<PAGE>
Exhibit 10.5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
COLLABORATION AND LICENSE AGREEMENT
dated as of March 17, 2006
by and between
PTC THERAPEUTICS, INC.
and
ESSEX CHEMIE AG
(a wholly-owned subsidiary of Schering-Plough Corporation)
<PAGE>
EXECUTION VERSION
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS.............................................................................
1
ARTICLE 2 RESEARCH
PROGRAM........................................................................
18
2.1
Collaborative
Research..............................................................
18
2.2
Conduct of
the Research; Allocation of
Responsibilities............................. 18
2.3
PTC
Research
Efforts................................................................
19
2.4
Schering
Research
Efforts...........................................................
19
2.5
Research
Funding; Responsibility for Costs of the Research
Program.................. 19
2.6
Disclosure
of Facilitating Research
Technology...................................... 20
2.7
Information Regarding Collaboration
Compound........................................ 20
2.8
Extension
of Research
Term..........................................................
21
2.9
Material
Transfer...................................................................
21
2.10
Exclusivity.........................................................................
22
2.11
Subcontractors......................................................................
23
2.12
Termination of Research
Program.....................................................
23
2.13
Testing of
Active Compounds Identified by PTC Outside of the Research
Program....... 23
2.14
Allocation
of Active
Compounds......................................................
24
ARTICLE 3 JOINT STEERING
COMMITTEE................................................................
24
3.1
Creation
and Structure of the
JSC................................................... 24
3.2
Meetings............................................................................
24
3.3
Responsibilities of the
JSC.........................................................
25
3.4
Subcommittees of the
JSC............................................................
26
3.5
Decisions
of the
JSC................................................................
26
3.6
Limitation
on JSC
Authority.........................................................
27
3.7
Project
Leaders.....................................................................
27
3.8
Project
Team
Access.................................................................
27
3.9
Reports to
JSC......................................................................
27
ARTICLE 4 DEVELOPMENT AND COMMERCIALIZATION
OF LICENSED PRODUCTS.................................. 27
4.1
Responsibility for Development;
Diligence........................................... 27
4.2
Responsibility for Development
Costs................................................ 30
4.3
Development
Plans...................................................................
30
4.4
Ownership
of Development Data and Other
Know-How.................................... 30
4.5
Access
[**].........................................................................
31
4.6
[**]
31
4.7
Responsibility for
Commercialization................................................
31
4.8
Meetings
to Discuss Schering's [**]
................................................ 32
4.9
Manufacturing and Supply
Responsibilities...........................................
32
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4.10
Regulatory
Matters Related to Schering Viral
Products............................... 32
4.11
Regulatory
Matters Related to Other Licensed
Products............................... 33
4.12
Impact of
Change of Control of
Schering............................................. 33
4.13
Additional
Reports and Information to be Provided Following Termination of the
JSC.. 33
4.14
Certain
Expenses of
PTC.............................................................
34
ARTICLE 4A DEVELOPMENT
AND COMMERCIALIZATION OF DESIGNATED NV COMPOUNDS BY EITHER
PARTY............ 34
4A.1
Designation of Designated NV
Compounds..............................................
34
4A.2
Development of NV Compounds by
Schering............................................. 35
4A.3
Development of NV Compounds by
PTC.................................................. 36
4A.4
No
Development or Commercialization of Collaboration Compounds in the
Viral Field by
PTC............................................................................
36
4A.5
No
Development or Commercialization of NV Compounds in the Viral Field
by Schering.. 36
4A.6
Applicability of
Restrictions.......................................................
36
ARTICLE 5 LICENSES
37
5.1
Research
Licenses...................................................................
37
5.2
Exclusive
Development and Commercialization License to
Schering..................... 37
5.3
Co-Exclusive Research and Development Licenses to Both
Parties...................... 37
5.4
Exclusive
Licenses to Develop and Commercialize NV
Compounds........................ 38
5.5
Right to
Sublicense.................................................................
38
5.6
No Further
Rights...................................................................
39
5.7
Section
365(n) of the Bankruptcy
Code............................................... 39
5.8
No Rights
to Other
Compounds........................................................
40
ARTICLE 6
CONSIDERATION...........................................................................
40
6.1
Up-front
Payment....................................................................
40
6.2
Development Milestone Payments for Schering Viral
Products.......................... 40
6.3
Approval
Milestone Payments for a Second Schering Viral
Product..................... 43
6.4
Sales
Milestones....................................................................
44
6.5
Royalties
Payable by Schering on Sales of Schering Viral
Products................... 44
6.6
Compulsory
License..................................................................
46
6.7
Responsibility for Third Party
Royalties............................................ 46
6.8
Limit on
Adjustments................................................................
48
6.9
Royalties
Payable by Schering on Sales of Schering Non-Viral
Products............... 48
6.10
Royalties
Payable by PTC on Sales of PTC
Products................................... 48
6.11
Royalty Reports and
Payments........................................................
49
6.12
Payments;
Interest..................................................................
49
6.13
Taxes...............................................................................
50
6.14
Additional
Tax
Matters..............................................................
50
6.15
Payment
Currency....................................................................
50
6.16
Schering's
Records of Net Sales and Audits of the
Same.............................. 50
6.17
PTC's
Records of Net Sales and Audits of the
Same................................... 51
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EXECUTION VERSION
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ARTICLE 7
CONFIDENTIALITY.........................................................................
51
7.1
Confidential
Information............................................................
51
7.2
Public
Domain.......................................................................
52
7.3
Legal
Disclosure....................................................................
52
7.4
Permitted
Use and
Disclosures.......................................................
52
7.5
Public
Disclosure...................................................................
53
7.6
Termination of Prior
Agreement......................................................
53
7.7
Publications........................................................................
53
7.8
Delay...............................................................................
54
7.9
Confidential
Terms..................................................................
54
ARTICLE 8 REPRESENTATIONS AND
WARRANTIES..........................................................
54
8.1
PTC
...............................................................................
54
8.2
Schering............................................................................
55
8.3
Knowledge
of Pending
Litigation.....................................................
55
8.4
Additional
Representations and Warranties of
PTC.................................... 55
8.5
Additional
Representations and Warranties of
Schering............................... 56
8.6
Disclaimer..........................................................................
56
ARTICLE 9 INTELLECTUAL
PROPERTY...................................................................
57
9.1
Ownership
of Disclosure of Program
Inventions....................................... 57
9.2 Assignment
of Program Inventions by Employees, Agents or Independent
Contractors.... 58
9.3
Patent
Prosecution and Related
Activities........................................... 58
9.4
Cooperation; Request to Responsible
Party........................................... 59
9.5
Election
Not to
Prosecute...........................................................
59
9.6
Third
Party
Infringement............................................................
60
9.7
Infringement Claims by Third
Parties................................................
61
9.8
Certification Under Drug Price Competition and Patent Restoration
Act............... 62
9.9
Listing of
Patents..................................................................
62
9.10
Diligence
with Respect to Marketing Exclusivity and Patent
Term..................... 62
ARTICLE 10
INDEMNIFICATION.........................................................................
63
10.1
PTC.................................................................................
63
10.2
Schering............................................................................
63
10.3
Procedure...........................................................................
63
ARTICLE 11 TERM AND
TERMINATION....................................................................
64
11.1
Term................................................................................
64
11.2
Schering's
Unilateral Termination
Right............................................. 64
11.3
Termination for
Cause...............................................................
64
11.4
Termination for
Insolvency..........................................................
65
11.5
Additional
Terminations.............................................................
65
11.6
Early
Termination of Research
Program............................................... 66
11.7
Consequences of Certain Terminations by the
Parties................................. 67
11.8
Consequences of Certain Terminations by
Schering.................................... 73
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EXECUTION VERSION
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11.9
Effect of
Termination and
Expiration................................................
74
11.10
Survival............................................................................
74
ARTICLE 12 DISPUTE
RESOLUTION......................................................................
75
ARTICLE 13
MISCELLANEOUS...........................................................................
75
13.1 Governing
Law.......................................................................
75
13.2
Independent
Contractors.............................................................
75
13.3
Assignment..........................................................................
76
13.4
Notices.............................................................................
76
13.5
Force
Majeure.......................................................................
77
13.6
Advice of
Counsel...................................................................
77
13.7
Further
Assurances..................................................................
77
13.8
Severability........................................................................
77
13.9
Waiver..............................................................................
77
13.10 Complete
Agreement..................................................................
77
13.11 Use of
Name.........................................................................
77
13.12
Headings............................................................................
78
13.13 Third
Party
Beneficiaries...........................................................
78
13.14
Consequential
Damages...............................................................
78
13.15
Counterparts........................................................................
78
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<PAGE>
EXECUTION VERSION
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement"), dated
as of
March 17, 2006 (the "Effective Date"), is entered into by and
between PTC
Therapeutics, Inc. with a principal place of business at 100
Corporate Court,
South Plainfield, NJ 07080 ("PTC"), and Essex Chemie AG, a
corporation organized
under the laws of Switzerland and a wholly-owned subsidiary of
Schering-Plough
Corporation, with a place of business at Weystrasse 20, CH-6006
Lucerne 6,
Switzerland ("Schering"). PTC and Schering are sometimes referred
to herein
individually as a "Party" and collectively as the "Parties".
BACKGROUND
WHEREAS, PTC and its Affiliates possess proprietary technology
and
know-how related to the discovery, identification and/or synthesis
of small
molecule drug candidates that inhibit the Hepatitis C virus ("HCV")
by
modulating (either directly or indirectly) the function of the HCV
internal
ribosome entry site ("HCV IRES"), and have identified certain
chemical compounds
that are inhibitors of HCV; and
WHEREAS, Schering and its Affiliates are engaged in the
research,
development and marketing of products for the treatment of, among
other things,
HCV and other viral diseases; and
WHEREAS, PTC and Schering desire to collaborate in the
discovery,
development and commercialization of Collaboration Compounds
(defined below) for
use in the treatment of diseases and conditions in humans and
animals, all as
set forth herein.
NOW, THEREFORE, PTC and Schering, intending to be legally bound,
hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Active Compound" means any compound that (x) [**] at a
concentration of [**] and (y) does not cause more than [**] [**],
or such other
appropriate assay as may be mutually agreed by the Parties) at a
concentration
that is [**]. Active Compounds include Highly Active Compounds.
1.1A "Active Ingredient" means, with respect to any
Collaboration
Compound, such Collaboration Compound, or any metabolites,
prodrugs, solvates
(including without limitation hydrates), esters, salts,
stereoisomers,
racemates, tautomers and polymorphs, of any such Collaboration
Compound.
