Exhibit 10.325
* CERTAIN INFORMATION IN THIS
EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
COLLABORATION AND LICENSE
AGREEMENT
By and Between
PHARMACOPEIA, INC.
and
SCHERING CORPORATION
Table of Contents
i
COLLABORATION AND LICENSE
AGREEMENT
This COLLABORATION AND LICENSE
AGREEMENT (the “Agreement”), dated as of the latest
date of signature appearing below (the “Execution
Date”) and to be effective as of the Effective Date (as
defined below), is made by and among: Pharmacopeia, Inc., a
Delaware corporation having its principal place of business at 3000
Eastpark Boulevard, Cranbury, New Jersey 08512, (hereinafter
referred to as “Pharmacopeia”); and Schering
Corporation, a New Jersey corporation having its principal place of
business at 2000 Galloping Hill Road, Kenilworth, New Jersey 07033,
U.S.A., (hereinafter referred to as
“Schering”). Pharmacopeia and Schering are
sometimes referred to herein individually as a Party and
collectively as the Parties. References to
“Schering” and “Pharmacopeia” shall include
their respective Affiliates (as hereinafter defined).
WHEREAS, Schering and Pharmacopeia
desire to collaborate to design and conduct medicinal chemistry
optimization programs against Schering’s biological targets
based upon lead compounds selected by Schering; and
WHEREAS, Schering and Pharmacopeia
also desire for Pharmacopeia to conduct a separate program to
identify new lead compounds by screening certain of its internal
compound libraries for activity against biological targets selected
by Schering; and
WHEREAS, Pharmacopeia and
Schering’s Affiliate Schering-Plough Ltd. have entered into a
collaboration and license agreement relating to countries and
territories outside of the United States of even date herewith;
and
WHEREAS, Schering and Pharmacopeia
wish to modify and amend certain terms of the existing 1998
Agreements (as defined below) between the Parties related to
Optimization Libraries (as defined in the 1998
Agreements);
NOW, THEREFORE, in consideration of
the covenants, conditions, and undertakings herein contained,
Schering and Pharmacopeia hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the
following capitalized terms, whether used in the singular or
plural, shall have the respective meanings set forth
below:
1.1 “ Acceptance
” shall mean, with respect to an IND, NDA or HRD submitted by
or on behalf of Schering or its Affiliate or Sublicensee, notice by
the FDA (or an analogous regulatory authority in another country)
that the IND, NDA or HRD has been accepted for review by the FDA
(or analogous regulatory authority). In the event that the FDA
(or analogous regulatory authority) is not required to provide such
a notice of acceptance of an IND, NDA or HRD, then
“Acceptance” shall be deemed to occur: (i) in the
case of an IND, thirty (30) days following the date of
submission, or if previously rejected any resubmission, of such
IND; or (ii) in the case of an NDA or HRD, sixty
(60) days following the date of submission, or if previously
rejected any resubmission, of such NDA or HRD, unless in each case
Schering or its Affiliates or Sublicensee receives notice from the
FDA (or analogous regulatory authority), during the applicable
thirty (30) or sixty (60) day period, that the NDA or HRD
is not acceptable for review.
1.2 “ Activity Criteria
” shall mean the threshold criteria to be agreed upon by the
Parties for identifying compounds having activity against the
relevant Screening Target.
1.3 “ Affiliate ”
shall mean any individual or entity directly or indirectly
controlling, controlled by or under common control with, a Party to
this Agreement. For purposes of this Agreement, the direct or
indirect ownership of fifty percent (50%) or more of the
outstanding voting securities of an entity, or the right to receive
fifty percent (50%) or more of the profits or earnings of an
entity shall be deemed to constitute control, or if not meeting the
preceding requirements, any company owned or controlled by or
owning or controlling Pharmacopeia or Schering at the maximum
control or ownership right permitted in a country where such
company exists. Such other relationship as in fact results in
actual control over the management, business and affairs of an
entity shall also be deemed to constitute
control. *
1
1.4 “ Agreement
Compound ” shall mean any Lead Compound or Derivative
Compound, as well as *
1.5 “ Agreement Product
” shall mean any product containing an Agreement Compound,
including, without limitation, products for the therapeutic or
prophylactic treatment or prevention of diseases and conditions in
human beings or animals.
1.6 “ Carryover
Programs ” shall have the meaning set forth in
Section 2.02.
1.7 “ Collaboration
” shall mean the Optimization Programs and Screening Programs
to be performed at Pharmacopeia’s facilities by Schering or
Pharmacopeia under this Agreement to discover Agreement Compounds
for further development by Schering.
1.8 “ Collaboration
Committee ” shall have the meaning set forth in
Section 3.1.
1.9 “ Collaboration
Research Plan ” shall have the meaning set forth in
Section 2.1.
1.10 “ Collaboration
Target-Specific Technology ” shall mean Collaboration
Technology relating to assays, compound screening methods and
biological research tools, in each case which are discovered and
developed through Collaboration research directed to a specific
Target, or a small number of closely related Targets (e.g. a family
of biological receptor subtypes), and are not readily applicable to
other types of Targets; provided , however , that
Collaboration Target-Specific Technology shall not include any
rights in or to any Schering Technology (including, without
limitation, Schering’s proprietary Targets) or any Agreement
Compounds.
1.11 “ Collaboration
Technology ” shall mean Collaboration Patent Rights and
Collaboration Know-How.
1.11.1 “ Collaboration
Patent Rights ” shall mean: (i) all patents and
patent applications claiming any invention or discovery made by or
on behalf of Pharmacopeia in performance of the Collaboration
(including, without limitation, the synthesis and composition of
matter of any Agreement Compound, or method of use thereof); and
(ii) any divisions, continuations, continuations-in-part,
reissues, reexaminations, extensions or other governmental actions
which extend any of the subject matter of the patent applications
or patents in (i) above, and any substitutions, confirmations,
registrations, revalidations, or additions of any of the foregoing,
in each case, which is owned or controlled, in whole or part, by
license, assignment or otherwise by Pharmacopeia during the term of
this Agreement; provided , however , that
Collaboration Patent Rights shall not include any patents or patent
applications which are Schering Technology or Pharmacopeia
Technology.
1.11.2 “ Collaboration
Know-How ” shall mean all proprietary ideas, inventions,
data, know-how, instructions, processes, formulas, materials,
expert opinion and information (including, without limitation,
(i) biological, chemical, physical and analytical data and
information relating to Agreement Compounds, and (ii) any
structure-function data related to Lead Compounds or Derivative
Compounds), in each case which is developed by Pharmacopeia in
performance of the Collaboration; provided , however
, that Collaboration Know-How shall not include Collaboration
Patent Rights, Schering Technology or Pharmacopeia
Technology.
1.12 “ Combination
Product ” shall mean an Agreement Product which comprises
two (2) or more active therapeutic ingredients at least one
(1) of which is an Agreement Compound.
