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ARTICLE I DEFINITIONS				1
	Section 1.1		“Action”	1
	Section 1.2		“Affiliate”	1
	Section 1.3		“Alnylam Collaboration IP”	2
	Section 1.4		“Alnylam In-License”	2
	Section 1.5		“Alnylam Know-How”	2
	Section 1.6		“Alnylam Patent Rights”	2
	Section 1.7		“Alnylam Sequence Specific Patent Rights”	2
	Section 1.8		“Alnylam Sequence Specific Know-How”	2
	Section 1.9		“Alnylam Technology”	3
	Section 1.10		“API Bulk Drug Substance”	3
	Section 1.11		“Asia”	3
	Section 1.12		“Asian Partner”	3
	Section 1.13		“Business Day”	3
	Section 1.14		“Calendar Quarter”	3
	Section 1.15		“Calendar Year”	3
	Section 1.16		“Clinical Investigation Laws”	3
	Section 1.17		“Clinical Regulatory Filings”	3
	Section 1.18		“Clinical Study”	4
	Section 1.19		“CMC”	4
	Section 1.20		“Collaboration”	4
	Section 1.21		“Commercialization” or “Commercialize”	4
	Section 1.22		“Commercialization Costs”	4
	Section 1.23		“Confidential Information”	5
	Section 1.24		“Control” or “Controlled”	5
	Section 1.25		“Cost of Goods Sold”	5
	Section 1.26		“Cover,” “Covering” or “Covered”	6
	Section 1.27		“CPI”	6
	Section 1.28		“Cubist Collaboration IP”	6
	Section 1.29		“Cubist In-License”	6
	Section 1.30		“Cubist Know-How”	6
	Section 1.31		“Cubist Patent Rights”	6
	Section 1.32		“Cubist Technology”	6
	Section 1.33		“Development” or “Develop”	7
	Section 1.34		“Development Costs”	7
	Section 1.35		“Development Plan”	8
	Section 1.36		“Diligent Efforts”	8
	Section 1.37		“Directly Competitive Product”	8
	Section 1.38		“Distribution Costs”	8
	Section 1.39		“DMF”	8
	Section 1.40		“Drug Regulation Laws”	8
	Section 1.41		“EMEA”	9

 

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	Section 1.42		“European Union” or “EU”	9
	Section 1.43		“Executive Officers”	9
	Section 1.44		“Existing Alnylam In-Licenses”	9
	Section 1.45		“FDA”	9
	Section 1.46		“Field”	9
	Section 1.47		“Finished Product”	9
	Section 1.48		“First Commercial Sale”	9
	Section 1.49		“First Opt-Out Milestone”	9
	Section 1.50		“FTE”	9
	Section 1.51		“FTE Cost”	10
	Section 1.52		“GAAP”	10
	Section 1.53		“Generic Competition”	10
	Section 1.54		“Generic Product”	10
	Section 1.55		“Good Clinical Practice”	10
	Section 1.56		“Good Laboratory Practice”	10
	Section 1.57		“Governmental Authority”	10
	Section 1.58		“Government Health Care Programs”	11
	Section 1.59		“Government Order”	11
	Section 1.60		“Health Care Laws”	11
	Section 1.61		“ICH”	11
	Section 1.62		“IND”	11
	Section 1.63		“Investigator Sponsored Clinical Study”	11
	Section 1.64		“Joint Collaboration IP”	11
	Section 1.65		“Know-How”	12
	Section 1.66		“Knowledge of Alnylam”	12
	Section 1.67		“Kyowa Agreement”	12
	Section 1.68		“Kyowa Hakko”	12
	Section 1.69		“Law”	12
	Section 1.70		“Legal Exclusivity Period”	12
	Section 1.71		“Licensed Product”	12
	Section 1.72		“Major EU Country”	12
	Section 1.73		“Manufacturing” or “Manufacture”	12
	Section 1.74		N.A. Pre-Tax Profit or Loss”	12
	Section 1.75		“Necessary Third Party IP”	13
	Section 1.76		“Net Sales”	13
	Section 1.77		“New Drug Application” or “NDA”	15
	Section 1.78		“North America” or “N.A.”	15
	Section 1.79		“Parties”	15
	Section 1.80		“Party”	15
	Section 1.81		“Patent-Based Exclusivity Period”	15
	Section 1.82		“Patent Rights”	15
	Section 1.83		“Person”	15

 

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	Section 1.84		“Phase I Clinical Study”	15
	Section 1.85		“Phase II Clinical Study”	15
	Section 1.86		“Phase III Clinical Study”	16
	Section 1.87		“Pivotal Clinical Study”	16
	Section 1.88		“Post-Approval Study”	16
	Section 1.89		“Private Health Care Plans”	16
	Section 1.90		“Post Approval Medical and Regulatory Activities”	16
	Section 1.91		“Product Liability Costs”	16
	Section 1.92		“Profit-Share Territory”	16
	Section 1.93		“Product Trademark”	16
	Section 1.94		“Regulatory Approval”	16
	Section 1.95		“Regulatory Authority”	17
	Section 1.96		“Regulatory-Based Exclusivity Period”	17
	Section 1.97		“Related Party”	17
	Section 1.98		“RNAi Product”	17
	Section 1.99		“Royalty Territory”	17
	Section 1.100		“RSV”	17
	Section 1.101		“RSV01 Product”	17
	Section 1.102		“RSV02 Product”	17
	Section 1.103		“Safety Data”	17
	Section 1.104		“Sales Representative”	18
	Section 1.105		“Second Opt-Out Milestone”	18
	Section 1.106		“Sublicensee”	18
	Section 1.107		“Sublicense Income”	18
	Section 1.108		“Territory”	19
	Section 1.109		“Third Party”	19
	Section 1.110		“United States” or “U.S.”	19
	Section 1.111		“Valid Claim”	19
	Section 1.112		Additional Definitions	19
ARTICLE II MANAGEMENT OF COLLABORATIVE ACTIVITIES				20
	Section 2.1		Joint Steering Committee	20
	Section 2.2		Appointment of Subcommittees, Project Teams and Collaboration Managers	22
	Section 2.3		Reports and Minutes	22
	Section 2.4		Decision-Making	23
	Section 2.5		Deadlocks	23
	Section 2.6		Dissolution of JSC	24
	Section 2.7		Collaboration Guidelines	24

