COLLABORATION, DEVELOPMENT AND LICENSE AGREEMENT

Exhibit 99.1

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

COLLABORATION, DEVELOPMENT AND LICENSE AGREEMENT

 

This COLLABORATION, DEVELOPMENT AND LICENSE AGREEMENT (the “Agreement”), effective as of this 8th day of June, 2005 (the “Effective Date”), is made by and between Trimeris, Inc., having a principal place of business at 3500 Paramount Parkway, Morrisville, North Carolina 27560, U.S.A. (“Trimeris”), and ChemBridge Research Laboratories, Inc. (together with its Affiliates, “CRL”), having a principal place of business at 16981 Via Tazon, Suite K, San Diego, California 92127, U.S.A.

 

RECITALS

 

WHEREAS CRL has skills, expertise and experience in the application of discovery chemistry and biology for use in identifying small molecule modulators for drug targets, and has identified, developed, rights to and owns proprietary chemistry and biological technologies suitable for preclinical drug discovery as high throughput biological screening assays and medicinal chemistry;

 

WHEREAS Trimeris has identified, developed, rights to and owns proprietary biological models, assays, and materials that have the potential to be used as the basis for drug discovery programs for Targets (as defined below) specific for Trimeris;

 

WHEREAS Trimeris and CRL desire to collaborate to identify Compounds (as defined below) with activity as anti-viral agents against the Targets, with the goal of delivering Compounds with desired activity and selectivity for developing Products (as defined below) in the Field (as defined below) with the Compounds and information which result from the Research Collaboration (as defined below).

 

NOW, THEREFORE, for and in consideration of the covenants, conditions and undertakings hereinafter set forth, it is agreed by and between the Parties as follows:

 

 

TABLE OF CONTENTS

 

 

ARTICLE 1

 

DEFINITIONS

 

Unless the context clearly indicates otherwise, the following rules shall govern the interpretation of this Agreement:

 

a.

The definitions of all terms defined herein shall apply equally to the singular, plural, and possessive forms of such terms.

 

b.

All references to “Sections,” or “Articles”, or “Exhibits” shall mean the corresponding Sections of, Articles of and Exhibits to this Agreement.

 

As used herein, the following terms will have the meanings set forth below:

 

1.1 “Active” shall mean a compound developed and tested under the Research Plan which meets potency and selectivity guidelines with respect to a Target, as provided in the Research Plan. The potency and selectivity guidelines defining an “Active” may be amended from time to time, based on SAR and available data, by the Joint Research Committee (“JRC”) in accordance with the JRC Decision-Making Process.

 

1.2 “ADMET” shall mean studies that are designed to examine preliminary adsorption, distribution, metabolism, excretion or toxicology profiles of a Compound in vitro and/or in animals, which may or nay not be conducted under GLP conditions.

 

1.3 “Affiliate” shall mean any corporation or other entity, whether de jure or de facto, which is directly or indirectly controlling, controlled by or under common control of a Party hereto for so long as such control exists. For the purposes of this Section 1.3, “control” shall mean the direct or indirect ownership of at least fifty percent ( ³ 50%) of the voting securities, income interest, a comparable equity in such or other voting rights of such subject entity having the power to vote on or direct the affairs of the entity, or if not meeting the preceding, the maximum voting right that may be held by the particular entity under the laws of the country where such entity exists. In case of CRL, affiliates shall include ChemBridge Corporation, having a principal place of business at 16981 Via Tazom, Suite G, San Diego, CA, 92127, U.S.A.; and ChemBridge Ltd., having a principal place of business at 1 Malya Pyrogovskaya, Moscow, 119435, Russian Federation.

 

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1.4 “Change of Control” shall have the meaning as set forth in Section 2.15.

 

1.5 “Chemist” shall mean a scientist with the sufficient knowledge and training in medicinal and synthetic organic chemistry, including but not limited to the design and synthesis of chemical entities, and whom possesses unique skills and expertise, to enable timely performance of the obligations as set out in the Research Plan, and with scientific qualifications that meets or exceeds industry standards for a research chemist performing in a drug discovery collaboration between two companies.

 

1.6 “Collaboration Technology” shall mean all Inventions and other intellectual property, including without limitation any Know-How and Patent Rights relating thereto, made solely by either CRL or solely by Trimeris, or jointly by CRL and Trimeris in the course of performing or in connection with the Research Collaboration. It is understood and agreed that Collaboration Technology shall not include any CRL Technology, or Trimeris Technology, or Development Technology.

 

1.6.1 “Know-How” shall mean all ideas, inventions, data, instructions, processes, formulas, expert opinions and information, including, without limitation, biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information developed either solely by CRL or Trimeris, or jointly by CRL and Trimeris during performing and in connection with the Research Collaboration, in each case, which is necessary for the development, manufacture, use or sale or commercialization of Compounds and/or Products, to the extent CRL or Trimeris has the right to license or sublicense the same; provided, however, that Know-How does not include any CRL Technology, Trimeris Technology, Development Technology, or any inventions otherwise included in the Patent Rights.

 

1.6.2 “Patent Rights” shall mean (i) all patents and patent applications the subject of which is an invention conceived and reduced to practice either solely by CRL or Trimeris, or jointly

 

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by CRL and Trimeris in the performance of or in connection with the Research Collaboration, that claim a Compound (including, but not limited to, their progeny and derivatives and all non-covalent derivatives, acid addition salts and cationic salts, and all diastereomeric and enantiomeric forms thereof), and including without limitation a Focused Library Compound, a Lead Compound, Development Compound, a Compound, or method of use or process for the synthesis or manufacture thereof or composition-of-matter containing such Compound, and (ii) any divisionals, 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; provided, however, that Patent Rights shall not include any CRL Technology, or Trimeris Technology, or Development Technology.

