COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

 

TABLE OF CONTENTS

 

1.	DEFINITIONS			4
2.	MANAGEMENT OF THE RESEARCH PROGRAM			17
2.1		JOINT RESEARCH COMMITTEE		17
2.2		MEETINGS		18
2.3		MINUTES		18
2.4		JRC FUNCTIONS AND POWERS		18
2.5		INDEPENDENCE		19
3.	CONDUCT OF THE RESEARCH PROGRAM			19
3.1		RESEARCH PLAN		19
3.2		CONDUCT OF RESEARCH		19
3.3		RESEARCH COSTS		19
3.4		RECORDS		20
3.6		TERMINATION OF RESEARCH PROGRAM		20
4.	HSR			20
4.1		HSR		20
5.	DEVELOPMENT AND COMMERCIALIZATION			21
5.1		TRANSITION PLAN		21
5.2		DEVELOPMENT PLAN		21
5.3		DEVELOPMENT INFORMATION EXCHANGE		21
5.4		DILIGENCE		22
5.5		REGULATORY AFFAIRS		22
5.6		MANUFACTURE AND SUPPLY		22
5.7		COSTS		23
5.8		TRADEMARKS		23
5.9		PRICING		23
6.	INCYTE PRODUCTS			23
6.1		DEVELOPMENT PLAN		23
6.2		REGULATORY AFFAIRS		23
6.3		MANUFACTURE AND SUPPLY		23
6.4		COSTS		23
6.5		TRADEMARKS		23
6.6		PRICING		23
6.7		INCYTE COMPOUNDS		23
7.	LICENSES AND RELATED RIGHTS			26
7.1		LICENSE TO PFIZER		26
7.2		SUBLICENSES AND LICENSE TO INCYTE		27
7.3		RESEARCH LICENSES		28
7.4		NON-COMPETE		29
7.5		ACQUISITION OF COMPETING PRODUCT		29
8.	FINANCIAL TERMS			30
8.1		UPFRONT PAYMENT		30
8.2		MILESTONE PAYMENTS		30
8.3		SALES MILESTONE PAYMENTS		34
8.4		ROYALTY PAYMENTS		34
8.5		PAYMENTS AND PAYMENT REPORTS		36
8.6		PAYMENT METHOD		36
8.7		TAXES		36
8.8		FOREIGN EXCHANGE		37
8.9		INTEREST		37

 

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8.10		RECORDS; AUDITS		37
8.11		INTER-COMPANY SALES		37
8.12		ANIMAL PRODUCTS		37
9.	INTELLECTUAL PROPERTY			38
9.1		OWNERSHIP		38
9.2		FILING, PROSECUTION AND MAINTENANCE		38
9.3		NOTICES, MAINTENANCE AND RESTRICTIONS ON TRANSFER		41
9.4		PATENT TERM EXTENSIONS		42
9.5		INTERPRETATION OF PATENT JUDGMENTS		42
9.6		ANTI-STACKING		42
9.7		INFRINGEMENT		43
10.	CONFIDENTIALITY			46
10.1		TREATMENT OF CONFIDENTIAL INFORMATION		46
10.2		AUTHORIZED DISCLOSURE		46
10.3		PUBLICITY		47
10.4		PUBLICATIONS		48
10.5		REGISTRATION AND FILING OF THIS AGREEMENT		49
11.	TERM; TERMINATION; CHANGE OF CONTROL			49
11.1		TERM		49
11.2		TERMINATION BY PFIZER		49
11.3		MUTUAL TERMINATION RIGHTS		49
11.4		TERMINATION BY PFIZER OF PFIZER INDICATION		50
11.5		TERMINATION BY PFIZER OF ***		52
11.6		EFFECT OF TERMINATION		53
11.7		CHANGE OF CONTROL		58
11.8		BANKRUPTCY		58
12.	REPRESENTATIONS AND WARRANTIES			59
12.1		GENERAL REPRESENTATIONS AND WARRANTIES		59
12.2		REPRESENTATIONS AND WARRANTIES OF INCYTE		59
13.	INDEMNITIES			60
13.1		INDEMNIFICATION		60
13.2		PRODUCT LIABILITY INDEMNIFICATION		61
13.3		CONDITIONS TO INDEMNIFICATION		61
13.4		EXCLUSION OF DAMAGES		63
14.	DISPUTE RESOLUTION			63
14.1		DISPUTES		63
14.2		GOVERNING LAW; JURISDICTION		63
15.	MISCELLANEOUS			64
15.1		ENTIRE AGREEMENT; AMENDMENT		64
15.2		FORCE MAJEURE		64
15.3		NOTICES		64
15.4		UNITED STATES DOLLARS		65
15.5		ASSIGNMENT		65
15.6		COUNTERPARTS		65
15.7		FURTHER ACTIONS		66
15.8		SEVERABILITY		66
15.9		HEADINGS		66
15.10		NO WAIVER		66
15.11		NON-SOLICITATION OF EMPLOYEES		66
15.12		THIRD-PARTY BENEFICIARIES		66
15.13		BINDING EFFECT		66

 

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*** Confidential material redacted and filed separately with the Commission.

 

EXHIBIT A: INCYTE PATENT RIGHTS

EXHIBIT B: RESEARCH PLAN

EXHIBIT C: TRANSITION PLAN

EXHIBIT D-1: ***

EXHIBIT D-2: ***

EXHIBIT D-3: ***

 

SCHEDULE 1.7(a)-(c): ***

SCHEDULE 1.27: ***

SCHEDULE 1.28: ***

SCHEDULE 1.29: ***

SCHEDULE 1.30: ***

SCHEDULE 1.31: ***

SCHEDULE 1.32: ***

SCHEDULE 1.33: ***

SCHEDULE 1.34: ***

SCHEDULE 1.35: ***

SCHEDULE 1.75: ***

SCHEDULE 6.7(a): ***

SCHEDULE 6.7(b): ***

SCHEDULE 10.3(a): PRESS RELEASE

SCHEDULE 10.3(b): PERMITTED DISCLOSURES

SCHEDULE 10.4 ***

 

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*** Confidential material redacted and filed separately with the Commission.

 

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

 

THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the “ Agreement ”) is entered into as of November 18, 2005 by and between INCYTE CORPORATION, a Delaware corporation with its offices at Experimental Station, Route 141 and Henry Clay Road, Building E336, Wilmington, DE 19880 (“ Incyte ”), and PFIZER INC., a Delaware corporation with its offices at 235 East 42 ^nd Street, New York, New York 10017 (“ Pfizer ”). Incyte and Pfizer may be referred to herein individually as a “ Party ” or collectively, as the “ Parties ”.

 

RECITALS

 

WHEREAS, Incyte owns certain patents, patent applications, technology, know-how and scientific and technical information relating to CCR2 Antagonists;

 

WHEREAS, Pfizer has extensive experience and expertise in the development and commercialization of pharmaceutical products, and desires to acquire an exclusive license in the Territory (as defined below) to such patents, patent applications, technology, know-how and scientific and technical information;

 

WHEREAS, Incyte desires to grant such license to Pfizer but also desires to secure a grantback of certain rights and to have a right of reversion under certain circumstances;

 

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this Agreement, the Parties agree as follows:

 

1.                                       DEFINITIONS

 

1.1          “ Affiliate ” means a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with a Party. For the purposes of this Section 1.1, the word “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the Voting Stock of such entity, or by contract or otherwise.

 

1.2          “ Animal Product ” has the meaning assigned to it in Section 8.12.

 

1.3          “ API ” has the meaning assigned to it in Section 11.5(c)(iii).

 

1.4          *** means, as diagnosed by a physician or other health care provider, a ***. A drug developed for the treatment of ***, respectively.

 

1.5          *** means an inflammatory or autoimmune disease of the *** diagnosed by a physician or other healthcare provider, *** shall also include ***

 

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1.6          “ Business Day ” means a day other than a Saturday, Sunday, bank or other public holiday in the state of New York.

 

1.7          “ CCR2 Antagonist ” means a compound of less than 1,000 Daltons Molecular Weight (MW) as the free base that is an inhibitor of CCR-2 (alpha and/or beta isoforms) binding and activation by known ligands (Macrophage Chemotactic Protein (MCP)-1, MCP-2, MCP-3 or MCP-4) with Inhibitory Concentration (IC) 50 potency less than (a) *** as described in Schedule 1.7(b) and (b) *** as described in Schedule 1.7(c) . The Parties agree that the JRC may amend, modify, replace or delete any of the assays described in Schedules 1.7(a)-(c) from time to time as it deems appropriate in accordance with Section 2.4(f).

