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EXHIBIT 10.38
COLLABORATION AND LICENSE AGREEMENT
THIS
COLLABORATION AND LICENSE AGREEMENT (this "AGREEMENT"), having a
date
of October 14, 2005 (the "EFFECTIVE DATE"), is made by and between,
on the one
hand, AMGEN INC., a Delaware corporation, having its principal
place of business
at One Amgen Center Drive, Thousand Oaks, California 91320
("AMGEN"), and, on
the other hand, MEMORY PHARMACEUTICALS CORP., a Delaware
corporation, having its
principal place of business at 100 Philips Parkway, Montvale, New
Jersey 07645
("MEMORY").
INTRODUCTION
1. Memory
has discovered compounds active as PDE10 inhibitors and owns
related
intellectual property rights.
2. Amgen
has expertise in the research, development, manufacture and
commercialization of human therapeutics.
3. The
parties wish to collaborate to research inhibitors and other
modulators
of PDE10.
4. In
consideration of the mutual covenants and promises contained in
this
Agreement
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Memory and Amgen
agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or
plural, shall have the following meanings:
1.1 "AFFILIATE"
means (a) a person or business entity which owns, directly or
indirectly, more
than fifty percent (50%) of the voting shares or other
means of
control of a Person; or (b) a business entity in which more
than
fifty
percent (50%) of the voting shares or other means of control
are
owned by a
Person, either directly or indirectly; or (c) a business
entity,
the majority ownership of which is directly or indirectly
common
to the
majority ownership of a Person. Notwithstanding the preceding
provisions, with respect to an Affiliate of a Party to this
Agreement,
once an
entity ceases to be an Affiliate, then such entity shall,
without
any
further action, cease to have any rights, including license and
sublicense
rights, under this Agreement that it has by reason of being an
Affiliate.
1.2 "AGREEMENT
TERM" means the term of this Agreement, more fully described in
Section
12.1.
1.3 "AMGEN
INVENTION" means an Invention having as inventors employees,
consultants or agents of Amgen or its Affiliates, but not
employees,
consultants or agents of Memory or its Affiliates, as determined
under US
patent
law.
1.4 "AMGEN
KNOW-HOW" means all Know-How that Amgen owns, or otherwise is
Controlled
by Amgen, during the Agreement Term. Notwithstanding the
foregoing,
Amgen Know-
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How shall
not be deemed to include Memory Know-How solely based upon the
fact that
Amgen may Control such Memory Know-How under this Agreement.
1.5 "AMGEN
PROPERTY" means (1) an exclusive, royalty bearing license,
under
intellectual property (including Collaboration Technology,
Joint
Inventions, Patent Rights Covering Collaboration Technology, and
Joint
Patent
Rights) controlled by Amgen that is exclusively related to the
Lead
Compounds
to make, have made, use, offer for sale, sell and import the
Lead
Compounds (subject to Amgen's retained non-exclusive research
license
to Memory
Inventions that relate to Memory compounds consisting of PDE10
inhibitors
or modulators, including Memory Compounds, and non-exclusive
license to
any other Memory Invention as provided under Section 2.1 and
further
subject to Sections 12.5(a) and 12.5(b)); (2) [*] (in the case
of
each of
(1) and (2), in the event that the Lead Compounds is not in
clinical
trials at the time of termination of the Agreement, then (1)
and
(2) shall
[*]); and (3) the assignment and transfer to Memory, or its
Affiliates
as requested by Memory, free of any liens, pledges or security
interests
(collectively, "LIENS"), of all of Amgen's right, title and
interest
in and to (i) [*](to the extent assignable and not cancelled by
the
party(ies) thereto other than Amgen) to the extent relating solely
to
the Lead
Compounds, (ii) [*] in Amgen's possession or in the possession
of
its
Affiliates or its or their respective agents to the extent
solely
relating to the Lead
Compounds (PROVIDED, HOWEVER, that Amgen may redact
any
information that does not relate to the Lead Compounds), (iii)
all
rights
relating to the infringement of Memory Patent Rights and Joint
Patent
Rights by Third Parties, solely relating to the Lead Compounds,
(iv) all
rights relating to patent prosecutions described in Section 9.2
relating
solely to the Lead Compounds (and Amgen shall thereafter use
diligent
efforts to file divisionals to separate any patent claims
solely
relating
to the Lead Compounds from those relating to other compounds)
and
(v) any
trademarks or trademark applications that are solely used or
solely
intended for use for the Lead Compounds, and not for any
products
of Amgen
or any of its Affiliates, and so long as any such trademarks or
trademark
applications do not use the name Amgen or any derivative
thereof.
1.6 "CALENDAR
QUARTER" means each respective period of 3 consecutive months
ending on March
31, June 30, September 30 and December 31 of each Calendar
Year.
1.7 "CALENDAR
YEAR" means each successive period of 12 months commencing on
January 1
and ending on December 31.
1.8 "CHANGE OF
CONTROL OF MEMORY" means the occurrence of any of the following
events:
(a)
Any person (as
such term is defined under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")),
corporation or other entity hereafter becomes the beneficial
owner
(as such term is defined in Rule 13d-3 under the Exchange Act)
of
securities of Memory [*] representing [*] percent ([*]%) or more
of
the combined voting power of the outstanding securities of
Memory
which ordinarily (and apart from rights accruing under special
circumstances) have the right to vote in the election of
directors
(calculated as provided in paragraph (d) of such Rule 13d-3 in
the
case of rights to
acquire the Memory's securities) (the
"SECURITIES");
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(b)
As a result of a
tender offer, merger, sale of assets or other major
transaction, the persons who are directors of Memory
immediately
prior to such transaction cease to constitute a majority of the
Board of Directors of Memory (or any successor corporations)
immediately after such transaction;
(C)
[*] Memory is
merged or consolidated with any other person, firm,
corporation or other entity and, as a result, the shareholders
of
Memory, as determined immediately before such transaction, own
less
than [*] percent ([*]%) of the outstanding Securities of the
surviving or resulting entity immediately after such
transaction;
(d)
Memory transfers
all or substantially all of its assets to another
person, firm, corporation or other entity;
(e)
An Industry
Buyer acquires twenty percent (20%) or more of the
outstanding Securities of Memory; or
(f)
(1) Memory
becomes bankrupt or insolvent, or files a petition in
bankruptcy or makes a general assignment for the benefit of
creditors or otherwise acknowledges in writing insolvency, or
is adjudged bankrupt, and Memory (i) fails to assume this
Agreement in any such bankruptcy proceeding within thirty (30)
days after filing or (ii) assumes and assigns this Agreement
to a Third Party;
(2) Memory
grants to a party other than Amgen a security interest
in any intellectual property licensed to Amgen hereunder
(unless Memory has first granted to Amgen a security interest
in such intellectual property to secure Memory's obligations
under this
Agreement and the security interest granted by
Memory to such party is subordinated or junior in priority to
the security interest granted by Memory to Amgen, PROVIDED,
HOWEVER, [*];
(3) Memory goes
into or is placed in a process of complete
liquidation;
(4) a trustee or
receiver is appointed for any substantial portion
of Memory's business who is not discharged within [*] days
after appointment;
(5) any case or
proceeding shall have been commenced or other
action taken against Memory in bankruptcy or seeking
liquidation, reorganization, dissolution, a winding-up
arrangement, composition or readjustment of its debts or any
other relief under any bankruptcy, insolvency, reorganization
or similar act or law of any jurisdiction now or hereafter in
effect and is not dismissed or converted into a voluntary
proceeding governed by clause (f)(1) above within [*] days
after filing; or
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(6) there shall
have been issued a warrant of attachment,
execution, distraint or similar process against any
substantial part of the property of Memory and such event
shall have continued for a period of [*] days undismissed, not
bonded in a manner reasonably satisfactory to Amgen or
undischarged.