1.13 “ Derivative
Compound ” shall mean any compound derived by
Pharmacopeia in the performance of the Collaboration, in each case
from one or more Lead Compounds, and having activity against the
same Target as such Lead Compound(s). As used herein, a
compound shall be deemed to have been “derived from” a
Lead Compound if it *
2
1.14 “ Development
Candidate ” shall mean a Lead Compound, Derivative
Compound or Schering Derivative which possesses the desirable
properties of a therapeutic agent for the prevention or treatment
of a clinical condition, in the absence of required safety trials
necessary to begin human testing.
1.15 “ Effective Date
” shall have the meaning set forth in
Section 2.01.
1.16 “ Excluded
Compound ” shall have the meaning set forth in
Section 2.9.3.
1.17 “ FDA ”
shall mean the United States Food and Drug Administration or any
corresponding foreign registration or regulatory
authority.
1.18 “ First Commercial
Sale ” shall mean, with respect to any Agreement Product,
the first sale for end use of such Agreement Product in the
Territory after receipt of the requisite Regulatory
Approval.
1.19 “ FTE ”
shall mean a full-time employee dedicated to the conduct of the
Collaboration or, in the case of less than full-time dedication, a
full-time equivalent person-year, based on a total of forty-six and
one-fourth (46.25) weeks or one thousand eight hundred fifty
(1,850) hours per year, of work on or directly related to the
Collaboration.
1.20 “ Hit ”
shall mean a Pharmacopeia Compound identified by Pharmacopeia
during the term and in performance of the Collaboration as meeting
the Activity Criteria with respect to the given Screening
Target.
1.21 “ HRD ”
shall mean a health registration dossier or its equivalent covering
an Agreement Product filed in any country outside the United States
and which is analogous to an NDA and including, where applicable,
applications for pricing, pricing reimbursement approval, labeling
and Regulatory Approval.
1.22 “ IND ”
shall mean an Investigational New Drug application, as defined in
the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder for initiating clinical trials in the United
States, or any corresponding foreign application, registration or
certification.
1.23 “ International
Agreement ” shall mean that certain Collaboration and
License Agreement entered into by and between Pharmacopeia and
Schering-Plough, Ltd. of even date herewith.
1.24 “ Lead Compound
” shall mean any Hit or Schering Compound with respect to
which the Parties agree to initiate a program of medicinal
chemistry to identify a Development Candidate based upon the
structure of such Hit or Schering Compound.
1.23 “ Major Market
” shall mean Japan or any three (3) of the following
countries; France, Germany, Italy, Spain or the United
Kingdom.
1.26 “ NDA ”
shall mean a New Drug Application, Product License Application, or
Biologic License Application, as defined in the U.S. Food, Drug and
Cosmetics Act and regulations promulgated thereunder, or the
equivalent filed with the FDA seeking approval to market and sell
an Agreement Product in the United States.
1.27 “ Net Sales
” shall mean, with respect to each country in the Territory,
the invoice price billed by Schering or its Affiliates, or their
respective Sublicensees, to Third Parties (whether an end-user, a
distributor or otherwise) for the sale of Agreement Products, and
exclusive of intercompany transfers or sales among Schering, its
Affiliates and/or Sublicensees in the Territory, less the
reasonable and customary deductions from such gross amounts
including: (i) normal and customary trade, cash and
quantity discounts, allowances and credits; (ii) credits
or allowances actually granted for damaged goods, returns or
rejections of Agreement Product and retroactive price
reductions; (iii) sales or similar taxes (including
duties or other governmental charges levied on, absorbed or
otherwise imposed on the sale of Agreement Product including,
without limitation, value added taxes or other governmental charges
otherwise measured by the billing amount, when included in
billing); (iv) freight, postage, shipping, customs duties
and insurance charges, when included in billing; (v) charge
back payments and rebates granted to managed health care
organizations or their agencies, and purchasers and reimbursers or
to trade customers, including but not limited to, wholesalers and
chain and pharmacy buying groups; (vi) commissions paid
to Third Parties other than sales personnel and sale
representatives or
3
sales agents; and (vii) rebates (or
equivalents thereof) granted to or charged by national, state or
local governmental authorities in a country in the Territory. In
determining Net Sales of an Agreement Product any of the above
discounts shall be accounted for and apportioned based on the list
price of each such Agreement Product.
In the event that an Agreement
Product is sold in the form of a Combination Product, Net Sales for
such Combination Product will be calculated by multiplying actual
Net Sales of such Combination Product by the fraction A/(A+B)
where: A is the invoice price of the Agreement Product contained in
the Combination Product if sold separately by Schering, an
Affiliate or Sublicensee; and B is the invoice price of any
other active therapeutic ingredients in the Combination Product if
sold separately by Schering, an Affiliate or Sublicensee. In
the event that the Agreement Product is sold in the form of a
Combination Product containing one or more active therapeutic
ingredients other than an Agreement Product and one or more such
active therapeutic ingredients of the Combination Product are not
sold separately, then the above formula shall be modified such that
A shall be the fully allocated manufacturing cost to Schering,
its Affiliates or Sublicensee of the Agreement Product and B shall
be the fully allocated manufacturing cost to Schering, its
Affiliate or Sublicensee of any other active therapeutic
ingredients in the combination, in each case, determined in
accordance with the schedule of fully allocated manufacturing
costs set forth in Exhibit C.
1.28 “ Optimization
Program ” shall mean a medicinal chemistry research
program to discover one or more Development Candidates with respect
to a given Target based upon one or more Lead Compounds.
1.29 “ Pharmacopeia Change
in Control ” shall mean any of the
following: (i) a reorganization, merger or consolidation
of Pharmacopeia with a Major Pharmaceutical Company if the
shareholders of Pharmacopeia (determined immediately prior to the
reorganization, merger or consolidation taking effect) hold,
directly or indirectly, less than fifty percent (50%) of the
surviving corporation (determined immediately after such
reorganization, merger or consolidation takes effect); (ii) an
acquisition by a Major Pharmaceutical Company of direct or indirect
beneficial ownership of voting stock of Pharmacopeia representing
more than fifty percent (50%) of the total current voting
power of Pharmacopeia then issued and outstanding; (iii) a
sale of all or substantially all the assets of Pharmacopeia’s
Drug Discovery division to a Major Pharmaceutical Company; or
(iv) a liquidation or dissolution of Pharmacopeia. As
used in this Section 1.29, the term “Major
Pharmaceutical Company” shall mean any entity (including any
corporation, joint venture, partnership or unincorporated entity),
as well as any Affiliates or division(s) of such entity, that is
engaged in the research, development, manufacturing, registration
and/or marketing of drug products that are approved under NDAs,
HRDs, ANDAs or Biologics License Applications, having total annual
sales of pharmaceutical products of at least *
1.30 “ Pharmacopeia
Compound ” shall mean a compound synthesized and
characterized by Pharmacopeia and which is contained in one of
Pharmacopeia’s proprietary internal compound
libraries.
1.31 “ Pharmacopeia
Technology ” shall mean Existing Pharmacopeia Patent
Rights, Existing Pharmacopeia Know-How, and Pharmacopeia
Improvements.
