COLLABORATION AGREEMENT

 

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                                                                   EXHIBIT 10.56

 

                                                 *CERTAIN CONFIDENTIAL

                                                 INFORMATION CONTAINED IN THIS

                                                  DOCUMENT, MARKED BY BRACKETS,

                                                 HAS BEEN OMITTED AND FILED WITH

                                                 THE SECURITIES AND EXCHANGE

                                                  COMMISSION PURSUANT TO RULE

                                                 24B-2 OF THE SECURITIES

                                                 EXCHANGE ACT OF 1934, AS

                                                 AMENDED.

 

                              COLLABORATION AGREEMENT

 

      THIS COLLABORATION AGREEMENT (the "AGREEMENT"), effective as of December

31, 2004 (the "EFFECTIVE DATE"), is by and between CELLADON CORPORATION, a

California corporation ("CELLADON"), with its principal place of business at

2223 Avenida de la Playa, Suite 300, c/o Enterprise Partners Venture Capital, La

Jolla, CA 92037, and TARGETED GENETICS CORPORATION, a Washington corporation

("TGC"), with its principal place of business at 1100 Olive Way, Suite 100,

Seattle, WA 98101.

 

      WHEREAS, TGC has developed substantial proprietary technology and is

engaged in the discovery, development and manufacture of viral and non-viral

gene-based product candidates and operates a cGMP-compliant production facility

for the manufacture of such candidates;

 

      WHEREAS, Celladon is engaged in the development of gene vector-delivered

therapeutic products based on phospholamban and/or SERCA2a for the treatment or

prevention of congestive heart failure;

 

      WHEREAS, the parties wish to establish a collaborative relationship

pursuant to which, among other things, TGC will assist Celladon in: (a)

designing a cardiac gene therapy product based in part on Celladon's proprietary

technology for clinical development by Celladon, (b) assessing the intellectual

landscape associated with such product, and (c) the development of a

manufacturing process and supplying such gene therapy product; and

 

      WHEREAS, concurrently herewith, the parties have entered into a

manufacturing and supply agreement pursuant to which TGC will be responsible for

the manufacture and supply of cardiac gene therapy products developed pursuant

to this Agreement, subject to the terms and conditions set forth therein (the

"MANUFACTURING AGREEMENT").

 

      NOW, THEREFORE, in consideration of the foregoing and the mutual promises

and covenants hereinafter set forth, Celladon and TGC, intending to be legally

bound, hereby agree as follows:

 

1. DEFINITIONS. Capitalized terms used but not otherwise defined herein shall

have the meanings provided in the Manufacturing Agreement. In addition, the

following terms shall have the meanings set forth below:

 

      1.1 "AAV VECTOR" shall mean an adeno-associated virus gene vector composed

of a viral capsid comprising three proteins known as VP1, VP2 and VP3, wherein

the genome is a single-strand DNA molecule flanked by inverted terminal repeats

("ITRs").

 

      1.2 "AFFILIATE" shall mean any company or entity controlled by,

controlling, or under common control with a party hereto and shall include any

company more than 50% of whose voting stock or participating profit interest is

owned or controlled, directly or indirectly, by a party, and any

 

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company which owns or controls, directly or indirectly, more than 50% of the

voting stock of a party.

 

      1.3 "ALLOCABLE OVERHEAD" shall mean the costs incurred by a party or for

its account which are attributable to a party's supervisory services, occupancy

costs, payroll and its payroll, information systems, human relations or

purchasing functions and which are allocated to company departments based on

space occupied or headcount or other activity-based method consistently applied

by a party, or a standard rate if agreed to by the parties. Allocable Overhead

shall not include any costs attributable to general corporate activities,

including, by way of example, executive management, investor relations, business

development, legal affairs and finance.

 

      1.4 "APPROVAL APPLICATION" means any application necessary and appropriate

to obtain a Regulatory Approval, together with all required documents, data and

information concerning a Selected Product that is the subject of such

application.

 

      1.5 "BUDGET" shall have the meaning provided in Section 2.1.

 

      1.6 "CELLADON COST OF GOODS" shall mean, with respect to any Selected

Product in final form that is sold by Celladon or its Affiliates hereunder:

 

            (A) in the case of Selected Product in final form that is

manufactured in whole or in part by Celladon or its Affiliate(s), the actual

fully allocated cost of manufacturing such Selected Product (in accordance with

cGMP) determined in accordance with GAAP consistently applied throughout the

organization of Celladon and its Affiliate(s), which includes the direct and

indirect cost of any raw materials, packaging materials and labor (including

benefits) utilized in such manufacturing (including formulation, fill/finish,

quality assurance, quality control and stability testing, labeling and

packaging, as applicable), plus an appropriate share of all factory overhead,

both fixed and variable, allocated to the Selected Product being manufactured,

in accordance with the normal accounting practices for all other products

manufactured in the applicable facility; provided, however, that "Cost of Goods"

shall exclude any allocation of cost related to idle capacity, unless such

excess capacity is specifically reserved for Selected Product; and

 

            (B) in the case of Selected Product in final form that is

manufactured entirely by a Third Party, the actual price paid by Celladon or its

Affiliate(s) to such Third Party for such Selected Product.

 

      1.7 "CELLADON-ASSIGNED JOINT INVENTION" shall mean a Joint Invention that

is not a TGC-Assigned Joint Invention.

 

      1.8 "CELLADON PATENTS" shall mean, to the extent necessary or useful for

the development, manufacture, use or sale of any Gene Therapy Product, all

Patents that Celladon or any of its Affiliates Controls as of the Effective Date

or during the Term.