1.2 "Affiliate" means, with respect to a specified Person, any
Person
that directly or indirectly controls, is controlled by, or is under
common
control with the specified Person. As used in this definition, the
term
"control" means the possession, directly or indirectly, of the
1
<PAGE>
EXECUTION VERSION
power to direct or cause the direction of the management and
policies of a
Person, whether through ownership of voting securities, by contract
or
otherwise. For purposes of this definition, "control" shall be
presumed to exist
if one of the following conditions are met: (a) in the case of
corporate
entities, direct or indirect ownership of more than fifty percent
(50%) of the
stock or shares having the right to vote for the election of
directors, and (b)
in the case of non-corporate entities, direct or indirect ownership
of more than
fifty percent (50%) of the equity interest with the power to direct
the
management and policies of such non-corporate entities.
1.3 "Back-up Development Candidate" means those Collaboration
Compounds
that Schering accepts as suitable for progression to pre-clinical
Development as
a Back-Up Development Candidate for use in the Viral Field in
accordance with
its then current internal decision-making processes. It is intended
that the JSC
develop criteria for a Back-Up Development Candidate that are based
on knowledge
gained as a result of the primary Development Candidate selection,
and may
reflect properties identified as desirable by the JSC given the
strengths and
weaknesses of a Development Candidate, including, for example,
enhanced potency,
better pharmacokinetics, structural distinctiveness, or patentably
distinct
chemical structure. It is understood that PTC or the JSC may
propose, and
Schering shall have the right to designate, Collaboration Compounds
as Back-Up
Development Candidates even if such compounds do not meet all of
the criteria
set forth in this Section 1.3 or on Schedule 1.14.
1.4 "Business Day" means any day that is not a Saturday, a Sunday
or
other day on which banks are required or authorized by Law to be
closed in New
York, New York.
1.5 "Collaboration Compound" means (i) the PTC Compounds, (ii)
the
Schering Compounds, and (iii) any compound that is an Active
Compound and is
either (x) first synthesized, or identified as a Viral IRES
Inhibitor, by PTC or
Schering, or any of their respective Affiliates, or any Third Party
working in
collaboration with or on behalf of PTC or Schering or any of their
respective
Affiliates, following the Effective Date in the course of
performing work under
the Research Program, or (y) claimed or covered in a Patent that
claims a
Program Invention, together in the case of both (x) and (y) with
any metabolites
and prodrugs, and any solvates (including without limitation
hydrates), esters,
salts, stereoisomers, racemates, tautomers and polymorphs, of any
such compound
that are themselves Active Compounds or are converted to an Active
Compound in
vivo.
1.6 "Combination Product" means any Licensed Product that contains
or
comprises a Collaboration Compound and one or more active
ingredients that are
not themselves Collaboration Compounds.
1.7 "Commercially Reasonable Efforts" means (i) with respect to
Schering, that degree of skill, effort, expertise, and resources
normally used
by an established pharmaceutical company and (ii) with respect to
PTC, that
degree of skill, effort, expertise, and resources normally used by
an
established biotechnology company, in each case with respect to a
pharmaceutical
product which is of similar market potential at a similar stage in
its product
life, taking into account the safety and efficacy of the compound
or product,
the cost to Develop and Commercialize the product, the risks
inherent in the
Development and Commercialization of the product, the
competitiveness of the
marketplace, the proprietary position of the compound or product,
the likelihood
of obtaining Regulatory Approval for the product, the potential
economic
2
<PAGE>
EXECUTION VERSION
return from the applicable product, and other technical, legal,
scientific,
medical or commercial factors that such Party deems in good faith
to be
relevant.
1.8 "Commercialization" and "Commercialize" shall refer to all
activities undertaken relating to the pre-marketing, marketing,
promotion,
distribution and sale of a product, and the process of
Commercialization,
respectively.
1.9 "Competitor" means a Third Party or any of its Affiliates
which,
(a) together with its Affiliates, had worldwide annual revenues
from the sale of
pharmaceutical products in excess of [**] Dollars ($ [**]) during
its most
recently reported fiscal year, or (b) is engaged in the Research,
Development or
Commercialization of a product for the treatment of HCV (either
alone or in
collaboration with a Third Party).
1.10 "Compulsory License" means a compulsory license under PTC
Patents
or Schering Patents obtained by a Third Party through the order,
decree, or
grant of a competent governmental authority or court, authorizing
such Third
Party to Develop, make, have made, use, sell, offer to sell or
import a Schering
Viral Product in any country in the Territory.
1.11 "Confidential Information" means all data or other
information
regarding a Party's technology, products or business, or its
activities related
to Collaboration Compound or Licensed Product, which a Party
considers
proprietary or confidential and which is disclosed to the other
Party pursuant
to this Agreement. Disclosures of Confidential Information may be
made by
written, graphic, oral, or electronic means, or in any other
form.
1.12 "Control" or "Controlled" means, with respect to any Patents
or
Know-How, possession (whether by ownership or license, other than
pursuant to
this Agreement) by a Party or its Affiliates of the ability to
grant the
licenses or sublicenses as provided for herein without violating
the terms of
any agreement or other arrangement with any Third Party. Patents or
Know-How
that are licensed or acquired by a Party following the Effective
Date and that
would otherwise be considered to be under the Control of a Party
shall not be
deemed to be under the Control of such Party if the application of
such
definition in the context of any license grants or sublicenses
under this
Agreement would require such Party to make any additional payments
or royalties
to a Third Party in connection with such license grants or
sublicenses, unless
the other Party agrees to cover the costs of such license grants or
sublicenses.
1.13 "Development" means non-clinical (including, without
limitation,
pre-clinical) and clinical drug development activities and related
research,
including, among other things: conducting toxicology studies,
statistical
analysis and report writing, conducting clinical trials for the
purpose of
obtaining or maintaining Regulatory Approval (including, without
limitation,
post-marketing studies) and regulatory affairs related to all of
the foregoing.
Development shall not include Research or any study that is
initiated after
receipt of Regulatory Approval for a Licensed Product and is
principally
intended to support the Commercialization of the Licensed Product.
When used as
a verb, "Develop" means to engage in Development.
1.14 "Development Candidate" means those Collaboration Compounds
that
Schering accepts as suitable for progression to Development
(starting with GLP
toxicology studies) for use in the Viral Field in accordance with
its then
current internal decision making processes. It is
3
<PAGE>
EXECUTION VERSION
intended that Collaboration Compounds which are designated by
Schering as
Development Candidates will meet a significant majority of the
criteria set
forth in Schedule 1.14, as it may be amended from time to time by
the JSC;
provided, however, it is understood that Schering shall have the
right to
designate Collaboration Compounds as Development Candidates even if
such
compounds do not meet all of the criteria set forth on Schedule
1.14.
1.15 "Development Data" means all data and other information
resulting
from the Development of any Collaboration Compound or Licensed
Product following
the Effective Date, including without limitation, the results of
any
non-clinical and clinical studies involving a Collaboration
Compound or Licensed
Product.
1.16 "EMEA" means the European Medicines Evaluation Agency, or
any
successor agency with responsibility for regulating the
Development, Manufacture
and Commercialization of human or veterinary pharmaceutical,
diagnostic, or
prophylactic products.
1.17 "EU" means the countries of the European Union, as they may
exist
from time to time during the Term.
1.18 "Exclusivity Term" means the period beginning on the
Effective
Date and ending on the one-year anniversary of the expiration or
termination of
the Research Term.
1.19 "FDA" means the United States Food and Drug Administration, or
any
successor agency with responsibility for regulating the
Development, Manufacture
and Commercialization of human or veterinary pharmaceutical,
diagnostic, or
prophylactic products.
1.20 "Field" means the prevention, treatment or diagnosis of
all
diseases or conditions in humans or animals. The Field consists of
the Viral
Field and the Non-Viral Field.
1.21 "First Commercial Sale" means (x) with respect to a Party,
the
first bona fide arms length sale of a Licensed Product sold to a
Third Party on
an arms' length basis in any country in the Territory by a Party,
its Affiliates
or Sublicensees after Regulatory Approval has been obtained for
such Licensed
Product in such country, and (y) with respect to a Third Party, the
first bona
fide arms length sale of a finished pharmaceutical or veterinary
product (in
each case in all formulations, dosage forms and packaging
configurations,
including, but not limited to, as part of a combination product) to
another
party (not an Affiliate or sublicensee of such Third Party) on an
arms' length
basis in any country in the Territory by such Third Party, its
Affiliates or
sublicensees after Regulatory Approval has been obtained for such
finished
pharmaceutical or veterinary product in such country. Sales for
clinical trial
purposes or compassionate or similar use shall not be considered to
constitute a
First Commercial Sale.
1.22 "FTE" means a full-time scientific or research/development
person
dedicated by Schering or PTC (or their Affiliates, as applicable)
to the
Research Program, or in the case of less than a full-time dedicated
scientific
or research/development person, a full-time, equivalent scientific
or
research/development person year, based upon a total of [**] hours
per year.
1.23 "FTE Rate" means [**] per full twelve-month (12-month) period
per
FTE.
4
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EXECUTION VERSION
1.24 "Full Development" means the commencement of any clinical
trial
for a Schering Viral Product after (i) demonstration of Proof of
Concept with
respect to such Schering Viral Product or initiation of synthesis
of clinical
material for use in a Pivotal Trial of such Schering Viral Product,
and (ii)
completion of all GLP toxicity studies required to support the
initiation of a
Pivotal Trial for such Schering Viral Product.
1.25 "GLP" means the current good laboratory practices applicable
to
the Development of Licensed Products under applicable Law, to the
extent that
such standards are not less stringent than the United States
current good
laboratory practice, including but not limited to 21 C.F.R. Part
58.
1.26 "Highly Active Collaboration Compound" means any
Collaboration
Compound that is a Highly Active Compound.
1.27 "Highly Active Compound" means any compound that (x[**] at
a
concentration of [**] and (y) does not cause more than [**] (as
measured by the
MTS assay, or such other appropriate assay as may be mutually
agreed by the
Parties) at a concentration that is [**].
1.28 "IND" means (a) (i) in the United States, an Investigational
New
Drug Application, as defined in the federal Food, Drug and Cosmetic
Act, as
amended from time to time (the "FD&C Act"), and the regulations
promulgated
thereunder, as amended from time to time, that is required to be
filed with the
FDA before beginning clinical testing of a Licensed Product in
human subjects,
or any successor application or procedure, and (ii) any counterpart
of such
Investigational New Drug Application in any country other than the
United States
in the Territory (e.g., a CTX), and (b) all supplements and
amendments that may
be filed with respect to any of the foregoing.
1.29 "Initial Research Term" means the period commencing on the
Effective Date and, subject to the provisions of Sections 2.12 and
Article 11,
terminating three (3) years from the Effective Date.
1.30 "Invent" or "Invented" means inventorship as determined by
utilizing the standards for inventorship for patent applications
under United
States patent law.
1.31 "Joint Know-How" means all Know-How that was developed by one
or
more employees, agents or consultants of PTC or any of its
Affiliates and one or
more employees, agents or consultants of Schering or any of its
Affiliates
during the course of performing work under the Research Program.