1.31.1 “ Existing
Pharmacopeia Patent Rights ” shall mean (i) all
patents and patent applications existing as of the Effective Date
that claim the synthesis or composition of matter of a Lead
Compound which is a Hit (and/or any other Hits from the same
Screening Program as such Lead Compound) or a corresponding
Derivative Compound, or the method of use thereof, and
(ii) any divisions, continuations, continuations-in-part,
reissues, reexaminations, extensions or other governmental actions
which extend any of the subject matter of the patent applications
or patents in (i) above, and any substitutions, confirmations,
registrations, revalidations, or additions of any of the foregoing,
in each case, which is owned or controlled, in whole or part, by
license, assignment or otherwise by Pharmacopeia during the term of
this Agreement, and subject to any limitations and prohibitions of
such license or sublicense.
1.31.2 “ Existing
Pharmacopeia Know-How ” shall mean all ideas, inventions,
data, know-how, instructions, processes, formulas, expert opinion
and information, including, without limitation, biological,
chemical, physical and analytical data and information, existing as
of the Effective Date, owned or controlled in whole or part by
Pharmacopeia by license, assignment or otherwise, which is
necessary for the discovery, development, manufacture or use of
Lead Compounds based on Hits (and/or any other Hits from the same
Screening Program as such Lead Compound) or corresponding
Derivative Compounds and/or the discovery,
4
development, manufacture, use, sale or
commercialization of corresponding Agreement Products, in each
case, to the extent Pharmacopeia has the right to license or
sublicense the same, and subject to any limitations and
prohibitions of such license or sublicense.
1.31.3 “ Pharmacopeia
Improvements ” shall mean all patentable inventions
conceived and reduced to practice, solely or jointly, by
Pharmacopeia or Schering in the conduct of the Collaboration that
are within the scope of a claim of an issued patent within the
Existing Pharmacopeia Patent Rights (i) which patent issued
prior to the Effective Date or (ii) which claim has an
effective filing date prior to the Effective Date; provided
, however , that Pharmacopeia Improvements shall not include
Pharmacopeia Independent Technology (as defined in
Section 2.10.1).
1.32 “ Phase III
” shall mean Phase III clinical trials as prescribed by
applicable FDA regulations, regardless of whether such trials are
conducted in the United States or elsewhere.
1.33 “ Regulatory
Approval ” shall mean any applications or approvals,
including any INDs, NDAs, supplements, amendments, pre- and
post-approvals, marketing authorizations based upon such approvals
(including any prerequisite manufacturing approvals or
authorizations related thereto) and labeling approval(s),
technical, medical and scientific licenses, registrations or
authorizations of any national, regional, state or local regulatory
agency, department, bureau, commission, council or other
governmental entity, necessary for the manufacture, distribution,
use, import, export or sale of Agreement Product(s) in the
Territory.
1.34 “ Schering
Compound ” shall mean a compound which is independently
discovered by or on behalf of Schering, without the use of
Collaboration Technology or Pharmacopeia Technology as demonstrated
by documented evidence created at the time of such discovery, and
which is active against a specific Target.
1.35 “ Schering
Derivative ” shall mean any compound derived by Schering
during the term of the Collaboration or for a period of * after the
expiration or earlier termination of the Collaboration, in each
case from any Derivative Compound(s) or from a Lead Compound which
is a Hit, and having as its primary mode of action *. As used
herein, a compound shall be deemed to have been “derived
from” such a Lead Compound or a Derivative Compound if it
*
1.36 “ Schering
Technology ” shall mean Schering Patent Rights, Schering
Know-How and Schering Improvements.
1.36.1 “ Schering Patent
Rights ” shall mean (i) all existing patents and
patent applications owned or controlled in whole or in part by
Schering or its Affiliates as of the Effective Date (including,
without limitation, those which claim the synthesis or composition
of matter of a Lead Compound or Derivative Compound, or the method
of use thereof, or which relate to any Target or any assay provided
by Schering for use in the Collaboration or the corresponding
Targets for such assays), (ii) all patents and patent
applications claiming any invention or discovery made by or behalf
of Schering or its Affiliates, other than in performance of the
Collaboration, in connection with the discovery and/or development
of any Agreement Compounds and/or Schering Compounds, and/or the
development and commercialization of any Agreement Product, and
(iii) any divisions, continuations, continuations-in-part,
reissues, reexaminations, extensions or other governmental actions
which extend any of the subject matter of the patent applications
or patents in (i) or (ii) above, and any substitutions,
confirmations, registrations, revalidations, or additions of any of
the foregoing.
1.36.2 “ Schering
Know-How ” shall mean all ideas, inventions, data,
know-how, instructions, processes, formulas, materials, expert
opinion and information, including, without limitation, biological,
chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical, clinical, safety, manufacturing and quality control
data and information (except for any of the above arising in
performance of the Collaboration) owned or controlled in whole or
part by Schering by license, assignment or otherwise, which is
necessary for the discovery, development, manufacture, use, sale or
commercialization of Agreement Products, in each case, to the
extent Schering has the right to license or sublicense the same,
and subject to any limitations and prohibitions of such license or
sublicense; provided , however , that Schering
Know-How does not include Schering Patent Rights.
5
1.36.3 “ Schering
Improvements ” shall mean all patentable inventions
conceived and reduced to practice solely or jointly by Schering or
Pharmacopeia in the conduct of the Collaboration that are within
the scope of the claims of any issued patent within the Schering
Patent Rights (i) which patent issued prior to the Effective
Date or (ii) which claim has an effective filing date prior to
the Effective Date.
1.37 “ Screening
Program ” shall mean a program to screen
Pharmacopeia’s internal compound libraries for activity
against one or more Screening Targets for the purpose of
identifying Hits.
1.38 “ Screening Target
” shall mean a Target agreed to by the Parties pursuant to
Section 2.1.2.
1.39 “ Sublicensee
” shall mean with respect to a particular Agreement Product,
a Third Party to whom Schering has granted a sublicense under the
applicable Pharmacopeia Technology, Schering Technology or
Collaboration Technology to make, use and/or sell such Agreement
Product. As used in this Agreement, it is understood that
“Sublicensee” shall also include a Third Party or Third
Parties to whom Schering has granted the right to distribute such
Agreement Product, provided that such Third Party or parties has
(have) the primary responsibility for marketing and promotion at
its (their) expense of such Agreement Product within the field or
territory for which such distribution rights are granted, which
marketing and promotional activities are not subsidized directly or
indirectly by Schering.
1.40 “ Target ”
shall mean a biomolecular entity (including, without limitation,
receptors, enzymes, nucleic acids and proteins, and/or fragments
thereof) that a small molecule is screened against in order to
determine whether the small molecule demonstrates a specific
biochemical or pharmaceutical effect.
1.41 “ Territory
” shall mean the United States and its territories,
possessions and commonwealths.
1.42 “ Third Party
” shall mean any Party other than Pharmacopeia and its
Affiliates, Schering and its Affiliates, Schering-Plough, Ltd. and
its Affiliates, and their permitted assigns.
1.43 “ 1994 Agreements
” shall have the meaning set forth in
Section 11.17.
1.44 “ 1998 Agreements
” shall have the meaning set forth in
Section 11.17.