 

1.8          “ Change of Control ” means that any of the following has occurred:

 

(a)           any Person or group that is a *** becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or more of the outstanding Voting Stock or voting power over Voting Stock of (i) Incyte or (ii) any one or more Persons which are direct or indirect parent holding companies of Incyte or Affiliates controlling Incyte (Incyte, together with the Persons described in clause (ii), each hereinafter referred to, individually, as an “Incyte Group Company” and, collectively, as the “Incyte Group Companies”); or

 

(b)           any Incyte Group Company enters into an agreement with any Person or group that is a *** providing for the sale or disposition of all or substantially all of the assets of the Incyte Group Companies, on a consolidated basis; or

 

(c)           any Incyte Group Company enters into an agreement with any Person or group providing for a merger, reorganization, consolidation or other similar transaction (or series of related transactions) of any Incyte Group Company with such Person or any Affiliate of such Person, in each case, that is a *** (other than with any of the Incyte Group Company’s wholly-owned subsidiaries) or with such group that contains a ***, that results in the shareholders of the applicable Incyte Group Company immediately before the occurrence of such transaction (or series of transactions) beneficially owning less than a majority of the outstanding Voting Stock or voting power over Voting Stock of the surviving or newly-created entity in such transaction (or series of transactions); or

 

(d)           a change in the board of directors of any Incyte Group Company in which the individuals who constituted the board of directors of such Incyte Group Company at the beginning of the two (2)-year period immediately preceding such change (together with any other director whose election by the board of directors of such Incyte Group Company or whose nomination for election by the stockholders of such Incyte Group Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office. This subsection (d) shall not apply if a majority of the votes cast in favor of a majority of directors following such change were cast by a single stockholder that is a ***; or

 

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*** Confidential material redacted and filed separately with the Commission.

 

(e)           any Incyte Group Company enters into an agreement with any Person providing for the matters described in subsection (a), (b) or (d) above;

 

For purposes of this definition of “Change of Control” only: (A) references to any Incyte Group Company shall be deemed to include all successors in any merger, consolidation, reorganization or similar transaction (or series of related transactions) preceding any transaction (or series of related transactions) described above; (B) “beneficial ownership” (and other correlative terms) means beneficial ownership as defined in Rule 13d-3 under the United States Securities and Exchange Act of 1934, as amended; it being understood and agreed that “beneficial ownership” shall also include any securities which any person or any of such person’s Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; (C) “group” means group as defined in the Securities Exchange Act of 1934, as amended and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof; (D) “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) of an entity means possession, direct or indirect, of (I) the power to direct or cause direction of the management and policies of such entity (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (II) at least fifty percent (50%) of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests of such entity; (E) *** means (x) any *** that had ***, (y) any one or more Persons that are direct or indirect parent holding companies of subsidiaries of the *** described in clause (x) above, or (z) any Affiliate of the *** described in clause (x) above; and (F) *** means (x) any *** that had ***, (y) any one or more Persons that are direct or indirect parent holding companies of subsidiaries of the *** described in clause (x) above, or (z) any Affiliate of the *** described in clause (x) above.

 

1.9          “ Claim ” has the meaning assigned to it in Section 13.1.

 

1.10        “ Combination Product ” means any human pharmaceutical product in which one or more active pharmaceutical ingredients are either (i) physically, chemically or otherwise combined or mixed with a Compound to produce a single entity for commercial distribution or (ii) packaged together with a Compound or any Pfizer Product in a single package or unit for commercial distribution.

 

1.11        “ Commence ” or “ Commencement ” when used to describe a Phase I Trial, Phase II Trial, Phase II(b) Trial or Phase III Trial, means the first dosing of the first patient for such trial.

 

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*** Confidential material redacted and filed separately with the Commission.

 

1.12        “ Commercially Reasonable Efforts ” means those efforts and resources that Pfizer would use were it developing or commercializing its own pharmaceutical products that are of similar market potential as the Pfizer Products, taking into account product labeling or anticipated labeling, present and future market potential, past performance of Pfizer Products and Pfizer’s own pharmaceutical products that are of similar market potential, financial return, medical and clinical considerations, present and future regulatory environment and competitive market conditions, all as measured by the facts and circumstances at the time such efforts are due. For the avoidance of doubt, in evaluating financial return, Pfizer shall not consider any payments due to Incyte pursuant to Sections 8.1, 8.2, 8.3 and 8.4.

 

1.13        “ Competing Product ” means any CCR2 Antagonist that ***

 

1.14        “ Compound ” means any CCR2 Antagonist *** that is covered by a claim contained in any ***. All salts, prodrugs, esters, metabolites, solvates, stereoisomers and polymorphs of a given Compound shall be considered to be the same Compound.

 

1.15        “ Control ” means, with respect to any intellectual property right, that a Party or an Affiliate of a Party owns or has a license to such item or right, and has the ability to grant a license or sublicense in or to such right without violating the terms of any agreement or other arrangement with any Third Party.

 

1.16        “ Damages ” has the meaning assigned to it in Section 13.1.

 

1.17        “ Development Plan ” has the meaning assigned to it in Section 5.2.

 

1.18        *** means *** disorders that are diagnosed by a physician or other health care provider as ***.

 

1.19        “ Effective Date ” means the later of (i) the date that the applicable waiting period under the HSR Act shall have expired or been terminated with respect to this Agreement and (ii) the date on which any investigations opened by means of a second request or otherwise shall have been closed.

 

1.20        “ FDA ” means the United States Food and Drug Administration, or any successor federal agency thereto.

 

1.21        “ FDCA ” means the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder.

 

1.22        “ FTE ” means the equivalent of one person working full time for a twelve (12)-month period in a research or other relevant capacity, with full time being defined as at least 1800 hours per year. In the interests of clarity, a single individual who works more than 1800 hours in a single year shall be treated as one FTE regardless of the number of hours worked.

 

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*** Confidential material redacted and filed separately with the Commission.

 

1.23        “ Generic Market Share ” means a fraction (expressed as a percentage), the numerator of which shall be the aggregate total unit sales of all Generic Products in a country in the Territory, and the denominator of which shall be the aggregate total unit sales of all such Generic Products and the relevant Pfizer Product in such country, based on data provided by IMS International, or, if such data is not available from IMS International, such other reliable data source as reasonably determined by Pfizer and reasonably agreed to by Incyte. In the event IMS International data (or such other data source) is not sufficient to determine the percentage market share for each country in the European Union, the average percent market share of the countries in the European Union for which data is available will be deemed to be the percent market share for those countries in which the data is not available.

 

1.24        “ Generic Product ” means any pharmaceutical product, other than a Pfizer Product, that (i) is sold under a marketing authorization granted by a Regulatory Authority to a Third Party (who is not a permitted sublicensee pursuant to Section 7.1), (ii) contains the same Compound as the relevant Pfizer Product as its active pharmaceutical ingredient and (iii) can be or is reasonably used for the same indication or indications as the relevant Pfizer Product.

 

1.25        “ Governmental Authority ” means any court, agency, department or other instrumentality of any foreign, federal, state, county, city or other political subdivision.

 

1.26        “ HSR Act ” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

1.27        “ INCB-3284 ” means the Compound referred to by Incyte as INCB-3284 as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.27 attached hereto.

 

1.28        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.28 attached hereto.

 

1.29        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.29 attached hereto.

 

1.30        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.30 attached hereto.

 

1.31        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.31 attached hereto.

 

1.32        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.32 attached hereto.

 

1.33        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.33 attached hereto.

 

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*** Confidential material redacted and filed separately with the Commission.

 

1.34        *** means the Compound referred to by Incyte as *** as of the date of this Agreement, which Compound is as described in *** and as depicted on Schedule 1.34 attached hereto.

 

1.35        “ Incyte Compound ” means (i) *** and as depicted on Schedule 1.35 attached hereto and (ii) ***  Schedule 1.35 shall be updated from time to time, upon the request of either Party, to reflect additions or deletions that have occurred after the Effective Date.