1.9 "CHANGE OF
CONTROL RIGHTS" means [*].
1.10 "COLLABORATION
COMPOUND" means a PDE10 inhibitor or modulator (a) for
which
Amgen during the Agreement Term has rights, whether by reason of
its
own
conception of such inhibitor or modulator or under agreement with
a
Third
Party, (b) was identified or confirmed as a PDE10 inhibitor or
modulator
through the use of the Memory Screening Technology, and (c)
subject to
Section 7.3(a), with respect to which the initial IND for the
inhibitor
or modulator has been filed within [*] years after the
Effective
Date by
Amgen or its Affiliate.
1.11 "COLLABORATION
TECHNOLOGY" means all Know-How generated in the conduct of
the
Research Collaboration by Amgen and Memory jointly or solely by
Memory, as
well as all Know-How, inventions, and/or intellectual property
rights
created, developed or generated by Memory or its Affiliates
with
respect to
any PDE10 inhibitors or modulators in violation of Section 2.5.
1.12 "COMPOSITION OF
MATTER CLAIM" means, for a given Product in a given
country of
the Territory, a Valid Claim of a Memory Patent Right or a
Joint
Patent Right that Covers the composition of matter of the PDE10
inhibitor
or modulator per se that is included in such Product, in whole
or as a
component thereof, as an active ingredient of such Product.
1.13 "COMPOUND" means
either a Primary Compound or a Secondary Compound.
1.14 "CONTROL" means,
with respect to any Know-How, Material or intellectual
property
right (including Patent Rights), possession by a party of the
ability
(whether by ownership, license or otherwise) to grant access, a
license or
a sublicense to such Know-How, Material or intellectual
property
right as provided for in this Agreement without violating the
terms of any agreement
with any Third Party in existence as of the
Effective
Date. With respect to any Know-How, Material or intellectual
property
right (including Patent Rights) to which either party obtains
rights
after the Effective Date, then Control shall include possession
by
such party
of the ability (whether by ownership, license or otherwise) to
grant
access, a license or a sublicense to such Know-How, Material or
intellectual property right as provided for in this Agreement
without
violating
the terms of any agreement with any Third Party pursuant to
which such
Know-How, Material or intellectual property rights were
obtained
or developed (PROVIDED, HOWEVER, that with respect to Know-How
that is obtained or
developed outside of the Research Collaboration, then
Control
means possession by such party of the ability (whether by
ownership,
license or otherwise) to grant access, a license or a
sublicense
to such Know-How as provided for in this Agreement without
violating
the terms of any agreement with any Third Party pursuant to
which such
Know-How was obtained or developed or in existence as of the
date such
party obtains such rights).
[*] CONFIDENTIAL
TREATMENT IS REQUESTED
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1.15 "COVER"
(including the variations such as "Covered", "Coverage" or
"Covering") means that the making, using, offering for sale,
selling or
importing
of the product or invention being referenced would infringe a
Valid
Claim of a Patent Right in the absence of a license under such
Patent
Right. Except to the extent set forth in Section 5.2, the
determination of whether a product or invention is Covered by a
particular
Patent
Right shall be made on a country-by-country basis.
1.16 "DEDICATED
PERSONNEL" means [*] percent ([*]%) of the Memory personnel who
performed
the Amgen funded FTE activities under the Research
Collaboration
during the
[*] immediately preceding the occurrence of the applicable
Change of
Control of Memory (rounded down to the nearest whole number).
1.17 "EUROPE" means
the [*].
1.18 "FDA" means the
United States Food and Drug Administration, or its foreign
equivalent.
1.19 "FIELD" means all
uses, including prophylaxis, palliative, diagnostic, and
therapeutic.
1.20 "FTE" means the
equivalent of the work of one employee full time for one
year
(consisting of at least a total of [*] weeks or [*] hours per
year
(excluding
vacations and holidays) of work on or directly related to the
Research
Collaboration), carried out by a Memory employee or a permitted
subcontractor. No more than [*] hours per week of overtime shall
be
counted
toward the number of hours that are used to calculate the FTE
contribution. No one person shall be permitted to account for more
than
one
FTE.
1.21 "FTE RATE" means
[*] Dollars ($[*]) per FTE per year.
1.22 "GENERAL
INVENTION" means a Memory Invention that is not specifically
related to
a Compound, a Product or the inhibition or modulation of PDE10.
1.23 "IND" means an
Investigational New Drug Application filed with the FDA for
human
clinical testing of a drug.
1.24 "INDUSTRY BUYER"
means an entity that, together with its Affiliates, has
an average
annual pharmaceutical and/or biotechnology pre-clinical
research
expenditure of more than [*]. Notwithstanding the foregoing, a
bona fide
venture capital or private equity firm that is not owned or
controlled
by, and does not own or control a significant biotechnology or
pharmaceutical company shall not be deemed to be an Industry Buyer.
For
the
purposes of illustration, the Parties consider the following to not
be
Industry
Buyers because they are bona fide venture capital or private
equity
firms that are not owned or controlled by, and do not own or
control a
significant biotechnology or pharmaceutical company: [*]
1.25 "INITIATION OF
PHASE 2A CLINICAL TRIAL" means the date that a patient is
first
dosed by or on behalf of Amgen, its Affiliate or sublicensee with
a
Product in
a clinical trial on sufficient numbers of patients that is
designed
to establish the safety and efficacy of a drug for its intended
use, and
to define warnings, precautions and adverse reactions that are
associated
with the drug in the dosage range to be prescribed and that
satisfies
the requirements of 21 CFR 312.21(b) (or its successor
regulation), or its foreign equivalent.
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1.26 "INITIATION OF
PHASE 2B CLINICAL TRIAL" means the date that a patient is
first
dosed by or on behalf of Amgen, its Affiliate or sublicensee with
a
Product in
a second clinical trial (of such Product) on sufficient numbers
of
patients that is designed to establish the safety and efficacy of
a
drug for
its intended use, and to define warnings, precautions and
adverse
reactions
that are associated with the drug in the dosage range to be
prescribed
and that satisfies the requirements of 21 CFR 312.21(b) (or its
successor
regulation), or its foreign equivalent. Notwithstanding the
foregoing,
if the first such clinical trial for such Product was
prematurely terminated or suspended and the parameters of such
second
clinical
trial are similar to those of the first such clinical trial of
such
Product, then the date that a patient is first dosed in such
second
clinical
trial shall be deemed to be another Initiation of Phase 2a
Clinical
Trial and not an Initiation of Phase 2b Clinical Trial.
1.27 "INITIATION OF
PHASE 3 CLINICAL TRIAL" means the date that a patient is
first
dosed by or on behalf of Amgen, its Affiliate or sublicensee with
a
Product in
a clinical trial of sufficient numbers of patients that, if the
defined
end-points are met, is intended to be a pivotal trial for
obtaining
Regulatory Approval or otherwise intended to supplement
existing
data on
the drug and thereby establish that a drug is sufficiently safe
and
efficacious for its intended use for the purposes of obtaining
Regulatory
Approval, and to provide an adequate basis for defining in
physician
labeling the warnings, precautions and adverse reactions that
are
associated with the drug in the dosage range to be prescribed,
and
which is
intended to support Regulatory Approval of such drug in the
United
States, European Union or any country in the European Union and
that
satisfies the requirements of 21 CFR 312.21(c), or its
successor
regulation, or an equivalent foreign clinical trial.