1.44 “ Valid Claim
” shall mean a composition-of-matter or method-of-use claim
of an issued and unexpired patent included within the Collaboration
Patent Rights or Pharmacopeia Patent Rights, and in each case which
has not been revoked or held unenforceable or invalid by a decision
of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and
which has not been disclaimed, denied or admitted to be invalid or
unenforceable through reissue or disclaimer or
otherwise.
ARTICLE II
COLLABORATION
2.0 Effective Date; 1998
Agreements .
2.01 Effective Date
. Schering and Pharmacopeia
have signed this Agreement on the Execution Date as evidence of
their mutual desire to establish a collaborative alliance to
discover and develop Agreement Products effective against certain
Targets. *
2.02 Relationship to 1998
Agreements . As of
the Effective Date, all of Schering’s remaining obligations
to provide research funding for Pharmacopeia FTEs under Sections
2.4 and 5.2 of the 1998 Agreements, and all of Pharmacopeia’s
remaining obligations to provide FTEs under Section 2.5.1 of
the 1998 Agreements, shall terminate. In addition, as of the
Effective Date, any and all ongoing research programs at
Pharmacopeia * shall continue to be performed using the
Pharmacopeia FTEs to be provided under this Agreement, as
determined by the Collaboration Committee. As of the Effective
Date, any and all such ongoing programs (hereinafter
“Carryover Programs”) shall be treated under this
Agreement as Optimization Programs; provided ,
however , that notwithstanding anything herein to the
contrary, the provisions of this Agreement related to diligence,
milestone payments, royalties, ownership, exclusivity, patent
related activities and any and all other rights or obligations with
respect to * shall be governed by the
6
terms and conditions of the 1998 Agreements, and
Schering shall have no milestone or royalty payment obligations
under this Agreement with respect thereto. Except as expressly
modified and amended by this Agreement, all other terms and
conditions of the 1998 Agreements shall remain in full force and
effect.
2.1 Collaboration Research
Programs .
2.1.1 Optimization
Programs . Within
thirty (30) days of the Effective Date, the Collaboration
Committee shall agree upon a written overall plan for each of the
Optimization Programs to be conducted by the Parties (the
“Collaboration Research Plan”). The Collaboration
Research Plan shall be periodically revised and updated (at least
annually) by the Collaboration Committee during the term of the
Collaboration. The Collaboration Research Plan shall set forth
the responsibilities of each of the Parties with respect to
performance of the Optimization Programs. The Collaboration
Committee shall have responsibility for monitoring the performance
of Optimization Programs against the current Collaboration Research
Plan. Notwithstanding the foregoing, the Parties acknowledge
and agree that Schering, in its sole discretion, shall have primary
responsibility and decision making authority with respect to the
selection of the Targets and Lead Compounds and the specific
Optimization Programs to be conducted during the Collaboration;
provided that Pharmacopeia shall not be obligated to
undertake an Optimization Program for a Target selected by Schering
if Pharmacopeia reasonably determines that the performance of an
Optimization Program based upon that Target would constitute a
breach one or more of Pharmacopeia’s existing contractual
obligations to Third Parties; and provided further ,
that Pharmacopeia’s obligation to undertake such an
Optimization Program shall be subject to
Section 2.12.
2.1.2 Screening
Programs . Within
thirty (30) days after the Effective Date, Schering shall
notify Pharmacopeia in writing of the identity of * Screening
Targets. Such notice shall include the applicable Activity
Criteria recommended by Schering for each proposed Screening
Target, which Activity Criteria shall constitute Schering
Know-How. Such Activity Criteria shall include, without
limitation, * Pharmacopeia shall have the right to reject any
proposed Targets as Screening Targets if: (i) it has a
pre-existing contractual obligation to any Third Party that
provides for exclusivity and/or non-compete obligations with
respect to such Target; or (ii) Pharmacopeia has previously
screened one or more Pharmacopeia Compounds against the same Target
and there are less than two million (2,000,000) Pharmacopeia
Compounds that have not previously been screened against the
Target; or (iii) in accordance with the terms of
Section 2.12. In addition, in the event that Pharmacopeia
reasonably believes (based upon objective scientific information)
that the Activity Criteria recommended by Schering for a proposed
Screening Target are not reasonably attainable, then the
Collaboration Committee shall promptly meet to agree in good faith
upon mutually acceptable Activity Criteria. Pharmacopeia shall
promptly notify in writing whether it accepts or rejects each such
Target as a Screening Target. Schering shall have the right to
propose a replacement Target for each Target rejected by
Pharmacopeia, which replacement Target may be accepted or rejected
by Pharmacopeia, as described above. The Parties shall use
reasonable efforts to agree on * Schering shall propose *
additional Targets for acceptance by Pharmacopeia as Screening
Targets for Screening Programs. Pharmacopeia shall have the
right to accept or reject such Targets, as described above, and the
Parties shall use reasonable efforts to agree on * new Screening
Targets for Screening Programs to be conducted by Pharmacopeia * To
the extent that Schering will be funding * the Parties shall use
reasonable efforts to agree upon * new Targets (to be proposed by
Schering * as Screening Targets for Screening Programs to be
conducted by Pharmacopeia *
2.2 Collaboration Term
. The term of the Collaboration
shall be *and, unless extended pursuant to Section 2.2.1, or
earlier terminated pursuant to Section 2.2.2 or
Article X, shall expire on the third anniversary of the
Effective Date.
2.2.1 Extension of Collaboration
Term . In the event
that Schering continues to fund the Collaboration *in accordance
with Section 2.5.2, then the Collaboration may be extended for
*as provided below. The first *shall be effective upon
agreement by Schering *shall be effective upon agreement by
Schering *Each of the *shall become effective upon written notice
by Schering to Pharmacopeia that it agrees to the *in accordance
with Section 2.8.3. *shall be at Schering’s sole
discretion and shall be for the purpose of completing any
Optimization Programs which are still in progress at the end *The
*extension, if any, shall be effective upon written notice by
Schering to Pharmacopeia at least* If Schering does not
provide such notice, the Collaboration shall expire on *
7
2.2.2 Wind Down Period
. The parties acknowledge that
* of the Collaboration is intended to serve as a wind down period
during which any then ongoing Optimization Programs can be
completed. Thus, if Schering does not elect to *during the *
shall be the wind down period. In the event that Schering is *
during * of the Collaboration and Schering does not agree to *
during * of the Collaboration based upon one or more * then the
Collaboration shall continue for a wind down period of * to enable
the Parties to complete and wind down any remaining Optimization
Programs then ongoing. Schering’s funding obligations
during the * period shall be governed by the terms of
Section 2.5.2 *2.5.4 *or 2.5.3 *, as applicable.