 

1.36        “ Incyte Confidential Information ” means all information about any element of Incyte Technology, as well as any other information regarding the business and operations of Incyte, that is disclosed (whether orally or in writing) prior to or after the Effective Date by Incyte to Pfizer or its Affiliates and (a) in the case of oral information, is outlined in a summary prepared by Incyte and delivered to Pfizer promptly after such disclosure and (b) in the case of written information, is designated “Confidential” in writing by Incyte at the time of disclosure to Pfizer, to the extent that such information is not (i) as of the date of disclosure to Pfizer, known to Pfizer other than by virtue of a prior confidential disclosure to Pfizer by Incyte; (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of Pfizer; (iii) obtained from a Third Party free from any obligation of confidentiality to Incyte; (iv) independently developed by Pfizer without access to the Incyte Confidential Information as shown by competent written proof; or (v) is, in the reasonable opinion of legal counsel, required to be disclosed under Law or in connection with any legal proceeding; provided that, in the case of clause (v), Pfizer provides Incyte sufficient prior notice (to the extent practicable) of such disclosure and agrees to cooperate, at the request and sole expense of Incyte with Incyte’s efforts to preserve the confidentiality of such information. All information about the existence and terms of this Agreement shall be considered both Incyte Confidential Information and Pfizer Confidential Information.

 

1.37        “ Incyte Indication ” means the treatment in humans of (i) MS or, (ii)
***

 

1.38        “ Incyte Key Decision Points ” means any of the following: (i) a decision to progress an Incyte Compound from preclinical to clinical development in an Incyte Indication or, if applicable, a Reverted Indication, (ii) with respect to any Incyte Product, a decision with respect to whether Incyte’s relevant go/no go criteria have been met prior to the Commencement of any Phase II Trial or Phase III Trial and (iii) a decision to terminate research and development for any Incyte Compound or Incyte Product or to terminate research and development for a particular Incyte Indication or, if applicable, a Reverted Indication.

 

1.39        “ Incyte Patent Rights ” means the Patent Rights listed in Exhibit A and all Patent Rights that are Controlled by Incyte or any of its Affiliates and cover Incyte Technology.

 

1.40        “ Incyte Product ” means any human or animal pharmaceutical product, whether commercialized or in development, that contains at least one Incyte Compound, alone or in combination with one or more active pharmaceutical ingredients, and developed and indicated solely for the treatment of one or more Incyte Indications or, if applicable, Reverted Indications.

 

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*** Confidential material redacted and filed separately with the Commission.

 

1.41        “ Incyte Product Patent Rights ” means all Incyte Patent Rights that become Incyte Product Patent Rights pursuant to Sections 9.2(b)(ii) or 9.2(e).

 

1.42        “ Incyte Program Patent Rights ” means all Program Patent Rights that become Incyte Program Patent Rights pursuant to Sections 9.2(c)(ii) or 9.2(e).

 

1.43        “ Incyte Technology ” means Technology that is or was (a) invented by officers, employees or agents of, or consultants to, Incyte or any of its Affiliates, alone or jointly with Third Parties, at any time outside of the Research Program or (b) acquired by purchase, license, assignment or other means from Third Parties by Incyte or any of its Affiliates, alone or jointly with Third Parties, at any time outside of the Research Program; provided that ***, then *** if (x) Incyte and all of its Affiliates comply with the provisions of *** and (y) ***.

 

1.44        “ IND ” means an Investigational New Drug Application filed with the FDA or the analogous application or filing filed with any analogous agency or Government Authority outside of the United States (including any supra-national agency such as in the European Union) necessary to Commence human clinical trials in such jurisdiction, and including all regulations at 21 CFR § 312 et. seq. and analogous foreign regulations.

 

1.45        “Joint Research Committee ” or “ JRC ” has the meaning assigned to it in Section 2.1(a).

 

1.46        “ Launch ” means, on a country-by-country and Pfizer Product-by-Pfizer Product basis, the date of the first shipment of a Pfizer Product for commercial sale (excluding any shipments for clinical trial purposes, compassionate use programs or other similar programs) by Pfizer, its Affiliates or its sublicensees to an unaffiliated Third Party in a country after receipt by Pfizer of the first Regulatory Approval (and, in any country in which Price Approval is necessary or relevant for a majority of the population to obtain access to pharmaceutical products, Price Approval) for such Pfizer Product in such country.

 

1.47        “ Law ” or “ Laws ” means all laws, statutes, rules, regulations, orders, judgments and/or ordinances of any Governmental Authority.

 

1.48        “ Major European Country ” means the United Kingdom, Spain, France, Germany or Italy.

 

1.49        “ MS ” means a demyelinating disease of the central nervous system diagnosed by a physician or other health care provider as multiple sclerosis.  MS includes (i) relapsing-remitting MS (RRMS), (ii) secondary progressive MS (SPMS), (iii) primary progressive MS (PMS), (iv) progressive-relapsing MS (PRMS), (v) clinical isolated syndrome (CIS) with MRI lesions and (vi) optic neuritis due to MS.

 

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1.50        “ NDA ” means a New Drug Application under the FDCA filed with the FDA with respect to a pharmaceutical product or the analogous application or filing filed with any analogous agency or Governmental Authority outside of the United States (including any supra-national agency such as in the European Union) necessary for approval of a pharmaceutical product in such jurisdiction.

 

1.51        “ Net Sales ” means

 

(a)           with respect to a Pfizer Product (subject to subsection (b) below), the amount invoiced by a Party or its Affiliate or a Third Party sublicensee for sales of such Pfizer Product, to Third Parties, less, without duplication, (i) actual bad debts related to such Pfizer Product and (ii) sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments including those granted on account of billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, adjustments arising from consumer discount programs or other similar programs, customs or excise duties, sales tax, consumption tax, value added tax, and other taxes (except income taxes) or duties relating to sales, and any payment in respect of sales to the United States government, any State government or any foreign government, or to any Governmental Authority, or with respect to any government-subsidized program or managed care organization; provided that all such deductions for payments in respect of sales to the United States government, any State government, any foreign government, any Governmental Authority, any government-subsidized program or any managed care organization that apply collectively to multiple pharmaceutical products shall be fairly allocated to the amounts invoiced for Pfizer Products; and

 

(b)           in the case of a Combination Product,

 

(i)    if Pfizer and/or its Affiliates and/or any Third Party separately sells in such country during such year when it sells such Combination Product both (1) one or more Pfizer Products as a single chemical entity and (2) other products containing active pharmaceutical ingredient(s) as a single chemical entity, both of which are also contained in such Combination Product, then the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/(A+B) where: A is the sum of Pfizer’s (or its Affiliates’ or Third Parties’, as applicable) average Net Sales prices per daily dose during such year for each Pfizer Product in such Combination Product as a single chemical entity in such country and B is the sum of the average of Pfizer’s (or its Affiliates’ or Third Parties’, as applicable) Net Sales prices per daily dose during such year in such country, for each product(s) containing the active pharmaceutical ingredient(s) in such Combination Product (other than the Pfizer Product) as a single chemical entity;

 

(ii)   if Pfizer and/or its Affiliates and/or any Third Party separately sells, in such country during such year when it sells such Combination Product, one or more Pfizer Products as a single chemical entity but does not separately sell, in such country, other products containing the active pharmaceutical ingredient(s) that are also contained in such Combination Product, then the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying the Net Sales of such Combination Product by the fraction A/C where: A is the sum of Pfizer’s (or its Affiliates’ or Third Parties’, as applicable) average Net Sales prices per daily dose during such year for each Pfizer Product

 

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in such Combination Product as a single chemical entity in such country, and C is Pfizer’s (or its Affiliates’ or Third Parties’, as applicable) average Net Sales price per daily dose during such year for the Combination Product in such country;

 

(iii)  if Pfizer and/or its Affiliates and/or Third Parties do not separately sell, in such country during such year when it sells such Combination Products, each Pfizer Product contained in the Combination Product, then the Net Sales attributable to such Combination Product during such year shall be calculated by multiplying the Net Sales of such Combination Product by the fraction 1/1+D where D is the number of active pharmaceutical ingredients in such Combination Product other than the Pfizer Products.

 

In all cases, Net Sales shall be determined from books and records maintained in accordance with generally acceptable accounting principles in the United States, consistently applied.

 

1.52        “ Non-Proprietary Drug Product ” has the meaning assigned to it in Section 11.5(c)(iii).

 

1.53        “ Note Purchase Agreement ” means the Note Purchase Agreement, dated the date hereof, between Pfizer Overseas Pharmaceuticals and Incyte, as amended from time to time.

 

1.54        “ Notes ” means has the meaning assigned to it in the Note Purchase Agreement.