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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ARTICLE III LICENSE GRANTS				25
	Section 3.1		Alnylam Grants	25
	Section 3.2		Cubist Grants	28
	Section 3.3		Sublicensing Terms; Liability	29
	Section 3.4		Joint Collaboration IP	29
	Section 3.5		Section 365(n) of the Bankruptcy Code	29
	Section 3.6		Retained Rights	30
ARTICLE IV  DEVELOPMENT OF LICENSED PRODUCTS; ADDITIONAL RSV PRODUCTS; OPT-OUT RIGHTS				30
	Section 4.1		Overview	30
	Section 4.2		Development Plan; Amendments; Development Responsibilities	30
	Section 4.3		Development Efforts; Manner of Performance; Records and Reports	31
	Section 4.4		Joint Development Costs	32
	Section 4.5		Reimbursement of Development Costs	33
	Section 4.6		Additional RSV Products	33
	Section 4.7		Alnylam Opt-Out Option	33
	Section 4.8		Technology Transfer and Exchange of Know-How	40
ARTICLE V COMMERCIALIZATION AND CERTAIN OTHER RESPONSIBILITIES				40
	Section 5.1		Diligent Efforts	40
	Section 5.2		Joint Commercialization Team	40
	Section 5.3		Commercialization Plan	41
	Section 5.4		Regulatory Filings	43
	Section 5.5		Advertising and Promotional Materials	43
	Section 5.6		Sales and Distribution	43
	Section 5.7		Reporting Obligations	44
	Section 5.8		Other Responsibilities	44
	Section 5.9		Adverse Event and Licensed Product Complaint Reporting Procedures; Notice of Information Affecting Marketability of Licensed Product	45
	Section 5.10		Recalls, Market Withdrawals or Corrective Actions	46
	Section 5.11		Medical Inquiries	46
	Section 5.12		Export Monitoring	46
ARTICLE VI MANUFACTURE AND SUPPLY				46
	Section 6.1		Supply Obligations; Alnylam’s Existing Manufacturing Arrangements	46

 

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	Section 6.2		Transition of Manufacturing Responsibilities to Cubist	48
	Section 6.3		Supply Agreement	49
	Section 6.4		Technology Transfer	49
ARTICLE VII FINANCIAL PROVISIONS				49
	Section 7.1		Upfront Fee	49
	Section 7.2		Development Milestones	49
	Section 7.3		Sales Milestones	50
	Section 7.4		N.A. Pre-Tax Profit or Loss	51
	Section 7.5		Licensed Product Royalties in the Royalty Territory	52
	Section 7.6		Adjustments for Necessary Third Party IP Payments in the Royalty Territory	53
	Section 7.7		Necessary Third Party IP in the Profit-Share Territory	54
	Section 7.8		Royalty Adjustments for Generic Products	54
	Section 7.9		Minimum Payments in the Royalty Territory	54
	Section 7.10		Royalty Reports; Payments	55
	Section 7.11		Payments from Alnylam to Cubist; Reports	55
	Section 7.12		Audits	55
	Section 7.13		Tax Matters	56
	Section 7.14		United States Dollars	57
	Section 7.15		Currency Exchange	57
	Section 7.16		Blocked Payments	57
	Section 7.17		Late Payments	57
	Section 7.18		No Overlapping Royalties	57
	Section 7.19		Reporting	57
	Section 7.20		Resolution of Disputes	58
ARTICLE VIII INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS				58
	Section 8.1		Inventorship	58
	Section 8.2		Ownership	58
	Section 8.3		Prosecution and Maintenance of Patent Rights	58
	Section 8.4		Third Party Infringement	60
	Section 8.5		Claimed Infringement; Third Party Challenges to Patent Rights	62
	Section 8.6		Third Party Technology	63
	Section 8.7		Patent Marking	64
	Section 8.8		Trademarks	64
ARTICLE IX CONFIDENTIALITY AND PUBLICITY				65
	Section 9.1		Confidential Information	65

 

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	Section 9.2		Employee, Consultant and Advisor Obligations and Disclosure to Regulatory Authorities	66
	Section 9.3		Certain Disclosures by Alnylam or Cubist	67
	Section 9.4		Publicity	67
	Section 9.5		Publications	67
	Section 9.6		Asian Partner	68
	Section 9.7		Coordination with Alnylam’s Asian Partner	68
ARTICLE X REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS; INDEMNIFICATION				68
	Section 10.1		Exclusivity Covenant	68
	Section 10.2		Representations of Authority	68
	Section 10.3		Consents	69
	Section 10.4		No Conflict	69
	Section 10.5		Enforceability	69
	Section 10.6		Sales Representatives	69
	Section 10.7		Additional Representations and Warranties of Alnylam	70
	Section 10.8		Cubist Representation Regarding Cubist In-Licenses	72
	Section 10.9		No Warranties	72
	Section 10.10		No Debarment	72
	Section 10.11		Indemnification	72
	Section 10.12		Limitation of Liability	74
	Section 10.13		Insurance	74
ARTICLE XI TERM AND TERMINATION				75
	Section 11.1		Term	75
	Section 11.2		Termination Rights	75
	Section 11.3		Effect of Termination	76
	Section 11.4		Payments to Cubist	78
	Section 11.5		Effect of Expiration or Termination; Survival	83
ARTICLE XII FINAL DECISION-MAKING; DISPUTE RESOLUTION				84
	Section 12.1		Disputes	84
	Section 12.2		Arbitration	84
ARTICLE XIII MISCELLANEOUS				85
	Section 13.1		Choice of Law	85
	Section 13.2		Notices	85
	Section 13.3		Severability	86

 

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	Section 13.4		Captions	86
	Section 13.5		Integration	86
	Section 13.6		Independent Contractors; No Agency	86
	Section 13.7		Submission to Jurisdiction	87
	Section 13.8		Assignment; Successors	87
	Section 13.9		No Consequential or Punitive Damages	88
	Section 13.10		Performance by Affiliates	88
	Section 13.11		Force Majeure	88
	Section 13.12		Construction	88
	Section 13.13		Execution in Counterparts; Facsimile Signatures	89
	EXHIBITS
	EXHIBIT A		Alnylam Patent Rights
	EXHIBIT B		ALN-RSV01
	EXHIBIT C		Existing Alnylam In-Licenses
	EXHIBIT D		Existing Alnylam Out-Licenses That Include Rights or Options to Licensed Products
	EXHIBIT E		Development Plan
	EXHIBIT F		Material Agreements Related to Licensed Products in the Territory
	EXHIBIT G		Supply Agreement Term Sheet
	EXHIBIT H		Milestone Payments Under the Existing Alnylam In-Licenses
	EXHIBIT I		Press Release
	Schedule 10.7		Disclosure Schedule

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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LICENSE AND COLLABORATION AGREEMENT

 

This License and Collaboration Agreement (this “ Agreement ”) is entered into as of the 9 th  day of January, 2009 (the “ Effective Date ”), by and between Alnylam Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 300 Third Street, Cambridge, Massachusetts 02142 (“ Alnylam ”), and Cubist Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 65 Hayden Avenue, Lexington, Massachusetts 02421 (“ Cubist ”).