2.2.3 Termination of
Collaboration Upon Pharmacopeia Change in Control
. In the event of a
Pharmacopeia Change in Control during the term of the
Collaboration, Schering shall have the right, in its discretion,
(i) to terminate the Agreement pursuant to
Section 10.4.1, below, or (ii) to terminate the
Collaboration and not the Agreement upon ninety (90) days
written notice to Pharmacopeia after such Change in Control
expressly stating its intention to terminate the
Collaboration. In the event that Schering elects to terminate
the Collaboration and not the Agreement, then (a) Schering
will not be obligated to make the payments set forth in
Section 5.2 for the period after the effective date of such
termination, (b) Pharmacopeia shall not be obligated to
conduct any Collaboration research activities after the effective
date of such termination, and (c) the remaining terms and
conditions of this Agreement, including without limitation the
licenses and royalty obligations set forth herein, shall remain in
full force and effect until the Agreement expires or is terminated
as set forth in Article X, below.
2.2.4 Early Termination of
Screening Programs . In the event that Pharmacopeia fails to
identify any Hits meeting the applicable Activity Criteria from any
of the Screening Programs conducted during * then Schering shall
have the right to terminate all further obligations with regard to
Screening Programs in *. This right shall be exercisable by
Schering, in its sole discretion, by providing written notice to
that effect to Pharmacopeia within * In the event that the
Screening Programs are terminated pursuant to this
Section 2.2.4, then Pharmacopeia shall not conduct any further
Screening Programs under this Agreement during the remaining term
of the Collaboration. In addition, notwithstanding anything
herein to the contrary: (i) the Collaboration shall be limited
to a total *of three (3) years with the third year being a
wind down year in which Schering shall only be obligated to fund *
chemists, as provided in Section 2.5.2; and (ii) the
number of FTEs to be funded during *, consisting of * chemistry
FTEs and * biology FTEs, to conduct the Optimization Programs * In
the event that following such early termination of the Screening
Programs by Schering, or during any other wind down period under
Section 2.2.2, Pharmacopeia undertakes any new Optimization
Programs based upon Lead Compounds which are Schering Compounds
(“Wind Down Programs”), then notwithstanding anything
herein to the contrary, Pharmacopeia shall be entitled to receive
milestone payments with respect to any new Agreement Compounds
resulting from such Wind Down Programs under Section 5.4.1(a),
but shall not be entitled to receive any royalty payments under
Section 5.5 on sales of any Agreement Products containing an
Agreement Compound resulting from such Wind Down Programs or with
respect to any pharmaceutical products containing a Schering
Compound having primary activity against the Target which was the
subject of the Wind Down Program.
2.3 Pharmacopeia
Responsibilities . Pharmacopeia shall use commercially
reasonable efforts to provide:
(i) the number of scientist FTEs
agreed to by the Parties, as set forth in Section 2.5, and
such additional scientists as may be mutually agreed to in writing
by the Parties and paid for by Schering, for performance of the
Collaboration during each year of the Collaboration (it being
understood and agreed that FTEs provided by Pharmacopeia for the
Collaboration under the International Agreement shall also be
deemed to be provided to this Collaboration for purposes of
determining the number of FTEs provided by Pharmacopeia
hereunder);
(ii) research facilities,
laboratories and equipment sufficient to enable the Collaboration
scientists (including Pharmacopeia employees and one
(1) Schering employee to be provided pursuant to
Section 2.4(i)) to perform the Collaboration in a fashion
similar to the operation of Pharmacopeia’s own
operations. The chemistry FTEs shall work in dedicated
laboratories at Pharmacopeia’s research facilities in New
Jersey; and
(iii) administrative services
necessary to conduct the business of the Collaboration in a manner
comparable to that of Pharmacopeia’s own business
activities.
8
It is understood and agreed that, except as may
be mutually agreed by the Parties, Pharmacopeia shall not be
obligated hereunder to conduct research or development activities
in the Collaboration which are outside the scope of the
Collaboration Research Plan or the Screening Programs.
2.4 Schering
Responsibilities . Schering shall provide research funding
for the Collaboration as set forth in Section 5.2 and shall
use commercially reasonable efforts to provide:
(i) one scientific director provided
by Schering, in combination with Schering-Plough, Ltd., to work
full-time on the Collaboration managing the day-to-day operations
of the Collaboration (the “Collaboration
Director”);
(ii) additional support for
Collaboration research projects, including, without limitation,
scientists, facilities and materials to perform biological research
to identify Targets, assay development, compound screening,
medicinal chemical research and analytical support services;
and
(iii) the research materials,
procedures and Schering Know-How necessary to conduct the Screening
Programs, as provided in Section 2.8.
2.5 Collaboration
Staffing .
2.5.1 Pharmacopeia Initial FTE
Commitments . During *
Pharmacopeia will provide * FTEs, consisting of synthetic/medicinal
chemists * and the remaining * biology FTEs to be allocated, as
determined by the Collaboration Committee, between bioassay support
for Optimization Programs and performance of Screening
Programs. The Parties agree that the Collaboration Committee
shall have the right to (i) increase or decrease the total
number of FTEs to be provided by Pharmacopeia and funded by
Schering during any year of the Collaboration, and/or (ii) to
adjust the allocation of the total number of FTEs working on the
Collaboration between chemistry and biology FTEs, in each case as
necessary to carry out the Collaboration Research Plan;
provided , however , that any such adjustments must
be agreed upon by the Collaboration Committee in advance in
writing, shall not be made more than once in any given quarter, and
shall not * or * in any wind down year. Pharmacopeia’s
obligation to provide FTEs during * as well as during any extension
of the Collaboration pursuant to Section 2.2.1 or wind down
period pursuant to Section 2.2.2, shall be determined in
accordance with Sections 2.5.2, 2.5.3 or 2.5.4, as
applicable. All of the Pharmacopeia chemistry FTEs assigned to
work on the Collaboration * On or before the Effective Date,
Pharmacopeia will provide to Schering a list individually
identifying those Pharmacopeia chemistry FTEs assigned to the
Collaboration, which list shall be updated from time to time during
the term of the Collaboration as FTEs assigned to work exclusively
for the Collaboration are added, removed and/or
replaced. During the term of the Collaboration, upon
initiating each Optimization Program, Pharmacopeia will also
individually identify a biology FTE as the primary contact at
Pharmacopeia for the performance of assays and other biology
related activities for such Optimization Program, it being
understood that such individuals may have responsibility for more
than one Optimization Program. It is understood that, in the
aggregate, the education, training and experience levels of all
Pharmacopeia FTEs assigned to the Collaboration will be reasonably
representative of Pharmacopeia employees working on
Pharmacopeia’s internal research programs. Within
fifteen (15) business days after the Effective Date,
Pharmacopeia will provide Schering with: (i) a copy of the
Collaboration Business Conduct Policy (as described in
Section 7.6) to be observed by all Pharmacopeia FTEs assigned
to work on the Collaboration; and (ii) Pharmacopeia’s
written representation and warranty that all such FTEs assigned to
the Collaboration have read and understand the terms of the
Collaboration Business Conduct Policy.
2.5.2 Pharmacopeia FTE
Commitments for *. In the
event that during *the Parties have initiated, or Schering has
agreed to initiate, * Optimization Programs * then Pharmacopeia
shall continue to provide, and Schering will continue to fund, *
FTEs during *If at least * then Schering shall have the right (in
its sole discretion) to reduce the number of FTEs to be provided by
Pharmacopeia and funded by Schering; provided that the
number of Pharmacopeia FTEs to be funded by Schering during the
third year of the Collaboration shall be * FTEs; and
provided further that all such FTEs shall be
chemistry FTEs dedicated to work full time on the
Collaboration.