 

1.7 “Compound” shall mean any one or more chemical entity(ies) that is (i) specifically designed by Trimeris and/or CRL in the course of performing or in connection with the Research Plan; or (ii) designed by Trimeris and/or CRL, and synthesized by CRL, in the course of performing or in connection with the Research Plan; or (iii) synthesized by CRL in the course of performing or in connection with the Research Plan; or (iv) has been designated as a Development Compound under Section 2.4.4(c) below. Except as expressly provided for in this Section 1.7, or in Section 2.4.4(c) below, it is understood and agreed that Library Compounds shall not be deemed Compounds. Compounds shall not include any Trimeris Technology.

 

1.8 “CRL Library” shall mean the collection of CRL proprietary chemical entities and other chemical libraries that CRL makes available on a non-exclusive basis to Third Parties; provided, however, CRL Library shall not include any Compounds.

 

1.9 “CRL Technology” shall mean certain know-how, intellectual property or patents, as shown by contemporaneous documentation, that is (i) developed, licensed and/or owned by CRL, prior to the Effective Date, or (ii) developed, licensed and/or owned by CRL at any time outside of the Research Collaboration, or (iii) developed during the term of the Research Collaboration and not having specific application to the Research Plan (i.e. such know-how, intellectual property, or patents having application only outside of the specific composition of matter, method of synthesis, manufacture, sale or importation of a Compound and/or a Product).

 

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1.10 “Database Mining Compound” shall mean a chemical entity that is received by CRL from a third party vendor or is a Library Compound. A Database Mining Compound shall not be deemed a Compound unless it is a Library Compound designated as a Development Compound under Section 2.4.4(c) below.

 

1.11 “Development Compound” shall mean any Compound that is selected by Trimeris for preclinical drug development or is entered into IND Enabling Studies, whichever occurs first.

 

1.12 “Development Technology” shall mean certain know-how, intellectual property or patents, as shown by contemporaneous documentation, developed, licensed or owned by Trimeris, or jointly developed by Trimeris and a Third Party, during the development by or on behalf of Trimeris of a Development Compound or Product pursuant to this Agreement..

 

1.13 “Field” shall mean the discovery, development and commercialization of small chemical molecules for the diagnosis of, or the therapeutic and/or prophylactic treatment of all human conditions and/or diseases.

 

1.14 “Focused Library” shall mean a library of Compounds, consisting of a total of approximately [**] to approximately [**] Compounds, which is created to specifically explore the SAR of an Active, the timeline for making and testing of a Focused Library to be determined by amendment of the Research Plan by the JRC.

 

1.15 “Focused Library Compound” shall mean any Compound that is contained in a Focused Library.

 

1.16 “FTE” shall mean a full-time person dedicated to the Research Collaboration or, in the case of a less than full-time, dedicated person, a full-time, equivalent person year based upon a total of one thousand eight hundred eighty (1,880) hours per year of work in connection with the Research Plan. [**]

 

1.17 “GLP” shall mean Good Laboratory Practice, as defined in the U.S. Food, Drug and Cosmetic Act.

 

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1.18 “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.

 

1.19 “IND Enabling Studies” shall mean studies performed specifically for inclusion in an IND, including without limitation ADMET and GLP toxicology, as well as formulation and manufacturing development necessary to obtain the permission of regulatory authorities to begin human clinical testing. Notwithstanding the foregoing, IND Enabling Studies shall not include any non-GLP studies, including ADMET or formulation studies, undertaken by Trimeris pursuant to the Research Plan prior to the designation of a Compound as a Development Compound.

 

1.20 “International Territory” shall mean all countries and territories outside of the U.S. Territory.

 

1.21 “Invention” shall mean any new and useful process, manufacture, compound or composition of matter, patentable or unpatentable, or any improvement thereof, conceived or first reduced to practice, or demonstrated to have utility by a Party, pursuant to the Research Plan and during the term of the Research Collaboration.

 

1.22 “JRC” or “Joint Research Committee” shall have the meaning set forth in Section 3.1.

 

1.23 “LC-MS/ELSD” shall mean liquid chromatography mass spectrometry with evaporative light scattering detector.

 

1.24 “Lead Compound” shall mean any Focused Library Compound that meets the JRC guidelines for a Lead Compound and is so designated in writing by the JRC, in accordance with the JRC Decision-Making Process, for further investigation pursuant to the Research Collaboration.

 

1.25 “Library Compound” shall mean any chemical entity that is contained in the CRL Library.

 

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1.26 “NDA” shall mean a New Drug Application, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated therein, or any corresponding foreign application, registration or certification.

 

1.27 “Net Sales” shall mean the gross invoice price for all Products sold by Trimeris, its Affiliates or Sublicensees (“Selling Party”), under this Agreement in arm’s length sales to Third Parties, less deductions allowed to the Third Party customer by the Selling Party on such sales that are for: (a) trade, quantity, and cash discounts, including charge-backs; (b) credits, rebates (including those to managed-care entities and government agencies), and allowances or credits to customers on account of rejection or returns (including, but not limited to, wholesaler and retailer returns) or on account of retroactive price reductions affecting such Product; (c) freight, postage, transportation insurance, packaging materials for dispatch of Product, and duties; and (d) sales and excise taxes, other consumption taxes, customs duties and compulsory payments to governmental authorities and any other governmental charges imposed upon the sale of such Product to Third Parties. In addition, the Selling Party may exclude from Net Sales a reasonable provision for uncollectible accounts to the extent such reserve is determined in accordance with generally accepted accounting standards, consistently applied across all product lines of Selling Party but not to exceed 3% of gross invoiced amounts, until such amounts are actually collected. Notwithstanding the foregoing, Net Sales shall not include sales among Trimeris, its Affiliates and Sublicensees for resale of Product, provided that such resale shall be included within Net Sales.

 

1.28 “Party” shall mean CRL or Trimeris individually, and “Parties” shall mean CRL and Trimeris collectively, unless otherwise specifically indicated.

 

1.29 “Phase I” shall mean human clinical trials conducted under the approval of the U.S. Food and Drug Administration (or any corresponding foreign regulatory counterpart), the principal purpose of which is to establish safety, or safety and proof of concept of efficacy, wherein the dosing with a Development Compound or Product is done over a period of thirty (30) days or less, and which is performed for purposes of supporting an NDA application, or its corresponding foreign regulatory counterpart.