 

1.55        “ Patent Rights ” means all claims contained in patent applications and issued or granted patents, whether domestic or foreign, including continuations, continuations-in-part, divisionals, provisionals and renewals, and letters of patent granted with respect to any of the foregoing, patents of addition, supplementary protection certificates, registration or confirmation patents and all reissues, re-examination and extensions thereof and any patent restoration or extension period granted by a Governmental Authority, including compensation for patent term lost during the clinical trial or Regulatory Approval process. Inventorship of Patent Rights, including sole and joint inventorship, shall be determined according to applicable United States Law at the time such determination is made.

 

1.56        “ Person ” means an individual, corporation, partnership, company, joint venture, unincorporated organization, limited liability company or partnership, sole proprietorship, association, bank, trust company or trust, whether or not legal entities, or any Governmental Authority.

 

1.57        “ Pfizer Confidential Information ” means all information about any element of Pfizer Technology, as well as any other information regarding the business and operations of Pfizer, that is disclosed (whether orally or in writing) prior to or after the Effective Date by Pfizer to Incyte or its Affiliates and (a) in the case of oral information, is outlined in a summary prepared by Pfizer and delivered to Incyte promptly after such disclosure and (b) in the case of written information, is designated “Confidential” in writing by Pfizer at the time of disclosure to Incyte, to the extent that such information is not (i) as of the date of disclosure to Incyte, known to Incyte other than by virtue of a prior confidential disclosure to Incyte by Pfizer; (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of Incyte; (iii) obtained from a Third Party free from any obligation of confidentiality to Pfizer; (iv) independently developed by Incyte without access to the Pfizer Confidential Information as shown by competent written proof; or (v) is, in the reasonable opinion of legal counsel, required to be disclosed under Law or in connection with a legal proceeding; provided that, in the case of

 

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clause (v), Incyte provides Pfizer sufficient prior notice (to the extent practicable) of such disclosure and agrees to cooperate, at the request and sole expense of Pfizer with Pfizer’s efforts to preserve the confidentiality of such information. All information about the existence and terms of this Agreement shall be considered both Incyte Confidential Information and Pfizer Confidential Information.

 

1.58        “ Pfizer Indication ” means any indication that is not an Incyte Indication or, if applicable, a Reverted Indication.

 

1.59        “ Pfizer Key Decision Points ” means any of the following: (i) with respect to any Pfizer Product, a decision with respect to whether Pfizer’s relevant go/no go criteria have been met prior to the Commencement of any Phase II Trial or Phase III Trial and (ii) a decision to terminate research and development for any Pfizer Product or to terminate research and development for a particular Pfizer Indication.

 

1.60        “ Pfizer Patent Rights ” means all Patent Rights that are Controlled by Pfizer or any of its Affiliates, claim any CCR2 Antagonist (or any salt, prodrug, ester, metabolite, solvate, stereoisomer or polymorph of any such CCR2 Antagonist) as a composition of matter and are (a) invented by officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, (b) invented by officers, employees or agents of, or consultants to, a Third Party or (c) jointly invented by officers, employees or agents of, or consultants to, both Incyte and Pfizer or any of their respective Affiliates, in each case, alone or jointly with Third Parties; provided that, in the case of each of clauses (a), (b) and (c), such CCR2 Antagonist (or any salt, prodrug, ester, metabolite, solvate, stereoisomer or polymorph of any such CCR2 Antagonist) covered by such claim was invented in a research program directed toward the identification of CCR2 Antagonists during the period beginning on the first day after the expiration of the Research Term and ending on the one (1) year anniversary of such day.

 

1.61        “ Pfizer Process Patent Claims ” means any claim contained in a Patent Right that is Controlled by Pfizer or any of its Affiliates, the subject matter of which (i) was invented by either (a) officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, or (b) officers, employees or agents of, or consultants to, a Third Party, in the case of each of clauses (a) and (b), during the Term in a program directed toward the development of CCR2 Antagonists (other than the Research Program) and (ii) is directed to a manufacturing process (including synthesis, purification, formulation or analytical methods or intermediates) that was actually used by Pfizer or any of its Affiliates in the manufacturing or processing of active pharmaceutical ingredient for a Compound or a Pfizer Product that contains a Compound as the sole active pharmaceutical ingredient.

 

1.62        “ Pfizer Product ” means any human pharmaceutical product (including any Combination Product), whether commercialized or in development, in all dosage forms and formulations that contains a Compound.

 

1.63        “ Pfizer Proprietary Process Patent Claims ” means any claim contained in a Patent Right that is Controlled by Pfizer or any of its Affiliates, the subject matter of which (i) was invented by either (a) officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, or (b) officers, employees, or agents of, or consultants to, a Third Party, in the case of each of clauses (a) and (b), at any time outside of a program directed toward the development of CCR2 Antagonists and (ii) is directed to a manufacturing process (including purification, formulation or analytical methods) that was

 

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actually used by Pfizer or any of its Affiliates in the manufacturing or processing of an applicable Pfizer Product that contains a Compound as the sole active pharmaceutical ingredient, which process was used to manufacture the formulated Pfizer Product from active pharmaceutical ingredient. For clarity, Pfizer Proprietary Process Patent Claims do not include claims to the extent they cover a process for manufacturing bulk active pharmaceutical ingredient.

 

1.64        “ Pfizer Quarter ” means (i) in the United States, each of the four (4) thirteen (13)-week periods used by Pfizer in its audited financial reports, the first such period commencing on January 1 of any year and (ii) in any country in the Territory other than the United States, each of the four (4) thirteen (13)-week periods used by Pfizer in its audited financial reports, the first such period commencing on December 1 of any year.

 

1.65        “ Pfizer Technology ” means Technology that is or was (a) invented by officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, at any time outside of the Research Program or (b) acquired by purchase, license, assignment or other means from Third Parties by Pfizer or any of its Affiliates, alone or jointly with Third Parties, at any time outside of the Research Program; provided that such Technology was (i) disclosed to Incyte during the Term or in the course of Pfizer’s performance of its obligations pursuant to Section 11.6(b)(ii) and (ii) actually used in connection with the discovery or development of any Compound, Incyte Compound or Pfizer Product.

 

1.66        “ Pfizer Use Patent Claims ” means any claim contained in a Patent Right that is Controlled by Pfizer or any of its Affiliates, the subject matter of which (i) was invented by (a) officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, or (b) officers, employees or agents of, or consultants to, a Third Party, in the case of each of clauses (a) and (b), during the Term in a program directed toward the development of CCR2 Antagonists (other than the Research Program) and (ii) is directed to the therapeutic use of a Compound or an Incyte Compound or Incyte Product for an Incyte Indication or, if applicable, a Reverted Indication or, in the case of Section 11.6(b)(ii)(E) only, any indication.

 

1.67        “ Phase I Trial ” means a clinical trial that is the first introduction into humans of a Pfizer Product.

 

1.68        “ Phase II Trial ” means a clinical trial, other than a Phase III Trial, that is intended to test the effectiveness of a Pfizer Product, or an Incyte Product, as the case may be, for a specific indication in patients with the disease or condition under study.

 

1.69        “ Phase II(b) Trial ” means a Phase II Trial that is intended to establish the dosing regimen for use in a Phase III Trial of a Pfizer Product or an Incyte Product, as the case may be, for a specific indication.

 

1.70        “ Phase III Trial ” means a clinical trial that is intended to form the primary basis of an effectiveness claim in approved product labeling for a Pfizer Product or an Incyte Product, as the case may be.

 

1.71        “ Price Approval ” means, in countries where Governmental Authorities or Regulatory Authorities authorize for reimbursement, or approve or determine pricing for pharmaceutical products for reimbursement or otherwise, receipt (or, if required to make such

 

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authorization, approval or determination effective, publication) of such reimbursement authorization or pricing approval or determination.

 

1.72        “ Program Patent Rights ” means all Patent Rights that are Controlled by Pfizer or any of its Affiliates and cover Program Technology.

 

1.73        “ Program Technology ” means Technology that is or was (a) invented by officers, employees or agents of, or consultants to, Incyte or any of its Affiliates, alone or jointly with Third Parties, in the course of performing the Research Plan during the Research Term, (b) jointly invented by officers, employees or agents of, or consultants to, both Incyte and Pfizer or any of their respective Affiliates, in each case, alone or jointly with Third Parties, in the course of performing the Research Plan during the Research Term, (c) invented by officers, employees or agents of, or consultants to, Pfizer or any of its Affiliates, alone or jointly with Third Parties, in the course of performing the Research Plan during the Research Term or (d) acquired by purchase, license, assignment or other means from Third Parties by Incyte or any of its Affiliates, by Incyte and Pfizer or any of their respective Affiliates or by Pfizer or any of its Affiliates, in each case, alone or jointly with Third Parties, in order for such Party (or Parties) to perform the Research Plan during the Research Term; provided that ***, then *** if (x) Incyte and all of its Affiliates comply with the provisions of *** and (y) ***.

