall include a budget (the “Development Plan Budget”) specifically including, but not limited to Development Costs.  With respect to any Development Plan Budget under which the Parties are sharing Development Costs pursuant to Sections 3.4.5 or 3.4.8, the Development Plan Budget shall be agreed upon by the Steering Committee.  Each Development Plan Budget shall, on an accrual basis, include an estimate of the Development Costs expected to be incurred to complete activities by each of Osiris, Genzyme and any Third Party, respectively, during the period covered by such Development Plan.

 

3.4.2                         Amendments; Projected Overruns.  At any time during a Development Plan Term, the Steering Committee may amend the Development Plan, including the Development Plan Budget.  The Development Plan Budget will be reviewed quarterly at the Steering Committee meetings.  At the quarterly Steering Committee meeting, if the Development Plan Budget for any activity for which the Parties are sharing or will seek reimbursement for Development Costs pursuant to Sections 3.4.5 or 3.4.8, is expected to exceed one hundred and ten percent (110%) of the amounts allocated to it under the relevant Development Plan Budget, a revised Development Plan Budget must be approved in writing by the Steering Committee for the sharing of the excess 10% of Development Costs to be in effect.

 

3.4.3                         Osiris.  Osiris shall be responsible for one hundred percent (100%) of the Development Costs incurred in accordance with a Development Plan in the conduct of (a) the Osiris Funded Trials, (b) any clinical trial of Prochymal for any Indication up to the commencement of a Phase III Clinical Trial (in addition to the Osiris Funded Trials), (c) subject to Section 3.4.8, the Chondrogen Trial, and (d) any Commercial Post-Marketing Study of a Product for an Indication in the Osiris Territory.  Osiris shall also be responsible for one hundred percent (100%) of the Development Costs incurred in connection with any clinical trial of Prochymal for an At-Risk Indication where Osiris is the Pursuing Party.

 

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3.4.4                         Genzyme.  Genzyme shall be responsible for one hundred percent (100%) of the Development Costs incurred in accordance with a Development Plan in the conduct of (a) clinical trials specifically required to obtain Marketing Approval in the Genzyme Territory that are not required to obtain Marketing Approval in the Osiris Territory, and (b) any Commercial Post-Marketing Study of a Product for an Indication in the Genzyme Territory.  Genzyme shall also be responsible for one hundred percent (100%) of the Development Costs incurred in connection with any clinical trial of Prochymal for an At-Risk Indication where Genzyme is the Pursuing Party.

 

3.4.5                         The Parties.  With the exception of the Development Costs incurred in connection with the trials set forth in Sections 3.4.3(a) and 3.4.4(a), upon agreement of the Steering Committee to conduct an Additional Trial, the Parties shall share the Development Costs incurred in accordance with a Development Plan for any Phase III Clinical Trial of Prochymal and for any Phase IV Study for Prochymal for any Indication, as follows: Osiris shall be responsible for sixty percent (60%) of such Development Costs and Genzyme responsible for forty percent (40%) of such Development Costs.

 

3.4.6                         Genzyme Opt-In Right.  In the event that Genzyme exercises the Genzyme Opt-In Right pursuant to Section 3.1.4(d) and Genzyme determines to seek a label expansion for Prochymal for the relevant At-Risk Indication in the Genzyme Territory, then Genzyme shall pay Osiris (a) twenty-five percent (25%) of the Development Costs actually incurred by Osiris in developing Prochymal for the At-Risk Indication in the Osiris Territory within thirty (30) days after Genzyme’s Opt In Right Notice, and (b) the remaining seventy-five percent (75%) of the Development Costs actually incurred by Osiris in developing Prochymal for the At-Risk Indication in the Osiris Territory within thirty (30) days after Genzyme obtains the label expansion for Prochymal for the relevant Indication.

 

3.4.7                         Osiris Opt-In Right.  In the event that Osiris exercises the Osiris Opt-In Right pursuant to Section 3.1.4(e) and Osiris determines to seek a label expansion for Prochymal for the relevant At-Risk Indication in the Osiris Territory, then Osiris shall pay Genzyme (a) twenty-five percent (25%) of the Development Costs actually incurred by Genzyme in developing Prochymal for the At-Risk Indication in the Genzyme Territory within thirty (30) days after Osiris’s Opt In Right Notice, and (b) the remaining seventy-five percent (75%) of the Development Costs actually incurred by Genzyme in developing Prochymal for the At-Risk Indication in the Genzyme Territory within thirty (30) days after Osiris obtains the label expansion for Prochymal for the relevant Indication.