 

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1.30 “Phase II” shall mean human clinical trials conducted under the approval of the U.S. Food and Drug Administration (or any corresponding foreign regulatory counterpart), the principal purpose of which is to establish safety and dose response activity, wherein the dosing with a Development Compound or Product is done over a period of at least thirty one (31) days, and which is performed for purposes of supporting an NDA application, or its corresponding foreign regulatory counterpart.

 

1.31 “Phase III” shall mean human clinical trials conducted under the approval of the U.S. Food and Drug Administration (or any corresponding foreign regulatory counterpart), the principal purpose of which is to establish acceptable safety and statistically significant efficacy of one or more particular doses of a Development Compound or Product in patients being studied, and which will (or are intended to) satisfy the requirements of a pivotal trial for purposes of obtaining approval to market a Product in a country by the health regulatory authority in such country to market such Product.

 

1.32 “Product” shall mean any human diagnostic, human therapeutic and/or human prophylactic product for use within the Field and incorporating a Compound.

 

1.33 “Research Collaboration” shall mean the research activities undertaken by the Parties pursuant to ARTICLE 2 below.

 

1.34 “Research Plan” shall mean the written research plan (including a detailed budget) governing the joint effort of the Parties in conducting the Research Collaboration, which may be amended in writing from time to time by the Joint Research Committee, as it deems necessary or appropriate. The initial Research Plan is attached hereto as APPENDIX A.

 

1.35 “Research Use License” shall have the meaning set forth in Section 2.4.4(c).

 

1.36 “SAR” shall mean the relationship between the biological activity of a chemical entity and its molecular structure.

 

1.37 “Stage I Research” shall mean the research activities undertaken by the Parties pursuant to Sections 2.4.1 and 2.4.2 below.

 

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1.38 “Sublicensee” shall mean, with respect to a particular Product, a Third Party to whom Trimeris has granted a license or sublicense under CRL Technology pursuant to Section 4.2.1 to either make, have made, offer for sale, import, export or sell such Product. As used in this Agreement, “Sublicensee” shall also include a Third Party to whom Trimeris has granted the right to distribute such Product, provided that such Third Party has responsibility for marketing and promotion of such Product within the Field and country for which such distribution rights are granted.

 

1.39 “Target(s)” shall mean any one or more of (a) the HIV gp120 glycoprotein, including all genetic variants of such glycoprotein, or (b) the HIV gp41 glycoprotein, including all genetic variants of such glycoprotein.

 

1.40 “Target Screening Assay” shall mean an in vitro assay utilized by or on behalf of Trimeris to detect or measure the modulation of a Target by interaction with a Library Compound or Compound.

 

1.41 “Third Party” shall mean any person or entity other than CRL and Trimeris, and their respective Affiliates.

 

1.42 “Trimeris Technology” shall mean certain know-how, intellectual property or patents, as shown by contemporaneous documentation, that is (i) developed, licensed and/or owned by Trimeris, prior to the Effective Date; or (ii) developed, licensed and/or owned by Trimeris at any time outside of the Research Collaboration; or (iii) developed during the term of the Research Collaboration and not having specific application to the Research Plan (i.e. such know-how, intellectual property, or patents having application only outside of the specific composition of matter, method of synthesis, manufacture, sale or importation of Compounds and/or Products); or (iv) Development Technology developed, licensed or owned solely by Trimeris, or by Trimeris and a Third Party.

 

1.43 “U.S. Territory” shall mean the United States of America, excluding Puerto Rico and the U.S. Virgin Islands.

 

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1.44 “Valid Claim” shall mean a claim of an issued, unexpired and unabandoned patent within the Patent Rights, which has not been held invalid in a final decision of a court of competent jurisdiction, which has not been appealed or from which no appeal may be taken, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise, and such that making, having made, offering for sale, importing, exporting or selling a Product would infringe such claim.

 

ARTICLE 2

 

RESEARCH COLLABORATION

 

2.1 Goals . The goal of the Research Collaboration is to develop Products for use in the Field pursuant to a Research Plan, which Research Plan is expected to consist of multiple steps, as the research under the Research Plan progresses.

 

2.2 Conduct of the Research Collaboration . Subject to the terms and conditions set forth herein, the Parties agree to conduct research under the Research Collaboration, which shall be funded as set forth in Section 2.8 below. During the term of the Research Collaboration, CRL and Trimeris shall collaborate and shall each use their commercially reasonable efforts to conduct the Research Collaboration in accordance with the Research Plan within the time schedules contemplated therein, and to keep the other Party informed as to the progress and results of the Research Collaboration hereunder.

 

2.3 Research Plan . The Research Collaboration shall be carried out in accordance with a mutually agreed upon written Research Plan, which shall establish specific research objectives and the research tasks to be performed and resources to be provided by each Party according to the terms and conditions specified in Section 2.4. The Research Plan shall, among other things, establish: (i) the scope of the research activities which will be performed; (ii) the research objectives, work plan activities and time schedules with respect to the Research Collaboration; (iii) the respective obligations of the Parties with respect to the Research Collaboration; and (iv) guidelines for determining when a Compound shall be deemed an Active or a Lead Compound. As of the Effective Date, the initial “Research Plan” shall be attached and incorporated herein as APPENDIX A. The

 

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Research Plan shall be reviewed on an ongoing basis, and may be amended during Stage I Research by the JRC, provided that any changes or adjustments in the allocation of CRL resources to a Target research program that are recommended by the JRC be made in accordance with the provisions outlined in Section 2.7.2 and ARTICLE 3, such adjustments to fall within the specific CRL resource allocation specified therein.

 

2.4 Research Collaboration Activities .

 

2.4.1 Stage I Research for the gp41 Target: Identification of inhibitors of HIV gp41-mediated fusion as a Lead Compound .