Joint Know-How
shall exclude Joint Patents.
1.32 "Joint Patents" means all Patents that claim Joint
Inventions.
1.33 "Know-How" means proprietary, non-public information and
materials, whether patentable or not, including, but not limited
to, (a) ideas,
discoveries, inventions, improvements or trade secrets, (b)
pharmaceutical,
chemical and biological materials, products and compositions, (c)
tests, assays,
techniques, data, methods, procedures, formulas, and/or processes,
(d) technical
and non-technical data and other information relating to any of the
foregoing,
(e) drawings, plans, designs, diagrams, sketches, specifications
and/or other
5
<PAGE>
EXECUTION VERSION
documents containing or relating to such information or materials,
and (f)
business processes, price data and information, marketing data and
information,
sales data and information, marketing plans and market
research.
1.34 "Laws" means all laws, statutes, rules, regulations,
ordinances
and other pronouncements having the effect of law or similar
binding effect of
any federal, national, multinational, supranational, state,
provincial, county,
city or other political subdivision, or any agency, department or
bureau
thereof.
1.35 "Licensed Product" means a Schering Non-Viral Product, a
Schering
Viral Product or a PTC Product.
1.36 "Major Market" means each of the United States, Japan,
Germany,
France, the United Kingdom, Italy and Spain.
1.37 "Manufacture" means all activities related to the
manufacturing of
a pharmaceutical product, or any ingredient thereof, including but
not limited
to test method development and stability testing, formulation,
process
development, manufacturing scale-up, manufacturing for use in
non-clinical and
clinical studies, manufacturing for commercial sale, packaging,
release of
product, quality assurance/quality control development, quality
control testing
(including in-process, in-process release and stability testing)
and release of
product or any component or ingredient thereof, and regulatory
activities
related to all of the foregoing.
1.38 "Marketing Exclusivity" means, with respect to a Licensed
Product,
any data or market exclusivity periods, including (a) the marketing
or data
exclusivity afforded approved drug products pursuant to (i)
Sections 505(c),
505(j), and 505A of the FD&C Act, and the regulations
promulgated thereunder, as
amended from time to time, or its equivalent in a country other
than the United
States, or (ii) the orphan drug exclusivity afforded approved drugs
designated
for rare diseases or conditions under Sections 526 and 527 of the
FD&C Act, and
the regulations promulgated thereunder, as amended from time to
time, or its
equivalent in a country other than the United States, and/or (iii)
any other
period of data or market exclusivity listed in FDA's Orange Book or
a foreign
equivalent for a Licensed Product, and/or (b) the coverage of such
Licensed
Product by a Law which precludes the Regulatory Authority in a
country from
granting Regulatory Approval or accepting an application for
Regulatory Approval
for another product because the application for the other product
(i) references
a Licensed Product, (ii) seeks approval of a product containing the
same Active
Ingredient as that which is contained in the applicable Licensed
Product and/or
(iii) seeks approval of a product for a use for which the
applicable Licensed
Product is approved.
1.39 "NDA" means (a) the single application or set of applications
for
approval and/or pre-market approval to make and sell commercially
a
pharmaceutical therapeutic, diagnostic, or prophylactic product or
delivery
systems or device filed with the FDA, including without limitation
all
information included in Drug Master Files related to such
application(s), and
any related registrations with or notifications to the FDA, and (b)
any
counterparts to such applications filed with any other national or
supranational
Regulatory Authority in the Territory, and (c) all supplements and
amendments
that may be filed with respect to any of the foregoing.
6
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EXECUTION VERSION
1.40 "Net Sales" means, with respect to any Licensed Product, the
gross
invoiced sales of such Licensed Product by a Party, its Affiliates
and
Sublicensees to Third Parties, less the following deductions to the
extent
included in the gross invoiced sales price for such Licensed
Product or
otherwise directly paid or incurred by such Party or its Affiliates
or
Sublicensees with respect to the sale of such Licensed Product:
(a) bad debts actually written off which are attributable to
sales
of the Licensed Product;
(b) trade, quantity and cash discounts, and any other
adjustments,
including, without limitation, those granted on account of price
adjustments,
billing errors, rejected goods, damaged goods, returns, rebates,
chargeback
rebates, fees, reimbursements or similar payments granted or given
to
wholesalers or other distributors, buying groups, health care
insurance carriers
or other institutions;
(c) freight and insurance charges to the extent that they are
included in the price or otherwise paid by the purchaser;
(d) customs or excise taxes, including, without limitation,
import
duties, sales tax and other taxes (except income taxes) or duties
relating to
sales;
(e) any payment (other than a payment imposed as a result of
violation of applicable Law) in respect of sales to any
governmental authority
in respect of any government-subsidized program, including, without
limitation,
Medicare and Medicaid rebates;
(f) [**];[**]distribution, packing, handling and transportation
charges for Licensed Product to the extent that they are included
in the price
or otherwise paid by the customer;
(g) [**]; and
(h) [**].
The foregoing adjustments shall be consistent with customary
accounting
practices within the selling Party and its Affiliates (or their
respective
Sublicensees) and in accordance with U.S. Generally Accepted
Accounting
Principles ("GAAP"), consistently applied.
The Net Sales from any Combination Product shall be determined by
multiplying
the Net Sales of the Combination Product (as determined based on
the definition
of "Net Sales" excluding this paragraph) during the applicable
royalty reporting
period, by the fraction, A/(A+B), where A is the weighted (by sales
volume)
average sale price of the Licensed Product which includes the
Collaboration
Compound when sold separately in finished form and for the same
indication in
the country in which the Combination Product is sold (the
"Monotherapy Licensed
Product") and B is the weighted (by sales volume) average sale
price of the
other product(s) which contain the other active ingredient(s)
included in the
Combination Product when sold separately as a monotherapy and in
finished form
and for the same indication in the country in which the Combination
Product is
sold, in each case during the applicable royalty reporting period
or, if sales
of both the Monotherapy Licensed Product and the other product(s)
did not occur
in such
7
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EXECUTION VERSION
period, then in the most recent royalty reporting period in which
sales of both
occurred. In the event that such average sale price cannot be
determined for
both the Monotherapy Licensed Product and all other products(s)
included in the
Combination Product, then Net Sales for purposes of determining
royalty payments
[**].
It is understood, however, that in certain countries in the
Territory, a Party
or its Affiliates may Commercialize Licensed Products through a
Third Party
distributor or agent under an arrangement in which such Party or
its Affiliates
(x) transfer the Licensed Product to such distributor or agent at a
fixed price
that is not necessarily related to the final selling price of the
distributor or
agent, and (y) are not responsible for marketing and promoting such
Licensed
Product in such countries and receive no compensation from the sale
of such
Licensed Products by the distributor or agent. To the extent that
such Third
Party distributors or agents would be considered "Sublicensees",
the Parties
agree that the gross invoiced sales prices for the sale of the
Licensed Product
by the applicable Party or its Affiliates to such Third Parties
shall be the
price to be used for purposes of computing Net Sales in such
countries.
1.41 "Non-Viral Field" means the prevention, treatment or diagnosis
of
all diseases or conditions in humans or animals, excluding the
Viral Field.
1.42 "NV Compounds" means Collaboration Compounds that are not
Highly
Active Collaboration Compounds.
1.43 "Patent" means all existing patents and patent applications
and
all patent applications hereafter filed, including any
continuations,
continuations-in-part, divisions, provisionals or any substitute
applications,
any patent issued with respect to any such patent applications, any
reissue,
reexamination, renewal or extension (including any supplementary
protection
certificate) of any such patent, and any confirmation patent or
registration
patent or patent of addition based on any such patent, and all
foreign
counterparts of any of the foregoing.
1.44 "Person" means any natural person, corporation, general
partnership, limited partnership, joint venture, proprietorship or
other
business organization.
1.45 "Pivotal Trial" means a human clinical trial that is designed
to
confirm with statistical significance the efficacy and safety of a
drug in a
given patient population, the results of which are intended to form
the basis
for approval of an NDA by a Regulatory Authority.
1.46 "Program Invention" means all inventions that are Invented by
one
or more employees, agents or consultants of PTC or any of its
Affiliates and/or
one or more employees, agents or consultants of Schering or any of
its
Affiliates in the course of performing work under the Research
Program.
1.47 "Proof of Concept" means that the data from a randomized,
placebo-controlled study sponsored by Schering or its Affiliates
demonstrates
that [**] In the event that Schering elects to initiate clinical
Development for
a Schering Viral Product in an indication other than the treatment
of HCV, the
Parties shall agree upon a corresponding definition of "Proof of
Concept" for
such indication. For the avoidance of doubt, Proof of Concept shall
be deemed to
have been met with respect to any Schering Viral Product for which
Schering
commences all of those GLP
8
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EXECUTION VERSION
toxicity studies referenced in Section 1.24(ii).
1.47A "PTC Background Patents" means the Patents within the Control
of
PTC either as of the Effective Date or thereafter during the Term,
which are
listed on Schedule 1.47A, as may be modified by mutual written
agreement of the
Parties.
1.48 "PTC Compounds" means (i) compounds that are synthesized by or
on
behalf of PTC or its Affiliates prior to the Effective Date and
that are known
to PTC to be Highly Active Compounds as of the Effective Date, (ii)
Active
Compounds that are either (x) synthesized prior to the Effective
Date during the
course of PTC's medicinal chemistry program directed at viral IRES
inhibitors,
or (y) synthesized or Invented by or on behalf of PTC or its
Affiliates prior to
the end of the Research Term and claimed in a Patent (including
without
limitation any patent application) Controlled by PTC as having
activity as an
antiviral compound that inhibits the HCV virus by modulating the
function of the
HCV IRES, or for which sufficient support exists in the written
description of
such Patent or patent application to support a claim and there is
the ability to
prosecute such claim, and (iii) any compound that is first
synthesized by or on
behalf of PTC or its Affiliates prior to the end of the Research
Term and is
both (a) identified by PTC or its Affiliates prior to the end of
the Research
Term as an Active Compound and (b) identified as a Viral IRES
Inhibitor in
accordance with the provisions of Section 2.13, together, in the
case of each of
(i), (ii) and (iii), with any metabolites and prodrugs, and any
solvates
(including without limitation hydrates), esters, salts,
stereoisomers,
racemates, tautomers and polymorphs of any such compounds that are
themselves
Active Compounds or are converted to an Active Compound in vivo.
Attached hereto
as Schedule 1.48 is a list of all PTC Compounds believed by PTC to
exist as of
the Effective Date; provided, however, it is understood that any
compound that
meets the criteria set forth in this Section 1.48 shall be deemed
to be a PTC
Compound regardless of whether such compound is identified on
Schedule 1.48.
1.49 "PTC Intellectual Property" means PTC Patents and PTC
Technology
Platform.