1.28 "INVENTION" means
an invention, including any Compound, that is made in
the
conduct of the Research Collaboration.
1.29 "JOINT COMPOUND"
means any PDE10 inhibitor or modulator which is Covered
by a
Composition of Matter Claim under a Joint Patent Right.
1.30 "JOINT INVENTION"
means an Invention having at least one co-inventor who
is an
employee, consultant or agent of Amgen and/or its Affiliates, and
at
least one
co-inventor who is an employee, consultant or agent of Memory
and/or its
Affiliates, as inventorship is determined under U.S. patent
law.
1.31 "JOINT PATENT
RIGHTS" means patent claims (and the Patent Rights in which
those
claims are contained), which if issued would, or as issued do,
Cover
a Joint
Invention and, under US patent law, require the naming of at
least
one
co-inventor who is an employee, consultant or agent of Amgen
and/or
its
Affiliates, and at least one co-inventor who is an employee,
consultant
or agent of Memory and/or its Affiliates.
1.32 "JRC" means that
committee organized and operating as provided in Article
7.
1.33 "KNOW-HOW" means
data, know-how, trade secrets, methods, knowledge and
information, including materials, samples, chemical manufacturing
data,
toxicological data, pharmacological data, preclinical data,
assays,
platforms,
formulations, specifications, quality control testing data,
that are
necessary or useful for the research,
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discovery,
manufacture, development or commercialization of any Product in
the
Territory.
1.34 "LAUNCH" means,
with respect to a Product in a country of the Territory,
the date
of the first commercial sale by or on behalf of Amgen, its
Affiliate
or its sublicensee of the given Product in the given country
after
Regulatory Approval (if required) in such country.
1.35 "LEAD
COMPOUND(S)" shall mean the Compound which, prior to the events
triggering
the provisions of Section 12.5(a), has [*] (unless another
Memory
Compound or Joint Compound that has reached IND enabling
toxicology
studies is
selected in writing by Memory as a lead compound), together
with a [*]
Compound which other than the aforementioned Compound has [*]
(unless
another Memory Compound or Joint Compound that has reached IND
enabling
toxicology studies is selected in writing by Memory as a
back-up
compound).
1.36 "MAJOR MARKET
COUNTRIES" means the [*].
1.37 "MATERIALS" means
certain biological materials or chemical compounds
including
assays, Compounds, screens, knock-out mice and other animal
models, cell lines,
cells, nucleic acids, receptors and reagents
Controlled
by the supplying Party. "Materials" shall be deemed to include
the
materials listed on Schedules 1.42, 1.60, and 1.65 each as
attached
hereto,
which Memory will provide to Amgen pursuant to Section 7.1(c)
of
this
Agreement.
1.38 "MEMORY COMPOUND"
means any PDE10 inhibitor or modulator for which Memory
during the
Agreement Term has rights, whether by reason of its own
conception
of such inhibitor or modulator or under agreement with a Third
Party,
which is Covered by a Valid Claim of a Memory Patent Right.
1.39 "MEMORY
INVENTION" means an Invention having as inventors employees,
consultants or agents of Memory or its Affiliates, but not
employees,
consultants or agents of Amgen or its Affiliates, as determined
under US
patent
law.
1.40 "MEMORY KNOW-HOW"
means all Know-How that Memory owns, or otherwise is
Controlled
by Memory, during the Agreement Term.
1.41 "MEMORY PATENT
RIGHTS" means all Patent Rights that Memory owns, or
otherwise
are Controlled by Memory, during the Agreement Term, excluding
any Joint
Patent Rights. Schedule 1.41 lists all Memory Patent Rights
that
claim
compounds that inhibit or modulate PDE10 as of the date hereof
("BASE
PATENTS").
1.42 "MEMORY SCREENING
TECHNOLOGY" means all of the screens and counterscreens
for the
PDE10 program [*] Controlled by Memory during the Agreement
Term.
To each
parties knowledge, as of the Effective Date, Schedule 1.42 sets
forth all
Memory Screening Technology then in existence.
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1.43 "MEMORY
TECHNOLOGY" means the Memory Compounds, the Memory Screening
Technology
and in addition to the foregoing the reagents, protocols and
documentation necessary and/or useful for Amgen to perform Memory's
PDE10
assay(s),
Controlled by Memory during the Agreement Term, including in
vitro and
in vivo behavioral and other assays, as well as all Know-How,
Materials
and documentation Controlled by Memory relating to PDE10.
1.44 "NDA" means a New
Drug Application, or its foreign equivalent, filed with
the FDA
for a drug.
1.45 "NET SALES"
means, with respect to a certain time period, the gross
invoiced
sales prices charged for all Products sold by or for Amgen, its
Affiliates
and sublicensees in arms length transactions to Third Parties
(but not
including sales relating to transactions between Amgen, its
Affiliates, and/or their respective sublicensees) during such time
period,
less the
total of the following estimated and/or incurred charges or
expenses
to the extent attributable to the sale of the Product: [*].
All of the
sales, and deductions taken above, shall be determined in
accordance
with GAAP. [*]. For the purposes of this Agreement, "GAAP"
means
generally accepted accounting principles.
Any
disposal of Products for, or use of Products in, clinical or
pre-clinical trials, given as free samples in accordance with
applicable
law, or
distributed at no charge to patients unable to purchase Product
shall not
be included in Net Sales.
Where a
Product is sold together with other pharmaceutical products
(excluding
devices used for using or administering the Product excluded
from Net
Sales above) for a single price (whether sold together in the
same package, or
merely price bundled) then for the purposes of
calculating the Net Sales for the Products under this Agreement,
the
Product
shall be deemed to be sold for an amount equal to the
following:
(X divided by Y) multiplied by Z
where X is
the average sales price during the applicable reporting period
generally
achieved for the Product in the country in which such sale or
other
disposal occurred when such Product is sold alone and not with
other
pharmaceutical products; Y is the sum of the average sales price
during
the
applicable reporting period generally achieved in that country
when
sold alone
by each product (including the Product) included in the bundle
of
pharmaceutical products that is sold for the single price; and Z
equals
the single
price at which the bundle of pharmaceutical products
represented in Y was actually sold. In the event one or more of
the
products
in the bundled product are not sold separately, the parties
shall
confer in
good faith to determine a fair market price that shall be
equitable
for the value of the Product within the bundled product.
1.46 "PARTY" means
Amgen or Memory. "PARTIES" means Amgen and Memory.
1.47 "PATENT RIGHT"
means all rights under (a) any patent or patent application
in any
country of the Territory, (b) all patent applications filed in
any
jurisdiction corresponding to or
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claiming
priority from the patents and/or patent applications referred
to
in the
foregoing clause (a); (c) all divisionals, continuations and
continuations-in-part of the patent applications referred to in
the
foregoing
clauses (a) and (b); (d) all patents issuing from the patent
applications referred to in the foregoing clauses (a), (b) and (c);
and
(e) all
reissues, re-examination certificates, registrations,
confirmations, extensions, substitutions, renewals and
supplementary
protection
certificates of the patent and/or patent applications referred
to in the
foregoing clauses (a), (b), (c) and (d).