 

1.74        *** means an *** disease that is characterized by ***. A patient is diagnosed with ***.

 

1.75        *** means the indications set forth on Schedule 1.75 attached hereto.

 

1.76        “ Regulatory Approval ” means any and all approvals, excluding any INDs, but including supplements and amendments, licenses, registrations or authorizations (other than Price Approvals) of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau,

 

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commission, council or other Governmental Authority, that are necessary for the manufacture, distribution, use, marketing or sale of a pharmaceutical product in a regulatory jurisdiction.

 

1.77        “ Regulatory Authority ” means any Governmental Authority with responsibility for granting any Regulatory Approval or with whom an IND is filed, including the FDA and any drug regulatory authority of countries of the European Union and Japan, and, where applicable, any ethics committee or any equivalent review board.

 

1.78        “ Regulatory Filing ” means any NDA, IND, or any foreign counterparts thereof and any other filings required by Regulatory Authorities relating to the study, manufacture or commercialization of a pharmaceutical product.

 

1.79        “ Representatives ” has the meaning assigned to it in Section 13.1.

 

1.80        “ Research Plan ” has the meaning assigned to it in Section 3.1.

 

1.81        “ Research Program ” means the research program established by the Parties pursuant to Article 3.

 

1.82        “ Research Term ” means the period beginning on the Effective Date and ending on ***.

 

1.83        “ Reverted Indication ” means any Pfizer Indication that has been reverted to Incyte pursuant to Section 11.4.

 

1.84        “ Royalty Term Expiration Date ” means on a country-by-country and Pfizer Product-by-Pfizer Product basis, the later to occur of:  (A) the date on which the manufacture, use, sale, offer for sale or importation of such Pfizer Product (i) ceases to be covered by a Valid Claim under any ***, (ii) ceases to be covered by a Valid Claim under any *** and (iii) ceases to be covered by a Valid Claim under any ***, as applicable, or (B) the *** year anniversary of the Launch of such Pfizer Product in such country.

 

1.85        “ Security Agreement ” means the Security Agreement, dated the date hereof, between Pfizer and Incyte.

 

1.86        “ Technology ” means all scientific and technical information and data, including know-how, trade secrets and technology related thereto, that are or were used in connection with the discovery, development or commercialization of any CCR2 Antagonist. Technology does not include any Patent Rights.

 

1.87        “ Term ” has the meaning assigned to it in Section 11.1.

 

1.88        “ Territory ” means worldwide.

 

1.89        “ Third Party ” means a Person other than (a) Pfizer, (b) Incyte or (c) an Affiliate of either of them.

 

1.90        “ Transition Plan ” has the meaning assigned to it in Section 5.1.

 

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1.91        “ Valid Claim ” means a claim of any issued, unexpired United States or granted foreign patent included within the patents under the ***, as the case may be, that has not been revoked, dedicated to the public, disclaimed, abandoned or held invalid or unenforceable by a court or other Governmental Authority of competent jurisdiction in an unappealed or unappealable decision, and that has not been explicitly disclaimed, or admitted by Incyte with respect to ***, as the case may be, in writing to be invalid or unenforceable or of a scope not covering Pfizer Products through reissue, disclaimer or otherwise.

 

1.92        “ Voting Stock ” means securities of any class or series of a corporation, association or other entity, the holders of which are ordinarily, in the absence of contingencies, entitled to vote generally in matters put before the shareholders or members of such corporation, association or other entity.

 

1.93        Construction . Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (i) “include”, “includes” and “including” are not limiting; (ii) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (iii) references to an agreement or instrument mean such agreement or instrument as from time to time amended, modified or supplemented; (iv) references to a Person are also to its permitted successors and assigns; (v) references to an “Article”, “Section”, “Exhibit” or “Schedule” refer to an Article or Section of, or any Exhibit or Schedule to, this Agreement unless otherwise indicated; (vi) the word “will” shall be construed to have the same meaning and effect as the word “shall”; and (vii) the word “any” shall mean “any and all” unless otherwise indicated by context. In the event an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

2.                                       MANAGEMENT OF THE RESEARCH PROGRAM

 

2.1          Joint Research Committee .

 

(a)           The Research Program established by this Agreement shall be overseen by a joint research committee composed of three (3) representatives from each Party (the “ Joint Research Committee ” or “ JRC ”). The Parties shall designate their JRC representatives within ten (10) Business Days after the Effective Date. An alternate member designated by a Party may serve temporarily in the absence of a permanent member of the JRC for such Party. Each Party shall designate one of its representatives as a co-chair of the JRC. The co-chairs of the JRC shall be jointly responsible for setting the agenda for each meeting, and each co-chair will be responsible for chairing alternating JRC meetings. From time to time, the JRC may establish subcommittees or subordinate committees (that may or may not include members of the JRC itself) to oversee particular projects or activities, and such subcommittees or subordinate committees shall be constituted and shall operate as the JRC agrees. After the end of the Research Term, the JRC shall only meet if necessary to fulfill its duties under Sections 2.4(f) and 2.4(g).

 

(b)           All decisions of the JRC made pursuant to this Agreement shall be made by consensus; provided , however , that in the event of a disagreement between Pfizer and Incyte,

 

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subject to Sections 2.1(c) and 2.1(d) below, the Pfizer co-chair of the JRC shall have the final decision-making authority.

 

(c)           Any changes to the Research Plan that materially expand Incyte’s obligations or require Incyte to materially increase its efforts or materially alter the nature of the services provided by Incyte shall require the unanimous consent of the JRC. If the JRC fails to reach unanimous consent regarding any such change to the Research Plan, then the obligations of Incyte shall not be increased and the nature of the services provided by Incyte shall not be altered.

 

(d)           Any changes to the assays used to define CCR2 Antagonists that are described in Schedules 1.7(a)-(c) shall require the unanimous consent of the JRC. If the JRC fails to reach unanimous consent regarding any such change to such assays, then such assays shall not be changed.

 

2.2          Meetings . The JRC shall hold meetings at such times and places as shall be determined by the JRC (it being expected that any in-person meetings will alternate between the appropriate offices of each Party), but in no event shall such meetings be held less frequently than once every calendar quarter during the Research Term; and the JRC may:

 

(a)           conduct meetings in person, by videoconference or by telephone conference;

 

(b)           invite other personnel of the Parties to attend meetings of the JRC as appropriate to the agenda for such meeting, after giving advance notice to the other Party;

 

(c)           act without a meeting if, prior to such action, a consent thereto is signed by the co-chairs of the JRC; and

 

(d)           by unanimous consent, amend or expand upon the foregoing procedures for its internal operation.

 

2.3          Minutes . At each meeting, the JRC shall elect a secretary who will prepare minutes after each meeting, reporting in reasonable detail the actions taken by the JRC during such meeting, issues requiring resolution, and resolutions of previously reported issues. Such minutes are to be reviewed and, if reasonably complete and accurate, signed by one JRC member from each Party. The secretary shall revise such minutes as necessary to obtain such signatures.

 

2.4          JRC Functions and Powers . The research activities of the Parties under the Research Plan shall be managed by the JRC only to the extent set forth herein (unless otherwise mutually agreed in writing by the Parties). The JRC shall foster the collaborative relationship between the Parties in order to assist each Party in fulfilling its obligations under the Research Plan, and shall in particular:

 

(a)           encourage and facilitate ongoing cooperation and information exchange between the Parties;

 

(b)           monitor the progress of the Research Program and the Parties’ diligence in carrying out their responsibilities thereunder;

 

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(c)           subject to Section 2.1 (c), prepare any amendments to the Research Plan, if the JRC should determine that any such amendments are necessary;

 

(d)           set priorities, allocate tasks and coordinate activities between the Parties, in each case as required to perform the Research Program;

 

(e)           perform such other functions as appropriate to further the purposes of the Research Plan as mutually determined by the Parties;

 

(f)            subject to Section 2.1(d), amend, modify, replace or delete any of the assays used to define CCR2 Antagonists, as described in Schedules 1.7(a)-(c) , if the JRC should determine that any such change is necessary; and

 

(g)           discuss issues relating to the ***, including if *** from the ***, the *** and ***

 

Except as set forth in Sections 2.4(c) and 2.4(f), the JRC shall have no power to amend this Agreement and shall have only such powers as are specifically delegated to it in this Agreement.