1.50 "PTC Know-How" means Know-How within the Control of PTC,
either as
of the Effective Date or thereafter during the Term, which is
proprietary to PTC
or its Affiliates and either (i) relates to the HCV IRES, to
compounds that are
Viral IRES Inhibitors or that are Collaboration Compounds, methods
of preparing
or using Viral IRES Inhibitors or Collaboration Compounds or
methods of
treating, diagnosing or preventing any disease or condition using
Viral IRES
Inhibitors or Collaboration Compounds, or (ii) is necessary or
useful for the
Research, Development, Manufacture, use or sale of Collaboration
Compounds or
Licensed Products and is developed prior to the end of the Research
Term.
Notwithstanding anything herein to the contrary, PTC Know-How shall
exclude PTC
Patents but shall include Joint Know-How to the extent Controlled
by PTC.
Information within the PTC Know-How shall cease to be proprietary
at such time
as it becomes publicly available, or otherwise becomes known to
Third Parties
without an obligation of confidentiality, in each case other than
through a
breach by Schering, its Affiliates or Sublicensees of the
obligations under
Article 7. Furthermore, information within the PTC Know-How shall
not be deemed
proprietary to PTC if it is (x) known to Schering prior to
disclosure under this
Agreement, as shown by written evidence, or (y) is independently
developed by
Schering or its Affiliates without the use of or reliance on any
proprietary,
non-public information within the PTC Know-How, as shown by
contemporaneous
9
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EXECUTION VERSION
written evidence.
1.51 "PTC NV Know-How" means, with respect to a Designated NV
Compound
designated by Schering, any PTC Know-How which (x) relates to such
Designated NV
Compound (or a Related Compound), methods of preparing or using
such Designated
NV Compound (or a Related Compound) in the Non-Viral Field or
methods of
treating, diagnosing or preventing any disease or condition in the
Non-Viral
Field using such Designated NV Compound (or a Related Compound),
and (y) is
developed prior to the date that Schering designated such NV
Compound as a
Designated NV Compound.
1.52 "PTC NV Patents" means, with respect to a Designated NV
Compound
designated by Schering, any Patents Controlled by PTC, either as of
the
Effective Date or thereafter during the Term, which (x) claim
inventions that
are Invented prior to the date that Schering designates such NV
Compound as a
Designated NV Compound, and (y) claim or cover (i) the composition
of matter of
such Designated NV Compound (or a Related Compound), (ii) the use
of such
Designated NV Compound (or a Related Compound) in the Non-Viral
Field, (iii) a
method of treating, diagnosing or preventing any disease or
condition in the
Non-Viral Field using such Designated NV Compound (or a Related
Compound) or
(iv) a method of Manufacturing such Designated NV Compound (or a
Related
Compound).
1.53 "PTC Patents" means the Patents within the Control of PTC,
either
as of the Effective Date or thereafter during the Term, which (i)
relate to
Licensed Products, HCV IRES, Viral IRES Inhibitors, or methods of
preparing or
using Licensed Products, Viral IRES Inhibitors, or methods of
treating,
diagnosing or preventing any disease or condition using Licensed
Products or
Viral IRES Inhibitors, or relate to methods or materials used for
discovering,
identifying, or assaying for Viral IRES Inhibitors or Licensed
Products, (ii)
contain claims that would be infringed by the Research,
Development,
Manufacture, use, import or sale of Collaboration Compounds or
Licensed Products
in the Field, and (iii) claim inventions Invented prior to the end
of the
Research Term. The PTC Patents shall include the PTC NV Patents, as
well as the
Joint Patents to the extent Controlled by PTC. The PTC Patents
shall not include
the PTC Background Patents. The PTC Patents existing as of the
Effective Date
are listed in Schedule 1.53.
1.54 "PTC Product" means any finished pharmaceutical or
veterinary
product containing a Designated NV Compound designated by PTC (or a
Related
Compound) that PTC or its Affiliates Develop and/or Commercialize
(either alone
or in collaboration with one or more Third Parties) in the
Non-Viral Field in
accordance with the provisions of Article 4A, in all formulations,
dosage forms
and package configurations, including, but not limited to, as part
of a
Combination Product. For the avoidance of doubt, a PTC Product may
not include a
Highly Active Collaboration Compound, a Schering Field NV Compound
(unless such
designation has lapsed pursuant to Section 4.1(a)), a Designated NV
Compound
designated by Schering (or a Related Compound), unless such
designation has
lapsed pursuant to Section 4A.1(c), or any Schering Compound.
1.55 "PTC Technology Platform" means (i) PTC Know-How, and (ii) any
PTC
Compounds.
10
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EXECUTION VERSION
1.56 "Regulatory Approval" means any approvals, licenses,
registrations
or authorizations of any federal, state, multinational,
supranational or local
regulatory agency, department, bureau or other governmental entity
necessary or
reasonably useful for the importation, commercial manufacture, use,
sale or
other Commercialization of a pharmaceutical product in a
regulatory
jurisdiction, including but not limited to pricing and/or
reimbursement
approvals.
1.57 "Regulatory Authority" means any governmental regulatory
authority
involved in granting Regulatory Approvals with respect to any
Licensed Product
in the Territory, including, without limitation, the FDA and the
European
Commission.
1.58 "Related Compound" means, with respect to a particular NV
Compound, any Collaboration Compound that (i) has the same core
structure as
such NV Compound, and (ii) has an activity level against the same
target that
was utilized to designate the applicable NV Compound that is at
least [**]
percent ([**]%) of the activity level of such NV Compound when
measured in the
same assay that was utilized to designate such NV Compound as a
Designated NV
Compound (i.e., if the Designated NV Compound has [**] [**] against
the same
target). For purposes of this definition, "core structure" means
the exact atom
arrangement that makes up the original core structure present in
the structure
of the applicable NV Compound, minus any substituent R groups.
Notwithstanding
the foregoing, Related Compounds shall not encompass any compound
whose activity
against the given target is a result of general toxic properties or
other
nonspecific inhibitory properties, e.g. denaturing of a protein.
Furthermore,
Related Compounds shall not encompass any Highly Active Compounds,
any Schering
Compounds, any Schering Field NV Compounds or any Collaboration
Compounds that
are either NV Compounds previously designated by either Party
pursuant to
Section 4A.1, or Related Compounds to such other NV Compounds
previously
designated by either Party pursuant to Section 4A.1 (unless such
designation has
lapsed pursuant to Section 4A.1(c)).
1.59 "Research" means all activities relating to the identification
and
early pre-clinical testing of compounds, including synthesis and
testing by in
vitro assay of compounds, the further testing, including structural
studies
thereof and/or via animal model, leading up to, but not including,
GLP
toxicology testing. Research shall exclude Development.
1.60 "Research Plan" means the specific plan for conducting the
Research Program, as described in Section 2.1 and attached hereto
as Schedule
1.60, as such plan may be revised from time to time by the JSC in
accordance
with the provisions of Article 3.
1.61 "Research Program" means the collaborative research
program
undertaken by the Parties pursuant to Article 2 of this Agreement
to discover,
identify, synthesize and evaluate PTC Compounds and other
Collaboration
Compounds for use in the Viral Field.
1.62 "Research Technology" means all tangible and intangible
know-how,
trade secrets, inventions (whether or not patentable),
discoveries,
developments, data, information, and physical, chemical or
biological material,
and any replication of or any part of any of the foregoing, that
was made by
employees or agents of PTC, Schering, and/or any of their
respective Affiliates,
either alone or jointly, during the course of and in the conduct of
the Research
Program during the Research Term.
11
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EXECUTION VERSION
1.63 "Research Term" means the period during which the Parties
shall
conduct the Research Program pursuant to the provisions of Article
2. The
Research Term shall include the Initial Research Term and the
Extended Research
Term. The Research Term will automatically terminate upon
termination of the
Research Program pursuant to Sections 2.12 or Article 11, or upon
termination of
this Agreement for any reason.
1.64 "Schering Background Know-How" means Know-How within the
Control
of Schering, either as of the Effective Date or thereafter during
the Research
Term, which is proprietary to Schering or its Affiliates and either
(i) relates
to the HCV IRES, to compounds that are Viral IRES Inhibitors,
methods of
preparing or using Viral IRES Inhibitors, or methods of treating,
diagnosing or
preventing any disease or condition using Viral IRES Inhibitors, or
(ii) is
necessary or useful for the Research to be performed under the
Research Plan.
Notwithstanding anything herein to the contrary, Schering
Background Know-How
shall not include Schering Background Patents. Information within
the Schering
Background Know-How shall cease to be proprietary at such time as
it becomes
publicly available, or otherwise becomes known to Third Parties
without an
obligation of confidentiality, in each case other than through a
breach by PTC,
its Affiliates or Sublicensees of the obligations under Article 7.
Furthermore,
information within the Schering Background Know-How shall not be
deemed
proprietary to Schering if it is (x) known to PTC prior to
disclosure under this
Agreement, as shown by written evidence, or (y) independently
developed by PTC
or its Affiliates without the use of or reliance on any
proprietary, non-public
information within the Schering Background Know-How, as shown by
contemporaneous
written evidence.
1.65 "Schering Background Patents" means Patents within the Control
of
Schering, either as of the Effective Date or thereafter during the
Research
Term, which (i) contain claims that would be infringed by the
Research to be
performed under the Research Plan, including but not limited to
chemical
optimization or initial biological characterization of
Collaboration Compounds,
or (ii) relate to methods or materials used for discovering,
identifying, or
assaying for Viral IRES Inhibitors. The Schering Background Patents
existing as
of the Effective Date are listed in Schedule 1.65.
1.66 "Schering Background Technology" means Schering Background
Know-How and Schering Background Patents.
1.67 "Schering Compounds" means Active Compounds that are either
(x)
identified as Viral IRES Inhibitors by Schering prior to the
Effective Date, or
(y) first synthesized or identified by Schering or its Affiliates
during the
Term through the use of PTC Know-How that is proprietary to PTC at
the time of
first use for synthesis or identification of such Active Compounds
by Schering
or its Affiliates or through the use of Joint Know-How, together,
in the case of
both (x) and (y), with any metabolites and prodrugs, and any
solvates (including
without limitation hydrates), esters, salts, stereoisomers,
racemates, tautomers
and polymorphs of any such synthesized compounds that are
themselves Active
Compounds or are converted to an Active Compound in vivo. Attached
hereto as
Schedule 1.67 is a list of all Schering Compounds believed by
Schering to exist
as of the Effective Date; provided, however, it is understood that
any compound
that meets the criteria set forth in this Section 1.67 shall be
deemed to be a
12
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EXECUTION VERSION
Schering Compound regardless of whether such compound is identified
on Schedule
1.67.
1.68 "Schering Field NV Compounds" means any NV Compound that
Schering
elects to Develop as a Schering Viral Product in accordance with
the provisions
of Section 4.1, together with any Related Compounds.
1.69 "Schering Intellectual Property" means Schering Patents
and
Schering Technology.