2.5.3 Pharmacopeia FTE
Commitments During * . If the term of the Collaboration is *
pursuant to Section 2.2.1, Schering shall continue to fund and
Pharmacopeia shall continue to provide * FTEs during *, if
applicable. If Schering extends the Collaboration for *
pursuant to Section 2.2.1, then the level of FTE support to be
provided by Pharmacopeia and funded by Schering shall be determined
by the Parties based * to be completed during *.
9
2.5.4 Pharmacopeia FTE
Commitments * . Schering shall have the right (in its
sole discretion) to decrease the level of FTE support to be
provided by Pharmacopeia and funded by Schering * as determined
pursuant to Section 2.2.2) * provided that the number
of Pharmacopeia FTEs to be funded by Schering during * shall be at
least *; and provided further that all such FTEs
shall be chemistry FTEs dedicated to work full time on the
Collaboration.
2.5.5 Schering FTE
Commitments . During
the term of the Collaboration Schering shall, in combination with
Schering-Plough Ltd. under the International Agreement, provide a
single scientific director as set forth in
Section 2.4(i). Such director shall be subject to
Pharmacopeia’s confidentiality restrictions such as limited
access to laboratories and access only to data that specifically
relate to the Collaboration. It is understood that the
scientific director shall remain an employee of Schering, and that
Schering shall remain responsible for, and indemnify Pharmacopeia
for any claims arising from or relating to, the conduct,
activities, salary and benefits of such director, except to the
extent caused by the gross negligence or willful misconduct of
Pharmacopeia. In addition, Schering shall provide such
additional FTEs located at Schering’s research facilities as
Schering determines, in its sole discretion, are reasonably
necessary to support the ongoing research programs of the
Collaboration, including, without limitation, assay development,
screening, medicinal chemistry, analytical services and animal
testing services.
2.6 Capital
Expenditures . In
the event that the Parties reasonably determine that one or more
Optimization Programs to be performed at Pharmacopeia, as
identified in the applicable Collaboration Research Plan, will
require capital expenditures to provide Pharmacopeia with access to
specialized equipment needed to perform such Optimization Program,
Schering shall be responsible (at its expense) for the purchase of
such specialized equipment, and for purchasing, or reimbursing
Pharmacopeia for the out-of-pocket costs of, any specialized
consumables that are uniquely necessary for the proper operation of
such specialized equipment. The Parties will make arrangements
for the delivery and installation of such specialized equipment at
Pharmacopeia’s facilities; provided that the specialized
equipment is and shall remain the sole and exclusive property of
Schering. Pharmacopeia shall have the right to utilize the
specialized equipment in performance of Optimization Programs and
shall not use the specialized equipment for any other activities or
programs whatsoever. Pharmacopeia shall be responsible (at its
own expense) for all routine operating costs incurred in connection
with the use of any specialized equipment provided by Schering
under this Section 2.6, including without limitation, any
utility costs and the costs of reagents, solvents or other
supplies necessary for the operation of the specialized
equipment. Pharmacopeia shall ensure that all Pharmacopeia
employees operating the specialized equipment have been properly
trained in its use and shall use the specialized equipment in
accordance with the instructions and operating procedures to ensure
its proper use. Pharmacopeia shall be responsible (at its
expense) for any damage (excluding ordinary wear and tear) to any
of Schering’s specialized equipment provided to Pharmacopeia
pursuant to this Section 2.6 resulting from
Pharmacopeia’s use of the specialized equipment. Upon
expiration or earlier termination of the Collaboration,
Pharmacopeia shall fully cooperate with Schering to promptly return
the specialized equipment to Schering. Alternatively, the
Parties may decide to permit Pharmacopeia to retain the specialized
equipment following the expiration or termination of the
Collaboration, in which case the Parties shall arrange for the
purchase and transfer of ownership of the specialized equipment to
Pharmacopeia on financial terms to be agreed to by the Parties
based upon the then current fair market value of the specialized
equipment.
2.7 Record Keeping and Inspection
of Records . Each of
Schering and Pharmacopeia, and their respective Affiliates, shall
maintain records of its Collaboration activities (or cause such
records to be maintained) in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes as
will properly reflect all work performed and the results achieved
in performance of the Collaboration. Schering shall also
maintain analogous records of its development activities with
respect to Agreement Compounds and Agreement Products. Such
records may include books, records, reports, research notes,
charts, graphs, comments, computations, analyses, recordings,
photographs, computer programs and documentation thereof, computer
information storage media, samples of materials and other graphic
or written data generated in connection with the Collaboration,
including any data required to be maintained pursuant to all
requirements of applicable laws, rules and regulations, or as
directed by the Collaboration Committee. Pharmacopeia’s
records shall also document by name which individuals assigned to
the Collaboration
10
pursuant to Section 2.5 are working on each
specific Collaboration research project (identifying the Target(s)
involved). During the Collaboration and for five
(5) years thereafter, each of Schering and Pharmacopeia shall
have the right, upon at least five (5) business days’
prior notice, to inspect all such records of the other Party (or
legible copies thereof) during normal business hours. Each
Party’s rights under this Section 2.7 shall be limited
to one (1) inspection in any calendar year. In each case,
the Party conducting the inspection shall maintain such records and
the information disclosed therein in confidence in accordance with
Section 7.1, and shall use such information solely for
purposes of this Agreement. Upon request and tender of payment
for the actual cost in providing copies, Pharmacopeia and/or
Schering, as appropriate, shall provide to the requesting Party
copies of such records.