1.48 "PDE10" means any
biological molecule that is a member of the family of
[*]
generally known as PDE10, [*], PDE10A (amino acid sequences of
which
are
attached hereto as Schedule 1.48), and any and all of the
following
biological
molecules related to PDE10: [*]
1.49 "PERSON" means
any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited
liability
partnership, joint venture, estate, trust, company (including any
limited
liability
company or joint stock company), firm or other enterprise,
association, organization, entity or governmental entity.
1.50 "PRIMARY
COMPOUND" means a Memory Compound, a Joint Compound or a
Collaboration Compound.
1.51 "PRIMARY PRODUCT"
means a product that includes, in whole or as a
component
thereof, a Primary Compound.
1.52 "PRODUCT" means
any Primary Product or Secondary Product.
1.53 [*]
1.54 "REGULATORY
APPROVAL" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations
of any
national
or international or local regulatory agency, department, bureau
or other
governmental entity, necessary for the manufacture and sale of
a
Product in
the Field in a regulatory jurisdiction in the Territory by
Amgen, its
Affiliate or sublicensee.
1.55 "REINSTATABLE
RIGHTS" means [*].
1.56 "RESEARCH
COLLABORATION" means the collaborative non-clinical research
program
between the Parties relating to PDE10 inhibitors and
modulators,
as more fully
described in the Research Workplan.
1.57 "RESEARCH
WORKPLAN" means the plan of non-clinical research activities
attached
as Schedule 1.57, as it may be amended in writing from time to
time.
1.58 "RESEARCH TERM"
shall have the meaning provided in Section 7.1(b)(iii).
1.59 "ROYALTY TERM"
means with respect to (i) a given Primary Product in a
given
country the period of time commencing on Launch in such country
and
continuing
until the later of (a) expiration of the last to expire of a
Memory
Patent Right or Composition of Matter
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Claim
Covering such Product in such country or (b) ten (10) years from
the
Launch of
such Product in such country, and (ii) a given Secondary
Product
in a given
country the period of time commencing on Launch in such country
and
continuing until ten (10) years from the Launch of such Product
in
such country.
Notwithstanding the foregoing, with respect to any given
Product
that becomes a Primary Product in a given country subsequent to
Launch in
such country, the Royalty Term shall expire in such country
upon
the later
of (x) expiration of the last to expire of a Memory Patent
Right
or
Composition of Matter Claim Covering such Product in such country
or
(y) ten
(10) years from the Launch of such Product in such country. The
Launch
within any country in the European Union shall be deemed the
date
of Launch
for all countries in the European Union.
1.60 "SECONDARY
COMPOUND" means (i) a PDE10 inhibitor or modulator, other than
a Primary
Compound, (a) for which Amgen during the Agreement Term has
rights,
whether by reason of its own conception of such inhibitor or
modulator,
or under agreement with a Third Party, (b) was identified or
confirmed
as a PDE10 inhibitor or modulator through the use of the Memory
Screening
Technology, and (c) subject to Section 7.3(a), with respect to
which the
initial IND for the inhibitor or modulator has not been filed
within [*]
after the Effective Date by Amgen or its Affiliate, or (ii) [*]
or as
identified by Memory on Schedule 1.60 attached hereto.
1.61 "SECONDARY
PRODUCT" means a product that includes, in whole or as a
component
thereof, a Secondary Compound; PROVIDED, HOWEVER, that if a
Product
includes in whole or as a component thereof, a Primary Compound
then such
Product shall be deemed a Primary Product. No Product shall be
deemed
both a Primary Product and a Secondary Product concurrently.
1.62 "TERRITORY" means
all countries and territories in the world.
1.63 "THIRD PARTY"
means a person or entity other than (i) Memory or any of its
Affiliates, or (ii) Amgen or any of its Affiliates.
1.64 "THIRD PARTY
ACQUIRER" means a Third Party that obtains ownership or
control of
(whether directly or indirectly) or otherwise acquires all or
substantially
all of the business or assets of Memory in connection with a
Change of
Control of Memory, whether in one transaction or a series of
transactions.
1.65 "TRIGGERING
EVENT" means a [*] determination by [*] resulting from the
performance of
the research set forth in Schedule 1.65-A attached hereto
that [*]
and that such [*] the central nervous system effects described
in
Schedule 1.65-B.
1.66 "US" means the
United States of America and its possessions and
territories, including
Puerto Rico.
1.67 "VALID CLAIM"
means a claim [*].
ARTICLE 2. LICENSE GRANTS
[*] CONFIDENTIAL TREATMENT IS REQUESTED
10
<PAGE>
2.1 License
Grants. Subject to the terms and conditions of this Agreement,
Memory
grants to Amgen the sole and exclusive license, including the
right
to grant
sublicenses pursuant to Section 2.2, under the Memory Patent
Rights,
the Memory Know-How, the Memory Inventions and Memory
Technology
to perform
Amgen's responsibilities under the Research Collaboration and
to
research, develop, make, have made, use, offer for sale, sell,
have
sold,
import, export or otherwise exploit, or transfer possession of
or
title in,
Compounds and Products in the Territory for use in the Field.
Subject to
the terms and conditions of this Agreement, Memory grants to
Amgen the
sole and exclusive license, including the right to grant
sublicenses pursuant to Section 2.2, under its joint interest in
Joint
Patent
Rights (other than with respect to General Inventions) to
perform
Amgen's
responsibilities under the Research Collaboration and to
research,
develop,
make, have made, use, offer for sale, sell, have sold, import,
export or
otherwise exploit, or transfer possession of or title in,
Compounds
and Products in the Territory for use in the Field.
Subject to
the terms and conditions of this Agreement, Memory grants to
Amgen the
sole and exclusive license, including the right to grant
sublicenses pursuant to Section 2.2, under its joint interest
in
Collaboration Technology to research, develop, make, have made,
use, offer
for sale,
sell, have sold, import, export or otherwise exploit, or
transfer
possession of or title in, products solely to the extent
related
to PDE10;
PROVIDED, HOWEVER, that Memory and Amgen shall each have the
non-exclusive right (including the right to grant sublicenses)
under the
Collaboration Technology to research, develop, make, have made,
use, offer
for sale,
sell, have sold, import, export or otherwise exploit, or
transfer
possession of or title in, products except solely to the extent
related to
PDE10.
During the
Agreement Term, subject to the terms and conditions of this
Agreement,
Memory grants to Amgen a worldwide, fully paid-up,
royalty-free, non-exclusive license, including the unrestricted
right to
grant
sublicenses, under the Memory Inventions, and all intellectual
property
rights to the extent relating thereto, for any and all
purposes.
Upon
expiration or termination of this Agreement, subject to the terms
and
conditions of
this Agreement (including Section 12.1), Memory grants to
Amgen and
its Affiliates a worldwide, fully paid-up, royalty-free,
non-exclusive license, with no right to grant sublicenses or assign
such
license,
under the Memory Inventions to the extent relating to Memory
compounds
consisting of PDE10 inhibitors or modulators, including Memory
Compounds
and all intellectual property rights to the extent relating
thereto
solely for internal research purposes (the "RESEARCH LICENSE"),
and Memory
grants to Amgen and its Affiliates a worldwide, fully paid-up,
royalty-free, non-exclusive license, including the unrestricted
right to
grant
sublicenses, under any other Memory Invention (including
General
Inventions), and all intellectual property rights to the extent
relating
thereto,
for any and all purposes.