 

      1.9 "CELLADON TECHNOLOGY" shall mean: (a) the Celladon Patents; and (b)

Information not included in the Celladon Patents that Celladon or any of its

Affiliates Controls on the Effective Date or during the Term, including, without

limitation, all such Information that is conceived or developed by Celladon or

any of its Affiliates in the course and as part of the Collaboration.

 

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      1.10 "cGMP" shall mean current good manufacturing practices for medicinal

products established by U.S. laws, rules and regulations (including 21 CFR Parts

210 and 211, as amended, and any successor regulations thereto, each as in

effect from time to time).

 

      1.11 "CMC" shall have the meaning provided in Section 3.2(b).

 

      1.12 "COLLABORATION" shall have the meaning provided in Section 2.1.

 

      1.13 "COLLABORATION TERM" shall have the meaning provided in Section 2.11.

 

      1.14 "COMMERCIALLY REASONABLE EFFORTS" means, with respect to the efforts

to be expended by any entity with respect to any objective, reasonable,

diligent, good faith efforts to accomplish such objective as such entity would

normally use to accomplish a similar objective under similar circumstances. With

respect to any objective relating to the commercialization of a product by any

entity, "Commercially Reasonable Efforts" means efforts and resources normally

used by such entity with respect to a product owned by such entity or to which

such entity has similar rights which is of similar market potential at a similar

stage in the development or life of such product, taking into account issues of

safety, efficacy, product profile, the competitiveness of the marketplace, the

proprietary position of the product, the regulatory structure involved,

profitability of the product and other relevant commercial factors.

 

      1.15 "COMMITTEE" shall have the meaning provided in Section 2.2.

 

      1.16 "CONFIDENTIAL INFORMATION" shall have the meaning provided in Section

8.1.

 

      1.17 "CONTROL" shall mean, with respect to any Information, Patent or

other intellectual property right, possession by a party of the ability (whether

by ownership, license or otherwise) to grant access, a license or a sublicense

to such Information or intellectual property right without violating the terms

of any agreement or other arrangement with any Third Party.

 

      1.18 "DEVELOPMENT COSTS" shall mean costs actually incurred by Celladon or

for its account that are specifically attributable to the development of

Selected Products. Development Costs will include, but not be limited to: (a)

costs of research and development of Selected Products, including costs of

studies on the toxicological, pharmacokinetic, metabolic or clinical aspects of

Selected Products conducted internally or by Third Parties; (b) Cost of Goods

for Selected Product for use in preclinical studies or clinical trials; (c)

costs of preparing and reviewing data or information for the purpose of

submission to the FDA and foreign regulatory authorities for the purpose of

obtaining Regulatory Approvals of Selected Products; (d) fees associated with

regulatory filings or other governmental requirements related to Selected

Products; and (e) applicable Allocable Overhead, including expenses for data

management, statistical designs and studies, document preparation, and other

administration expenses associated with clinical testing programs.

 

      1.19 "DEVELOPMENT PLAN" shall have the meaning provided in Section 2.1.

 

      1.20 "DMF" shall mean a drug master file (as such term is defined in 21

C.F.R. Part 314.420, as it may be amended from time to time), or any foreign

equivalent thereof, for a Selected Product.

 

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      1.21 "FDA" shall mean the United States Food and Drug Administration, or

any successor agency thereto.

 

      1.22 "FIELD" shall mean the Therapeutic Field and/or the Pathway Field.

 

      1.23 "FINANCING" shall mean the purchase by Enterprise Partners and

Venrock (and/or their respective affiliated entities) of shares of the common

stock of TGC having an aggregate fair market value of US$6,000,000 pursuant to

that certain Stock Purchase Agreement by and among TGC and such entities dated

of even date herewith.

 

      1.24 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the

first sale for end use or consumption of such Product in a country after the

governing health regulatory authority of such country has granted Regulatory

Approval. Sale to an Affiliate or Licensee shall not constitute a First

Commercial Sale unless the Affiliate or Licensee is the end user of the Product.

 

      1.25 "GAAP" shall mean U.S. generally accepted accounting principles

consistently applied.

 

      1.26 "GCP" means, to the extent applicable, the then-current good clinical

practices (under the regulations set forth in 21 C.F.R. Subchapter A and the

requirement imposed thereunder by the FDA) and in effect from time to time

during the Term, together with the then-current equivalent or corresponding

regulations and requirements in jurisdictions outside the United States.

 

      1.27 "GENE THERAPY PRODUCT" shall mean an AAV Vector-delivered therapeutic

product for the treatment or prevention of congestive heart failure based on one

or more of the following: (a) phospholamban mutant gene (S16EPLN) to inhibit

phospholamban-mediated events; (b) sarco(endo)plasmic reticulum Ca(2+)-ATPase

("SERCA2a"); (c) [*]; and/or (d) [*].

 

      1.28 "GROSS PROFIT" shall mean Gross Revenues, less the following:

 

            (A) (i) trade discounts, credits or allowances; (ii) credits or

allowances additionally granted upon returns, rejections or recalls; (iii)

freight, shipping and insurance charges; (iv) taxes, duties or other

governmental tariffs (other than income taxes); and (v) government mandated

rebates; all of the foregoing to the extent actually included in the calculation

of gross revenues;

 

            (B) the Celladon Cost of Goods of Selected Products sold by Celladon

and its Affiliates;

 

             (C) all royalties paid by Celladon or its Affiliates to Third

Parties and all royalties paid by TGC or its Affiliates to Third Parties with

respect to Patents and/or Information of such Third Parties that Celladon and

TGC (in the case of TGC Licensed Technology), deem necessary or useful for the

manufacture, use or sale of Selected Products (excluding any such royalties paid

with respect to delivery devices, such as catheters); and

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

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            (D) all marketing and sales costs and revenue sharing (including for

example, royalties on product sales and/or sales milestones payments) incurred

by Celladon or its Affiliates with respect to marketing and sales of Selected

Products in jurisdictions where one or more Third Parties markets and sells

Selected Products on behalf of Celladon.