 

(a) CRL Responsibilities . In accordance with the Research Plan, CRL shall (i) supply Database Mining Compounds, as selected by the JRC to Trimeris for analysis, providing that the total number of Database Mining Compounds provided by CRL free of charge in accordance with this Section will not exceed [**]; and (ii) consult with Trimeris on the design of, and be subsequently responsible for the chemical synthesis of Focused Library Compounds. In addition, at Trimeris’ request, CRL shall make available to Trimeris a copy of any and all quality control data, methods used for characterization of, and the complete chemical structure of, Database Mining Compounds delivered to Trimeris which are designated as “Actives” by the JRC and pursuant to the Research Plan. CRL shall provide Trimeris with such Database Mining Compounds and Focused Library Compounds according to the specifications (including quantities degree of purity, and timelines) agreed upon by the Parties in the Research Plan, so as to facilitate the implementation of the Research Plan. CRL shall also provide to Trimeris the complete chemical structure for each Focused Library Compound. In addition, at Trimeris’ request, CRL shall make available to Trimeris a copy of any and all quality control data and methods used for characterization of the Focused Library Compounds delivered to Trimeris. The Parties recognize that during Stage I Research CRL will create at least one (1) Initial Focused Library , as defined in the Research Plan under APPENDIX A and approved by the JRC; and that subsequent Stage I Research may comprise the creation and subsequent analysis of more than one (1) Focused Library and/or the creation of multiple Focused Libraries for different Actives, provided however that any changes or adjustments in the allocation of CRL resources to the gp41 Target research program for

 

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the purpose of generating one or more Focused Libraries as recommended by the JRC be made in accordance with the provisions outlined in Section 2.7.2 and ARTICLE 3, such adjustments to fall within the specific CRL resource allocation specified therein.

 

(b) Trimeris Responsibilities . In accordance with the Research Plan, Trimeris shall assay the Database Mining Compounds and Focused Library Compounds, made available to it pursuant to this Section 2.4.1(a), for in vitro activity in the Target Screening Assay(s) in accordance with the Research Plan, and for purposes of establishing SAR data with respect to such Database Mining Compounds and Focused Library Compounds.

 

(c) Designation of Lead Compounds . In accordance with the responsibilities of the JRC and its decision making process in accordance with Section 3.1, the JRC shall designate Lead Compounds which will be further evaluated under the Research Plan for possible designation as Development Compounds.

 

2.4.2 Stage I Research for the gp120 Target: Identification of inhibitors of HIV entry as a Lead Compound .

 

(a) CRL Responsibilities . In accordance with the Research Plan, CRL shall (i) supply up to [**] Database Mining Compounds, as selected by the JRC to Trimeris for analysis; (ii) synthesize and supply Compounds based on the initial chemistry plan as agreed on between the Parties and incorporated into the Initial Research Plan; and (iii) consult with Trimeris on the design of, and be subsequently responsible for the chemical synthesis of, Focused Library Compounds. In addition, at Trimeris’ request, CRL shall make available to Trimeris a copy of any and all quality control data, methods used for characterization of, and the complete chemical structure of, Database Mining Compounds and Compounds delivered to Trimeris which are designated as “Actives” pursuant to the Research Plan. CRL shall provide Trimeris with such Database Mining Compounds, Compounds, and Focused Library Compounds according to the specifications (including quantities degree of purity, and timelines) agreed upon by the Parties in the Research Plan, so as to facilitate the implementation of the Research Plan. CRL shall also provide to Trimeris the complete chemical structure for each Compound and Focused Library Compound. In

 

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addition, at Trimeris’ request, CRL shall make available to Trimeris a copy of any and all quality control data and methods used for characterization of the Compounds and Focused Library Compounds delivered to Trimeris. The Parties recognize that during Stage I Research CRL will create at least one (1) Initial Focused Library , as defined in the Research Plan under APPENDIX A and approved by the JRC; and that subsequent Stage I Research may comprise the creation and subsequent analysis of more than one (1) Focused Library and/or the creation of multiple Focused Libraries, provided however that any changes or adjustments in the allocation of CRL resources to the gp120 Target research program for the purpose of generating one or more Focused Libraries as recommended by the JRC be made in accordance with the provisions outlined in Section 2.7.2 and ARTICLE 3, such adjustments to fall within the specific CRL resource allocation specified therein.

 

(b) Trimeris Responsibilities . In accordance with the Research Plan, Trimeris shall assay the Database Mining Compounds, Compounds, and Focused Library Compounds, made available to it pursuant to this Section 2.4.2(a), for in vitro activity in the Target Screening Assay(s) in accordance with the Research Plan, and for purposes of establishing SAR data with respect to such Database Mining Compounds, Compounds, and Focused Library Compounds.

 

(c) Designation of Lead Compounds . In accordance with the responsibilities of the JRC and its decision making process in accordance with Section 3.1, the JRC shall designate Lead Compounds which will be further evaluated under the Research Plan for possible designation as Development Compounds.

 

2.4.3 Focused Library Exclusivity . All Focused Library Compounds made for either the gp120 Target or the gp41 Target pursuant to this Agreement shall be deemed Compounds, and shall be made solely available to Trimeris on an exclusive basis, and such Focused Library Compounds shall not be included in any CRL Library supplied to a Third Party by CRL under a separate agreement.

 

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2.4.4 Development Compound Identification .

 

(a) General . Using the data and information regarding Actives, Focused Libraries, Lead Compounds, structures thereof, and SAR data obtained from Stage I Research, the Parties shall define the properties desired of a Development Compound to be pursued, and conduct research activities in accordance with an updated Research Plan directed to validating and optimizing Lead Compounds for each Target for the purpose of determining whether a Lead Compound can be declared a Development Compound appropriate for further development and possible commercialization into a Product.