 

INTRODUCTION

 

WHEREAS, Alnylam owns or controls certain fundamental intellectual properties relating to RNA interference, and is developing therapeutic products targeting respiratory syncytial virus that function through RNA interference, including the proprietary Alnylam product known as ALN-RSV01;

 

WHEREAS, Cubist desires to develop and commercialize such therapeutic RNA interference products for the treatment of respiratory infections in humans caused by RSV, throughout the world, excluding Japan and certain other countries in Asia;

 

WHEREAS, Alnylam and Cubist believe that a license and collaboration for such purpose on the terms and conditions of this Agreement would be desirable.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings set forth below:

 

Section 1.1  “ Action ”.  Action means any threatened, pending or completed claim, action, cause of action or suit (whether in contract or tort or otherwise), litigation (whether at law or in equity, whether civil or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding of, to, from, by or before, or threatened to be brought to, from, by or before, any Governmental Authority, including interferences, oppositions and patent invalidity suits as described in Section 8.5.

 

Section 1.2  “ Affiliate ”.  Affiliate means with respect to any Party, any Person controlling, controlled by or under common control with such Party.  For purposes of this Section 1.2, “control” means (a) in the case of a Person that is a corporate entity, direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote for the election of directors of such Person, and (b) in the case of a Person that is an entity, but is

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

 

not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

Section 1.3  “ Alnylam Collaboration IP ”.  Alnylam Collaboration IP means (a) any improvement, discovery or Know-How, patentable or otherwise, first identified, discovered or developed solely by employees of Alnylam or its Affiliates or other persons not employed by Cubist or any of its Affiliates acting on behalf of Alnylam or any of its Affiliates in the conduct of the Collaboration, and (b) any Patent Rights that claim or cover such improvements, discoveries or Know-How and are owned or otherwise Controlled by Alnylam or, subject to Section 13.8, any of its Affiliates, at any time during the Term.  Alnylam Collaboration IP excludes Alnylam’s interest in Joint Collaboration IP.

 

Section 1.4  “ Alnylam In-License ”.   Alnylam In-License means (a) the Existing Alnylam In-Licenses, and (b) any other agreement between Alnylam and a Third Party, executed during the Term, pursuant to which Alnylam has rights and obligations with respect to, or which otherwise Cover, a Licensed Product and where (i) the intellectual property that is the subject of such agreement is included within Alnylam Technology, and (ii) such Alnylam Technology is necessary or reasonably useful to Develop, Commercialize or Manufacture Licensed Product in the Field.

 

Section 1.5  “ Alnylam Know-How ”.   Alnylam Know-How means Know-How owned or otherwise Controlled by Alnylam or any of its Affiliates as of the Effective Date or as to which Alnylam or, subject to Section 13.8, any of its Affiliates, obtains Control during the Term that is necessary or reasonably useful for Cubist and its Related Parties to perform their obligations or exploit their rights under this Agreement with respect to Licensed Product, including their rights to Develop, Manufacture, or Commercialize Licensed Product (other than Alnylam’s rights in Joint Collaboration IP and Alnylam Collaboration IP).

 

Section 1.6  “ Alnylam Patent Rights ”.   Alnylam Patent Rights means those Patent Rights owned or otherwise Controlled by Alnylam or any of its Affiliates as of the Effective Date or as to which Alnylam or, subject to Section 13.8, any of its Affiliates, obtains Control during the Term that are necessary or reasonably useful for Cubist and its Related Parties to perform their obligations or exploit their rights under this Agreement with respect to Licensed Product, including their rights to Develop, Manufacture, or Commercialize Licensed Product (other than Alnylam’s rights in Joint Collaboration IP and Alnylam Collaboration IP), including the Patent Rights set forth in Exhibit A .

 

Section 1.7  “ Alnylam Sequence Specific Patent Rights ”.  Alnylam Sequence Specific Patent Rights means claim(s) contained in Patent Rights comprising Alnylam Technology that are specifically directed to particular sequences of Licensed Products in the Territory.

 

Section 1.8  “Alnylam Sequence Specific Know-How ”.  Alnylam Sequence Specific Know-How means Know-How that is specific to RSV01 Product or to any other particular

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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sequence of Licensed Product, including composition information and any preclinical and clinical test data related to any of the foregoing.

 

Section 1.9  “ Alnylam Technology ”.   Alnylam Technology means, collectively, Alnylam Know-How, Alnylam Patent Rights, Alnylam Collaboration IP and Alnylam’s interest in Joint Collaboration IP, and any Third Party Technology that is included in the definition of Alnylam Technology after the Effective Date in accordance with Section 8.6.

 

Section 1.10  “ API Bulk Drug Substance ”.  API Bulk Drug Substance means Licensed Product in bulk form manufactured for use as an active pharmaceutical ingredient.

 

Section 1.11  “ Asia ”.  Asia means Brunei, Cambodia, China (including Hong Kong and Macao, but excluding Taiwan), Indonesia, Japan, Laos, Malaysia, Myanmar, North Korea, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

 

Section 1.12  “ Asian Partner ”.  Asian Partner means Kyowa Hakko or any other Third Party to whom Alnylam grants licenses under the Alnylam Technology to Develop or Commercialize Licensed Products for use in the Field in Asia, but shall not include a Third Party engaged by Alnylam or any of its Affiliates merely to perform specific discreet tasks as contract services in connection with Alnylam’s Development or Commercialization of Licensed Product.

 

Section 1.13  “ Business Day ”.  Business Day means a weekday on which banking institutions in Boston, Massachusetts are open for business.  For purposes of clarity, a Business Day shall not include any Saturday or Sunday or federal or Commonwealth of Massachusetts holiday.

 

Section 1.14  “ Calendar Quarter ”.  Calendar Quarter means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31; provided that the first Calendar Quarter of the Term shall begin on the Effective Date and end on March 31, 2009, and the last Calendar Quarter of the Term shall end on the last day of the Term.

 

Section 1.15  “ Calendar Year ”.  Calendar Year means each successive period of twelve (12) months commencing on January 1 and ending on December 31; provided that the first Calendar Year of the Term shall begin on the Effective Date and end on December 31, 2009 and the last Calendar Year of the Term shall end on the last day of the Term.