1.70 "Schering Know-How" means Know-How within the Control of
Schering
that is developed by Schering or its Affiliates during the Term in
the conduct
of the Research, Development or Manufacture of Collaboration
Compounds or
Licensed Products, which is proprietary to Schering or its
Affiliates.
Notwithstanding anything herein to the contrary, Schering Know-How
shall exclude
Schering Patents but shall include Joint Know-How to the extent
Controlled by
Schering. Information within the Schering Know-How shall cease to
be proprietary
at such time as it becomes publicly available, or otherwise becomes
known to
Third Parties without an obligation of confidentiality, in each
case other than
through a breach by PTC, its Affiliates or Sublicensees of the
obligations under
Article 7. Furthermore, information within the Schering Know-How
shall not be
deemed proprietary to Schering if it is (x) known to PTC prior to
disclosure
under this Agreement, as shown by written evidence, or (y) is
independently
developed by PTC or its Affiliates without the use of or reliance
on any
proprietary, non-public information within the Schering Know-How,
as shown by
contemporaneous written evidence.
1.71 "Schering Licenses" means the licenses and other rights
granted or
to be granted to Schering pursuant to Sections 5.1(a), 5.1(b), 5.2,
5.3(a) and
5.4(a).
1.72 "Schering Non-Viral Product" means any finished pharmaceutical
or
veterinary product containing a Designated NV Compound designated
by Schering
(or a Related Compound) that Schering or its Affiliates Develop
and/or
Commercialize (either alone, or in collaboration with one or more
Third Parties)
in the Non-Viral Field in accordance with the provisions of Article
4A, or a
Related Compound, in all formulations, dosage forms and
packaging
configurations, including, but not limited to, as part of a
Combination Product.
For the avoidance of doubt, a Schering Non-Viral Product may not
include any
Designated NV Compound designated by PTC (or a Related Compound),
unless such
designation has lapsed pursuant to Section 4A.1(c). Notwithstanding
the
foregoing, a product Developed by Schering that contains either (x)
both an NV
Compound and a Highly Active Collaboration Compound, or (y) an NV
Compound that
Schering elects to Develop as a Schering Viral Product in
accordance with the
provisions of Section 4.1, shall not be deemed a Schering Non-Viral
Product and
shall instead be deemed a Schering Viral Product.
1.73 "Schering NV Know-How" means, with respect to a Designated
NV
Compound designated by PTC, any Schering Know-How which (x) relates
to such
Designated NV Compound (or a Related Compound), methods of
preparing or using
such Designated NV Compound (or a Related Compound) in the
Non-Viral Field or
methods of treating, diagnosing or preventing any disease or
condition in the
Non-Viral Field using such Designated NV Compound (or a Related
Compound), and
(y) is developed prior to the date that PTC designated such NV
Compound as a
Designated NV Compound.
13
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EXECUTION VERSION
1.74 "Schering NV Patents" means, with respect to a Designated
NV
Compound designated by PTC, any Patents Controlled by Schering
during the Term
which (x) claim inventions that are Invented prior to the date that
PTC
designates such NV Compound as a Designated NV Compound, and (y)
claim or cover
(i) the composition of matter of such Designated NV Compound (or a
Related
Compound), (ii) the use of such Designated NV Compound (or a
Related Compound)
in the Non-Viral Field, (iii) a method of treating, diagnosing or
preventing any
disease or condition in the Non-Viral Field using such Designated
NV Compound
(or a Related Compound) or (iv) a method of Manufacturing such
Designated NV
Compound (or a Related Compound).
1.75 "Schering Patents" means those Patents Controlled by
Schering
during the Term which (i) claim Program Inventions, or other
inventions Invented
by Schering or its Affiliates during the Term in the conduct of
Research,
Development or Manufacture of Highly Active Collaboration Compounds
(or, in the
case of the license to be granted under Section 5.3(b), NV
Compounds), Schering
Field NV Compounds or Schering Viral Products, and (ii) contain
claims that
would be infringed by the Research, Development, Manufacture, use,
import or
sale of Highly Active Collaboration Compounds (or, in the case of
the license to
be granted under Section 5.3(b), NV Compounds), Schering Field NV
Compounds or
Schering Viral Products in the Field. The Schering Patents shall
include the
Joint Patents to the extent Controlled by Schering, but except as
explicitly
provided in this Section 1.75 do not include the Schering NV
Patents.
1.76 "Schering Technology" means (i) Schering Know-How, and (ii)
any
Schering Compounds.
1.77 "Schering Viral Product" means any finished pharmaceutical
or
veterinary product containing either a Highly Active Collaboration
Compound or
Schering Field NV Compound, in each case in all formulations,
dosage forms and
packaging configurations, including, but not limited to, as part of
a
Combination Product. For the avoidance of doubt, a Schering Viral
Product may
not include any Designated NV Compound designated by PTC pursuant
to Section
4A.1 (or any Related Compound), unless such designation has lapsed
pursuant to
Section 4A.1(c).
1.78 "Specified Third Party Patents" means any Patents owned or
controlled by a Third Party (and not Controlled by a Party or its
Affiliates)
which claim the composition of matter of a Highly Active
Collaboration Compound
or Schering Field NV Compound, the use of a Highly Active
Collaboration Compound
or Schering Field NV Compound in the Field, a method of treating,
diagnosing or
preventing any disease or condition through the use of a Highly
Active
Collaboration Compound or Schering Field NV Compound, or a method
of
manufacturing a Highly Active Collaboration Compound or Schering
Field NV
Compound.
1.79 "Sublicensee" means a Third Party to whom a Party has granted
a
license or sublicense to make, have made, import, use, sell, or
offer for sale
Licensed Products pursuant to Section 5.5(b), 5.5(c) or 5.5(d).
Third Parties
that are permitted to distribute and resell Licensed Product
purchased from
Schering, its Affiliates or any entity designated by Schering or
its Affiliates,
or from PTC or its Affiliates, or any entity designated by PTC or
its
Affiliates, shall be
14
<PAGE>
EXECUTION VERSION
considered Sublicensees only if such Third Parties are also
responsible for
marketing and promoting the applicable Licensed Product in the
applicable
country. In addition, Third Parties that Manufacture Licensed
Product on behalf
of a Party for supply to a Party or its Affiliates or Sublicensees
(and have no
other rights to Develop or Commercialize such Licensed Product) are
not
Sublicensees.
1.80 "Territory" means all countries of the world.
1.81 "Third Party" means any entity other than PTC or Schering or
any
of their respective Affiliates.
1.82 "Third Party License Agreement" means any contract or
agreement
pursuant to which a Party or its Affiliates obtains or has obtained
rights to or
under any Third Party Patents or Third Party Know-How to Research,
Develop,
Manufacture or Commercialize Collaboration Compounds or Licensed
Products in the
Field. The Third Party License Agreements existing as of the
Effective Date are
set forth in Schedule 1.82
1.83 "Valid Claim" means a claim of any issued, unexpired Patent
which
has not been revoked, withdrawn, canceled, disclaimed or held
unenforceable or
invalid by a decision of a court or tribunal of competent
jurisdiction from
which no appeal can be taken, or with respect to which an appeal is
not taken
within the time allowed for appeal, and which has not been
disclaimed, denied or
admitted to be invalid or unenforceable through reissue, disclaimer
or
otherwise.
1.84 "Viral Field" means the prevention, treatment or diagnosis of
all
viral diseases or conditions in humans or animals.
1.85 "Viral IRES Inhibitor" means a compound which has as its
primary
mechanism of action the inhibition (either directly or indirectly)
of viral
replication by virtue of decreasing IRES-dependent translation of
viral
proteins. For clarity, a compound which broadly inhibits viral
replication as a
result of general toxic properties or other nonspecific inhibitory
properties
shall not be considered a Viral IRES Inhibitor.
ADDITIONAL DEFINITIONS. Each of the following definitions is set
forth
in the section of this Agreement indicated below:
DEFINITION
SECTION
----------
-------
AEs
4.10(d)
Agreement
Preamble
Blocking Patent
11.5(b)
Collaboration Patents
9.3(e)
Designated NV Compound
4A.1(a)
Designation Date
4A.1(a)
Development Milestones Group
6.2
Development Plan
4.3
Dollars or "$"
6.15
15
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EXECUTION VERSION
Effective Date
Preamble
Existing Third Party License Agreement
6.7(f)
Extended Research Plan
2.8(b)
Extended Research Term
2.8(a)
FD&C Act
1.28
GAAP
1.40
HCV
Recitals
HCV IRES
Recitals
Indemnitor
10.3
Invention Policy
9.1
IRES Research Program
2.10(a)
Joint Inventions
9.1(c)
JPT
9.3(e)
JSC
3.1
key internal Schering project team meetings
3.8
Liability
10.1
LIBOR
6.12
Materials
2.9
Monotherapy Licensed Product
1.40
Party; Parties
Preamble
Project Leaders
3.7
PTC
Preamble
PTC Licensed Compound Patents
9.3(b)
PTC Indemnitee
10.2
PTC Triggering Event
11.6(a)
Publishing Party
7.7
Reviewing Party
7.7
Schering
Preamble
Schering Indemnitee
10.1
Schering Triggering Event
4.12
Second Schering Viral Product
6.3
Term
11.1
Terminated Compound
11.7(b)(ii)
Termination Date
11.7(b)(iii)
Third Party Activity
2.10(e)
Unqualified Blocking Opinion
11.5(b)
Unqualified Opinion
6.7(a)
USPTO
8.4(i)
16
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EXECUTION VERSION
ARTICLE 2
RESEARCH PROGRAM
2.1 Collaborative Research. Commencing on the Effective Date,
and
subject to the terms and conditions herein, the Parties shall each
use
Commercially Reasonable Efforts to conduct the Research Program on
a
collaborative basis pursuant to the Research Plan. The Research
Plan, among
other things, shall specify the scientific direction of the
program, the
specific research objectives to be achieved during the Research
Program, the
specific responsibilities of each of the Parties under the Research
Plan, and
the specific number of FTEs to be provided by PTC (and funded by
Schering
pursuant to Section 2.5(a)) to support the Research Plan. The
Parties agree that
the goal of the Research Program is to identify one or more Highly
Active
Collaboration Compounds that are suitable for designation as
potential
Development Candidates, as well as to identify one or more Highly
Active
Collaboration Compounds that are suitable for designation as
potential Back-Up
Development Candidates. The Research Plan may be amended by the JSC
from time to
time in accordance with the provisions of Article 3.
2.2 Conduct of the Research; Allocation of Responsibilities.
(a) The Research Program will be managed and directed by the
JSC,
as provided in Article 3 hereof.
(b) Subject to the oversight of the JSC, PTC shall, with the
advice and assistance of Schering, be primarily responsible for the
chemical
optimization activities and biological/pharmacological
characterization
activities as defined in the Research Plan, and Schering shall,
with the advice
and assistance of PTC, be responsible for all other aspects of the
Research Plan
that are necessary to determine whether or not a Highly Active
Collaboration
Compound is suitable for designation as a potential Development
Candidate or a
Back-Up Development Candidate.