 

(b) Selection of Development Compounds . Based upon the results generated during the Research Collaboration and the evaluation of Focused Library Compounds and Lead Compounds, the JRC may, from time to time, nominate a Focused Library Compound, Lead Compound or Compound for consideration by Trimeris as a potential Development Compound, and shall inform Trimeris of such recommendation. Notwithstanding the recommendation of the JRC, Trimeris shall have the right, in its sole discretion, to designate any Active, Focused Library Compound, Lead Compound or Compound as a Development Compound during the term of this Agreement. CRL acknowledges and agrees that the final decision as to whether or not to designate any Active, Focused Library Compound, Lead Compound or Compound as a Development Compound shall rest with Trimeris, and that such decision will be made by Trimeris in accordance with Trimeris’ standard internal procedures for the nomination and selection of a Development Compound. Trimeris shall give CRL written notice of its designation of a Compound as a Development Compound; and a Focused Library Compound, Lead Compound or a Compound shall not be deemed a Development Compound unless so designated by Trimeris by such written notice. Trimeris agrees not to undertake any IND-Enabling Studies with respect to a particular Focused Library Compound, Lead Compound or Compound until such compound has been designated a Development Compound in accordance with this Section 2.4.4(b); provided however, that Trimeris may undertake to perform non-GLP ADMET studies on Compounds in order to determine whether or not it shall designate a Compound as a Development Compound. All Development Compounds shall be made solely available to Trimeris on an exclusive basis, and such Development Compounds shall not be, unless the prior written consent of Trimeris is obtained, included in any CRL Library supplied to a Third Party by CRL under a separate agreement.

 

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(c) It is understood between the Parties that CRL is in the business of providing compound libraries to Third Parties, and except as expressly provided herein, nothing herein shall prevent or restrict CRL from providing Library Compounds to Third Parties, or from using the Library Compounds for any purposes for other than to screen against the Targets to its best knowledge. It is further understood that CRL may grant to Third Parties rights to acquire licenses in the Library Compounds similar to those granted to Trimeris hereunder except to screen against the Targets (as specified in 2.11.1); accordingly, Trimeris’ right to designate any particular Library Compound as a Development Compound, and CRL’s grant of rights to Trimeris thereto under Section 4.2, are limited to the extent that CRL has, prior to Trimeris’ request, granted a Third Party a license or other right with respect to such a Library Compound. In the event that Trimeris wishes to designate a Library Compound as a Development Compound pursuant to Section 2.4.4(c), CRL must inform Trimeris within five (5) business days whether or not CRL has previously granted a Third Party rights that would prevent CRL from granting Trimeris an exclusive license to such Library Compound and designation by Trimeris of such Library Compound as a Development Compound. In the event that CRL informs Trimeris that CRL has not granted to a Third Party rights that would prevent CRL from granting Trimeris an exclusive license to such Library Compound as a Development Compound, such Library Compound shall be deemed a Development Compound under this Agreement. In the event CRL informs Trimeris that CRL has granted a Third Party rights that would prevent CRL from granting Trimeris an exclusive license to such Library Compound as a Development Compound, and within five (5) business days of so informing Trimeris, Trimeris shall automatically be granted by CRL a nonexclusive, sublicensable, royalty-free, non-transferable license and right to use such Library Compound solely for research purposes by Trimeris or its Third Party contractors, for a term of ten (10) years (“ Research Use License ”), as long as the rights to such Library Compound granted by CRL to the Third Party does not preclude the granting by CRL to Trimeris of such Research Use License. A chemical entity or entities developed by Trimeris as a result of such Research Use License which does not infringe a Valid Claim of a CRL patent existing as of the date of granting of such Research Use License to Trimeris shall: (i) be solely owned by Trimeris, including all right, title, interest, and intellectual property to any such chemical entity; and (ii) constitute Trimeris Technology. It is understood and agreed that so long as CRL complies with this Section 2.4.4(c), CRL shall have no liability with respect to any

 

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conflict of Trimeris’ rights and those rights granted to Third Parties by CRL regarding such Library Compound. A Research Use License granted under this Section 2.4.4(c), shall be separate and distinct from the license rights granted to Trimeris by CRL under Section 4.1.2 of this Agreement. CRL makes no representation or warranty that any Library Compound designated by Trimeris as a Development Compound does not or will not infringe the intellectual property rights of any Third Party.

 

2.5 General Resources and Responsibilities .

 

2.5.1 CRL Responsibilities . During the term of the Research Collaboration, CRL shall be primarily responsible for the following activities, in connection with the Research Collaboration as specified in the Research Plan:

 

(a) Supply of Database Mining Compounds to Trimeris as specified under Sections 2.4.1 and 2.4.2;

 

(b) Design, chemical synthesis, purification, and analysis of Compounds and Focused Library Compounds;

 

(c) Computational chemistry and structure-based drug design and pharmacophore mapping as well as de novo virtual library generation;

 

(d) Transfer protocols and materials, and provide assistance to Trimeris, pursuant to this Agreement, and also as specified in the Research Plan; and

 

(e) Medicinal chemistry in support of the generation of Focused Libraries, chemical optimization of Lead Compound(s).

 

2.5.2 Trimeris Responsibilities . During the Research Term, Trimeris shall be primarily responsible for the following activities, among others, as specified in the Research Plan or in connection with the Research Collaboration:

 

(a) Pursuant to the Initial Chemistry Plan, design of the initial set of Compounds for the gp120 Target;

 

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(b) Assist CRL in the design of additional Compounds and/or Focused Libraries for the gp120 target and the gp41 Target as needed;

 

(c) Primary and secondary analysis for activity and selectivity;

 

(d) Anti-viral activity assays;

 

(e) Dose-response titrations in viral inhibition assays;

 

(f) ADMET studies on Compounds;

 

(g) In vivo proof of concept;

 

(h) In vitro and ex vivo metabolite profiling;

 

(i) Providing information for structural biology; and

 

(j) Initiation of pre-clinical studies.