 

      1.29 "GROSS REVENUES" shall mean the gross revenues (including for

example, royalties on product sales and sales milestones) actually received by

Celladon and its Affiliates from the commercial sale of Selected Products after

Regulatory Approval thereof, determined in accordance with GAAP.

 

      1.30 "IND" shall mean an Investigational New Drug Application filed with

the FDA, or the equivalent application or filing filed with any equivalent

agency or governmental authority outside the United States of America (including

any supra-national agency such as in the European Union) necessary to commence

human clinical trials in such jurisdiction.

 

      1.31 "INFORMATION" shall mean all tangible and intangible (a) techniques,

technology, practices, trade secrets, inventions (whether patentable or not),

methods, knowledge, know-how, skill, experience, test data and results

(including pharmacological, toxicological and clinical test data and results),

analytical and quality control data, results or descriptions, software and

algorithms and (b) compositions of matter, cells, cell lines, assays, animal

models and physical, biological or chemical material.

 

      1.32 "JOINT INVENTION" shall mean any invention, whether patentable or

not, which is conceived or reduced to practice, either as part of the

Collaboration or under the Manufacturing Agreement, jointly by one or more

employees or contractors of Celladon and one or more employees or contractors of

TGC.

 

      1.33 "LEAD PARTY" shall have the meaning provided in Section 6.2(c).

 

      1.34 "LICENSEE" shall mean a Third Party to whom Celladon or any of its

Affiliates has granted a license or sublicense of the right to develop, make,

have made, use, distribute for sale, promote, market, offer for sale, sell, have

sold, import or export Products, beyond the mere right to purchase Products from

Celladon or its Affiliates.

 

      1.35 "MANUFACTURING AGREEMENT" shall mean the Manufacturing Agreement

between the parties dated the Effective Date and, as defined therein, the

"Commercial Agreement" to be entered into by the parties in the future.

 

      1.36 "MANUFACTURING DOCUMENTS" shall have the meaning provided in Section

3.2(b).

 

      1.37 "MANUFACTURING PROCESS" shall mean the manufacturing process for a

Selected Product developed by TGC pursuant to the terms of this Agreement and

used by TGC, its Affiliates or Third Party subcontractors in producing such

Selected Product under this Agreement.

 

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      1.38 "NDA" shall mean a New Drug Application (as more fully defined in 21

C.F.R. 314.5 et seq.) and all amendments and supplements thereto filed with the

FDA, or the equivalent application filed with any equivalent agency or

governmental authority outside the United States of America (including any

supra-national agency such as in the European Union), including all documents,

data, and other information concerning a pharmaceutical product which are

necessary for gaining Regulatory Approval to market and sell such pharmaceutical

product.

 

      1.39 "PATENTS" shall mean (a) United States patents, re-examinations,

reissues, renewals, extensions and term restorations, and foreign counterparts

thereof, and (b) pending applications for United States patents, including,

without limitation, provisional applications, continuations,

continuations-in-part, divisional and substitute applications, including,

without limitation, inventors' certificates, and foreign counterparts thereof.

 

      1.40 "PATHWAY FIELD" shall mean modulation of the phospholamban/SERCA

biological pathway [*].

 

      1.41 "PHASE 1/2 CLINICAL TRIAL" shall mean a human clinical trial that

would satisfy the requirements for a Phase 1 study as defined in 21 C.F.R.

312.21(a) (or its successor regulation) and/or the requirements for a Phase 2

study as defined in 21 C.F.R. 312.21(b) (or its successor regulation).

 

       1.42 "PHASE 3 CLINICAL TRIAL" shall mean a human clinical trial that would

satisfy the requirements for a Phase 3 study as defined in 21 C.F.R. 312.21(c)

(or its successor regulation).

 

      1.43 "PRE-COMMERCIAL NET REVENUES" shall mean the amount (if any) by which

Pre-Commercial Payments received by Celladon exceed Development Costs paid by

Celladon.

 

      1.44 "PRE-COMMERCIAL PAYMENTS" shall mean all amounts actually received by

Celladon or an Affiliate of Celladon from any and all Licensees prior to the

First Commercial Sale of a Selected Product arising from the license or

sublicense of the right to develop, make, have made, use, distribute for sale,

promote, market, offer for sale, sell, have sold, import or export Selected

Products. Pre-Commercial Payments shall include up-front or license fees,

milestone payments, premiums above the fair market value on sales of securities,

annual maintenance fees and any other payments in respect of the grant to such

Licensee of a license or sublicense of the right to develop, make, have made,

use, distribute for sale, promote, market, offer for sale, sell, have sold,

import or export Selected Products (with any of the foregoing consideration

received by Celladon or its Affiliates other than in the form of cash to be

valued at its fair market value as of the date of receipt); provided, however,

that Pre-Commercial Payments shall not include any payments tied directly to the

provision of goods and services by Celladon or its Affiliate to such Licensee

(including research and development and manufacturing) to compensate Celladon or

its Affiliate for the fair market value of the provision of such goods and

services, or payments for securities (other than premiums above the fair market

value of such securities).

 

       1.45 "PROJECT LEADER" shall have the meaning provided in Section 2.2(d)

 

      1.46 "REGULATORY APPROVAL" shall mean any and all approvals (including

price and reimbursement approvals, if required), licenses, registrations, or

authorizations of any country, federal, supranational, state or local regulatory

agency, department, bureau or other government

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

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entity that are necessary for the manufacture, use, storage, import, transport

and/or sale of a Selected Product in such jurisdiction.