(c) During the Research Term, (i) PTC shall disclose to
Schering
such of the PTC Know-How as Schering reasonably needs to perform
its obligations
and assigned tasks under the Research Plan, and (ii) Schering shall
disclose to
PTC such of the Schering Background Know-How as PTC reasonably
needs to perform
its obligations and assigned tasks under the Research Plan.
Notwithstanding the
foregoing, nothing in this Agreement shall require PTC to disclose
to Schering
its Know-How or Patents relating to its GEMS screening technology
(other than
the published or issued Patents listed on Schedule 1.47A).
(d) All work conducted by either Party in the course of the
Research Program shall be completely and accurately recorded, in
sufficient
detail and in good scientific manner, in separate laboratory
notebooks distinct
from other work being conducted by such Party. On reasonable
notice, and at
reasonable intervals, each Party shall have the right to inspect
and copy all
such records of the other Party or its Affiliates reflecting
Research Technology
or work done under the Research Program.
17
<PAGE>
EXECUTION VERSION
(e) The Parties acknowledge and agree that neither Party
guarantees the success of the Research Program tasks undertaken
hereunder.
2.3 PTC Research Efforts. During the Research Term, PTC agrees
to
commit to the Research Program such number of FTEs in its or its
Affiliates'
employ as shall be specified in the Research Plan. In conducting
the Research
Program, PTC shall be responsible for the tasks allocated to it
under the
Research Plan. In the performance of such work, PTC shall maintain
and utilize
scientific and research/development staff, laboratories, offices
and other
facilities consistent with such undertaking. PTC shall use
personnel with
sufficient skills and experience as are required to accomplish
efficiently and
expeditiously the objectives of the Research Program as set forth
in the
Research Plan in good scientific manner and in compliance in all
material
respects with all applicable Laws.
2.4 Schering Research Efforts. During the Research Term, Schering
shall
commit to the Research Program sufficient FTEs in its or its
Affiliates' employ
to conduct Schering's obligations under the Research Plan, and
shall report to
the JSC the approximate number of Schering FTEs that are engaged in
the Research
Program. In conducting the Research Program, Schering shall be
responsible for
the tasks allocated to it under the Research Plan. In the
performance of such
work, Schering shall maintain and utilize scientific and
research/development
staff, laboratories, offices and other facilities consistent with
such
undertaking. Schering shall use personnel with sufficient skills
and experience
as are required to accomplish efficiently and expeditiously the
objectives of
the Research Program as set forth in the Research Plan in good
scientific manner
and in compliance in all material respects with all requirements of
applicable
Laws.
2.5 Research Funding; Responsibility for Costs of the Research
Program.
(a) During the Initial Research Term, Schering agrees to
provide
PTC with funding (at the FTE Rate) for the number of FTEs set forth
in the
Research Plan, as it may be amended from time to time. The JSC
shall have the
discretion to adjust the number of FTEs to be provided by PTC and
supported by
Schering during the Initial Research Term consistent with changes
in the
Research Plan; provided that in the initial phase of the Research
Plan (prior to
Schering's acceptance of the first Development Candidate), the JSC
shall not (i)
increase the number of FTEs funded by Schering on an annualized
basis to greater
than [**], or (ii) decrease the number of FTEs funded by Schering
on an
annualized basis to fewer than [**]. Following Schering's
acceptance of the
first Development Candidate, the number of FTEs to be funded by
Schering will be
decreased by the JSC to reflect the decreased activities, if any,
required under
the Research Plan to identify a Back-up Development Candidate and
support the
accepted Development Candidate. It is currently expected that the
number of FTEs
to be funded by Schering during the second phase of the Research
Plan (following
Schering's acceptance of the first Development Candidate) will be
approximately
[**] of the number that is funded by Schering during the initial
phase of the
Research Plan; provided, however, that in no case will the number
of FTEs funded
by Schering during this second phase of the Research Plan exceed
[**] or be
fewer than [**] on an annualized basis. Following designation of a
Back-Up
Development Candidate by Schering, the number of FTEs to be funded
by Schering
will be
18
<PAGE>
EXECUTION VERSION
decreased by the JSC to reflect the decreased activities required
under the
Research Plan to support the accepted Back-up Development Candidate
and accepted
Development Candidate. Funding of any PTC FTEs by Schering during
the Extended
Research Term shall be as provided in Section 2.8.
(b) The amounts due to PTC under this Section 2.5 shall be
payable
in equal installments on a quarterly basis, on the fifteenth (15th)
day of each
January, April, July and October of each year during the Research
Term.
(c) Except for the FTE funding to be provided by Schering
pursuant
to Sections 2.5(a) and 2.8, each Party shall be solely responsible
for all costs
and expenses incurred by it in performing activities assigned to it
under the
Research Plan. Notwithstanding the foregoing, to the extent that
PTC agrees to
undertake any activities that are not related to the chemical
optimization or
biological or pharmacological characterization of Collaboration
Compounds,
Schering shall be responsible for any PTC internal costs (such
costs to be
calculated by multiplying the number of PTC FTEs by the FTE Rate),
as well as
any external costs incurred by PTC in performing such activities
(but only to
the extent such external costs have been approved by Schering in
advance).
2.6 Disclosure of Facilitating Research Technology. Each Party
will
disclose to the other all Research Technology discovered, Invented,
or otherwise
made by such Party that is necessary to enable the other Party to
perform its
obligations under the Research Plan or to exercise its rights under
this
Agreement, including, without limitation, information regarding
Collaboration
Compounds, activities of Collaboration Compounds, and results of in
vitro and in
vivo studies, assay techniques and new assays. Such Research
Technology will be
promptly disclosed to the other Party, with meaningful discoveries
or advances
being communicated as promptly as practicable after such
information is obtained
or its significance is appreciated.
2.7 Information Regarding Collaboration Compounds. PTC shall
inform
Schering and the JSC in writing on a quarterly basis and otherwise
reasonably
promptly in response to Schering's written request of its
discovery, synthesis,
or biological characterization of Collaboration Compounds during
the Research
Term. In addition, the Project Leaders shall implement procedures
for the prompt
sharing between them of information and materials generated under
the Research
Plan relating to the discovery, synthesis, or biological
characterization of
Collaboration Compounds. Without limiting PTC's obligations
pursuant to Sections
2.6, 2.14 or 3.9, PTC will provide Schering with such information
regarding such
Collaboration Compounds as Schering shall reasonably request in
writing,
including without limitation the structures of Collaboration
Compounds and the
results of PTC's testing of such compounds, and will provide
Schering with
samples of such Collaboration Compounds in amounts to be agreed
upon by the
Parties but which are sufficient to enable Schering to complete
its
responsibilities to characterize such Collaboration Compounds
according to the
Research Plan. Without limiting Schering's obligations pursuant to
Sections 2.6,
2.14 or 3.9, results of studies performed by Schering on such
Collaboration
Compounds will be communicated to PTC and the JSC on a quarterly
basis during
the Research Term.
19
<PAGE>
EXECUTION VERSION
2.8 Extension of Research Term.
(a) By written notice to PTC given at least [**] prior to the
expiration of the Initial Research Term, Schering may extend the
Research Term
for an additional year. In the event that Schering has elected to
extend the
Research Term for an additional year, then, by written notice to
PTC given at
least [**] prior to the then scheduled expiration of the Research
Term, Schering
may extend the Research Term for a further additional year, subject
to PTC's
written consent within [**] of receipt of Schering's notice, such
consent not to
be unreasonably withheld or delayed. Any period during which the
Research Term
has been extended beyond the Initial Research Term pursuant to this
Section 2.8
is referred to herein as the "Extended Research Term".
(b) During the Extended Research Term, the JSC shall propose a
revised Research Plan (the "Extended Research Plan"), which shall
specify the
number of FTEs to be contributed by PTC and funded by Schering and
the specific
Research activities to be performed by PTC during such period;
provided,
however, that (i) PTC shall not be required to perform a level of
chemical
optimization or biological or pharmacological characterization
activities that
cannot reasonably be accomplished by the number of FTEs to be
funded by
Schering, and (ii) PTC shall not be required to perform activities
that are not
related to chemical optimization or biological/pharmacological
characterization
of Collaboration Compounds without PTC's consent.
2.9 Material Transfer. In order to facilitate the Research
Program,
either Party may provide to the other Party certain biological
materials or
chemical compounds including, but not limited to Collaboration
Compounds,
receptors, reagents and screens (collectively, "Materials") owned
by or licensed
to the supplying Party (other than under this Agreement) for use by
the other
Party in furtherance of the Research Program. Except as otherwise
provided under
this Agreement, all such Materials delivered to the other Party
shall, subject
to the licenses granted the other Party pursuant to Article 5,
remain the sole
property of the supplying Party, shall be used only in furtherance
of the
Research Program and solely under the control of the other Party
and its
Affiliates, shall not be used or delivered to or for the benefit of
any Third
Party without the prior written consent of the supplying Party, and
shall not be
used in research or testing involving human subjects. The Materials
supplied
under this Section 2.9 must be used with prudence and appropriate
caution in any
experimental work, since not all of their characteristics may be
known. Each
Party represents and warrants to the other that it has the right to
provide the
Materials to the other Party for the uses contemplated herein.
EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 2.9 OR IN SECTION 8.4, THE
MATERIALS ARE
PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF
FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF
THE MATERIALS
WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS
OF ANY THIRD
PARTY.
20
<PAGE>
EXECUTION VERSION
2.10 Exclusivity.
(a) During the Exclusivity Term, each Party agrees not to, and
agrees to cause its Affiliates not to, (i) conduct any activity,
either on its
own, or for the benefit of, sponsored by, or pursuant to any type
of corporate
partnership, licensing arrangement or joint venture with, any Third
Party, that
has as its goal or intent discovering, identifying or otherwise
Researching
Viral IRES Inhibitors except pursuant to this Agreement (an "IRES
Research
Program"), (ii) Develop, either on its own, or for the benefit of,
sponsored by,
or pursuant to any type of corporate partnership, licensing
arrangement or joint
venture with, any Third Party, any compound resulting from an IRES
Research
Program, except pursuant to this Agreement, or (iii) grant any
license, either
express or implied, or any option to license, to any Third Party to
utilize any
intellectual property Controlled by such Party or its Affiliates
for the purpose
of discovering, identifying or otherwise Researching Viral IRES
Inhibitors
except pursuant to this Agreement. Each Party acknowledges that the
other Party
is in the business of developing products in the Viral Field and
that, except as
explicitly provided to the contrary in this Agreement, but subject
to the
licenses granted to Schering pursuant to Section 5.2, each Party
has and will
have programs related to the Research and Development of products
for the
treatment of viral diseases or conditions. For the avoidance of
doubt, nothing
in this Section 2.10 shall preclude either Party from (x) entering
into
collaborations with academic or government entities in support of
the Research
Program that are consistent with the other provisions of this
Agreement
(including without limitation the licenses granted to Schering
pursuant to
Sections 5.1(a) and 5.1(b)), or (y) Developing or Commercializing
outside of the
scope of this Agreement any compound or product that is not a
Collaboration
Compound (subject to the restriction set forth in subsection (ii)
above).