 

2.6 Conduct of Research Collaboration . During the term of the Research Collaboration, each Party shall:

 

2.6.1 undertake its obligations under the Research Collaboration as set forth in the Research Plan, provided however that any changes or adjustments in the allocation of CRL resources to the gp120 Target research program and/or the gp41 Target research program or within such programs as recommended by the JRC be made in accordance with the provisions outlined in Section 2.7.2 and ARTICLE 3, such adjustments to fall within the specific CRL resource allocation specified therein;

 

2.6.2 use all reasonable efforts and proceed diligently to perform the work set out for such Party to perform the Research Plan, including without limitation by using personnel with such sufficient skills and experience, together with sufficient equipment and facilities to perform its obligations under the Research Plan;

 

2.6.3 conduct the Research Plan in good scientific manner and in compliance in all material respects with the requirements of applicable laws, rules and regulations, and all other requirements of any applicable good laboratory practices to attempt to achieve its objectives efficiently and expeditiously;

 

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2.6.4 within thirty (30) days following the end of each calendar month during the first six months of the term of the Research Collaboration furnish the other Party with a reasonably detailed written report summarizing the activities conducted by such Party under the Research Plan during such month; and

 

2.6.5 provide reasonable and informal access to, and communication with, any and all of such Party’s FTEs assigned to the Research Collaboration, as well as to records pertaining to research activities under the Research Plan on a need-to-know basis and in accordance with Section 2.10 herein.

 

2.7 Staffing of the Research Collaboration

 

2.7.1 For the first [**] of the term of the Research Collaboration, CRL shall devote [**] FTEs to the Research Plan as follows:

 

(a) [**], located at CRL’s San Diego facility, each of whose efforts under the Research Collaboration will be considered a [**] for billing purposes;

 

(b) [**], located at CRL’s facility in the Russian Federation, each of whose efforts under the Research Collaboration will be considered a [**] for billing purposes; and

 

(c) [**] located at CRL’s San Diego facility, responsible for senior level project management, molecular modeling, analytical, purification and any other chemistry support as necessary for CRL to meet its obligations and perform its activities pursuant to the Research Plan and whose efforts under the Research Collaboration will be considered a [**] for billing purposes.

 

2.7.2 FTE adjustments [**] after the Effective Date . For the term of the Research Collaboration beyond the first [**] of the Research Collaboration, the Parties agree as follows:

 

(a) Trimeris, in its sole discretion and at its sole option, can adjust by either increasing or decreasing the level of CRL’s FTEs from the initial level of [**] FTEs to an adjusted level of between [**] FTEs; provided, however, that the number of CRL FTEs shall in any event be

 

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reasonable in light of CRL’s Research Collaboration responsibilities. Trimeris shall give CRL [**] written notice of the desire to make such adjustment of FTE levels, with such adjusted level of FTEs taking effect at the end of the [**] notice period. Trimeris can opt to adjust the level of FTEs multiple times during the term of the Research Collaboration, so long as Trimeris provides CRL with [**] written notice of such adjustment. The JRC shall be timely advised of any such adjustment in the FTE level so that the JRC can then re-apportion FTE allocation with respect to CRL’s obligations and activities under the Research Plan. CRL shall then adapt the skill set of CRL’s FTEs to facilitate such re-apportioned FTE allocation between its San Diego Facility and its Russian Federation facility, provided that CRL must maintain at least [**] FTE within the San Diego Facility covering senior level project management as long as the FTE level set by Trimeris is at least [**] FTE. All such CRL FTE’s shall be billable to Trimeris [**] unless otherwise determined in writing by CRL as specified in Section 2.8.3(d).

 

(b) At a time no later than [**] from the Effective Date of this Agreement, the JRC shall convene to review the progress made under the Research Plan, and to determine whether or not Stage I Research for each Target is timely attaining the specific objectives set forth in the Research Plan. Based on the results of the JRC review process, Trimeris will then determine whether to terminate the Agreement as specified in ARTICLE 13 or to continue with the Research Collaboration.

 

(c) At any time after [**] from the Effective Date of the Agreement, Trimeris, in its sole discretion and at its sole option, can terminate the Research Collaboration activities under the Research Plan with respect to either the gp41 Target or the gp120 Target, and then adjust the level of CRL’s FTEs for performing research related to the remaining Target according to the process set forth in Section 2.7.2(a) herein. CRL shall then adapt the skill set of CRL’s FTEs to facilitate such adjustment in FTE allocation.

 

2.7.3 For the term of the Research Collaboration, Trimeris will provide, at its own costs, the personnel as necessary for Trimeris to meet its obligations and perform its activities pursuant to the Research Plan.

 

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2.8 Research Collaboration Funding .

 

2.8.1 Research Tax Credits . To the extent permitted by law, Trimeris shall have the sole right to claim any tax credits due on account of research expenses and milestone payments Trimeris incurs under this Agreement.

 

2.8.2 Equipment, Supplies, and Capital Expenditures . Unless the Parties otherwise agree in writing, or as specified below under Section 2.8.2(a), the Parties acknowledge and agree that CRL is solely responsible for the cost of all equipment, supplies, chemicals, solvents, laboratory scale reagents, materials, handling, disposal, and capital items that CRL uses (or is required to use) in connection with the obligations of CRL under the Research Collaboration. Unless the Parties otherwise agree in writing, the Parties acknowledge and agree that Trimeris is solely responsible for the cost of all equipment, supplies, chemicals, solvents, reagents, materials, handling, disposal, and capital items that Trimeris uses (or is required to use) in connection with the obligations of Trimeris under the Research Collaboration.

 

(a) Costs for Extraordinary Research Use Reagents . The Parties agree that if Trimeris makes a request for CRL to synthesize one or more particular Compounds either individually or collectively as part of a Focused Library to support the Research Plan and CRL would need to purchase a research reagent from a Third Party that costs more than [**] dollars ($[**]) to effect such Compound synthesis (“Extraordinary Research Use Reagent”), then CRL will ask the JRC to approve in advance such expense in writing. Upon receiving JRC written approval to proceed with the purchase of the Extraordinary Research Use Reagent, Trimeris will reimburse CRL for [**] percent ([**]%) of the costs of such Extraordinary Research Use Reagent in accordance with the terms and conditions specified in Section 2.8.4 .

 

(b) Reagent costs for synthesis of bulk amounts of Compounds by CRL . The Parties hereby agree that if the JRC makes a request in writing for CRL to synthesize more than [**] of any individual Compound to support the Research Plan, then Trimeris will reimburse CRL for [**] percent ([**]%) the cost of any and all Third Party reagents purchased by CRL to effect the synthesis of more than [**] of any individual Compound to support the Research Plan.