 

      1.47 "ROYALTY TERM" shall mean, in the case of any Selected Product, in

any country, the period of time commencing on the [*] of such Selected Product

in such country and ending upon the later of (a) [*] after the date of [*] of

such Selected Product in such country, and (b) the expiration of the last to

expire of the [*] claiming the manufacture, use or sale of such Selected Product

in such country.

 

      1.48 "SELECTED PRODUCT" shall mean a Gene Therapy Product selected by

Celladon, in its sole discretion, by written notice thereof to TGC, as a

candidate for clinical development and commercialization by Celladon in the

Field. Notwithstanding the foregoing, Selected Products shall exclude TGC

Candidates.

 

      1.49 "SELECTED PRODUCT PATENTS" shall have the meaning provided in Section

6.1(b).

 

      1.50 "TERM" shall have the meaning provided in Section 9.1.

 

      1.51 "TGC ACCOUNTING METHOD" shall mean the method by which TGC accounting

and budgeting under this Agreement will be conducted. The details of such

accounting are set forth in Exhibit B. Exhibit B shall be revised in advance of

each twelve (12) month period of the Collaboration.

 

      1.52 "TGC-ASSIGNED JOINT INVENTION" shall mean a Joint Invention directed

to the [*].

 

      1.53 "TGC CANDIDATES" shall mean the adeno-associated virus-delivered gene

therapy candidates Controlled by TGC as of the Effective Date with potential

utility in the Field.

 

      1.54 "TGC LICENSED PATENTS" shall mean, to the extent necessary or useful

for the development, manufacture, use or sale of any Gene Therapy Product, all

Patents that TGC or any of its Affiliates Controlled (but not owned) as of the

Effective Date or during the Term, as a result of being licensed to TGC by a

Third Party.

 

      1.55 "TGC LICENSED TECHNOLOGY" shall mean: (a) the TGC Licensed Patents;

and (b) to the extent necessary or useful for the development, manufacture, use

or sale of any Gene Therapy Product, Information not included in the TGC

Licensed Patents, TGC Patents, TGC Technology or Joint Inventions that TGC or

any of its Affiliates Controls (but does not own) on the Effective Date or

during the Term, including, without limitation, all such Information that is

conceived or developed by TGC or any of its Affiliates, as a result of being

licensed to TGC by a Third Party, in the course and as part of the Collaboration

or in performing its obligations under the Manufacturing Agreement.

 

      1.56 "TGC PATENTS" shall mean, to the extent necessary or useful for the

development, manufacture, use or sale of any Gene Therapy Product, all Patents

that TGC or any of its Affiliates owns as of the Effective Date or during the

Term.

 

                                               *CONFIDENTIAL TREATMENT REQUESTED.

 

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      1.57 "TGC TECHNOLOGY" shall mean: (a) the TGC Patents; and (b) to the

extent necessary or useful for the development, manufacture, use or sale of any

Gene Therapy Product, Information not included in the TGC Patents that TGC or

any of its Affiliates owns on the Effective Date or during the Term, including,

without limitation, all such Information that is conceived or developed by TGC

or any of its Affiliates in the course and as part of the Collaboration or in

performing its obligations under the Manufacturing Agreement.

 

      1.58 "THERAPEUTIC FIELD" shall mean the treatment or prevention of

congestive heart failure.

 

       1.59 "THIRD PARTY" shall mean any entity other than Celladon or TGC or an

Affiliate of Celladon or TGC.

 

      1.60 "TRANSFER PRICE" shall mean:

 

            (A) with respect to bulk Selected Product commercialized hereunder

that is supplied by TGC pursuant to the Manufacturing Agreement or by a Third

Party, the price actually paid by Celladon, its Affiliate or a Licensee for such

bulk Selected Product; and

 

            (B) with respect to bulk Selected Product commercialized hereunder

that is manufactured by Celladon or its Affiliate, Celladon's or its Affiliate's

actual fully allocated cost of manufacturing bulk Selected Product (in

accordance with cGMP) determined in accordance with GAAP consistently applied

throughout the organization of Celladon and its Affiliate(s), which includes the

direct and indirect cost of any raw materials, packaging materials and labor

(including benefits) utilized in such manufacturing (including formulation,

quality assurance, quality control and stability testing, labeling and

packaging, as applicable), plus an appropriate share of all factory overhead,

both fixed and variable, allocated to the Selected Product being manufactured,

in accordance with the normal accounting practices for all other products

manufactured in the applicable facility, provided that such cost of manufacture

shall exclude any allocation of cost related to idle capacity, unless such

excess capacity is specifically reserved for Selected Product.

 

      1.61 "VALID CLAIM" shall mean an unexpired claim of an issued patent

within the Celladon Patents or TGC Patents which has not been found to be

unpatentable, invalid or unenforceable by a court or other authority in the

subject country, from which decision no appeal is taken or can be taken.

 

2. COLLABORATION

 

      2.1 COLLABORATIVE DEVELOPMENT PROGRAM. Subject to the terms and conditions

of this Agreement, the parties shall conduct a collaborative development program

to design one or more Gene Therapy Products suitable for clinical development

and commercialization by Celladon in the Therapeutic Field, as more fully

described below in this Article 2 (collectively, the "COLLABORATION"). The

parties shall conduct the Collaboration during the Collaboration Term in

accordance with a written development plan to be mutually agreed upon within 60

days after the Effective Date and attached hereto as EXHIBIT A (the "DEVELOPMENT

Plan"). A Development Plan shall be created and mutually agreed upon by the

parties for each 12 month period of the Collaboration. The Development Plan

shall set forth the activities to be performed by TGC, the estimated timeline

for conduct of such activities and an estimated budget for the Development Plan

 

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activities (the "BUDGET"). The parties shall report on the progress made

pursuant to the goals of the Development Plan, revise and update such

activities, Budget, and timeline as necessary, on a quarterly basis during the

Collaboration Term. If modifications in the activities or timeline of activities

conducted under the Development Plan are requested by Celladon, TGC shall make

good faith efforts to accommodate such requests within the parameters of

conducting its other programs, and taking into account its facility, capacity

and resource constraints. If activities contemplated by the Development Plan are

cancelled by Celladon less than [*] from their initiation, Celladon shall be

responsible for non-cancelable costs incurred by TGC in preparation for such

activities and shall be responsible for the hours or manufacturing facility time

allocated to such activities [*]. At any time, and from time to time, during the

Term or during any period when Celladon's license under Section 4.2(b) is in

effect, Celladon may, in its sole discretion, designate any Selected Product by

written notice thereof to TGC.