 

2.5          Independence . Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity. The relationship between Incyte and Pfizer is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement. Incyte and Pfizer are not joint venturers, partners, principal and agent, employer and employee, and have no other relationship other than independent contracting parties.

 

3.                                       CONDUCT OF THE RESEARCH PROGRAM

 

3.1          Research Plan . The Parties shall conduct the Research Program according to the research plan (as amended from time to time, the “ Research Plan ”). The initial Research Plan has been approved by the Parties concurrent with the execution of this Agreement and is attached hereto as Exhibit B . The Research Plan may be amended from time to time by the JRC during the Research Term based upon the data obtained in the Research Program and in accordance with Sections 2.1(c) and 2.4(c); provided that such amendments (i) are in writing and signed by both Parties if required by Section 2.1(c) and (ii) do not violate or contradict any provision of this Agreement. In the event of an inconsistency or disagreement between the Research Plan and this Agreement, the terms of this Agreement shall prevail.

 

3.2          Conduct of Research . The Parties shall conduct the Research Program in compliance in all material respects with the requirements of applicable Laws and use reasonably diligent efforts to achieve the objectives of the Research Program and the Research Plan efficiently and expeditiously. Each Party shall promptly inform the other about all inventions within Program Technology that are made in the performance of the Research Program or the Research Plan.

 

3.3          Research Costs . Except as provided in this Section 3.3, each Party shall bear its own internal costs and any external payments to Third Parties that it incurs in the course of the

 

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Research Program unless otherwise agreed by the JRC. Pfizer shall reimburse Incyte for the number of FTEs specified in the Research Plan at a rate equal to (i) *** and *** and (ii) *** for *** and ***. Incyte shall bill Pfizer for such FTE costs at the beginning of each calendar quarter, and Pfizer shall make all such payments by wire transfer, in accordance with the wire instructions set forth in Section 8.6, within thirty (30) days after its receipt of each such invoice from Incyte.

 

3.4          Records . Each Party shall maintain complete and accurate records of all work conducted under the Research Program and all results, data and developments made pursuant to its efforts under the Research Program. Such records shall reflect work done and results achieved in the performance of the Research Program in sufficient detail and in a manner appropriate for patent and regulatory purposes. Subject to bona fide confidentiality obligations to a Third Party, each Party shall have the right to request copies of such records of the other Party at reasonable times and upon reasonable notice to the extent necessary or useful for such Party to conduct its research or perform its other obligations under this Agreement, or to secure or enforce patents licensed under this Agreement.

 

3.5          Reports . During the Research Term, each Party shall report to the JRC no less than once per calendar quarter, and such reports shall consist of a written progress report summarizing the work performed under the Research Plan since the previous report. The JRC shall define the format and the nature of the content of such quarterly reports, which format and nature shall be adopted by both Parties.

 

3.6          Termination of Research Program . The Research Program and the Research Plan shall automatically terminate on the effective date of any termination of this Agreement pursuant to Section 11.2 or 11.3. In addition, Pfizer may terminate the Research Program and the Research Plan if Incyte has materially breached its obligations under Article 3 of this Agreement or under the Research Plan, such termination to be effective thirty (30) days after Incyte’s receipt of a notice from Pfizer to such effect in accordance with Section 15.3; provided that if Incyte has cured such breach prior to the expiration of such thirty (30)-day period, then the Research Program and Research Plan shall remain in effect pursuant to the terms thereof. As a result of any termination in accordance with this Section 3.6, Article 2 (other than Sections 2.4(f) and 2.4(g)), Article 3, the Research Program and the Research Plan shall cease to be in effect and neither Party shall have any further obligations with respect thereto.

 

4.                                       HSR .

 

4.1          HSR . Pfizer (or its Affiliate) and Incyte (or its Affiliate) shall take (or shall cause such Affiliate to take, if applicable) (i) all actions necessary at the earliest practicable date to make the filing required under the HSR Act and (ii) reply at the earliest practicable date with any requests for information received from the United States Federal Trade Commission (“ FTC ”) or Antitrust Division of the United States Department of Justice (“ DoJ ”) pursuant to the HSR Act. The Parties shall, to the extent reasonably practicable, consult with one another prior to making any filings, responses to inquiries or other contacts with the FTC or DoJ concerning the transactions contemplated hereby. Pfizer shall pay any fees in connection in with the HSR filing, other than any Incyte legal fees or expenses.

 

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5.                                       DEVELOPMENT AND COMMERCIALIZATION

 

5.1          Transition Plan . In order to ensure the smooth transition of ongoing development activities for the Compounds that Incyte has licensed to Pfizer pursuant to Section 7.1 and to facilitate the transfer of the Incyte Technology to Pfizer, the Parties hereby agree to comply with the provisions of the transition plan (the “ Transition Plan ”), which is attached hereto as Exhibit C . In the event of an inconsistency or disagreement between the Transition Plan and this Agreement, the terms of this Agreement shall prevail.

 

5.2          Development Plan . The development of each Pfizer Product shall be governed by a development plan that describes the proposed overall program of development (the “ Development Plan ”). The initial Development Plans for *** and *** are attached hereto as Exhibits D-1 , D-2 and D-3 , respectively (collectively, the “ Initial Development Plan ”). Pfizer shall have the sole right and responsibility for preparing the Development Plan for each Pfizer Product. All decisions with respect to the creation, modification and implementation of the Initial Development Plan, all other such Development Plans and all development activities shall be made by Pfizer in its sole discretion; provided that Pfizer will present a draft Development Plan for each Pfizer Product and any material changes to the Initial Development Plan to the Development Committee and will give due consideration to any comments of Incyte thereto.

 

5.3          Development Information Exchange .

 

(a)           Development Committee . The Parties shall establish a development committee (the “ Development Committee ”) for the sole purpose of reviewing and discussing (i) past and current material development activities and (ii) as appropriate, future material development activities for Pfizer Products and Incyte Products. The Development Committee shall have no decision-making authority.

 

(b)           Members . The Development Committee shall consist of no more than four (4) representatives of Incyte and no less than four (4) representatives of Pfizer. Depending on the number of Pfizer Products in development at any given time, Pfizer shall have the flexibility to add additional members to the Development Committee, as appropriate. The Development Committee shall be chaired by one of the Pfizer representatives (the “ Committee Chair ”).

 

(c)           Meetings . During the period beginning on the Effective Date and ending, on a Pfizer Product-by-Pfizer Product basis, after the first Launch of such Pfizer Product (the “ Meeting Period ”), the Development Committee shall meet quarterly (each such meeting, a “ Development Committee Meeting ”). The Parties agree that the ***. The Parties further agree that a Development Committee Meeting will be ***; provided that in no event will the Parties be required to meet more than four (4) times in any calendar year as a result of such scheduling. All Development Committee Meetings may be conducted in person, by videoconference or by teleconference at such times and such Pfizer or Incyte locations as shall be determined by the Development Committee. In-person meetings of the Development Committee will alternate between appropriate offices of each Party. The Parties shall each bear all expenses of their respective representatives relating to their participation on the Development Committee.

 

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(d)           Reports . During the Meeting Period, (i) Pfizer shall provide quarterly written reports (“ Pfizer Development Reports ”) to the Incyte representatives on the Development Committee, which contain (x) a summary of material development activities with respect to Pfizer Products since the last Pfizer Development Report and (y) if applicable, draft Development Plans for Pfizer Products and (ii) Incyte shall provide quarterly written reports (“ Incyte Development Reports ” and, together with Pfizer Development Reports, “ Development Reports ”) to the Pfizer representatives on the Development Committee, which contain (x) a summary of material development activities with respect to Incyte Products since the last Incyte Development Report and (y) if applicable, draft development plans for Incyte Products. The Parties will use reasonable efforts to provide their respective Development Reports to the Development Committee representatives at least five (5) Business Days before the next Development Committee Meeting. All Pfizer Development Reports and Development Plans for Pfizer Products shall be deemed Pfizer Confidential Information. All Incyte Development Reports and development plans for Incyte Products shall be deemed Incyte Confidential Information.