 

Section 1.16  “ Clinical Investigation Laws ”.  Clinical Investigation Laws means Laws relating to human clinical investigations, including 21 C.F.R. Parts 50, 54, 56 and 312, and then-current Good Clinical Practice, each as in effect and as amended from time to time.

 

Section 1.17  “ Clinical Regulatory Filings ”.  Clinical Regulatory Filings means data, filings or materials relating to Licensed Product submitted to the applicable Regulatory Authorities, including (a) data derived from Clinical Studies, (b) data derived from non-clinical studies, and (c) data, filings or materials relating to or contained in the CMC or a DMF.

 

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Section 1.18  “ Clinical Study ”.  Clinical Study means a Phase I Clinical Study, Phase II Clinical Study, Phase III Clinical Study or Pivotal Clinical Study, as applicable, but excluding any Post-Approval Studies.

 

Section 1.19  “ CMC ”.  CMC means the chemistry, manufacturing and controls section of an IND or NDA in the United States, or the equivalent section of regulatory filings made outside the United States.

 

Section 1.20  “ Collaboration ”.   Collaboration means the collaboration of the Parties in the activities governed by this Agreement, including such activities relating to the Development and Regulatory Approval of Licensed Product.

 

Section 1.21  “ Commercialization ” or “ Commercialize ”.  Commercialization or Commercialize means (a) pre-launch, launch or post launch activities directed to obtaining pricing and reimbursement approvals, marketing, promoting, distributing, importing or selling a product, and (b) solely for definitional purposes in implementing the terms of this Agreement, all Post-Approval Medical and Regulatory Activities.  Commercialization includes strategic marketing, market research, sales force recruitment, training and meetings, sales force detailing, sample drops, activities related to managed care accounts and other similar accounts and government programs, activities related to reimbursement, advertising, market and product support, customer support, educational initiatives, product distribution, invoicing, and sales activities.  Commercialization shall not include any activities related to Manufacturing.

 

Section 1.22  “ Commercialization Costs ”.  Commercialization Costs means, with respect to Licensed Product in the Field in the Profit-Share Territory, whether or not occurring during Development or Commercialization (a) the costs and expenses incurred by a Party or any of its Related Parties in the Commercialization of Licensed Product, including the costs of advertising, detailing, sales, marketing and promotion of Licensed Product and medical, customer or regulatory support and a reasonable allocation (subject to the oversight of the JCT) of []* for sales force management and support, (b) infrastructure required to support and maintain patient/safety surveillance as required by applicable Regulatory Authorities directly attributable to Licensed Product, including the costs of maintaining the global safety database contemplated under Section 5.9, (c) reasonable out-of-pocket []* costs and expenses incurred by a Party or any of its Related Parties with respect to []*, (d) reasonable out-of-pocket []* incurred by a Party or any of its Related Parties regarding []* under Section 8.4 to the extent such enforcement action is approved by the JSC and reasonable out-of-pocket costs and expenses incurred by a Party or any of its Related Parties and included in Commercialization Costs pursuant to Section []*, in each case with respect to []* in the Field in the Profit-Share Territory, (e) the reasonable out-of-pocket costs and expenses of maintaining Regulatory Approval for Licensed Product, (f) except for those obligations to be paid fully by Alnylam under Section 7.7, []* to the extent reasonably allocable to the Profit-Share Territory, (g) the costs of product recalls, withdrawals, insurance, []* and returned product destruction, and (h) the cost of []*.  In calculated Commercialization Costs, the costs of internal personnel engaged in Commercialization efforts shall be based on the FTE Cost applicable to such efforts, unless another basis is otherwise agreed by the Parties in

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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writing.  For sake of clarity, the FTE Cost of a sales representative does not include []* based on sales of Licensed Product in the Profit-Share Territory, which such []* shall be separately included as a Commercialization Costs budget item.  For purposes of clarity, costs and expenses included in the calculation of N.A. Pre-Tax Profit or Loss, and the deductions specified in the definition of Net Sales or in Development Costs, shall not be double-counted, and shall be determined from the books and records of the applicable Party and its Affiliates maintained in accordance with GAAP, consistently applied.

 

Section 1.23  “ Confidential Information ”.  Confidential Information means any and all information and data, including information regarding or included within Alnylam Technology and Cubist Technology and all other scientific, pre-clinical, clinical, regulatory, manufacturing, marketing, financial or commercial information or data, whether communicated in writing or orally or by any other method, which is provided by one Party to the other Party in connection with this Agreement.  Alnylam Technology and Alnylam Collaboration IP are Confidential Information of Alnylam. Cubist Technology and Cubist Collaboration IP are Confidential Information of Cubist.  Joint Collaboration IP is the Confidential Information of both Parties.

 

Section 1.24  “ Control ” or “ Controlled ”.  Control or Controlled means, with respect to any intellectual property right or other intangible property, the possession (whether by license or ownership, or by control over an Affiliate having possession by license or ownership) by a Party of the ability to grant to the other Party access or a license or sublicense as provided herein without violating the terms of any agreement with any Third Party; provided that with respect to Third Party Technology obtained by a Party during the Term, Control shall be deemed not to exist unless such Third Party Technology is added to the Alnylam Technology or the Cubist Technology (as the case may be) in accordance with Section 8.6.

 

Section 1.25  “ Cost of Goods Sold ”.  Cost of Goods Sold means, with respect to API Bulk Drug Substance, Finished Product or placebo, as the case may be, Manufactured under this Agreement, the reasonable internal and external costs of a Party or any of its Related Parties incurred in Manufacturing such API Bulk Drug Substance, Finished Product or placebo, including:  (a) to the extent that such API Bulk Drug Substance, Finished Product or placebo is Manufactured by a Party or any of its Related Parties, the Cost of Goods Sold of such API Bulk Drug Substance, Finished Product or placebo, consisting of direct material and direct labor costs, []*, all determined in accordance with the books and records of the applicable Party or its Related Party(ies) maintained in accordance with United States GAAP, consistently applied, and (b) to the extent that such API Bulk Drug Substance, Finished Product or placebo is Manufactured by a Third Party manufacturer, the actual fees paid by a Party or any of its Related Parties to the Third Party for the Manufacture, supply, packaging and labeling of such API Bulk Drug Substance, Finished Product or placebo []*, determined in accordance with the books and records of the applicable Party or its Related Party(ies) maintained in accordance with United States GAAP, consistently applied.  Cost of Goods Sold shall not include []*, except with respect to Licensed Product Manufactured by Cubist for Alnylam to supply to its Asian Partner.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.26  “ Cover ,” “ Covering ” or “ Covered ”.  Cover, Covering or Covered means that, with respect to Licensed Product, in the absence of a license granted under a Valid Claim, the making, use, offering for sale, sale, or importation of Licensed Product would infringe such Valid Claim or, with respect to a pending Valid Claim included in the Patent Rights under which such license is granted, the making, use, offering for sale, sale, or importation of Licensed Product would infringe such Valid Claim if such patent application were to issue as a patent.