 

      2.2 COLLABORATION COMMITTEE. As promptly as practicable (but no later than

30 days) following the Effective Date, the parties shall establish a committee

(the "COMMITTEE") in accordance with this Section 2.2. The Committee shall be

responsible for execution of the Development Plan within the budget established

by the parties, and, in connection therewith, shall manage and monitor the

progress and results of the Collaboration, allocate resources (including,

without limitation, FTEs) among the various Development Plan activities and

encourage and facilitate ongoing cooperation between the parties.

 

            (A) COMPOSITION OF THE COLLABORATION COMMITTEE. The Committee shall

be composed of two named representatives of Celladon and two named

representatives of TGC. Each party shall appoint its respective representatives

to the Committee from time to time, and may substitute one or more of its

representatives, in its sole discretion, effective upon notice to the other

party of such change. These representatives shall have appropriate technical

credentials, experience and knowledge, and ongoing familiarity with the

Collaboration. Additional representatives or consultants may from time to time,

by mutual consent of the parties, be invited to attend Committee meetings,

subject to such representative's or consultant's written agreement to comply

with confidentiality and non-use obligations equivalent to those set forth in

Article 8. Each party shall bear its own expenses related to the attendance of

such meetings by its representatives. The Committee shall be chaired by a

representative of Celladon. Decisions of the Committee shall be made by

unanimous vote, with each party's representatives on the Committee collectively

having one vote. In the event that the Committee cannot or does not, after good

faith efforts, reach agreement on an issue, such issue shall be referred to the

Chief Executive Officers of Celladon and TGC. Such officers of the parties shall

meet promptly thereafter and shall negotiate in good faith to resolve such

issue.

 

            (B) MEETINGS. The Committee shall meet in accordance with a schedule

established by mutual written agreement of the parties, but no less frequently

than once per calendar quarter, with the location for such meetings alternating

between TGC and Celladon facilities (or such other locations as is mutually

agreed by the parties). Alternatively, the Committee may meet by means of

teleconference, videoconference or other similar communications equipment or by

a signed unanimous written consent in lieu of a meeting, but not by proxy. No

Committee meeting may be conducted unless both representatives of each party are

participating.

 

                                               *CONFIDENTIAL TREATMENT REQUESTED.

 

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            (C) MINUTES. The hosting party shall have responsibility for

preparing definitive minutes of each Committee meeting, a draft of which shall

be circulated for comment to all members of the Committee within 10 days after

the relevant meeting. Such minutes shall provide a description, in reasonable

detail, of the Collaboration progress to date and of the discussions at the

meeting, a list of any actions or determination approved by the Committee and

any disagreements not resolved by the Committee. The Project Leaders for the

parties shall discuss any comments on such minutes and finalize the minutes by

no later than 30 days after the meeting. Any disagreement on the minutes shall

be resolved in accordance with Section 2.2(a).

 

            (D) PROJECT LEADERS. Celladon and TGC each shall appoint a person

from the Committee or another representative of Celladon and TGC not on the

Committee, but agreed upon by both parties to lead the project, to coordinate

its part of the Collaboration and to be the primary contact between the parties

with respect to the Collaboration ("PROJECT LEADERS"). Each party shall notify

the other party as soon as practicable upon changing this appointment.

 

      2.3 CONDUCT OF THE COLLABORATIVE DEVELOPMENT PROGRAM. Subject to the terms

and conditions of this Agreement, each party shall be responsible for managing

and controlling its respective obligations under the Development Plan. Each

party shall proceed diligently and in a timely manner with the work set out in

the Development Plan by using its good faith efforts to allocate sufficient

time, effort, equipment and facilities to the Collaboration and to use personnel

with sufficient skills and experience as are required to accomplish the

objectives of the Collaboration in accordance with the terms of this Agreement.

Each party shall be entitled to utilize the service of Third Parties to perform

its Collaboration responsibilities only upon the prior written consent of the

other party (not to be unreasonably withheld) or as specifically set forth in

the Development Plan or the Manufacturing Agreement. Notwithstanding any such

consent, each party shall remain at all times responsible for the performance of

its respective responsibilities under the Collaboration and shall use

Commercially Reasonable Efforts to obtain the written agreement of each such

Third Party, prior to the time such Third Party initiates work, to assign

ownership of Inventions made in the course of Collaboration activities to such

party.

 

      2.4 FUNDING OF COLLABORATIVE DEVELOPMENT PROGRAM.

 

            (A) FUNDING. Celladon shall be responsible for funding its own

Collaboration activities. TGC hereby covenants to contribute to the

Collaboration, up to US $2,000,000 ([*] through the performance of activities

pursuant to the Development Plan. Such $2,000,000 contribution of efforts shall

include payments to Third Parties contracted by TGC (raw material purchases,

release testing etc.), with the remainder comprised of internal research and

development and manufacturing efforts. Any Third Party costs incurred in

accordance with the Development Plan that exceed $300,000 in the aggregate shall

be borne by Celladon. For purposes of accounting for the $2,000,000 contribution

of efforts, TGC shall utilize the TGC Accounting Method set forth in Exhibit B.