Amgen's
right to use Memory's pre-existing technology and all
intellectual
property
rights relating thereto pursuant to the licenses granted under
this
Section 2.1 shall be limited solely to Amgen's and its
Affiliates'
and
sublicensees' use in connection with activities under this
Agreement
related to
PDE10. Pursuant to the licenses granted under this Section 2.1,
Amgen
shall have exclusive rights to all technology and all
intellectual
[*] CONFIDENTIAL TREATMENT IS REQUESTED
11
<PAGE>
property
rights to the extent relating thereto developed solely or
jointly
by Memory
during the Research Collaboration for use solely in connection
with
activities under this Agreement related to PDE10, including
Memory
Inventions
and Collaboration Technology, and non-exclusive rights relating
thereto
for activities unrelated to PDE10. Further, nothing in this
Agreement
shall limit the right of Memory to use Memory Know-How
(including
the Memory Screening Technology, but excluding Memory
Inventions
pursuant to which Amgen has been granted an exclusive license
under the
first paragraph of this Section 2.1) for any purpose except
solely to
the extent related to researching, developing, making, having
made,
using, offering for sale, selling, having sold, importing,
exporting
or
otherwise exploiting, or transferring possession of or title
in,
Compounds
and Products in the Territory for use in the Field.
2.2 Sublicense
Rights. Except with respect to the Research License, the rights
and
licenses granted to Amgen under Section 2.1 shall include the
unrestricted right to grant sublicenses to its Affiliates and
Third
Parties
under such rights and licenses, in whole or in part. Amgen
assumes
full
responsibility for the performance of all obligations and
observance
of all
terms of this Agreement imposed on such Affiliate or Third
Party
sublicensee and will itself account to Memory for all payments due
under
this
Agreement by reason of such sublicensee's activities.
Upon the
licenses granted herein to Amgen becoming fully paid up
pursuant
to Section
12.1, any and all sublicenses granted by Amgen similarly shall
become
fully paid up as to Memory.
2.3 Products
Containing Amgen Compounds. Memory acknowledges that prior to
the
Effective
Date Amgen has or, during the Agreement Term Amgen may have,
rights in
or to Amgen Compounds. For the purposes of this Agreement,
"AMGEN
COMPOUND" means a PDE10 inhibitor or modulator, other than a
Primary
Compound or Secondary Compound, (a) for which Amgen during the
Agreement
Term has rights, whether by reason of its own conception of
such
inhibitor
or modulator, or under agreement with a Third Party, and (b)
was
not
identified or confirmed as a PDE10 inhibitor or modulator through
the
use of the
Memory Screening Technology.
All rights
in and to any Amgen Compound shall remain solely owned by
Amgen, and
Memory shall have no rights, and Amgen shall have no
obligations, financial or otherwise, to Memory, under this
Agreement with
respect to
any Amgen Compound.
2.4 No Implied
License. No rights or licenses with respect to any intellectual
property
owned or Controlled by either party are granted or shall be
deemed
granted hereunder or in connection herewith, other than those
rights or
licenses expressly granted in this Agreement.
2.5 Exclusivity.
Notwithstanding anything to the contrary in this Agreement,
during the
Agreement Term, Memory and its Affiliates will not, internally
(other
than in performance of the Research Workplan) or in conjunction
with a
Third Party, conduct, effect, participate in or cause, or
advise,
assist or
encourage any Third Party (including, without limitation,
through
the transfer of information, materials or technology) to
[*] CONFIDENTIAL TREATMENT IS REQUESTED
12
<PAGE>
conduct,
effect, participate in or cause, in any way, directly or
indirectly, any activities related to PDE10 inhibitors or
modulators;
PROVIDED,
HOWEVER, that nothing contained herein shall prohibit any
activity
with respect to inhibitors or modulators of phosphodiesterases
other than
those that inhibit or modulate PDE10. For the purposes of this
Section
2.5, Affiliates shall [*].
2.6
Registration. The Parties shall execute the short-form of license
attached
hereto as
Schedule 2.6 concurrently with this Agreement. From time to
time
after the
Effective Date, upon request by Amgen, Memory agrees to execute
such
similar short-forms of license to evidence the license of
rights
granted to
Amgen by this Agreement. Amgen shall have the right to record
such
short-forms of license in the United States Patent and
Trademark
Office,
the corresponding offices outside the United States, and/or
with
other
appropriate governmental agencies. Amgen shall provide Memory
with
prompt written
notice of any such recordation, including a copy of all
papers
recorded. Upon termination of the Agreement in its entirety for
any
reason,
Amgen at its sole cost and expense shall promptly execute and
deliver to
Memory, or cause to be filed with the United States Patent and
Trademark
Office, the corresponding offices outside the United States,
and/or
with other appropriate governmental agencies, appropriate
terminations of such short-forms of license.
ARTICLE 3. DILIGENCE
3.1 Amgen's
Diligence. Amgen shall use reasonable diligence in proceeding
with
the
research, development (including obtaining required Regulatory
Approvals), manufacturing, marketing and sale of Products in the
Major
Market
Countries.
Reasonable
diligence as used in this Agreement shall mean the same
standard
of effort as used by Amgen, or in any case not less than common
in the
industry taken as a whole, in the research, development,
clinical
testing,
manufacturing, marketing and sale of a product of similar
profile,
market potential and at a similar stage in its product life as
that of
the applicable Product, taking into account safety, efficacy,
competition, the
patent and other proprietary position of the Product, the
likelihood
of Regulatory Approval given the regulatory structure involved,
the
profitability of the Product including the royalties payable to
licensors
of patent rights, alternative products and product candidates
and other
relevant factors, including scientific, business and marketing
and return
on investment considerations. The Parties also acknowledge
that, even
within the Major Market Countries, Amgen (and its Affiliates)
does not
always seek to market its own products in every such country or
seek to
obtain regulatory approval in every such country or for every
potential
indication or seek to obtain regulatory approvals in different
countries
concurrently. As a result, reasonable diligence shall be
determined
by judging Amgen's efforts taken as a whole in the following
regions on
a region-by-region basis (the regions being [*]) (taking into
account
factors including pricing strategy, applicable law and
regulation
and the
availability and strength of protection for intellectual
property
and
proprietary rights), and it is anticipated that the level of
effort
will
change over time, reflecting changes in the status of the Product
and
the market
and/or region involved and based upon changing scientific,
business,
marketing, return on investment and other considerations.
Additionally, the Parties acknowledge that prior to Initiation of
Phase 3
[*] CONFIDENTIAL TREATMENT IS REQUESTED
13
<PAGE>
Clinical
Trial conducted to support Regulatory Approval of a Product in
the [*],
Amgen shall have no diligence obligations under this Section
3.1
with
respect to [*].
3.2 Memory's
Diligence. Memory shall use reasonable diligence, and shall
commit the
personnel, facilities and resources, to perform its obligations
under the
Research Workplan. Memory will conduct its activities under the
Research
Collaboration in good scientific manner, using qualified
personnel,
and in material compliance with applicable laws and
regulations. Memory will prepare and maintain complete and
accurate
written
records relating to its activities under the Research
Collaboration consistent with industry standards including, for
purposes
of patent
and regulatory matters, prompt, but in no event less than
daily,
signing
and corroboration of laboratory notebooks and conception
documents.