2.8 Performance of Screening
Programs . With respect
to each Screening Target, the Parties agree that promptly following
the acceptance by Pharmacopeia of each Screening Target in
accordance with Section 2.1.2, Schering will provide
Pharmacopeia (free of charge) with reasonable quantities of the
Screening Target protein and any of Schering’s other
proprietary reagents required to perform assays to identify
compounds having activity against such Screening Target. All
such proteins and other reagents are and shall remain the property
of Schering, shall be used by Pharmacopeia solely in performance of
the Screening Program, and shall not be transferred or otherwise
made available to any Third Party without Schering’s prior
written consent (which consent may be granted or withheld in
Schering’s sole discretion.) Upon receipt of such *
Pharmacopeia shall use diligent efforts to initiate and conduct a
Screening Program to identify Pharmacopeia Compounds having
activity against such Screening Target. Such efforts shall
include any assay development work or assay modifications necessary
to enable Pharmacopeia to perform the relevant assays to determine
whether or not the applicable Activity Criteria are met for such
Screening Target. Except as otherwise provided in
Section 2.6, Pharmacopeia shall be solely responsible *
Effective upon acceptance by Pharmacopeia of each Screening Target
under Section 2.1.2, Pharmacopeia shall not conduct any
screening of Pharmacopeia Compounds, either for itself or for any
Third Party, against the same Target as such Screening Target (as
determined pursuant to Section 2.11.1) for the period
*
2.8.1 Hits
. Any Pharmacopeia Compound(s)
identified as meeting the Activity Criteria against a Screening
Target through screening of the Pharmacopeia Compounds by
Pharmacopeia during the term of the Collaboration, shall be
designated a Hit. Upon completion by Pharmacopeia of the
Screening Program for a given Screening Target, Pharmacopeia shall
promptly notify Schering of all Hits identified with respect to
that Screening Target, which notice shall identify the Screening
Target and the available data generated by Pharmacopeia regarding
*but shall not disclose the chemical structure of the Hits, or in
the event that no Hits are identified from the Screening Program,
Pharmacopeia shall notify Schering to that effect. *
information and samples of Hits solely for the purpose of
confirming that such Pharmacopeia Compound meets the Activity
Criteria for the Screening Target. This will include the
performance by Schering of any tests necessary to confirm
* Schering agrees, however, not to conduct, or have conducted,
*
2.8.2 * Within Schering shall notify Pharmacopeia in
writing of those compounds which Schering has confirmed are Hits *
Promptly after receipt of such notice, Pharmacopeia shall disclose
to Schering * Upon receipt of the * Schering shall ensure that
those employees having access to the * shall only use such
information for *
2.8.3 Lead Compounds from
Screening Programs . *
Schering shall notify Pharmacopeia which (if any) of those
confirmed Hits are acceptable to Schering as Lead Compounds for
initiation of new Optimization Programs. Following notice from
Schering that one or more Hits are acceptable as Lead Compounds,
the Parties shall, as soon as reasonably practicable, initiate a
new Optimization Program based upon such Lead Compound(s) in
accordance with Section 2.9. The Parties acknowledge and
agree that if Schering notifies Pharmacopeia that at least one Hit
is acceptable to Schering as a Lead Compound for a given Screening
Target, then the licenses granted to Schering under Article 4
with respect to such Lead Compound shall also include * The
restrictions set forth in Section 2.8.2 regarding disclosure,
access and use of structural information with respect to confirmed
Hits shall no longer apply following notice of acceptance by
Schering of one or more such Hits as a Lead Compound pursuant to
this Section 2.8.3. Upon acceptance by Schering of one or
more Hits as a Lead Compound pursuant to this Section 2.8.3,
the duration of the restriction on screening by Pharmacopeia
against the relevant Screening Target, as set forth in the last
sentence of Section 2.8, *
11
2.8.4 Hits Not Accepted by
Schering . In the
event that Schering does not accept any of the Hits identified by
Pharmacopeia with respect to a given Screening Target as Lead
Compounds for an Optimization Program, Pharmacopeia shall have the
right to * In the event that Pharmacopeia decides to * Following
receipt of any * by Schering, the Parties agree that for
*
2.9 Performance of Optimization
Programs . The first
Optimization Programs to be performed under this Agreement are the
ongoing research programs for Optimization Libraries (as defined in
the 1998 Agreements) listed in Exhibit D, which shall be subject to
the terms and conditions of Section 2.0. All new
Optimization Programs to be initiated by the Parties after the
Effective Date shall be programs based upon Lead Compounds selected
under the terms and conditions of this Agreement and
Section 2.0 shall not apply to any such new Optimization
Programs. It is anticipated that the Parties will generally seek to
maintain * ongoing Optimization Programs during each year of the
Collaboration in which Schering is funding research at the full
level of * FTEs in accordance with Section 2.5;
provided , however , that the Parties acknowledge
that the actual number of ongoing Optimization Programs at any
given time may vary and shall be subject in part to
Pharmacopeia’s success in identifying Hits from Screening
Programs. If the Parties are unable to maintain * of
Optimization Programs based upon Lead Compounds which are Hits from
Screening Programs, Schering will use commercially reasonable
efforts to approve and initiate new Optimization Programs based
upon Lead Compounds which are Schering Compounds as necessary in
order maintain a reasonable number of ongoing Optimization Programs
based upon the available Pharmacopeia FTEs working on the
Collaboration; provided , however , failure by
Schering to provide Lead Compounds which are Schering Compounds
shall not constitute a breach under this Agreement. If
Schering ceases funding the Collaboration at the full level in * in
accordance with Sections 2.5.2, 2.5.3 and 2.5.4, then Schering will
not be obligated to initiate any new Optimization Programs
*. The Collaboration Committee shall be responsible for
allocation of the FTEs and other resources among the various
Optimization Programs selected by Schering. This will include
allocation of the medicinal chemistry FTEs, as well as additional
FTEs to provide bioassay support, as necessary, for each
Optimization Program to generate primary assay data for Lead
Compounds and Derivative Compounds. In the event that all FTEs
are fully allocated among the various ongoing Optimization
Programs, any new Optimization Programs will be initiated as
resources become available within the Collaboration, based upon
prioritization determined by Schering. Any delay in initiating
an Optimization Program based upon a Lead Compound which is a Hit
from a Screening Program shall not have any effect on the
acceptance of such Hit as a Lead Compound and Pharmacopeia shall
not acquire any *
2.9.1 Preparation of Derivative
Compounds . In
performing each Optimization Program, Pharmacopeia shall undertake
the synthesis of analogs and other Derivative Compounds based upon
the relevant Lead Compounds. Pharmacopeia will also conduct
primary screening assays of all such Derivative Compounds to
determine activity against the applicable Target. Pharmacopeia
will provide the Collaboration Committee with regular (at least
quarterly) written reports of the data and results generated in
performance of each Optimization Program. Such reports will
identify the chemical structure of any and all Derivative Compounds
prepared by Pharmacopeia in performance of the Optimization Program
(whether or not such compounds are identified as active against the
Target), and all test data with respect thereto.
2.9.2 * .
2.9.3 * Notwithstanding the provisions of
Section 2.9.2, *
2.9.4 Leads Based Upon Schering
Compounds . Schering
shall not be obligated to disclose the structure of any Schering
Compound(s) proposed as Lead Compounds unless and until
Pharmacopeia has agreed, pursuant to Section 2.1.1, to conduct
an Optimization Program against the relevant Target. Upon
Pharmacopeia’s agreement to conduct an Optimization Program
based upon one or more Lead Compounds which are Schering Compounds,
Schering shall disclose to Pharmacopeia the structure of such
Schering Compounds. Effective upon the date Pharmacopeia
agrees to perform an Optimization Program based upon one or more
Lead Compounds which are Schering Compounds, for the period
extending from *
2.10 Pharmacopeia Independent
Research Activities .
2.10.1 Activities Outside the
Collaboration . The
Parties acknowledge that during and after the term of the
Collaboration Pharmacopeia may (either alone or in collaboration
with one or more Third Parties) perform independent research and
development
12
activities with respect to Targets (including,
without limitation, to identify, develop and commercialize
products), which activities are not within the scope of this
Agreement; provided that Pharmacopeia shall not use any
Schering Technology, and except as otherwise expressly set forth in
this Agreement shall not use any Collaboration Technology, in
connection with any such independent research and development
activities. Any data, information, materials, compounds,
products or other technology resulting from such independent
research and development activities is the property of Pharmacopeia
(“Pharmacopeia Independent Technology”). The
Parties further acknowledge that Pharmacopeia Independent
Technology may include technology independently acquired,
discovered or developed by Pharmacopeia (as demonstrated by
documented evidence created at the time of such acquisition,
discovery or development) and which coincidentally is substantially
the same as technology within the scope of Collaboration Technology
and/or Schering Technology. Schering shall have no rights or
licenses whatsoever to any Pharmacopeia Independent
Technology.