If performance of TGC's obligations under the Development Plan reasonably

requires funding in excess of US$2,000,000, Celladon shall be responsible for

funding such excess expenses (in each case, to the extent of [*]. TGC's

obligation to contribute up to $2,000,000 through the contribution of efforts

under the Development Plan shall end on the second anniversary of the Effective

Date of this Agreement. If TGC's performance of activities under the Development

Plan does not reach $2,000,000 over the first 24 months of the Collaboration,

TGC shall have no further obligation to perform activities pursuant to the

Development Plan without compensation for

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

                                       10

<PAGE>

such activities by Celladon. All activities performed by TGC pursuant to the

Collaboration shall be paid for at the then applicable FTE Rate and

Manufacturing Rate specified in Exhibit B.

 

            (B) REPORTING OF COSTS. Within 45 days of the end of each quarter

during the Collaboration Term, TGC shall provide to Celladon a reasonably

detailed written report of the costs incurred by TGC in performing its

obligations under the Development Plan, including, without limitation, the

number of hours dedicated to specific activities and an itemized list of

out-of-pocket costs for materials, supplies and Third Party services used in the

performance of the Development Plan. From and after such time (if ever) as TGC

has applied US$2,000,000 to the performance of its obligations under the

Development Plan in accordance with Section 2.4(a), TGC shall provide an invoice

prior to the start of the quarter or partial quarter and Celladon shall pay [*]

of the following partial quarter and/or whole quarter's Development Plan

estimated budget within [*] days of the start of the next whole quarter. Upon

receipt by Celladon of the written report of the costs incurred by TGC in

performance of its obligations under the Development Plan during the quarter,

Celladon shall pay TGC the amount remaining, calculated by subtracting the

payment received by TGC for the estimated budget from the costs incurred by TGC.

Each quarterly report of TGC under this Section 2.4(b) shall be accompanied by

an itemized invoice for costs incurred by TGC in performance of the Development

Plan that are in excess of US$2,000,000 in the aggregate. Each such invoice

shall be due and payable upon receipt by Celladon. Failure to make payments to

TGC within [*] business days of receipt by Celladon shall result in the

obligation of Celladon to prepay the entire quarter estimated budget in advance

of the start of each quarter.

 

            (C) AUDIT OF COSTS. For a period of one year after each Development

Plan year, TGC shall keep complete and accurate records of the hours of

non-manufacturing time, the weeks of cGMP manufacturing facility time (both

determined in accordance with Exhibit B) and the Third Party costs utilized in

the performance of its obligations under the Development Plan, in sufficient

detail to permit Celladon to verify the accuracy of TGC's reports to Celladon

under Section 2.4(b). Such audit shall be limited to the computation of the FTE

Rate and the Manufacturing Rate specified in Exhibit B, and the compilation of

time, effort, and outside costs incurred by TGC in performance of the

Development Plan. For a period of one (1) year following the completion of each

calendar year, Celladon shall have the right to cause an independent, certified

public accountant reasonably acceptable to TGC to audit such records to confirm

such costs for a period covering not more than the preceding year. Such audits

may be exercised during normal business hours upon reasonable prior written

notice to TGC. Prompt adjustments shall be made by the parties to reflect the

results of such audit. Celladon shall bear the full cost of such audit unless

such audit discloses that TGC has overstated its costs in any report delivered

by it with respect to the period audited by [*] or more, in which case, TGC

shall bear the full cost of such audit and shall promptly reimburse to Celladon

the amount of any overpayment.

 

      2.5 EXCHANGE OF INFORMATION. Promptly following the Effective Date and

from time to time as necessary thereafter during the Collaboration Term, TGC

shall disclose to Celladon such TGC Technology as may be necessary or useful for

the performance by Celladon of its responsibilities under the Development Plan.

Promptly following the Effective Date and from time to time as necessary

thereafter during the Collaboration Term, Celladon shall disclose to TGC such

Celladon Technology as may be necessary or useful for the performance by TGC of

its responsibilities under the Development Plan or the Manufacturing Agreement.

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

                                       11

<PAGE>

      2.6 RECORDS AND REPORTS.

 

            (A) RECORDS. TGC and Celladon shall each maintain, and shall use

Commercially Reasonable Efforts to cause any of their Third Party contractors to

maintain, accurate and complete records that reflect all work done and results

achieved in the performance of the Collaboration and all results of any trials,

studies and other investigations conducted under this Agreement by or on behalf

of TGC and Celladon, their Affiliates and Third Party contractors, as

applicable.

 

            (B) INSPECTION OF RECORDS. No more frequently than once per calendar

year, a party shall have the right, during normal business hours and upon

reasonable notice without undue interruption to normal business operations and

provided such requests for visits are not otherwise unreasonable, to inspect all

records of the other party referred to in Section 2.6(a) and their Third Party

contractors (provided it is permitted under the agreement with the Third Party

contractor); provided, however, that such party shall not have the right to

review records to the extent that such records contain information that does not

relate to the subject matter of this Agreement and/or the Manufacturing

Agreement and access to such records shall be limited to the narrowest

practicable group of other party's personnel who have a strict need to know the

same for the purposes of such quality assurance inspections, audits and

investigations. TGC shall permit representatives of Celladon to enter TGC's

manufacturing facilities upon reasonable prior notice and at intervals of no

more than once per year, during normal business hours for the purpose of making

quality assurance audits of the facilities and of the procedures and processes

used by TGC in storing, manufacturing and shipping any Selected Product and to

inspect all related records. To the extent any such inspections, notices,

responses, filings, audits and investigations could lead to the disclosure of

any Confidential Information of TGC to Celladon: (i) access to such Confidential

Information shall be limited to the narrowest practicable group of Celladon's

quality assurance personnel who have a strict need to know the same for the

purposes of such quality assurance inspections, audits and investigations; and

(ii) any and all such Confidential Information and shall be protected by

Celladon under Article 8. Each party shall maintain such records and the

information disclosed therein in confidence in accordance with Article 8.