 

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2.8.3 Research Payments to CRL by Trimeris .

 

(a) [**]. For the [**] of the term of the Research Collaboration, Trimeris shall pay to CRL the sum of [**] dollars ($[**]) covering the cost of [**]. Payment to CRL of such [**] costs will be in accordance with Section 7.2. If Trimeris terminates this Agreement at the end of [**] after the Effective Date by providing written notice to CRL pursuant to ARTICLE 13, Trimeris shall pay to CRL the additional sum of [**] dollars ($[**]) as compensation for the remaining [**] period. Trimeris shall be under no further obligation to make any further payments to CRL after the effective Termination Date.

 

(b) During the period between [**] and [**] after the Effective Date . If Trimeris does not terminate the Agreement after [**], then for the period between [**] and [**] Trimeris shall pay CRL [**] for the FTEs allocated by the JRC to the Research Plan, as specified under Section 2.7.2. Payment to CRL of such [**] costs will be in accordance with Section 7.2. CRL shall make available a minimum of [**] FTEs and a maximum of [**] FTEs for sourcing the needs identified by the JRC under the Research Plan during this period.

 

(c) During the period starting [**] after the Effective Date . If Trimeris does not terminate the Agreement after [**], then for the period after [**] Trimeris shall pay CRL for the FTEs allocated by the JRC to the Research Plan [**] unless CRL elects to [**] as specified in Section 2.8.3(d) below. Payment to CRL of such [**] will be in accordance with Section 7.2. CRL shall make available a minimum of [**] FTEs and a maximum of [**] FTEs for sourcing the needs identified by the JRC under the Research Plan during this period until such time a Development Compound is declared by Trimeris.

 

(d) CRL [**] Option [**] after the Effective Date . At least [**] before the beginning of the [**] of the term of the Research Collaboration, CRL shall have the option to [**] by providing Trimeris written notice of such election. If CRL elects this option, Trimeris will pay CRL for CRL FTEs allocated to the Research Plan [**] at the beginning of the [**] of the term of the Research Collaboration, and in doing so the provisions of Section 6.2 will immediately take effect. If CRL does not elect to [**] by the date specified herein, then Trimeris will continue to [**] allocated to the Research Plan [**], and CRL shall forego its option to [**] at any time thereafter.

 

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2.8.4 Payment Terms for Research Payments to CRL . CRL shall provide Trimeris with an invoice at the end of each calendar quarter detailing any and all amounts due CRL for costs incurred under the Research Plan during the immediately preceding calendar quarter which are in accordance with the terms and conditions specified in this Section 2.8. Trimeris shall make payments to CRL within 30 days of receipt of an invoice specifying such costs in accordance with Section 7.2.

 

2.9 Term and Termination of Research Collaboration . The term of the Research Collaboration shall commence on the Effective Date and shall end by a termination of the Research Collaboration or this Agreement pursuant to Article 13.

 

2.10 Records; Inspection .

 

2.10.1 Records . CRL and Trimeris shall each maintain records of the Research Collaboration (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect: (a) all work done and results achieved by the respective Party in the performance of the Research Plan (including all data in the form required under any applicable governmental regulations and as directed by the JRC); and (b) all FTEs used in connection with, including the number of FTEs utilized in performing its activities related to each of the two Targets under, the Research Plan. Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of the other Party to the extent reasonably required in connection with the performance of its obligations or exercise of its rights under this Agreement; however such inspection may be made no more than once per calendar year. Each Party shall maintain such records and the information of the other Party contained therein in confidence in accordance with ARTICLE 10.

 

2.10.2 Reports and Information Exchange . Each of Trimeris and CRL shall use commercially reasonable and diligent efforts to disclose to the other Party all material information relating to the Research Collaboration, including without limitation any Actives, Focused Library

 

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Compounds, Lead Compounds, Development Compound, or Compound promptly after such information is learned or its materiality is appreciated. In addition to the exchange of reports under Section 2.6.4, during the term of the Research Collaboration each Party shall keep the JRC informed as to its progress under the Research Plan by means of written reports to the JRC. Such written reports shall be provided to the JRC at least seven (7) days in advance of each bimonthly meeting of the JRC, and shall contain in reasonable detail a description of the work done and include all results achieved and data generated in performance of the Research Plan since the last report. The written reports submitted to the JRC shall be forwarded by the JRC to senior management representatives of the respective Parties, as determined by the JRC.

 

(a) Within thirty (30) days following June 30 ^th and December 30 ^th in a calendar year during the Research Collaboration, CRL shall provide Trimeris with a reasonably detailed written report describing the progress to date of all activities for which CRL was allocated responsibility during such six (6) month period under the Research Plan. Each written report by CRL shall summarize the results and experimental procedures of the activities conducted by CRL and include a description of all Collaboration Technology and Compound structures, except that CRL will not disclose the chemical structure of a Database Mining Compound which was not designated as an Active by the JRC. CRL shall make available to Trimeris: analytical data related to Compounds; physical chemical characterization data of Compounds; Compound numbers, lot numbers, names of Compound, and dates when Compounds were prepared; full details of synthesis methods (especially new methods or modifications and new applications of existing methods) for all Actives, Lead Compounds, and Development Compounds; Compound purification conditions and protocols, chemical reaction schemes, conditions, protocols, yields, and certificate of analysis; and such other matters as Trimeris may reasonably request. CRL shall provide a final report to Trimeris within thirty (30) days after the earlier of (i) completion of the Research Plan, or (ii) termination or expiration of this Agreement. In no event shall CRL be required to disclose to Trimeris any CRL Technology, except as provided for in this ARTICLE 2.