 

Section 1.27  “ CPI ”.  CPI means the Consumer Price Index — Urban Wage Earners and Clerical Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United States Department of Labor, Bureau of Labor Statistics (or its successor equivalent index) in the United States.

 

Section 1.28  “ Cubist Collaboration IP ”.  Cubist Collaboration IP means (a) any improvement, discovery or Know-How, patentable or otherwise, first identified, discovered or developed solely by employees of Cubist or its Affiliates or other persons not employed by Alnylam or any of its Affiliates acting on behalf of Cubist or any of its Affiliates, in the conduct of the Collaboration, and (b) any Patent Rights which claim or cover such improvements, discoveries or Know-How and are owned or otherwise Controlled by Cubist or, subject to Section 13.8, any of its Affiliates, at any time during the Term.  Cubist Collaboration IP excludes Cubist’s interest in Joint Collaboration IP.

 

Section 1.29  “ Cubist In-License ”.  Cubist In-License means any agreement between Cubist and a Third Party executed during the Term pursuant to which Cubist has rights and obligations with respect to, or which otherwise Cover, a Licensed Product and where (a) the intellectual property that is the subject of such agreement is included within Cubist Technology, and (b) such Cubist Technology is necessary or reasonably useful to Develop, Commercialize or Manufacture Licensed Product in the Field.

 

Section 1.30  “ Cubist Know-How ”.   Cubist Know-How means Know-How Controlled by Cubist or, subject to Section 13.8, any of its Affiliates, during the Term that is necessary or reasonably useful for Alnylam and its Affiliates to perform their obligations or exploit their rights under this Agreement (other than Cubist’s rights in Joint Collaboration IP and Cubist Collaboration IP).

 

Section 1.31  “ Cubist Patent Rights ”.   Cubist Patent Rights means those Patent Rights that (a) claim (i) Cubist Know-How, or (ii) the Development, Manufacture or Commercialization of   Licensed Product, and that are necessary or reasonably useful to Develop, Manufacture or Commercialize Licensed Product in the Field, and (b) are Controlled by Cubist or, subject to Section 13.8, any of its Affiliates, at any time during the Term.  Cubist Patent Rights shall not include Patent Rights included in Cubist Collaboration IP or Cubist’s interest in Joint Collaboration IP.

 

Section 1.32  “ Cubist Technology ”.  Cubist Technology means, collectively, Cubist Know-How and Cubist Patent Rights, Cubist Collaboration IP and Cubist’s interest in Joint

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Collaboration IP, and any Third Party Technology that is included in the definition of Cubist Technology after the Effective Date in accordance with Section 8.6.

 

Section 1.33  “ Development ” or “ Develop ”.  Development or Develop means non-clinical and clinical research and drug development activities, including research activities directed at back-up compounds, toxicology, pharmacology and other discovery efforts, test method development and stability testing, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical studies (including pre- and post-approval studies and investigator sponsored clinical studies), regulatory affairs, and regulatory approval and clinical study regulatory activities (excluding regulatory activities directed to obtaining pricing and reimbursement approvals).

 

Section 1.34  “ Development Costs ”.  Development Costs means costs incurred by the Parties or any of their Affiliates in Developing Licensed Product in the Field for the Profit-Share Territory, in accordance with this Agreement and determined from the books and records of the applicable Party and its Affiliates maintained in accordance with GAAP, consistently applied, whether incurred before or after Regulatory Approval, provided such activities and costs are consistent with the Development Plan and related budget, including:

 

(a)           all out-of-pocket costs and expenses incurred;

 

(b)           the costs of internal scientific, medical or technical personnel engaged in such efforts, which costs shall be determined based on the FTE Cost, unless another basis is otherwise agreed by the Parties in writing;

 

(c)           the costs and expenses for pre-clinical and clinical supplies needed for such efforts as set forth in the Development Plan, consisting of (i) []* for clinical supplies of Licensed Product and placebo; (ii) cost of comparator or combination drugs or devices; and (iii) costs and expenses of disposal of clinical samples;

 

(d)           fees incurred in connection with filings for or relating to Regulatory Approvals or pricing or reimbursement approval in the Field in the Profit-Share Territory;

 

(e)           costs and expenses incurred in connection with (i) []*; and (v) internal and Third Party costs and expenses incurred in connection with (A) []*; and

 

(f)            any other costs incurred that are explicitly included in the budgets included in the Development Plan.

 

For purposes of clarity, it is understood that costs and expenses included in the calculation of N.A. Pre-Tax Profit or Loss, and the deductions specified in the definition of Net Sales or in Development Costs, shall not be double-counted.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.35  “ Development Plan ”.  Development Plan means the written workplan, timetable and budget for the Parties’ Licensed Product Development efforts in the Profit-Share Territory, agreed upon by the Parties as of the Effective Date, as amended from time to time in accordance with this Agreement.  The initial Development Plan is attached as Exhibit E .

 

Section 1.36  “ Diligent Efforts ”.  Diligent Efforts means, with respect to each Party’s obligations relating to Licensed Product, the carrying out of such obligations in a diligent and sustained manner using efforts substantially similar to the efforts a biopharmaceutical company of comparable size and resources would typically devote to a product of similar market potential, profit potential, similar stage in development or commercialization, or strategic value resulting from its own research efforts, based on conditions then prevailing, and taking into account other relevant factors, including technical, medical, clinical efficacy, safety, manufacturing, and delivery considerations, product labeling or anticipated labeling, the patent and other proprietary position of the product, the regulatory environment and competitive market conditions.  Diligent Efforts with respect to Alnylam’s obligations, as specified in Sections 3.3, 4.3(b), 5.9, 6.1(b) and 9.6  related to the actions of its Related Parties or the actions of any other Third Party with whom Alnylam has entered into an agreement related to Licensed Product shall mean that (a) to the extent such obligation is not currently included in its agreement with such Related Party or other Third Party, Alnylam shall []*, (b) in entering into any new agreement with a Related Party or such other Third Party, Alnylam shall []*, and (c) in each case, Alnylam shall take reasonable action to enforce such obligations.

 

Section 1.37  “ Directly Competitive Product ”.  Directly Competitive Product means any therapeutic or prophylactic product that specifically targets RSV.  For avoidance of doubt, Directly Competitive Product as to a Party shall not include a product with []*.