 

            (C) PROGRESS REPORTS. Within 45 days following the end of each

calendar quarter during the Collaboration Term, each party shall provide to the

other party a written progress report, or shall communicate by some other

mechanism agreed to by both parties, including circulation of the minutes of the

Committee, which shall describe the work performed by such party to date on the

Collaboration, evaluate the work performed in relation to the goals of the

Collaboration and provide such other information required by the Collaboration

or reasonably requested by the other party relating to the progress of the goals

or performance of the Collaboration. Such progress reports shall include the

progress and results of activities conducted outside of the Collaboration, by

Celladon or Third Parties on behalf of Celladon, on the Gene Therapy Products

that are part of the Collaboration. Such activities would include by example

preclinical, clinical and regulatory activities of the Gene Therapy Products or

Selected Products.

 

      2.7 INTELLECTUAL PROPERTY ANALYSIS AND LICENSING. Celladon and TGC, [*],

shall conduct [*] analysis under Third Party intellectual property rights with

respect to all elements of any Gene Therapy Product [*]. Third Party Patents may

be identified as necessary for Celladon to develop, make, have made, use, have

used, commercialize, offer for license, lease, sale or transfer a Selected

Product. The parties agree to consult with, inform, and collaborate on

identifying such

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

                                        12

<PAGE>

Third Party Patents and Information during the Term. Upon identification of any

Third Party Patents, the parties will mutually agree to [*] to obtain such

rights subject to the following conditions:

 

            (A) Celladon shall be responsible for securing rights or licenses to

Third Party Patents and Information directed to: (i) [*]; (ii) [*]; (iii) [*];

and (iv) [*]. In the event Celladon determines it requires such Third Party

Patent Rights and TGC makes a good faith determination that such Third Party

Patent Rights are not necessary for TGC, Celladon will not [*]. Celladon will

involve TGC in the process of obtaining the Third Party Patent Rights to the

extent necessary for TGC to ensure no such obligations are created.

 

            (B) TGC shall be responsible for securing rights or licenses to

Third Party Patents and Information directed to: (i) [*], (ii) [*], (iii) [*];

and (iv) [*].

 

All costs of [*] under Third Party intellectual property rights, licensing,

complying with or obtaining other rights to any such Third Party technology

shall be borne by [*] unless [*] in which case, Celladon and TGC shall determine

the appropriate [*]. Royalty obligations associated with obtaining such rights

shall be [*]. Each Party shall use Commercially Reasonable Efforts to secure

rights or licenses identified in Sections 2.7(a) and 2.7(b), and shall determine

a mutually agreeable solution if either Party is not able to secure the licenses

or rights identified by the Parties.

 

       2.8 COMPLIANCE. Each Party shall conduct the Collaboration in good

scientific manner and in accordance with all applicable laws, rules and

regulations, including, without limitation, and to the extent applicable, all

current governmental regulatory requirements concerning cGMP. Each party shall

notify the other party in writing of any material deviations from applicable

regulatory or legal requirements. Celladon shall permit representatives of TGC

to enter clinical trial sites upon reasonable prior notice at reasonable

intervals, but no more frequently than once per year per site unless a

significant adverse event has been reported to TGC, and with the approval, such

approval shall not be unreasonably withheld or delayed, of the appropriate

Celladon medical director, during normal business hours for the purpose of

making quality assurance audits of the clinical trial sites and of the

implementation of the clinical trial protocol according to the appropriate

regulatory documents. Each party hereby certifies that it will not and has not

employed or otherwise used in any capacity the services of any person debarred

under Section 21 USC 335a in performing any activities under this Agreement, the

Manufacturing Agreement or in performing activities, outside of this Agreement,

that will be utilized in regulatory documents to support the conduct of human

clinical trials of any Selected Product.

 

      2.9 MATERIALS. In order to facilitate the Collaboration, each party may

provide the other party with other chemical or biological materials as necessary

for the conduct of the Collaboration. Each party shall use materials supplied by

the other party solely: (a) for the purposes of carrying out its respective

activities under the Collaboration in accordance with the terms of this

Agreement during the Collaboration Term; (b) in the case of Celladon, of

developing, commercializing and, if applicable, manufacturing Selected Products

in accordance with this Agreement during the Term; and (c) in the case of TGC,

manufacturing Selected Products in accordance with the Manufacturing Agreement

during the Manufacturing Term. Neither party shall transfer, deliver or disclose

any such materials of the other party, or any derivatives, modifications or

components thereof, to any Third Party without the prior written approval of the

providing party, except that: (A) TGC may transfer materials provided by

Celladon (i) to TGC's subcontractors of its Collaboration activities as

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

                                       13

<PAGE>

permitted in accordance with Section 2.3 for the sole purpose of performing such

Collaboration activities or (ii) to TGC's Affiliates and Third Party

subcontractors under the Manufacturing Agreement for the sole purpose of

performing TGC's obligations thereunder; and (B) Celladon may transfer Materials

provided by TGC (i) to Celladon's permitted subcontractors of Collaboration

activities as permitted in accordance with Section 2.3 for the sole purpose of

performing such Collaboration activities or (ii) to Celladon's Affiliates,

licensees and agents without TGC's prior written consent for the sole purpose of

developing, commercializing and, if applicable, manufacturing Selected Products

in the Field; subject in each case to the terms and conditions of this Agreement

and the Manufacturing Agreement. Neither party shall use any materials provided

by the other party in humans, except as contemplated by this Agreement and

permitted by applicable law. Materials supplied by a party hereunder shall be

deemed to constitute Confidential Information of the supplying party.