 

(b) Within thirty (30) days following June 30 ^th and December 30 ^th in a calendar year during the Research Collaboration, Trimeris shall provide CRL with a reasonably detailed written report describing the progress to date of all activities for which Trimeris was

 

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allocated responsibility during such six (6) month period under the Research Plan. Each written report by Trimeris shall summarize the results and experimental procedures of the activities conducted by Trimeris that include hits generated from Target Screening Assays, analysis, toxicology studies, in vitro activity studies, and SAR. Each such written report will contain the results and general protocols for all experiments performed by Trimeris using Database Mining Compounds, Compounds and any other compound derived from active substances generated under the Research Plan, including, but not limited to, Target Screening Assays, in-vitro activity studies, SAR, in-vivo activity, toxicity, ADME, non-GLP pharmacokinetic and/or pharmacodynamic studies. Trimeris shall not be required to disclose to CRL any Trimeris Technology, except as provided for in this ARTICLE 2.

 

2.11 Exclusivity pertaining to the gp41 Target and the gp120 Target .

 

2.11.1 CRL . Except as set forth herein, prior to termination of this Agreement pursuant to Section 13.1, CRL shall not knowingly conduct, participate in, or fund, directly or indirectly, alone or with a Third Party, drug discovery research and/or drug development efforts directed to the identification of, or grant any right to exploit, chemical entities for use against either the gp41 Target or the gp120 Target, except pursuant to this Agreement. The provisions of this Section 2.11.1 shall apply so long as Trimeris is utilizing commercially reasonable efforts (as described in Section 8.1) to pursue the research, development and/or commercialization of Compound(s) or Product(s) pursuant to the terms and conditions specified in this Agreement.

 

2.11.2 Trimeris. Except as provided in Sections 2.11.2 (a) and (b) herein, nothing in this Agreement shall prevent or restrict Trimeris from using its screening assays and analytical methods to assay compound libraries provided by Third Parties, and/or to do any one or more of develop, commercialize, make, have made, use (for any purpose), own or license compounds provided by Third Parties related to the gp41 Target or the gp120 Target.

 

(a) During the first [**] of the term of Research Collaboration, nothing in this Agreement shall prevent or restrict Trimeris from using its screening assays and analytical methods to assay compound libraries provided by Third Parties, and/or to do any one or more of

 

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develop, commercialize, make, use (for any purpose), have made, own, sell or license compounds provided by Third Parties related to the gp120 Target, except that Trimeris will not knowingly work with a Third Party with a compound which is identified to be in the same chemical family as a chemical entity provided to Trimeris by CRL.

 

(b) During the Limited Exclusivity Period (as defined below in Section 2.11.2(c)) applicable to Trimeris only, Trimeris shall not knowingly conduct, participate in, or fund, directly or indirectly, with a Third Party, drug discovery research and/or drug development efforts directed to the identification of small molecule chemical entities with a molecular size of [**] for use against the gp120 Target, except pursuant to this Agreement.

 

(c) Limited Exclusivity Period . For purposes of this Agreement, the “Limited Exclusivity Period” shall mean the period beginning [**] after the Effective Date of the Agreement and terminating by the earlier of either: (i) exercise by Trimeris’ of its option to terminate the Limited Exclusivity Period pursuant to Section 2.11.2(d) herein; or (ii) [**] from the Effective Date; or (iii) termination of this Agreement.

 

(d) Trimeris can, at its sole discretion and option, terminate the Limited Exclusivity Period by giving written notice to CRL of Trimeris’ termination of the Limited Exclusivity Period. If Trimeris elects the option to terminate the Limited Exclusivity Period prior to its expiration, CRL shall remain bound by the exclusivity provisions specified in Section 2.11.1.

 

2.12 Effect of Termination of Limited Exclusivity Period .

 

2.12.1 If Trimeris terminates the Limited Exclusivity Period prior to its expiration (as specified in Section 2.11.2(c)(ii)) and Trimeris then terminates the Agreement prior to Trimeris’ selection of a Development Compound for the gp120 Target, and if during the Limited Exclusivity Period CRL provided FTEs to the Research Collaboration funded [**], Trimeris shall pay to CRL at the time the Agreement is terminated a Limited Exclusivity Period termination fee (“Limited Exclusivity Period Termination Fee”) equal to [**] percent ([**]%) of the aggregate FTE payments made by Trimeris to CRL after the [**] of the term of the Research Collaboration, provided, however, that in no event shall the Limited Exclusivity Period Termination Fee due and payable to CRL exceed [**] dollars ($[**]).

 

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2.12.2 If Trimeris terminates the Limited Exclusivity Period prior to its expiration, and Trimeris subsequently declares a first Development Compound for the gp120 Target, Trimeris shall pay CRL the applicable milestone after selection of such Development Compound, and no Limited Exclusivity Period Termination Fee shall be due and payable to CRL by Trimeris.

 

2.12.3 If Trimeris terminates the Limited Exclusivity Period prior to its expiration and CRL had elected to provide [**] to the Research Collaboration after the [**] pursuant to Section 2.8.3(d), then no Limited Exclusivity Period Termination Fee shall be due and payable to CRL by Trimeris upon termination of the Agreement by Trimeris.

 

2.13 Certain Matters Relating to Acquisition of CRL . If (i) this Agreement is assigned upon a Change of Control of CRL, and (ii) at the time of such Change of Control, the surviving entity had ongoing, or subsequently undertakes, a program for drug discovery research and/or drug development efforts specifically directed to the identification of chemical entities for use against a Target, then subject to the provisions of Section 2.11.1, then:

 

2.13.1 The entity that CRL becomes immediately subsequent to such Change of Control shall not disclose Trimeris Confidential Information and shall not disclose non-public Collaboration Technology and shall not utilize Collaboration Technology except pursuant to the terms and conditions of this Agreement;

 

2.13.2 The Parties shall put procedures in place to prevent the unauthorized disclosure or use of Trimeris Confidential Information or non-public Collaboration Technology prohibited under paragraph (a) above;

 

2.13.3 CRL Technology and Collaboration Technology shall not include any intellectual property or subject matter of the acquiring party existing as of the date of the Change of Control. CRL Technology and Collaboration Technology shall not include any intellectual property or subject matter created or acquired by the surviving entity following the Change of Control, unless

 

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