 

Section 1.38  “ Distribution Costs ”.  Distribution Costs means the costs, excluding []*, incurred by a Party or any of its Related Parties or for its account, specifically identifiable to the distribution of a Licensed Product to a Third Party in the Field intended for commercial sale in the Profit-Share Territory, including (a) handling, transportation, customs clearance, containers, freight, duties and insurance (including shipments from Third Party logistics service providers to wholesalers, and excluding such costs, if any, treated as a deduction in the definition of Net Sales), (b) customer services including order entry, billing and adjustments, inquiry and credit and collection, and (c) direct cost of facilities utilized for the storage and distribution of Licensed Product, determined from the books and records of the applicable Party and its Affiliates maintained in accordance with GAAP, consistently applied.

 

Section 1.39  “ DMF ”.  DMF means a Drug Master File filed with the FDA, or an equivalent filing with any other Regulatory Authority.

 

Section 1.40  “ Drug Regulation Laws ”.  Drug Regulation Laws means Laws regulating drugs and pharmaceutical products, including the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. , the Prescription Drug Marketing Act of 1987, the Federal Controlled Substances Act, 21 U.S.C. § 801 et seq ., and policies issued by the FDA, and similar

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Laws of the EMEA or other countries or jurisdictions in the Territory, each as in effect and as amended from time to time.

 

Section 1.41  “ EMEA ”.  EMEA means the European Medicines Agency or any successor agency thereto.

 

Section 1.42  “ European Union ” or “ EU ”.  European Union or EU means the countries of the European Union, as it is constituted as of the Effective Date and as it may be expanded from time to time, and Switzerland, Norway and Iceland.

 

Section 1.43  “ Executive Officers ”.  Executive Officers means the Chief Executive Officer of Alnylam (or a senior executive officer of Alnylam designated by Alnylam’s Chief Executive Officer) and the Chief Executive Officer of Cubist (or a senior executive officer of Cubist designated by Cubist’s Chief Executive Officer).

 

Section 1.44  “ Existing Alnylam In-Licenses ”.  Existing Alnylam In-Licenses means the Third Party agreements set forth on Exhibit C .

 

Section 1.45  “ FDA ”.  FDA means the United States Food and Drug Administration or any successor agency thereto.

 

Section 1.46  “ Field ”.  Field means the treatment or prophylaxis of diseases in humans.

 

Section 1.47  “ Finished Product ”.  Finished Product means the finished product formulation of Licensed Product, containing API Bulk Drug Substance, filled into unit packages for final labeling and packaging, and as finally labeled and packaged in a form ready for administration.

 

Section 1.48  “ First Commercial Sale ”.  First Commercial Sale means, with respect to Licensed Product in a country, the first commercial sale of Licensed Product in such country.  Sales for clinical study purposes or compassionate, named patient or similar use shall not constitute a First Commercial Sale.

 

Section 1.49  “ First Opt-Out Milestone ”.  First Opt-Out Milestone means the earlier of: (a) each of the following conditions having been met:  (i) []*, in each case with respect to Licensed Product in the Field and with respect to the Profit-Share Territory; or (b) []* with respect to Licensed Product in the Field and with respect to the Profit-Share Territory.  For purposes of clause (a)(iii) above, the JSC shall make the  determination whether to continue with plans for []*.

 

Section 1.50  “ FTE ”.  FTE means the number of full-time-equivalent person-years (each consisting of a total of []* hours) of Development, Manufacturing or Commercialization  work by each Party’s personnel on or directly related to the applicable activity conducted hereunder.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.51  “ FTE Cost ”.  FTE Cost means the amount obtained by multiplying (a) the number of FTEs by (b) either (i) $[]* with respect to FTEs engaged in Development activities or engaged in any scientific aspects of Commercialization including drug safety analysis, or (ii) with respect to FTEs engaged in other Commercialization activities, such rate as shall be determined by the JCT in connection with preparation of the first Commercialization Plan, which such amount shall be based on []*, consistent with GAAP, in each case of clauses (i) or (ii) []* annually by []*, in the case of the FTE Cost under clause (i), and over the []*, in the case of the FTE Cost under clause (ii) ( i.e. , the first such []* with respect to the FTE Cost for FTEs engaged in Development would occur on []*).

 

Section 1.52  “ GAAP ”.  GAAP means United States generally accepted accounting principles applied on a consistent basis, or any successor accounting principles generally accepted for public companies in the United States (such as International Financial Reporting Standards (“ IFRS ”)).  Unless otherwise defined or stated, financial terms shall be calculated by the accrual method under GAAP.

 

Section 1.53  “ Generic Competition ”.  Generic Competition means, with respect to a Licensed Product in any country in the Royalty Territory in a given Calendar Quarter, that, during such Calendar Quarter, one or more Generic Products shall be commercially available in such country and such Generic Products shall have a []* (calculated on the basis of []*) of []* percent ([]* of Licensed Products and Generic Products (based on []*, or if such data is not available, such other reliable data source as reasonably determined by Cubist and agreed to by Alnylam (such agreement not to be unreasonably withheld or delayed)); provided , however , that, if []* data (or data from another data source selected in accordance with the foregoing) is unavailable to determine the percentage []* for a country in the Royalty Territory where a Generic Product is being sold, the average Generic Competition of the countries in the EU for which such data is available will be deemed to be the Generic Competition for such country in which such data is not available.

 

Section 1.54  “ Generic Product ”.  Generic Product means any pharmaceutical product sold by a Third Party not authorized by Cubist or its Related Parties that is (a) []*.

 

Section 1.55  “ Good Clinical Practice ”.  Good Clinical Practice means the current good clinical practice applicable to the clinical Development of Licensed Product under applicable Law, to the extent such standards are not less stringent than the U.S. current good clinical practice, including the ICH guidelines.

 

Section 1.56  “ Good Laboratory Practice ”.  Good Laboratory Practice means the current good laboratory practice applicable to the Development of Licensed Product under applicable Law, to the extent such standards are not less stringent than the U.S. current good laboratory practice, including 21 C.F.R. Part 58.

 

Section 1.57  “ Governmental Authority ”.  Governmental Authority means any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any governmental arbitrator or arbitral body.

 

Section 1.58  “ Government Health Care Programs ”.  Government Health Care Programs means the Medicare program (Title XVIII of the Social Security Act), the Medicaid program (Title XIX of the Social Security Act), TRICARE, the Federal Employee Health Benefits Program, and other foreign, federal, state and local governmental health care plans and programs.