 

(e)           Notices . Each Party shall deliver to the other Party the following notices: (i) prior to any decision being made by a Party with respect to a Pfizer Key Decision Point or an Incyte Key Decision Point, as the case may be, such Party shall notify the other Party that such Pfizer Key Decision Point or Incyte Key Decision Point is under consideration; provided that Pfizer will use reasonable efforts to deliver any such notice sufficiently in advance of a decision being made with respect to a Pfizer Key Decision Point ***, (ii) no later than ten (10) Business Days after a Party has made a final decision with respect to a Pfizer Key Decision Point or an Incyte Key Decision Point, as the case may be, such Party shall notify the other Party of such decision, (iii) no later than ten (10) Business Days (x) after a Party receives Regulatory Approval of an NDA in the United States for a Pfizer Product or an Incyte Product, as the case may be, or (y) after the Launch of a Pfizer Product or an Incyte Product, as the case may be, in a Major European Country or Japan, the Party receiving such Regulatory Approval or Launching such Pfizer Product or Incyte Product, as the case may be, shall notify the other Party of the receipt of such Regulatory Approval or such Launch, as the case may be.

 

5.4          Diligence .

 

(a)           Pfizer will use Commercially Reasonable Efforts to carry out the Initial Development Plan, as it may be amended in accordance with Section 5.2.

 

(b)           Pfizer will use Commercially Reasonable Efforts to develop, seek Regulatory Approval for and commercialize Pfizer Products on a country-by-country and Pfizer Product-by-Pfizer Product basis.

 

5.5          Regulatory Affairs . Pfizer shall own and be responsible for preparing and submitting all Regulatory Filings and seeking and maintaining all Regulatory Approvals for all Pfizer Products, including preparing all reports necessary as part of a Regulatory Filing or Regulatory Approval.

 

5.6          Manufacture and Supply . Pfizer shall be responsible for the manufacture of all preclinical and clinical materials for each Pfizer Product, for the commercial supply of each Pfizer Product and for all costs associated therewith.

 

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5.7          Costs . Pfizer shall be responsible for all costs associated with the development and commercialization of Pfizer Products that are incurred by it after the Effective Date. In addition, Pfizer agrees to pay the costs that are specified in the Transition Plan.

 

5.8          Trademarks . Pfizer shall select all trademarks for all Pfizer Products and shall own all such trademarks.

 

5.9          Pricing . Pfizer shall be solely responsible for the pricing and other terms of sale for all Pfizer Products.

 

6.                                       INCYTE PRODUCTS

 

6.1          Development Plan . The development of each Incyte Product shall be governed by a development plan that describes the proposed overall program of development. Incyte shall have the sole right and responsibility for preparing the development plan for each Incyte Product. All decisions with respect to the creation, modification and implementation of such development plans and all development activities shall be made by Incyte in its sole discretion; provided that Incyte will present a draft development plan for each Incyte Product and any material changes thereto to the Development Committee and will give due consideration to any comments of Pfizer thereto.

 

6.2          Regulatory Affairs . Incyte shall own and be responsible for preparing and submitting all Regulatory Filings and seeking and maintaining all Regulatory Approvals for all Incyte Products, including preparing all reports necessary as part of a Regulatory Filing or Regulatory Approval.

 

6.3          Manufacture and Supply . Incyte shall be responsible for the manufacture of all preclinical and clinical materials for each Incyte Product, for the commercial supply of each Incyte Product and for all costs associated therewith.

 

6.4          Costs . Incyte shall be responsible for all costs associated with the development and commercialization of Incyte Products.

 

6.5          Trademarks . Incyte shall select all trademarks for all Incyte Products and shall own all such trademarks.

 

6.6          Pricing . Incyte shall be solely responsible for the pricing and other terms of sale for all Incyte Products.

 

6.7          Incyte Compounds .

 

(a)           Designation of Initial Back-Up Incyte Compound . The Parties agree that Incyte shall choose the first back-up Incyte Compound only in accordance with the procedures set forth below:

 

(i)             Incyte shall run the studies set forth on Schedule 6.7(a) under the heading ***, in parallel and at Incyte’s sole expense, on the following *** Compounds: *** (each, individually, a “ Test Compound ” and,

 

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*** Confidential material redacted and filed separately with the Commission.

 

collectively, and together with the additional Compounds permitted to be designated by Incyte as Test Compounds pursuant to Section 6.7(a)(v), the “ Test Compounds ”). Promptly after completion of such ***, Incyte shall provide Pfizer with a copy of all information, data and test results of such *** for each of the Test Compounds.

 

(ii)            If any of the Test Compounds successfully completes the *** and meets Incyte’s criteria for advancement, as determined by Incyte in its sole discretion, then Incyte shall select one of such Test Compounds and shall analyze such Test Compound, at Incyte’s sole expense, by ***. Promptly after completion of such ***, Incyte shall provide Pfizer with a copy of all information, data and test results of such *** for such Test Compound. If any of the Test Compounds do not successfully complete the *** or do not meet Incyte’s criteria for advancement, then (x) *** and (y) ***.

 

(iii)          If the first Test Compound selected by Incyte pursuant to Section 6.7(a)(ii) successfully completes the *** and meets Incyte’s criteria for advancement, as determined by Incyte in its sole discretion, then Incyte shall promptly notify Pfizer that it would like to designate such Test Compound as an Incyte Compound. Effective upon Pfizer’s receipt of such notice pursuant to Section 15.3, (x) ***, (y) *** and (z) ***.

 

(iv)           If the first Test Compound selected by Incyte pursuant to Section 6.7(a)(ii) does not successfully complete the ** or does not meet Incyte’s criteria for advancement, then (x) ***, (y) ***. Promptly after completion of such ***, Incyte shall provide Pfizer with a copy of all information, data and test results of such *** for such Test Compound. If the *** Test Compound successfully completes the *** and meets Incyte’s criteria for advancement, then Section 6.7(a)(iii) shall apply with respect to such Test Compound and the other Test Compounds. If the *** Test Compound does not successfully complete the *** or does not meet Incyte’s criteria for advancement, then this Section 6.7(a)(iv) shall apply with respect to such Test Compound and the other Test Compounds. Sections 6.7(a)(iii) and (iv) shall continue to be applied until Incyte either designates an Incyte Compound from the Test Compounds or notifies Pfizer that it will not designate any of the Test Compounds as an Incyte Compound, in which case ***.

 

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*** Confidential material redacted and filed separately with the Commission.

 

(v)             If Incyte notifies Pfizer that it will not designate any of the Test Compounds listed in Section 6.7(a)(i) as an Incyte Compound because none of the Test Compounds successfully completed both the *** and the *** and met Incyte’s criteria for advancement, then Incyte may designate up to an additional *** Compounds as Test Compounds under the following circumstances: (A) ***, (B) *** and (C) ***.  After Incyte and Pfizer have agreed which Compounds will be designated as additional Test Compounds, Incyte shall follow the procedures set forth in this Section 6.7(a) with respect to such additional Test Compounds until Incyte either designates an Incyte Compound from such additional Test Compounds or notifies Pfizer that it will not designate any of the additional Test Compounds as an Incyte Compound, in which case ***.

 

(b)           Designation of Future Incyte Compounds .  If Incyte does not *** either because such Incyte Compounds have not yet been selected or because Incyte has notified Pfizer pursuant to Section 5.3(e) that it is not going to pursue any further research or development of an Incyte Compound that is either a lead or a back-up compound for an Incyte Indication, then (x) *** or ***, (I) *** (II) *** to *** (y) ***.

 

(i)             *** “ Incyte Pool Compounds ”; provided that ***.  If Pfizer wishes to designate a Compound as an Incyte Pool Compound and any of the assays set forth on Schedule 6.7(b) under the heading “Assays” (the “ Assays ”) has been conducted with respect to such Compound, Pfizer will only be permitted to designate such Compound as an Incyte Pool Compound, if such Compound meets the guidelines set forth on Schedule 6.7(b) under the heading “Requirement for Designation” for each Assay that has been conducted or if Incyte agrees that Pfizer may designate such Compound as an Incyte Pool

 

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*** Confidential material redacted and filed separately with the Commission.

 

Compound.  The Parties agree that Pfizer will not be obligated to perform any Assays with respect to any Compound, other than pursuant to the Research Plan.