Without limiting the generality of the foregoing, it is expressly
understood
that Schering and its Affiliates shall have the right to conduct
Development
during the Exclusivity Term with respect to compounds or products
that are Viral
IRES Inhibitors that are acquired or in-licensed following the
Effective Date if
such compounds or products have initiated human clinical trials as
of the time
they were in-licensed or acquired by Schering or its
Affiliates.
(b) In the event of a breach of the provisions of Section
2.10(a)
by a Party or its Affiliates, the non-breaching Party may, as one
of its
remedies and not to the exclusion of any other remedy such Party
may have, (i)
terminate this Agreement pursuant to Section 11.3, and/or (ii)
terminate the
provisions of Section 2.10(a) as it applies to such non-breaching
Party.
(c) In the event this Agreement is terminated pursuant to
Section
11.4 or 11.5(a), or Schering terminates this Agreement pursuant to
Section 11.2
or 11.5(b), the restrictions set forth in this Section 2.10 shall
automatically
terminate. Furthermore, in the event that a Party terminates this
Agreement
pursuant to Section 11.3, the restrictions set forth in this
Section 2.10 shall
automatically terminate with respect to such Party (but shall
remain in effect
with respect to the breaching Party).
(d) The Parties agree that, given the high costs and
significant
risks involved in discovering and developing pharmaceutical
products, and given
that the Parties will be exchanging Confidential Information in
order to perform
the Research Program, the exclusive relationship between them which
is reflected
in this Section 2.10 is a fair and efficient means to reach a
satisfactory
conclusion from their cooperative efforts.
21
<PAGE>
EXECUTION VERSION
(e) The provisions of Section 2.10(a) are not intended to apply
to
any activity otherwise prohibited by Section 2.10(a) if a Party's
involvement in
such activity results from such Party's acquisition by or of a
Third Party (by
merger or otherwise), but only if (i) such Third Party, prior to
such
acquisition or merger, was already engaged in such prohibited
activity (the
"Third Party Activity"), (ii) such Third Party Activity remains
separate from
the activities contemplated by this Agreement, and no Patent rights
or Know-How
of the other Party are used in connection with such Third Party
Activities, and
(iii) in the case of an acquisition of a Third Party by a Party,
such Party does
not significantly expand the scope of, or financial commitment to,
such Third
Party Activity.
2.11 Subcontractors. PTC may not perform any of its obligations
under
the Research Program through a subcontractor without first
obtaining Schering's
prior written consent, such consent not to be unreasonably withheld
or delayed.
The subcontractors identified on Schedule 2.11 as currently used,
or planned to
be used, by PTC are hereby deemed to be approved for the purposes
of this
Section 2.11. It is understood that as part of the approval
process, any
subcontractors must undertake in writing obligations of
confidentiality and
non-use regarding Schering's and PTC's Confidential Information
which are
substantially the same as those undertaken by PTC pursuant to
Article 7 hereof
(either directly with Schering, or through their agreements with
PTC). In the
event PTC is authorized to perform one or more of its obligations
under the
Research Program through a subcontractor, then PTC shall at all
times be
responsible for the performance of such subcontractor.
2.12 Termination of Research Program.
(a) In the event that Schering has not accepted a Development
Candidate within two years of the Effective Date, Schering shall
have the right
to terminate the Research Program upon [**] prior written notice to
PTC.
(b) At any time following designation of a Back-Up Development
Candidate by Schering, Schering shall have the right to terminate
the Research
Program upon [**] prior written notice to PTC.
(c) At the end of the Research Term, whether extended or not
pursuant to the provisions of Section 2.8, all obligations of the
Parties to
conduct any further activities under the Research Plan shall
terminate, but the
other rights and obligations under this Agreement shall not
otherwise be
affected, except to the extent otherwise provided herein.
2.13 Testing of Active Compounds Identified by PTC Outside of
the
Research Program. In the event that any compound synthesized by or
on behalf of
PTC or its Affiliates prior to the end of the Research Term and
outside of any
activities conducted under the Research Program is identified by
PTC or its
Affiliates prior to the end of the Research Term as an Active
Compound, PTC
shall promptly undertake appropriate steps to determine whether
such Active
Compound is a Viral IRES Inhibitor. Any such compound that is
identified as a
Viral IRES Inhibitor shall be deemed a PTC Compound pursuant to the
provisions
of Section 1.48(iii).
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EXECUTION VERSION
2.14 Allocation of Certain Collaboration Compounds. Reasonably
promptly
following the Effective Date, the Parties shall establish
appropriate provisions
for transferring to Schering (i) an amount of PTC's existing
inventory of each
of the NV Compounds to be determined as follows: the [**] the [**],
and any
remaining PTC inventory [**] and (ii) in addition to any shipments
of Highly
Active Collaboration Compounds required elsewhere in this
Agreement, all of
PTC's remaining inventory of Highly Active Collaboration Compounds
within [**]
after the end of the Research Term. With respect to any quantities
of NV
Compounds that are synthesized following the Effective Date and
prior to the end
of the Research Term, the Parties shall share the inventory of each
such
compound equally.
ARTICLE 3
JOINT STEERING COMMITTEE
3.1 Creation and Structure of the JSC. The Parties shall create a
joint
steering committee (the "JSC") to facilitate the Parties'
collaboration called
for herein. The JSC shall consist of three representatives
designated by each
Party, or such other number as the Parties may mutually agree. As
soon as
practicable following the Effective Date (but in no event more than
thirty (30)
days following the Effective Date), each Party shall designate
their initial
representatives on the JSC. Schering shall designate one of its
representatives
as the Chairperson of the JSC. Each Party shall be free to change
its
representatives on notice to the other or to send a substitute
representative to
any JSC meeting; provided, however, that each Party will ensure
that at all
times during the existence of the JSC, their representatives on the
JSC are
appropriate in terms of expertise and seniority (including at least
one member
of senior management) for the then current stage of Research and
Development of
Collaboration Compounds or Schering Viral Products. The JSC shall
continue to
function until such date as Schering has received the first
Regulatory Approval
for a Schering Viral Product in each of the United States, in three
Major
Markets in the European Union, and in Japan; provided, however,
that once
Schering receives the first Regulatory Approval for a Schering
Viral Product in
the United States, in three Major Markets in the European Union, or
in Japan,
then the JSC's activities shall cease to exist with respect to the
United
States, the European Union or Japan, respectively.
3.2 Meetings. During the Research Term, the JSC shall meet on a
quarterly basis, or at such other frequency as the Parties shall
agree.
Following the Research Term, the JSC shall meet semi-annually, or
at such other
frequency as the Parties shall agree. During the Research Term,
meetings of the
JSC shall alternate between the offices of PTC and Schering.
Following the end
of the Research Term, meetings of the JSC shall occur at the
offices of
Schering, or at such other location as Schering and PTC shall
agree. A JSC
member of the Party hosting the meeting shall serve as Secretary of
that
meeting, who shall be responsible for preparing the minutes of the
meeting. Such
minutes shall provide a description in reasonable detail of the
discussions held
at the meeting and a list of any actions, decisions or
determinations approved
by the JSC. The Parties agree that they shall endeavor to ensure
that draft
minutes of each meeting shall be distributed within fifteen (15)
days of the
meeting, and final minutes shall be approved by both Parties within
forty-five
(45) days of the meeting. Final minutes of each meeting shall be
distributed to
the members of the JSC by the Chairperson. The JSC may also
convene, or be
polled or consulted, from time to time by means of
telecommunications, video
conferencing or
23
<PAGE>
EXECUTION COPY
written correspondence, as deemed necessary or appropriate. Each
Party shall
disclose to the other proposed agenda items in advance of each
meeting of the
JSC. The JSC may invite other representatives of the Parties with
special skills
or knowledge to attend meetings where appropriate. The JSC shall
adopt such
other rules as shall be necessary or convenient for its work. Each
Party shall
be responsible for all travel and other costs for its
representatives to attend
meetings of, and otherwise participate on, the JSC.
3.3 Responsibilities of the JSC. The JSC shall be the primary
vehicle
for interaction between the Parties with respect to the Research
Program and the
Development of Schering Viral Products, and shall function as a
forum for the
Parties to inform and consult with one another concerning progress
of the
Research Program and make decisions regarding the Research Program,
as well as
for Schering to inform and consult with PTC concerning the
Development of
Schering Viral Products. Without limiting the foregoing, the JSC
shall be
responsible for:
(i) directing, managing and monitoring the progress of the
Research Program;
(ii)
making any modifications to the Research Plan as the JSC
deems appropriate;
(iii) developing and approving a charter for a joint project
team,
which shall include participation of appropriate representatives
from both
Parties and shall be responsible for drafting recommendations with
respect to
the Research Plan;
(iv) identifying to the Parties that the criteria set forth in
Schedule 1.14 as guidelines for Development Candidates have been
reasonably met
with respect to a particular Collaboration Compound, and making
recommendations
to Schering that one or more Collaboration Compounds be designated
by Schering
as a Development Candidate;
(v) reviewing and approving any changes to Schedule 1.14, and
developing and approving criteria for the Back-Up Development
Candidate
referenced in Section 1.3;
(vi) making recommendations to Schering that one or more
Collaboration Compounds be designated by Schering as a Back-Up
Development
Candidate;
(vii) reviewing and approving Schering's initial Development
Plans
for the first Development Candidate or first Back-Up Development
Candidate, as
well as reviewing and commenting upon (but not approving) any
changes to such
Development Plans which Schering determines are necessary or
appropriate (for
clarity, if the Development of a Development Candidate or Back-Up
Development
Candidate is terminated for any reason prior to the first
Regulatory Approval of
such Development Candidate or Back-Up Development Candidate, and
Schering
subsequently continues to Develop one or more other Schering Viral
Products,
then the next most advanced Development Candidate (and, if any
exist, the next
most advanced Back-Up Development Candidate) shall be deemed
"first" for the
purposes of this Section 3.3(vii));
(viii) reviewing the progress under such Development Plans;
24
<PAGE>
EXECUTION VERSION
(ix) reviewing and commenting upon the patent filing and
prosecution strategies of the Parties as provided in Article 9,
including
directing, managing and monitoring the activities of the Joint
Patent Team
pursuant to Section 9.3(e); and
(x) reviewing and coordinating each Party's internal approval
of
any publications by the Parties to the extent required pursuant to
Section 7.7.
3.4 Subcommittees of the JSC. From time to time, the JSC may
establish
one or more subcommittees to oversee particular projects or
activities related
to the Research Program, and such subcommittees will be constituted
as the JSC
agrees.