Amgen shall have the right to use such source data to support
submissions to regulatory agencies and the filing, prosecution,
maintenance, defense and enforcement of Joint Patent Rights and for
such
other
purposes as reasonably necessary in pursuit of performing
Amgen's
responsibilities under the Research Collaboration and
researching,
developing, making, having made, using, offering for sale, selling,
having
sold, importing,
exporting or otherwise exploiting, or transferring
possession
of or title in, Compounds and Products in the Territory for use
in the
Field. Memory shall maintain such records for the later of (a)
the
Agreement
Term or (b) five (5) years following the expiration or
termination of the Research Collaboration. Upon Amgen's written
request
and within
fifteen (15) business days after such request, Memory shall
make
available for inspection by the Amgen Audit Representative (as
that
term is
defined in Section 7.3 hereof) the records of Memory (including
source
data such as laboratory notebook records) regarding the
activities
conducted
and results achieved under the Research Collaboration,
including
all
records related to Collaboration Technology and Inventions, at
any
reasonable
time during Memory's regular working hours, and copies of all
or any
part of such data and records (whether in tangible or
electronic
form)
shall be furnished to the Amgen Audit Representative upon
request,
provided
that the Amgen Audit Representative shall execute a
confidentiality agreement of the type described in Section 7.3
prior to
the Amgen
Audit Representative exercising any such rights. The rights and
obligations contained in the preceding sentence shall survive for
the
later of
(a) the Agreement Term or (b) five (5) years after the
expiration
or
termination of the Research Collaboration.
3.3 Use of
Memory Screening Technology. After the occurrence of the
Triggering
Event,
Amgen shall [*] the Memory Screening Technology with respect to
its
use in the
Research Collaboration, [*].
ARTICLE 4. PAYMENTS TO MEMORY
4.1 Up-Front
Payment. Subject to Section 12.2, Amgen shall pay Memory an
up-front
payment of five million dollars ($5,000,000), which shall be
non-refundable and non-creditable. Payment for such up-front fee
shall be
made
within thirty (30) days following the Effective Date.
4.2 Triggering
Event. Upon the occurrence of the Triggering Event, Amgen
shall pay Memory a payment of [*] dollars ($[*]), which shall
be
non-refundable and non-
[*] CONFIDENTIAL TREATMENT IS REQUESTED
14
<PAGE>
creditable. Upon the occurrence of the Triggering Event, Amgen
shall
notify
Memory of such occurrence, and Memory will invoice Amgen for
such
payment.
Such payment shall be due and payable by Amgen within [*] days
after
receipt of the applicable invoice from Memory. Amgen shall use
reasonable
diligence to cause the Triggering Event to occur as soon as
reasonably
practicable. If, within [*] days from the date hereof, the
Triggering
Event has not occurred, Memory shall have the right, at
Memory's
expense, to, and/or the right to cause a Third Party to, [*].
The
Triggering
Event shall only be deemed to have occurred if [*] results in
the
occurrence of the Triggering Event. The Parties confirm that
the
absence of
the Triggering Event shall not eliminate, reduce or otherwise
modify any
obligation to make any milestone payments or royalty payments
hereunder
(other than the payment provided for in this Section 4.2).
4.3 Milestone
Payments. (a) Amgen shall pay to Memory each of the following
applicable
one-time milestone payments following achievement of the
corresponding milestone event by Amgen, its Affiliates or
sublicensees,
and all
such payments shall be nonrefundable and non-creditable, except
to
the extent
expressly set forth in this Section 4.3 or Section 6.5.
<TABLE>
<CAPTION>
MILESTONE PAYMENT MILESTONE PAYMENT
MILESTONE
EVENT
(PRIMARY PRODUCT) (SECONDARY PRODUCT)
------------------------- -----------------
-------------------
<S>
<C>
<C>
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
[*]
US$[*]
US$[*]
TOTAL
US$[*]
US$[*]
</TABLE>
[*] CONFIDENTIAL TREATMENT IS REQUESTED
15
<PAGE>
(b)
Notwithstanding Section 4.3(a) but subject to Section 4.3(g) and
Section
5.9, in
the event that either:
(i)
a Primary
Product has a black box warning, in the US or the European
Union, in its label at time of Launch in the US or the European
Union, respectively, or receives one during its first [*] after
Launch in the US or the European Union, respectively;
(ii)
a "Dear Doctor" letter
is issued in the US or the European Union,
respectively, in relation to such Primary Product during such
period;
(iii) a
Primary Product is not the first or second PDE10 inhibitor or
modulator (excluding any Secondary Product) having regulatory
approval for the treatment of [*] in the US or the European
Union,
respectively; or
(iv)
a third PDE10
inhibitor or modulator (excluding any Product) having
regulatory approval for the treatment of [*] launches in the US
or
the European Union, respectively, during the [*] period
following
the Launch of the Primary Product in the US or the European
Union,
respectively,
then with
respect to any such event in the US the milestone payment
payable
for such Primary Product upon approval of an NDA for such
Primary
Product in
the US shall be reduced to $[*] (PROVIDED, HOWEVER, that, if
such event
occurs with respect to the US within [*] after Launch in the US
then Amgen
shall be entitled to deduct $[*] from subsequent payments of
royalties
to Memory), and with respect to any such event in the European
Union the milestone
payment payable for such Primary Product upon approval
of an NDA
for such Primary Product in the European Union shall be reduced
to $[*]
(PROVIDED, HOWEVER, that, if such event occurs with respect to
the
European
Union within [*] after Launch in the European Union then Amgen
shall be
entitled to deduct $[*] from subsequent payments of royalties
to
Memory).
(c)
Notwithstanding Section 4.3(a) but subject to Section 4.3(g) and
Section
5.9, in
the event that either:
(i)
a Secondary
Product has a black box warning, in the US or the
European Union, in its label at time of Launch in the US or the
European Union, respectively, or receives one during its first
[*]
after Launch in the US
or the European Union, respectively;
(ii)
a "Dear Doctor" letter
is issued in the US or the European Union,
respectively, in relation to such Secondary Product during such
period;
(iii) a
Secondary Product is not the first or second PDE10 inhibitor or
modulator having regulatory approval for the treatment of [*] in
the
US or the European Union, respectively; or
[*] CONFIDENTIAL TREATMENT IS REQUESTED
16
<PAGE>
(iv)
a third PDE10
inhibitor or modulator (excluding any Product) having
regulatory approval for the treatment of [*] launches in the US
or
the European Union, respectively, during the [*] period
following
the Launch of the Secondary Product in the US or the European
Union,
respectively,
then with
respect to any such event in the US the milestone payment
payable
for such Secondary Product upon approval of an NDA for such
Secondary
Product in the US shall be reduced to $[*] (PROVIDED, HOWEVER,
that, if
such event occurs with respect to the US within [*] after
Launch
in the US
then Amgen shall be entitled to deduct $[*] from subsequent
payments
of royalties to Memory), and with respect to any such event in
the
European Union the milestone payment payable for such Secondary
Product
upon approval of an NDA for such Secondary Product in the
European
Union
shall be reduced to $[*] (PROVIDED, HOWEVER, that, if such
event
occurs
with respect to the European Union within [*] after Launch in
the
European
Union then Amgen shall be entitled to deduct $[*] from
subsequent
payments
of royalties to Memory).
(d)
(i)
Upon the
occurrence of a milestone event, Amgen shall promptly
notify Memory of such occurrence, and Memory will invoice Amgen
for
the related payment. Such payment shall be due and payable by
Amgen
within [*] days after receipt of the applicable invoice from
Memory.