2.11 Schering’s Screening
Programs . The
Parties acknowledge that Schering shall have the right to conduct
its own independent screening programs against any and all Targets,
and that except as expressly set forth in this Section 2.11, *
resulting from such independent screening programs. Schering
shall have the right * The Parties acknowledge and agree that any
pharmaceutical products discovered, developed and commercialized as
a result of * are and shall be treated as Agreement Products and
shall be subject to * but shall not be subject *
2.11.1 Differentiation of
Targets . A Target
will encompass *
2.12 Third Party
Patents . The
Parties acknowledge and agree that Pharmacopeia shall have the
right to reject and shall not be obligated to undertake any
Screening Program or Optimization Program, or any new research
activities in connection with an ongoing Screening Program or
Optimization Program, pursuant to this Agreement if Pharmacopeia
reasonably determines, in good faith, that such program or
activities cannot be performed without infringing an issued US
patent held by a Third Party. It is further understood and
agreed that, unless Schering obtains a license for Pharmacopeia, or
grants Pharmacopeia a sublicense under a license held by Schering,
to conduct such program or research activities,
Pharmacopeia’s failure to conduct such program or research
activities shall not constitute a breach of this
Agreement. Pharmacopeia shall promptly inform Schering in the
event that Pharmacopeia determines in accordance with this
Section 2.12 that it will be unable to undertake any proposed
Screening Program, Optimization Program or research activities due
to Third Party patents. *
ARTICLE III
COLLABORATION
MANAGEMENT
3.1 Collaboration
Committee . The
Parties shall establish a Collaboration Committee to oversee,
review and coordinate the conduct of the Collaboration. The
Collaboration Committee shall be comprised of three
(3) representatives from each of Schering and Pharmacopeia, or
such other equal number of representatives as the Parties may
agree, each Party’s members selected by that Party. Each
of Pharmacopeia and Schering may replace its Collaboration
Committee representatives at any time upon written notice to the
other Party. The Collaboration Committee shall be chaired by
the Collaboration Director appointed by Schering, unless otherwise
agreed by the Parties.
From time to time the Collaboration
Committee may establish various subcommittees, constituted as
agreed by the Collaboration Committee, to oversee particular
projects or activities within the Collaboration.
3.2 Collaboration Committee
Meetings . During the
term of the Collaboration, including as it may be extended, the
Collaboration Committee shall meet at least four (4) times per
year, or more often as agreed by the Parties, at such locations as
the Parties shall agree. At such meetings the Collaboration
Committee’s responsibilities will include:
(i) formulating and reviewing the Collaboration objectives
with respect to each Optimization Program; (ii) monitoring the
progress of the Collaboration toward those objectives;
(iii) evaluating Hits identified by Pharmacopeia from
Screening Programs; (iv) initially reviewing recommendations
by Pharmacopeia to Schering for Hits proposed to be accepted as
Lead Compounds for new Optimization Programs; and (v) taking
such other actions as may be specified under this Agreement or
which the Parties deem appropriate. The Collaboration
Committee may designate a patent committee comprised of employees
or representatives of the Parties to oversee the patent prosecution
and/or enforcement activities described in Article VI, and to
facilitate communication and agreement between the Parties
regarding inventorship of
13
inventions made in the Collaboration and the
classification of such inventions (e.g., as Schering Improvements,
Pharmacopeia Improvements, Collaboration Technology,
etc.). Additional non-voting representatives or consultants
from either Party may from time to time be invited by Schering or
Pharmacopeia to attend and participate in Collaboration Committee
meetings (e.g., to evaluate and advise on business or scientific
issues) subject to compliance with the confidentiality provisions
of Section 7.1. Each Party shall be responsible for its
own expenses in connection with the Collaboration
Committee.
3.3 Collaboration Committee
Decisions . Decisions of the Collaboration Committee
shall be based upon the consensus of all the members. In the
event that the Collaboration Committee cannot or does not, after
good faith efforts, reach agreement on an issue, such issue shall
be referred to the President of Schering’s Affiliate, the
Schering-Plough Research Institute (“SPRI”), and the
President and Chief Operating Officer of Pharmacopeia Drug
Discovery for resolution. In the event that these officers are
unable to resolve the issue within fifteen (15) business days
after submission of the issue to them, then the unresolved issue
may be submitted by either Party to binding arbitration pursuant to
Section 11.3 of this Agreement, except that the decision shall
be made by one (1) arbitrator with expertise in pharmaceutical
product development, and the decision of the arbitrator shall be
rendered within six (6) months of initiation of the
arbitration. During the pendency of any such arbitration
proceedings, the Parties shall proceed with performance of the
Collaboration following the course of conduct determined by
Schering; provided , however , that notwithstanding
the foregoing, Pharmacopeia shall not be obligated to
(i) perform any action that would violate its obligations to
any Third Party or contravene Section 2.12, (ii) spend or
forego receiving any amounts of money (except as necessary in
connection with the fulfillment of Pharmacopeia’s
responsibilities under Section 2.3), or (iii) knowingly
prepare or deliver to Schering any compounds previously licensed to
any Third Party. Notwithstanding the foregoing, Schering, in
its sole discretion, shall have complete and final control over
Schering’s research, development and commercialization of
Schering Compounds, Agreement Compounds and/or Agreement Product(s)
in accordance with the terms and conditions of this
Agreement.
3.4 Development Status; Notice of
Sale of Agreement Products . During the term of this Agreement,
Schering shall provide Pharmacopeia written annual reports within
thirty (30) days after the first and each subsequent
anniversary of the Effective Date, which reports shall provide:
(i) a brief report summarizing the development status of each
Lead Compound and/or Development Candidate under development at
Schering; (ii) the status of all patent applications claiming
any Library Compounds or Derivative Compounds, and
(iii) copies of all such patent applications which have
published during the relevant twelve (12) month period and
were not previously provided to Pharmacopeia. Such reports
shall contain information sufficient to allow Pharmacopeia to
monitor the status of Schering’s efforts with respect to the
accomplishment of the milestones set forth in Section 5.3;
provided , however , that nothing hereunder shall be
construed as requiring Schering to provide Pharmacopeia with any
specific research data or results, including, without limitation,
information relating to Targets or data obtained from screening
programs being conducted at Schering. Until the First
Commercial Sale of each Agreement Product by or on behalf of
Schering hereunder, Schering shall keep Pharmacopeia reasonably
informed as to the status of the pre-clinical, clinical and
commercial development of such Agreement Product by providing
Pharmacopeia with annual written reports summarizing such
activities with respect to each potential Agreement Product under
development during the term of this A