 

(ii)            *** Incyte Pool Compound, Pfizer will provide Incyte with a list of the then current Incyte Pool Compounds and a copy of all information, data and test results that Pfizer has with respect to such Incyte Pool Compounds that have not been previously provided to Incyte.  When Pfizer provides Incyte with such information, data and test results, Pfizer may ***.  All information, data or test results, whether or not so marked, will be Pfizer Confidential Information, and Incyte shall treat such information, data or test results in accordance with the provisions of Sections 10.2 and 10.4.  After its receipt of such information, data and test results, Incyte, in its sole discretion, may conduct additional Assays, *** or *** with respect to any or all Incyte Pool Compounds, in each case, at Incyte’s sole expense, but in no event may ***.  Promptly after completion of any such Assays, *** or ***, Incyte shall provide Pfizer with a copy of all information, data and test results with respect to each applicable Incyte Pool Compound.

 

(iii)          After Incyte has notified Pfizer that it would like to designate an Incyte Pool Compound as an Incyte Compound then, effective upon Pfizer’s receipt of such notice pursuant to Section 15.3, such Incyte Pool Compound shall be deemed an Incyte Compound and added to Schedule 1.35.

 

(iv)           ***

 

(c)           Designation of an Incyte Compound due to Reverted Indication .  If a Pfizer Indication becomes a Reverted Indication pursuant to Section 11.4 and Pfizer decides not to revert a Compound to Incyte with such Reverted Indication, then Incyte shall have the right but not the obligation to designate an additional Incyte Compound ***

 

7.                                       LICENSES AND RELATED RIGHTS

 

7.1          License to Pfizer .  Subject to the terms of this Agreement, Incyte grants, and shall cause its Affiliates to grant, to Pfizer the following:

 

(a)           an exclusive (even as to Incyte and its Affiliates) license, with the right to sublicense, to use the Incyte Technology, Incyte Confidential Information and Program Technology to the extent necessary or useful, to make, have made, use, import, offer for sale or sell Compounds, Incyte Compounds, Pfizer Products, Animal Products or Incyte Products for the

 

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treatment, control or prevention of the Pfizer Indications or the Incyte Indications in the Territory;

 

(b)           an exclusive (even as to Incyte and its Affiliates) license, with the right to sublicense, under the Incyte Patent Rights, Incyte Product Patent Rights and Incyte Program Patent Rights to the extent necessary or useful to make, have made, use, import, offer for sale or sell Compounds, Incyte Compounds, Pfizer Products, Animal Products or Incyte Products for the treatment, control or prevention of the Pfizer Indications or the Incyte Indications in the Territory; and

 

(c)           a non-exclusive, irrevocable, worldwide, royalty-free, perpetual license, with the right to sublicense, under the Incyte Program Patent Rights for any and all purposes.

 

Notwithstanding the foregoing, with respect to any Incyte Technology, Incyte Patent Rights or Incyte Product Patent Rights, that Incyte acquires by purchase, license, assignment or other means from a Third Party, Incyte shall only be required to grant to Pfizer a license to such Incyte Technology, Incyte Patent Rights or Incyte Product Patent Rights (x) to the extent permitted under its agreement with such Third Party and (y) if Pfizer agrees to be responsible for all payments to such Third Party under such Third Party agreement that may be incurred as a result of such sublicense to Pfizer and executes documentation reasonably satisfactory to Incyte to such effect.

 

7.2          Sublicenses and License to Incyte .  Subject to the terms of this Agreement, Pfizer grants, and shall cause its Affiliates to grant, to Incyte the following fully paid, royalty-free, worldwide sublicenses and licenses:

 

(a)           an exclusive (even as to Pfizer and its Affiliates) sublicense, with the right to further sublicense, to use the Incyte Technology, Incyte Confidential Information, Pfizer Technology, Pfizer Confidential Information and Program Technology to the extent necessary or useful to make, have made, use, import, offer for sale or sell Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory for the sole purpose of making, having made, using, importing, offering for sale or selling Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory;

 

(b)           an exclusive (even as to Pfizer and its Affiliates) sublicense, with the right to further sublicense, under the Incyte Patent Rights, Incyte Product Patent Rights and Incyte Program Patent Rights to the extent necessary or useful to make, have made, use, import, offer for sale or sell Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory for the sole purpose of making, having made, using, importing, offering for sale or selling Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory;

 

(c)           an exclusive (even as to Pfizer and its Affiliates) license, with the right to sublicense, under the Program Patent Rights and Pfizer Use Patent Claims to the extent necessary to make, have made, use, import, offer for sale or sell Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory for the sole purpose of making, having made, using, importing, offering for sale or selling Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory;

 

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(d)           an exclusive (even as to Pfizer and its Affiliates) license, with the right to sublicense, under the Pfizer Process Patent Claims to the extent necessary to manufacture Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory for the sole purpose of making, having made, using, importing, offering for sale or selling Incyte Compounds or Incyte Products for the treatment, control or prevention of the Incyte Indications in the Territory; and

 

(e)           a non-exclusive license, with the right to sublicense, under the Program Patent Rights for any and all purposes, except to make, have made, use, import, offer for sale or sell Compounds, Incyte Compounds, Pfizer Products, Animal Products or Incyte Products (other than as permitted under Sections 7.2 and 11.4).

 

Notwithstanding the foregoing, with respect to any Pfizer Technology, Pfizer Use Patent Claims or Pfizer Process Patent Claims, that Pfizer acquires by purchase, license, assignment or other means from a Third Party, Pfizer shall only be required to grant to Incyte a license to such Pfizer Technology, Pfizer Use Patent Claims or Pfizer Process Patent Claims (x) to the extent permitted under its agreement with such Third Party and (y) if Incyte agrees to be responsible for all payments to such Third Party under such Third Party agreement that may be incurred as a result of such sublicense to Incyte and executes documentation reasonably satisfactory to Pfizer to such effect.

 

7.3          Research Licenses .

 

(a)           Subject to Section 7.4(a), and without limiting any of the licenses granted in Section 7.1, Incyte grants, and shall cause its Affiliates to grant, to Pfizer a nonexclusive, irrevocable, worldwide, royalty-free, perpetual license, with the right to sublicense to Affiliates, to use for all research purposes the Incyte Technology, Incyte Confidential Information and Program Technology disclosed to Pfizer during the Term; provided that Pfizer shall not have any right to use the Incyte Technology, Incyte Confidential Information or Program Technology for the sale or manufacture for sale of pharmaceutical products or processes.  Subject to Section 7.4(a), without limiting any of the sublicenses or licenses granted in Section 7.2, Pfizer grants, and shall cause its Affiliates to grant, to Incyte a nonexclusive, irrevocable, worldwide, royalty-free, perpetual license, with the right to sublicense to Affiliates, to use for all research purposes (i) the Incyte Technology, Incyte Confidential Information and Program Technology and (ii) the Pfizer Technology and Pfizer Confidential Information disclosed to Incyte during the Term; provided that Incyte shall not have any right to use the Pfizer Technology, Pfizer Confidential Information or Program Technology for the sale or manufacture for sale of pharmaceutical products or processes.

 

(b)           Subject to Section 7.4(a), and without limiting any of the licenses granted in Section 7.1, Incyte grants, and shall cause its Affiliates to grant, to Pfizer a non-exclusive, irrevocable, worldwide, royalty-free, perpetual license, with the right to sublicense to Affiliates, under the Incyte Product Patent Rights to use for all research purposes; provided that Pfizer shall not have any right to use the Incyte Product Patent Rights for the sale or manufacture for sale of pharmaceutical products or processes.

 

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*** Confidential material redacted and filed separately with the Commission.

 

7.4          Non-Compete .

 

(a)           Research Non-Compete .  During the Research Term, except pursuant to this Agreement or the Research Plan, the Parties will not, and will cause their respective Affiliates not to, directly or indirectly, by itself (or themselves) or with any Third Party, conduct research on or develop any CCR2 Antagonist in the Territory; provided that this Section shall not ***.

 

(b)           Commercial Non-Compete .  Subject to Section 7.5, during the Term, except for Pfizer Products, Animal Products and Incyte Products, the Parties will not, and will cause their respective Affiliates not to, directly or indirectly, by itself (or themselves) or with any Third Party, market, sell, detail, promote or distribute any human or animal pharmaceutical product that contains any CCR2 Antagonist in the Territory; provided that this Section 7.4(b) (x) shall not apply to Pfizer (i) with respect to any Reverted Indication and (ii) after the Royalty Term Expiration Date for a given Pfizer Product in a country in the Territory, with respect to the Pfizer Indication (or Pfizer Indications) for which such Pfizer Product received Regulatory Approval in such country and (y) shall not ***.

 

(c)           Indication Non-Compete .  During the Term (i) Pfizer will not, and will cause its Affiliates not to, develop, market, detail or promote any human or animal pharmaceutical product that contain