 

      2.10 ACCESS TO OTHER TGC CAPABILITIES. Should Celladon wish to have TGC

perform preclinical, regulatory and/or clinical development or other services

not expressly contemplated by this Agreement (including, without limitation,

EXHIBIT A hereto), TGC shall, in its sole discretion and determination, provide

access to such capabilities, if and when available, at the rate specified in

Exhibit B or, in light of the services that would be provided, at a commercially

reasonable rate to be mutually agreed upon by the parties.

 

      2.11 COLLABORATION TERM. The term of the Collaboration (the "COLLABORATION

TERM") shall begin on the Effective Date and continue until the earlier of (i)

completion of all activities under the Development Plan, or (ii) the termination

of this Agreement by either party in accordance with Article 9. Celladon may

terminate the Collaboration prior to its expiration upon written notice to TGC;

provided, however, that Celladon shall pay to TGC within 30 days of such

termination a termination fee in an amount equal to [*] as set forth in the most

recently-approved budget included in a Development Plan. For the avoidance of

doubt, in the event that Celladon terminates the Collaboration under this

Section 2.11, then Article 2 shall terminate (subject to Celladon's compliance

with any obligation incurred prior to such termination), TGC's obligation

pursuant to Section 2.4(a) shall terminate, but this Agreement shall otherwise

remain in full force and effect in accordance with its terms related to

termination contained in Article 9.

 

3. DEVELOPMENT AND COMMERCIALIZATION OF SELECTED PRODUCTS.

 

      3.1 DEVELOPMENT AND COMMERCIALIZATION OF SELECTED PRODUCTS. Except as

otherwise expressly set forth in this Agreement or the Manufacturing Agreement,

Celladon shall be solely responsible for the worldwide development and

commercialization of Selected Products. Celladon agrees to use Commercially

Reasonable Efforts to obtain Regulatory Approval of Selected Products in the

United States and in such other countries as Celladon deems appropriate and,

following Regulatory Approval, to commercialize Selected Products. Celladon

shall provide quarterly updates to TGC of the progress of clinical development

of Selected Products, the filing of any IND or NDA with respect to a Selected

Product, and the Regulatory Approval of a Selected Product in any jurisdiction.

Celladon shall, on a timely basis, provide TGC with information in Celladon's

possession or control relevant to its or its Affiliates' or Third Party

subcontractors' role as the holder of the INDs and NDAs and the manager of the

clinical trials of Selected Products that is reasonably necessary for and

relevant to TGC's obligations hereunder in complying with such regulatory

requirements.

 

                                              *CONFIDENTIAL TREATMENT REQUESTED.

 

                                       14

<PAGE>

      3.2 REGULATORY FILINGS AND APPROVALS.

 

             (A) CELLADON RESPONSIBILITIES. Except as set forth in Section

  3.2(b) below or in the Manufacturing Agreement, Celladon or its designee shall

  be solely responsible for filing, obtaining and maintaining all INDs, NDAs,

  Regulatory Approvals and other licenses, registrations, listings,

  authorizations and approvals that may be required for the manufacture,

  development or commercialization of the Selected Products throughout the world

  (collectively, "REGULATORY DOCUMENTS"). Except as set forth in Section 3.2(b)

  below or in the Manufacturing Agreement, Celladon shall be the sole and

  exclusive owner of all Regulatory Documents. At Celladon's request, TGC shall

  take all actions necessary to assist Celladon in filing, obtaining and

  maintaining the Regulatory Documents. Celladon or its designee shall serve as

  the point of contact with the FDA and other regulatory agencies concerning any

  and all Regulatory Documents but may, as appropriate, request TGC's assistance

  with such matters. Celladon, with appropriate assistance from TGC as and to the

  extent provided under the appropriate Development Plan, will use Commercially

  Reasonable Efforts to assemble all Approval Applications needed to conduct

  clinical trials with any Selected Product developed or to be developed under

  the Agreement or supplied or to be supplied to Celladon under the Manufacturing

  Agreement. In connection with any Approval Application, Celladon will have the

  right to reference any relevant regulatory documents of TGC.

 

             (B) TGC RESPONSIBILITIES. TGC shall use its Commercially Reasonable

  Efforts to prepare, file and permit Celladon, at Celladon's request, to cross

  reference the Selected Product chemistry, manufacture and control ("CMC")

  information in any Regulatory Document for a Selected Product. For the

  avoidance of doubt, TGC shall own all right, title and interest in all TGC

  regulatory documents and all Approval Applications filed by TGC which are

  necessary to obtain Regulatory Approvals required for manufacture of Selected

  Product by TGC, including the documents provided as part of the CMC. With

  respect to INDs and NDAs to be filed in the United States with respect to

  Selected Products, CMC information shall follow the format and content set

  forth in 21 C.F.R. Parts 312 and 314, respectively, and all applicable rules,

  regulations and guidelines promulgated thereunder. TGC shall also be

  responsible for obtaining and maintaining any filings, permits and approvals

  necessary for the manufacture of clinical and commercial supply of Selected

  Products, including, without limitation, DMFs for each Selected Product and all

  applicable permits and approvals required to operate TGC's manufacturing

  facilities (collectively, "MANUFACTURING DOCUMENTS"). Celladon shall have, and

  TGC hereby grants to Celladon, the right to reference the Manufacturing

  Documents for the purpose of obtaining and maintaining Regulatory