3.5 Decisions of the JSC. At least two JSC representatives from
each
Party must participate in a meeting of the JSC in order for there
to be a quorum
for such meeting. Subject to the remainder of this Section 3.5, all
decisions of
the JSC shall be made by the unanimous vote of the Parties, with
the JSC
representatives of each Party collectively having one vote. The
Parties shall
use reasonable good faith efforts to reach consensus on all issues
within the
responsibility of the JSC. In the event that the members of the JSC
cannot agree
with respect to a particular issue within the responsibility of the
JSC, then:
(a) if the issue relates to the Research Program, or activities
to
be conducted under the Research Plan, or the approval of either of
the initial
Development Plans within the scope of Section 3.3(vii), such issue
shall be
referred to the Vice-President, Discovery of the Schering-Plough
Research
Institute division of Schering Corporation and the Senior Vice
President, Drug
Discovery Technologies of PTC, who shall meet in a good faith
effort to resolve
the dispute within [**]. In the event such individuals cannot agree
on a
resolution of the dispute within such [**] period, such issue shall
be referred
to the CEO of PTC and the Senior Vice-President, Research &
Development of
Schering-Plough Corporation, who shall meet in a good faith effort
to resolve
the dispute within [**]. In the event such individuals cannot agree
on a
resolution of the dispute within such [**] period, Schering's
decision shall
control; provided, however, in no event [**] [**] pursuant to this
Section
3.5(a) in order to modify the Research Plan in a manner that would
(i) be
inconsistent with the provisions of Section 2.5(a), (ii) require
PTC to perform
a level of chemical optimization or biological/pharmacological
characterization
activities that cannot reasonably be accomplished by the number of
FTEs to be
funded by Schering, (iii) require PTC to perform activities that
are not related
to chemical optimization or biological/pharmacological
characterization of
Collaboration Compounds without PTC's consent, or (iv) prevent PTC
from
presenting for designation a Development Candidate or Back-Up
Development
Candidate.
(b) if the issue relates to the Development of a Schering Viral
Product (other than the approval of the initial Development Plans
within the
scope of Section 3.3(vii)), or any activities conducted under a
Development
Plan, or relates to any other matter within the responsibility of
the JSC, then
Schering's decision shall control.
3.6 Limitation on JSC Authority. Notwithstanding the creation of
the
JSC, each Party shall retain the rights, powers and discretions
granted to it
hereunder, and the JSC shall not be delegated or vested with any
such rights,
powers or discretion unless such delegation or vesting
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EXECUTION VERSION
is expressly provided for herein or the Parties expressly so agree
in writing.
The JSC shall not have the power to make any decisions other than
those set
forth in Section 3.3 or otherwise expressly set forth in this
Agreement. Without
limiting the generality of the foregoing, the JSC may not amend or
modify this
Agreement, which may be amended or modified only as provided in
Section 13.10.
Furthermore, it is understood that the JSC shall not have any
responsibilities
related to the Research or Development of Schering Non-Viral
Products or PTC
Products.
3.7 Project Leaders. Schering and PTC shall each appoint one or
more
persons to coordinate their respective activities under the
Research Program
(the "Project Leaders"). Such individuals shall be responsible for,
among other
things, ensuring the appropriate level of information exchange
between the
Parties regarding Collaboration Compounds and Schering Viral
Products, as
contemplated by Section 3.9, as well as scheduling the JSC
meetings.
3.8 Project Team Access. Until Schering pays the milestone payment
set
forth in Section 6.2(e), (i) [**] and as are reasonably acceptable
[**], shall
have the right [**], and (ii) Schering shall provide [**]. For
purposes of this
Section 3.8, [**] relating to such products.
3.9 Reports to JSC. During the Exclusivity Term, each Party
shall
provide the JSC on a quarterly basis with reports regarding the
activities
performed by such Party under the Research Plan. Each report shall
summarize in
reasonable detail the major activities undertaken by such Party
during the prior
quarter, as well as the results of such activities. Such reports
will be
accurate and, where appropriate, will contain raw data from studies
carried out
by or on behalf of such Party. Following the Exclusivity Term, with
respect to
any Schering Viral Products within the scope of Section 3.3(vii),
Schering shall
also provide semi-annual progress reports to the JSC regarding the
Development
of such products under the applicable Development Plans.
ARTICLE 4
DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS
4.1 Responsibility for Development; Diligence.
(a) Selection of Development Candidates and Back-Up Development
Candidates. Based upon the criteria set forth in Schedule 1.14 and
the criteria
it develops under Section 1.3, the JSC shall review all data
relating to the
Collaboration Compounds and shall identify appropriate
Collaboration Compounds
for recommendation to Schering for selection as Development
Candidates and
Back-Up Development Candidates. It is understood and agreed that,
subject to the
provisions of Section 4.1(d), all decisions regarding the
designation of
Development Candidates and Back-Up Development Candidates shall be
made by
Schering in its sole discretion; provided, however, Schering agrees
to make such
decisions in good faith based upon its then-current internal
decision-making
standards and processes. Upon the designation of any Collaboration
Compound by
Schering as a Development Candidate or Back-Up Development
Candidate, Schering
shall promptly notify PTC in writing. In addition, for the
avoidance of doubt,
the first Highly Active Collaboration Compound
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EXECUTION VERSION
(or NV Compound designated as a Schering Field NV Compound pursuant
to this
Section 4.1(a)) for which Schering commences GLP toxicology studies
intended to
support submission of an IND shall be deemed to be a Development
Candidate, and
the second Highly Active Collaboration Compound (or NV Compound
designated as a
Schering Field NV Compound pursuant to this Section 4.1(a)) for
which Schering
commences GLP toxicology studies intended to support submission of
an IND shall
be deemed to be a Back-Up Development Candidate. In addition to
selecting Highly
Active Collaboration Compounds for Development as Schering Viral
Products, it is
understood that Schering shall also have the right at any time to
designate one
or more NV Compounds for Development as Schering Viral Products in
the Viral
Field; provided that Schering shall not make any such designation
unless it (1)
has a good faith intention to Develop and Commercialize such NV
Compound in the
Viral Field, and (2) has provided PTC with data supporting its
designation,
together with a written research plan describing Schering's planned
initial
Research regarding such compound, which research plan is consistent
with a
commitment by Schering to initiate [**] (or a later downstream
Research or
Development activity) with respect to such compound (or a Related
Compound)
within [**] of the date of such designation by Schering. For
clarity, Schering
may not designate a particular NV Compound for Development as a
Schering Viral
Product if either (x) PTC has previously designated such compound
as a
Designated NV Compound pursuant to Section 4A.1, or (y) such NV
Compound is a
Related Compound for another NV Compound previously designated by
PTC as a
Designated NV Compound pursuant to Section 4A.1. If, with respect
to any NV
Compound designated by Schering for Development as a Schering Viral
Product,
Schering fails to initiate [**] (or later downstream activities)
with respect to
such compound, or any Related Compound, within the [**] period
described above
in this Section 4.1(a), then Schering's exclusive license to such
NV Compound
(and any Related Compounds) shall terminate, PTC shall have the
right to
designate such compound as a PTC Designated NV Compound in
accordance with the
provisions of Section 4A.1, and Schering shall have no right to
re-designate
such NV Compound as a compound for Development as a Schering Viral
Product or
Schering Non-Viral Product for a period of [**] following the end
of the [**]
period described above in this Section 4.1(a).
(b) Responsibility for Development. Following the Effective
Date,
[**] Development of Schering Viral Products in the Field, and shall
[**] make
decisions relating thereto, subject in each case to Schering's
obligations under
Section 4.1(d) and the provisions of Article 3. Without limiting
the generality
of the foregoing, [**] shall be responsible for (a) determining
which Highly
Active Collaboration Compounds and Schering Field NV Compounds will
be Developed
as Schering Viral Products in the Field, (b) determining the
Development
strategy for all Schering Viral Products, (c) preparing the
Development Plans
and, to the extent set forth in Section 3.3, reviewing the same
with the JSC,
(d) developing protocols for all pre-clinical and clinical studies
to be
conducted for Schering Viral Products, and (e) conducting any
pre-clinical and
clinical studies regarding Highly Active Collaboration Compounds
and Schering
Viral Products.
(c) PTC's Participation in Early Development Activities.
Schering
may request that PTC perform certain Development activities related
to
pre-clinical or Phase I clinical studies for any Schering Viral
Product
following the Effective Date. PTC may agree to perform such
services, subject to
the provisions of Section 4.2, but is not obligated to do so.
(d) Diligence. Schering and its Affiliates shall use
Commercially
Reasonable Efforts to Develop at least one Schering Viral Product
in each of the
Major Markets. It is understood that Schering shall have no
obligation to
Develop any particular Schering Viral Product, and Schering's
failure to Develop
any particular Schering Viral Product shall in no way
27
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EXECUTION COPY
be considered a breach of Schering's obligations under this Section
4.1(d) or
provide any basis for PTC to seek termination of this
Agreement.
(e) Development Benchmarks. In the event that Schering has not
(i)
[**] following its acceptance of the first Development Candidate,
or (ii) has
not [**] of acceptance of the applicable Development Candidate,
then PTC shall
have the right to request that the Parties meet to discuss in good
faith any
concerns that PTC may have regarding Schering's satisfaction of its
diligence
obligations set forth in Section 4.1(d). During such discussions,
Schering shall
provide a reasonable explanation as to why it believes either of
the foregoing
specified events has not occurred by the applicable date.
(i) If (A) after good faith discussions PTC still
reasonably believes that Schering's failure to achieve either of
the
events specified in Section 4.1(e) by the dates specified
therein
demonstrates that Schering has breached its diligence
obligation
pursuant to Section 4.1(d), or (B) such good faith discussions have
not
been initiated within [**] of PTC's request therefor or
completed
within [**] (or in either case such longer time period as the
Parties
may mutually agree), then PTC shall have the right to initiate
dispute
resolution proceedings pursuant to Article 12. In such
proceedings,
[**].
(ii) For the avoidance of doubt, nothing in Section
4.1(d) is intended to limit the ability of PTC to bring claims in
good
faith against Schering at any time regarding Schering's alleged
breaches of Section 4.1(d); provided, however, it is understood
that
[**] shall apply solely with respect to the specific issue
described in
such section and only with respect to those proceedings
(including
litigation) related to such specific issue and not to any other
allegations of PTC regarding lack of diligence (whether such
allegations are raised in a dispute resolution proceeding
initiated
pursuant to Section 4.1(e)(i) or otherwise).
(iii) The Parties acknowledge that there are numerous
reasons that are beyond the control of Schering that might
impact
Schering's ability to achieve either of the events specified in
Section
4.1(e) by the dates specified therein (e.g., safety concerns
which
arise during testing of the Development Candidate), and it is
understood that the failure by Schering to achieve either of
such