(ii)
Notwithstanding
Section 4.3(d)(i), except as provided in the next
sentence, a Product that includes, in whole or as a component
thereof, a Collaboration Compound shall be presumed to be a
Secondary Product until such time as it is determined to be a
Primary Product. An inhibitor or modulator of PDE10 comprising
a
composition of matter claimed in a patent application within a
Memory Patent Right or a Joint Patent Right shall, prior to
Launch,
be presumed to be a Primary Product.
(iii) If
at the time of Launch no Valid Claim under a Memory Patent
Right
or a Composition of Matter Claim Covers such Product, then,
subject
to Section 5.9, Amgen shall be entitled to deduct from
subsequent
payments of royalties to Memory the difference between the
milestone
payments actually paid for such Product and the milestone
payments
that would have otherwise been paid for such Product, if any,
by
Amgen but for the presumption provided for in Section
4.3(d)(ii).
(iv)
If a Valid Claim under
a Memory Patent Right or a Composition of
Matter Claim subsequently Covers such Product, then Amgen shall
promptly reimburse Memory for the amounts deducted pursuant to
Section 4.3(d)(iii).
[*] CONFIDENTIAL TREATMENT IS REQUESTED
17
<PAGE>
(v) Amgen shall
only be obligated to make each milestone payment
once, for the first occurrence of a respective event,
regardless of how many times the event may be subsequently
achieved with one or more Products.
(vi) If Amgen's
obligation to pay Memory for an occurrence of an
event for a Secondary Product arises, and subsequently,
Amgen's obligation to pay Memory for an occurrence of a
corresponding event for a Primary Product should arise, then
Amgen shall be required to pay Memory, promptly after such
occurrence of the corresponding event for a Primary Product,
an amount equal to the difference between the amount payable
for such event for a Primary Product and the amount previously
paid for such event as a Secondary Product. Accordingly,
should Amgen's obligation to pay Memory for an occurrence of
an event for a Primary Product arise, then Amgen's obligation
to pay Memory for a corresponding event for a Secondary
Product shall expire.
(e)
In the event
that a milestone event relating to clinical development
is achieved and payment with respect to the previous milestone
event(s) has not been made by Amgen, then Amgen shall promptly
pay
Memory all such unpaid payments with respect to such previous
milestone event(s).
(f)
In no event
shall Amgen be obligated to pay to Memory milestone
payments in excess of $[*] in the aggregate for the achievement
of
all milestone events, regardless of how many times milestone
events
are achieved and regardless of whether they are achieved by
Primary
Products, Secondary Products or both.
(g)
Notwithstanding
the foregoing provisions of this Section 4.3, if
during any Calendar Year after the Launch of a Product with
respect
to which the milestone payments have been reduced pursuant to
Section 4.3(b) or (c) hereof the annual worldwide Net Sales of
such
Product exceed US$[*], Amgen shall promptly pay to Memory the
amount
of such reduction in the milestone payments, but in any event
within
[*] days following the end of such Calendar Year.
ARTICLE 5. ROYALTIES
5.1 Royalties
Payable by Amgen.
(a)
Primary
Products. With respect to each Calendar Year (or portion
thereof) during the Royalty Term of a Primary Product, Amgen
shall
pay to Memory royalties on total annual Net Sales of such
Primary
Product in such Calendar Year (or portion thereof) by Amgen,
its
Affiliates and its sublicensees, which royalties shall be at
the
following rates:
(i) [*] percent
([*]%) of that portion of such total annual Net
Sales of such Product that is less than or equal to US$[*];
(ii) [*] percent
([*]%) of that portion of such total annual Net
Sales of such Product that is greater than US$[*] and less
than or equal to US$[*]; and
[*] CONFIDENTIAL TREATMENT IS REQUESTED
18
<PAGE>
(iii) [*] percent ([*]%) of that portion of such total annual
Net
Sales of such Product that is greater than US$[*].
(b)
Secondary
Products. With respect to each Calendar Year (or portion
thereof) during the Royalty Term of a Secondary Product, Amgen
shall
pay to
Memory royalties on total annual Net Sales of such Secondary
Product in such Calendar Year (or portion thereof) by Amgen,
its
Affiliates and its sublicensees, which royalties shall be at
the
following rates:
(i) [*] percent
([*]%) of that portion of such total annual Net
Sales of such Product that is less than or equal to US$[*];
(ii) [*] percent
([*]%) of that portion of such total annual Net
Sales of such Product that is greater than US$[*] and less
than or equal to US$[*]; and
(iii) [*] percent ([*]%) of that portion of such total annual
Net
Sales of such Product that is greater than US$[*].
(c) Subsequent Events.
Notwithstanding the foregoing, a Product may
change from time to time from a Primary Product to a Secondary
Product and vice versa. Royalties for Primary Products shall be
payable at the applicable rates set forth in Section 5.1(a)
until
the beginning of the first Calendar Quarter following the
Calendar
Quarter in which such Product has been determined to be a
Secondary
Product at which time royalties for such Product shall be payable
at
the applicable rates set forth in Section 5.1(b), and royalties
for
Secondary Products shall be payable at the applicable rates set
forth in Section 5.1(b) until the beginning of the first
Calendar
Quarter following the Calendar Quarter in which such Product
has
been determined to be a Primary Product at which time royalties
for
such Product shall be payable at the applicable rates set forth
in
Section 5.1(a).
5.2 Royalty
Term; Royalty Rate; Net Sales. Royalties for sales of any
Product
shall be
paid for a period equal to the Royalty Term for such Product.
If
a Memory
Patent Right or a Joint Patent Right has been found to be
unpatentable, invalid or unenforceable by a court or other
authority of
competent
jurisdiction in the country in which a Patent Right has issued,
as a
result of which Amgen is no longer required to pay royalties for
a
Product in
such country, and subsequently such ruling is reversed upon
appeal and
such Patent Right is thereafter not subject to such
determination of unpatentability, invalidity or unenforceability,
then
[*]. The
royalty rates set forth above shall be determined on a
Product-by-Product basis. [*] Nothing contained in this Section 5.2
shall
affect the
obligations of Amgen under Section 3.1. Additionally, when
determining annual Net Sales of any given Product, the total annual
Net
Sales of
such Product shall be the total annual Net Sales of such
Product
in all
countries in which the Royalty Term is in effect for such
Product
(and shall
only include sales made while such Royalty Term is in effect).
5.3 Third
Party Licenses. If Amgen reasonably determines, in its
reasonable
discretion, that in order to avoid the potential infringement of
the
patent or know-how rights of a Third
[*] CONFIDENTIAL TREATMENT IS REQUESTED
19
<PAGE>
Party or
Third Parties one or more licenses to access such intellectual
property
rights of a Third Party or Third Parties are required for
Amgen,
its
Affiliates and/or its sublicensees to research, develop, make,
have
made, use,
import, offer to sell and/or sell, export or otherwise exploit,
or
transfer physical possession of or title in a Product ("THIRD
PARTY
LICENSE(s)"), then [*] of any compensation (including, without
limitation,
up-front
payments, milestones and royalties) actually paid by Amgen, its
Affiliates
and/or sublicensees with respect to such Product under any such
Third
Party License(s) entered into by Amgen, its Affiliates or
sublicensees shall be creditable against the royalty payments to be
paid
to Memory
by Amgen hereunder with respect to the sale of such Product;
PROVIDED,
HOWEVER, that the royalty rates due to Memory under Section
5.1(a) in
any given Calendar Year will not be reduced to less than [*];
FURTHER
PROVIDED, HOWEVER, that the royalty rates due to Memory under
Section
5.1(b) in any given Calendar Year will not be reduced to less
than
[*].