 

Section 1.59  “ Government Order ”.  Government Order means any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

 

Section 1.60  “ Health Care Laws ”.  Health Care Laws means Laws relating to Government Health Care Programs, Private Health Care Plans, privacy and confidentiality of patient health information and human biological materials, including:  federal and state Laws pertaining to the federal Medicare and Medicaid programs (including the Medicaid rebate program); federal Laws pertaining to the Federal Employees Health Benefit Program, the TRICARE program and other Government Health Care Programs; federal and state Laws applicable to health care fraud and abuse, kickbacks, physician self-referral and false claims (including 42 U.S.C. § 1320a-7a, 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn and the federal Civil False Claims Act, 31 U.S.C. § 3729 et seq. ); the Health Insurance Portability and Accountability Act of 1996; and 45 C.F.R. Part 46, each as in effect and as amended from time to time.

 

Section 1.61  “ ICH ”.  ICH means the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use.

 

Section 1.62  “ IND ”.  IND means an Investigational New Drug Application filed with FDA or a similar application filed with an applicable Regulatory Authority outside of the United States such as a clinical trial application (CTA) or a clinical trial exemption (CTX).

 

Section 1.63  “ Investigator Sponsored Clinical Study ”. Investigator Sponsored Clinical Study means a human clinical study of Licensed Product that is sponsored and conducted by a Third Party under an agreement with a Party pursuant to which such Party provides clinical supplies of Licensed Product or funding for such clinical study.

 

Section 1.64  “ Joint Collaboration IP ”.  Joint Collaboration IP means, collectively, (a) any improvement, discovery or Know-How, patentable or otherwise, first identified, discovered or developed jointly by the Parties or their Affiliates or others acting on behalf of Cubist and Alnylam or their Affiliates in the conduct of the Collaboration, and (b) any Patent Rights which claim or cover such improvements, discoveries or Know-How during the Term.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.65  “ Know-How ”.   Know-How means all biological materials and other tangible materials, inventions, practices, methods, protocols, formulas, knowledge, know-how, trade secrets, processes, procedures, assays, skills, experience, techniques and results of experimentation and testing, including pharmacological, toxicological and pre-clinical and clinical test data and analytical and quality control data, patentable or otherwise.

 

Section 1.66  “ Knowledge of Alnylam ”.  Knowledge of Alnylam means the []*.

 

Section 1.67  “ Kyowa Agreement ”.  Kyowa Agreement means the License and Collaboration Agreement entered into by and between Alnylam and Kyowa Hakko as of June 19, 2008, with respect to the Development and Commercialization of Licensed Product in Asia.

 

Section 1.68  “ Kyowa Hakko ”.  Kyowa Hakko means Kyowa Hakko Kirin Co., Ltd. (formerly known as Kyowa Hakko Kogyo Co., Ltd.), a corporation organized and existing under the laws of Japan.

 

Section 1.69  “ Law ”.  Law means any United States federal, state or local or foreign or multinational law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any Government Order, or any license, franchise, permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.

 

Section 1.70  “ Legal Exclusivity Period ”.  Legal Exclusivity Period means, with respect to a Licensed Product, the period beginning on the earlier of the commencement of the (a) Patent-Based Exclusivity Period or (b) Regulatory-Based Exclusivity Period, and expiring on the later of the expiration of the (i) Patent-Based Exclusivity Period or (ii) Regulatory-Based Exclusivity Period.

 

Section 1.71  “ Licensed Product ”.  Licensed Products means any RNAi Product directed to RSV.

 

Section 1.72  “ Major EU Country ”.  Major EU Country means any of the United Kingdom, France, Germany, Italy or Spain.

 

Section 1.73  “ Manufacturing ” or “ Manufacture ”.  Manufacturing or Manufacture means, as applicable, all activities associated with the production, manufacture, supply, processing, filling, finishing, testing, packaging, labeling, shipping, and storage of Licensed Product or placebo (including API Bulk Drug Substance and Finished Product), including process and formulation development, process validation, stability testing, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and quality control development, testing and release.

 

Section 1.74  “N.A. Pre-Tax Profit or Loss ”.  N.A. Pre-Tax Profit or Loss means Net Sales of Licensed Product in North America by Cubist and its Affiliates (but not Sublicensees) plus Sublicense Income minus (a) Cost of Goods Sold, (b) Distribution Costs and (c)

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Commercialization Costs, in each case determined from the books and records of the applicable Party or its Related Parties, maintained in accordance GAAP, consistently applied.

 

Section 1.75  “ Necessary Third Party IP ”.  Necessary Third Party IP means, on a country-by-country basis, Know-How or Patent Rights that are owned or controlled by a Third Party and Cover or are otherwise necessary or reasonably useful for the Development, Manufacture or Commercialization of Licensed Product in the Field in such country, and are the subject of an Alnylam In-License or a Cubist In-License.

 

Section 1.76  “ Net Sales ”.  Net Sales shall mean the gross amount invoiced by Cubist, and its Affiliates with respect to the Profit-Share Territory and shall mean the gross amount invoiced by Cubist and its Related Parties with respect to the Royalty Territory, in each case on sales or other dispositions (excluding sales or dispositions for use in clinical trials, other scientific testing, or as samples, or as part of compassionate use, patient assistance, named patient or test marketing program or any similar program or study, or other similar cases, in each case for which Cubist or its Related Parties receive no revenue) of Licensed Product to Third Parties, less the following deductions:

 

(a)           Trade, cash and quantity discounts and allowances actually allowed and taken directly with respect to such sales or other dispositions;

 

(b)           Tariffs, duties, excises, sales taxes, value-added or other taxes or governmental charges imposed upon and paid directly with respect to the delivery, sale or use of Licensed Product (excluding national, state or local taxes based on income);

 

(c)           Amounts repaid or credited by reason of rejections, defects, recalls or returns or because of reasonable and customary chargebacks, refunds, rebates (including rebates to managed care organizations, group purchasing organizations, pharmacy benefit management companies, health maintenance organizations, healthcare institutions, other buying groups or providers of healthcare or social and welfare systems, or in connection with patient assistance or similar programs) or retroactive price reductions (including any discounts granted later than at the time of invoicing), government mandated rebates and similar types of rebates (e.g., Pharmaceutical Price Regulation Scheme and Medicaid, or wholesalers, distributors and other trade customers), or cash sales incentives, or deductions for items of a nature or substance similar to that of the foregoing deductions in this clause (c) that may become customary;

 

(d)           []*;

 

(e)           []*;

 

(f)            Postage charges, shipping materials, freight, insurance and other transportation charges incurred in shipping such Licensed Product to Third Parties, included and separately stated in the applicable invoice; and

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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(g)           Any item substantially similar in character or substance to any of the foregoing and not separately invoiced to the customer, to the extent consistent with then prevailing industry standards.