 

3.4.8                         Participation Decision.  In the event Genzyme makes the Participation Decision as set forth in Section 3.2.2(a), the Parties shall share the Development Costs incurred in accordance with a Development Plan for any Phase III Clinical Trial of Chondrogen and for any Phase IV Study for Chondrogen for any Indication, as follows: Osiris shall be responsible for sixty percent (60%) of such Development Costs and Genzyme responsible for forty percent (40%) of such Development Costs in the development of Chondrogen.  In addition, if Genzyme’s Participation Decision occurs after Osiris has begun a Phase III Clinical Trial of Chondrogen, then Genzyme shall be responsible for reimbursing Osiris for 40% of the Development Costs incurred by Osiris in connection with that Phase III Clinical Trial prior to the date of the Participation Decision.

 

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3.4.9                         Quarterly Reporting.  Commencing with the Effective Date and ending with the quarter in which no further obligations exist for either Party under any Development Plan, each Party shall report to the other Party (with a copy to the Steering Committee) within fifteen (15) Business Days (or as the Parties may otherwise agree) after the end of each quarter a detailed itemization of the actual Development Costs incurred by such Party (only to the extent consistent with a Development Plan approved by the Steering Committee) and a detailed update of all activities performed under each Development Plan.  If a Party’s actual costs are not available within the fifteen (15) Business Day period, the then current approved Development Plan Budget(s) may be used as an estimate, but each subsequent quarterly report shall reconcile any estimated amounts from the previous month (e.g. a 2Q report shall reconcile any estimates included in the 1Q report).  Unless otherwise delegated by the Steering Committee, the Parties agree that Genzyme shall be responsible for issuing a written report to the Steering Committee and to Genzyme within twenty-five (25) Business Days (or as the Parties may otherwise agree) after the end of each quarter reconciling all Development Costs.

 

3.5                                Consideration of Resources.  The Parties shall be the providers of first choice for any development activities under a Development Plan the Steering Committee deems appropriate based on each Party’s capacity to perform the activities; provided that if a Third Party can perform a development activity on terms that are more favorable than either Party’s terms, or the Steering Committee determines, in good faith, that the Party responsible for an activity is better served utilizing a Third Party, such responsible Party shall have the option of using such Third Party.

 

3.6                                Primary Contact Persons.  Each Party shall designate a qualified employee (each, a “Primary Contact Person”) who will serve as a Primary Contact Person.  As of the Effective Date, the initial Primary Contact Persons are set forth in Exhibit B attached hereto and incorporated herein by reference.  Each Party may change its Primary Contact Person upon written notice to the other Party.  The Primary Contact Persons shall initially attempt to resolve any disputes that arise during and in connection with any Development Plan.  If the Primary Contact Persons cannot resolve any such dispute within thirty (30) days (or such longer reasonable period of time as they may agree in writing) after their initial discussion of such issue, the dispute shall be submitted to the Steering Committee for resolution in accordance with Section 2.2 hereof.  Nothing in the foregoing shall limit a Party’s ability to designate one or more additional contact persons to interact with the other Party that are not the Primary Contact Person.

 

3.7                                Visit of Facilities.  Each of Genzyme and Osiris shall permit, and shall require its Affiliates and subcontractors to permit, to the extent reasonably required for purposes of this Agreement, the other or the representatives of the other to visit, upon reasonable notice specifying the context of such visit and at reasonably acceptable times, their respective facilities where the Development Plans is being conducted, and consult informally, during such visits and by telephone, facsimile and email, with their respective personnel performing work on the Development Plans.  Any costs and expenses associated with the visits contemplated by this Section 3.7 shall not be considered a Development Cost and shall be borne by the visiting Party.  Each Party shall maintain information obtained in such visit in confidence in accordance with Article 9 hereof and shall use such information only to the extent permitted by this Agreement.

 

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3.8                                Records.  The Parties will make available and disclose to one another all results of the work conducted pursuant to any Development Plan and shall keep such records as described in this Section 3.8 or elsewhere in this Agreement; provided that each Party shall maintain such results and records of the other Party in confidence in accordance with Article 9 hereof and shall use such results or records only to the extent permitted by this Agreement.  The Parties shall maintain records of the results in sufficient detail and in good scientific manner appropriate for patent purposes and as will properly reflect all work done and results achieved in the performance of a Development Plan (including all data in the form required to be maintained under any applicable governmental regulations).  Such records shall include books, records, reports, research notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, samples of materials and other graphic or written data generated in connection with a Development Plan.  Each Party shall retain such records in accordance with the terms of its internal records retention policy, if any, but in any event no less than required under applicable laws and regulations.  Each Party hereby grants the other Party the right to inspect and copy such records during the Term to the extent reasonably required by the other Party for purposes of this Agreement.

 

3.9                                Ownership and Use of Data.  The Parties shall jointly own all Joint Program Data and such data shall constitute the Confidential Information of each Party under Article 9.  Each Party shall have the right to use the Joint Program Data in connection with the development of a Product for an I