5.4 Cumulative
Royalties. The obligation under Section 5.1 to pay royalties on
the Net
Sales of a Product shall be imposed only once with respect to
the
same unit
of said Product.
5.5 No Other
Compensation. Other than as explicitly set forth (and as
applicable) in this Article 5, and in Article 4 and Section 7.3,
Amgen
shall not
be obligated to pay any additional fees, milestone payments,
royalties
or any other compensation to Memory under this Agreement.
5.6 Cross
License. In the event that Amgen, in its sole business
judgment,
shall determine
it is reasonably necessary to grant a sublicense, or a
covenant
not to sue, under Memory Patent Rights claiming a Product or
method of
using a Product, to any Third Party in a country in order for
Amgen to
obtain the right to make, have made, use, sell, lease, offer to
sell or
lease, or import, export or otherwise exploit, transfer
physical
possession
of or otherwise transfer title in such Product in the Field in
any case
where any one or more such activities by Amgen, its Affiliates
or
sublicensees otherwise may infringe the intellectual property
rights of
such Third
Party, and wherein no compensation or consideration other than
the
cross-licenses is exchanged between Amgen and such Third Party as
a
result
thereof, Amgen shall have the right to grant such sublicense or
covenant
not to sue to such Third Party solely in connection with the
manufacture, use, sale or other commercialization of an inhibitor
or
modulator
of PDE10. For purposes of this Section 5.6, the determination
of
Net Sales
of Products for purposes of calculating the royalties payable
by
Amgen to
Memory under Section 5.1 shall not include sales of such
inhibitor
or modulator of PDE10 by or on behalf of such Third Party (or
its
Affiliates or sublicensees) receiving such sublicense or covenant
not
to
sue.
5.7 Adjustments
Related to Third Party Competition.
(a)
For a given
Primary Product in a given Calendar Quarter, if, in
addition to such Primary Product, there are [*] PDE10 inhibitors
or
modulators (excluding any Product) having regulatory approval
for
the treatment of [*] in the US, then Amgen shall have the right
to
reduce for the entire Territory the applicable royalty rate
provided
for under Section 5.1(a) to [*] percent ([*]%) of the applicable
Net
Sales in clause (i), [*] percent ([*]%) of the applicable Net
[*] CONFIDENTIAL TREATMENT IS REQUESTED
20
<PAGE>
Sales in clause (ii), and [*] percent ([*]%) of the applicable
Net
Sales in clause (iii).
(b)
Additionally, so
long as there are [*] PDE10 inhibitors or
modulators (excluding any Product) having regulatory approval
for
the treatment of [*] in the US, the minimum royalty rates
provided
for under Section 5.3 due to Memory for royalties payable under
Section 5.1(a) in any given Calendar Year may be further reduced
by
Amgen to not less than [*] percent ([*]%) of the applicable
annual
Net Sales in clause (i), [*] percent ([*]%) of the applicable
annual
Net Sales in clause (ii), and [*] percent ([*]%) of the
applicable
annual Net Sales in clause (iii).
(c)
For a given
Secondary Product in a given Calendar Quarter, if, in
addition to such Secondary Product, there are [*] PDE10
inhibitors
or modulators (excluding any Product) having regulatory approval
for
the treatment of [*] in the US, then Amgen shall have the right
to
reduce for the entire Territory the applicable royalty rate
provided
for under
Section 5.1(b) to [*] percent ([*]%) of the applicable Net
Sales in clause (i), [*] percent ([*]%) of the applicable Net
Sales
in clause (ii), and [*] percent ([*]%) of the applicable Net
Sales
in clause (iii).
(d)
Additionally, so
long as there are [*] PDE10 inhibitors or
modulators (excluding any Product) having regulatory approval
for
the treatment of [*] in the US, the minimum royalty rates
provided
for under Section 5.3 due to Memory for royalties payable under
Section 5.1(b) in any given Calendar Year may be further reduced
by
Amgen to not less than [*] percent ([*]%) of the applicable
annual
Net Sales in clause (i), [*] percent ([*]%) of the applicable
annual
Net Sales in clause (ii), and [*] percent ([*]%) of the
applicable
annual Net Sales in clause (iii).
(e)
Notwithstanding
the foregoing provisions of this Section 5.7, if
during any Calendar Year after the Launch of a Product, the
annual
worldwide Net Sales of such Product exceed US$[*], the
reductions
provided for in this Section 5.7 as to such Product shall
terminate
for the Calendar Year in which such Net Sales amount is achieved
and
all future Calendar Years.
5.8 Adjustments
Related to Black Box Label and "Dear Doctor" letters.
(a)
For a given
Primary Product in a given Calendar Quarter in which
there is a black box warning in the US as referred to in clause
(1)
below or a "Dear Doctor" letter in the US as referred to in
clause
(2) below (and for every Calendar Quarter thereafter until and
unless such black box warning or "Dear Doctor" letter is removed
or
withdrawn), if, (1) in the US the Primary Product has a black
box
warning in its label or (2) there should be any "Dear Doctor"
letters issued in the US regarding such Primary Product, Amgen
shall
have the right to reduce for the entire Territory the
applicable
royalty rate provided for under Section 5.1(a) to [*] percent
([*]%)
of the applicable Net Sales in clause (i), [*] percent ([*]%) of
the
applicable Net Sales in clause (ii), and [*] percent ([*]%) of
the
applicable Net Sales in clause (iii).
[*] CONFIDENTIAL TREATMENT IS REQUESTED
21
<PAGE>
(b)
Additionally,
during the continuance of a black box warning in the
US or a "Dear Doctor" letter in the US, the minimum royalty
rates
provided for under Section 5.3 due to Memory for royalties
payable
under Section 5.1(a) in any given Calendar Year may be further
reduced by Amgen to not less than [*] percent ([*]%) of the
applicable annual Net Sales in clause (i), [*] percent ([*]%) of
the
applicable annual Net Sales in clause (ii), and [*] percent
([*]%)
of the applicable annual Net Sales in clause (iii).
(c)
For a given
Secondary Product in a given Calendar Quarter in which
there is a black box warning in the US as referred to in clause
(1)
below or a "Dear Doctor" letter in the US as referred to in
clause
(2) below (and for every Calendar Quarter thereafter until and
unless such black box warning or "Dear Doctor" letter is removed
or
withdrawn), if, (1) in the US the Secondary Product has a black
box
warning in its label or (2) there should be any "Dear Doctor"
letters issued in the US regarding such Secondary Product,
Amgen
shall have the right to reduce for the entire Territory the
applicable royalty rate provided for under Section 5.1(b) to
[*]
percent ([*]%) of the applicable Net Sales in clause (i), [*]
percent ([*]%) of the applicable Net Sales in clause (ii), and
[*]
percent ([*]%) of the applicable Net Sales in clause (iii).
(d)
Additionally,
during the continuance of a black box warning in the
US or a "Dear Doctor" letter in the US, the minimum royalty
rates
provided for under Section 5.3 due to Memory for royalties
payable
under Section 5.1(b) in any given Calendar Year may be further
reduced by Amgen to n