 

Such amounts shall be determined from the books and records of Cubist or its Related Parties, maintained in accordance with GAAP, consistently applied.

 

For purposes of clarity, it is understood that costs and expenses included in the above deductions and in the calculation of N.A. Pre-Tax Profit or Loss or in Development Costs shall not be double-counted.  In the case of pharmacy incentive programs, hospital performance incentive program chargebacks, disease management programs, similar programs or discounts on “bundles” of products, all discounts and the like shall be allocated among products in proportion to the respective list prices of such products or such other reasonable allocation method as the Parties shall agree.

 

The transfer of Licensed Product by Cubist or any of its Affiliates to a Related Party in the Royalty Territory for resale, and the transfer of Licensed Product by Cubist or any of its Affiliates to an Affiliate in the Profit-Share Territory for resale shall not be considered a sale.

 

In the case where a Licensed Product is a Combination Product, royalties with respect to a Combination Product in a country of the Royalty Territory shall be equal to the royalties calculated in accordance with Article VII, multiplied by a fraction whose numerator is the average published sales price in such country for an equivalent dosage of Licensed Product (sold separately as a stand-alone product) contained in a given Combination Product, and whose denominator is the sum of the average published sale prices in such country of the Royalty Territory for all components (sold separately as a stand alone product) that are equivalent to all components contained in the Combination Product.  If the numerator or denominator cannot be determined in the manner set forth above, the Parties shall negotiate in good faith and agree to an appropriate adjustment to Net Sales to reflect the relative significance of the stand-alone Licensed Product contained in the Combination Product and the other components contained in the Combination Product, which agreement shall not be unreasonably withheld, conditioned or delayed.  If the Parties are unable to reach agreement regarding such issue within thirty (30) days after commencing good faith negotiations, the issue shall be referred to dispute resolution in accordance with Article XII.

 

Notwithstanding the foregoing, with respect to Licensed Products that are Combination Products, Net Sales in the Profit-Share Territory shall not be reduced as set forth in the immediately preceding paragraph and the cost of acquiring any other clinically active therapeutic or prophylactic ingredient or other significant component, mechanism or device shall be included in the calculation of the Cost of Goods Sold for purposes of calculating N.A. Pre-Tax Profit or Loss for such Licensed Product in the Profit-Share Territory.

 

As used above, the term “ Combination Product ” means any pharmaceutical product that consists of a Licensed Product and other active compounds or active ingredients or other significant component, mechanism or device or any combination of Licensed Product sold

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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together with another pharmaceutical product or other significant component, mechanism or device for a single invoiced price, and the phrases “sold as part of a Combination Product,” “sold separately,” “Net Sales of the Combination Product” and “average sale price” refer to sales by Cubist or its Related Parties in the applicable country.  All references to Licensed Product in this Agreement shall be deemed to include Combination Product, to the extent applicable.

 

Section 1.77  “ New Drug Application ” or “ NDA ”.  New Drug Application or NDA means (a) an application submitted to FDA pursuant to 21 U.S.C. § 505(b), which contains complete details of the manufacture and testing of a new drug, for purposes of obtaining Regulatory Approval for such new drug in the United States, for a particular indication, and also includes any Biologics License Application, or (b) a similar application, such as a Marketing Approval Authorization (“ MAA ”) filed with the EMEA or other Regulatory Authority.

 

Section 1.78  “North America ” or “ N.A .”.  North America or N.A. means the United States, Canada and Mexico.

 

Section 1.79  “ Parties ”.  Parties means Alnylam and Cubist.

 

Section 1.80  “ Party ”.  Party means either Alnylam or Cubist.

 

Section 1.81  “ Patent-Based Exclusivity Period ”.  Patent-Based Exclusivity Period means, with respect to a country in the Royalty Territory, that period of time during which at least one Valid Claim within the Alnylam Patent Rights Covers Licensed Product in such country.

 

Section 1.82  “ Patent Rights ”.  Patent Rights means patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, reissues, reexaminations, supplemental protection certificates and extensions and the like thereof, and all counterparts thereof in any country.

 

Section 1.83  “ Person ”.  Person means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government, or any agency or political subdivisions thereof.

 

Section 1.84  “ Phase I Clinical Study ”.  Phase I Clinical Study means a clinical study of Licensed Product in human volunteers or patients with the endpoint of determining initial tolerance, toxicity, safety or pharmacokinetic information, which shall be deemed commenced when the third volunteer or patient in such study has received his or her initial dose of Licensed Product.

 

Section 1.85  “ Phase II Clinical Study ”.  Phase II Clinical Study means a preliminary efficacy and safety or dose ranging human clinical study of Licensed Product in the target patient population, which shall be deemed commenced when the third patient in such study has received his or her initial dose of Licensed Product.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

 

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Section 1.86  “ Phase III Clinical Study ”.  Phase III Clinical Study means a human clinical study to confirm with statistical significance the efficacy and safety of Licensed Product performed to obtain Regulatory Approval for Licensed Product in any country, which shall be deemed commenced when the third patient in such study has received his or her initial dose of Licensed Product.

 

Section 1.87  “ Pivotal Clinical Study ”.  Pivotal Clinical Study means a human clinical study, including any Phase III Clinical Study, the results of which, if the pre-defined endpoints are met, are intended to be the data from a pivotal study necessary to support Regulatory Approval for Licensed Product in any country.

 

Section 1.88  “ Post-Approval Study ”.  Post Approval Study means a clinical study of Licensed Product that is initiated in a country in the Territory after receipt of Regulatory Approval for such Licensed Product in such country.

 

Section 1.89  “ Private Health Care Plans ”.  Private Health Care Plans means non-governmental Third Party health care payors and plans, including insurance companies, health maintenance organizations and other managed care organizations, Blue Cross and Blue Shield plans and self-funded employers.

 

Section 1.90  “ Post Approval Medical and Regulatory Activities ”.  Post Approval Medical and Regulatory Activities means all medical and regulatory activities directed at support of Licensed Product after Regulatory Approval, including medical education, use of medical science liaisons, post approval regulatory activities, Post Approval Studies, and patient safety/pharmacovigilance surveillance.

 

Section 1.91  “ Product Liability Costs ”.  Product Liability Costs means costs associated with Third Party product liability claims or Actions resulting from the Development, Manufacture or Commercialization of Licensed Product under this Agreement in the Field in the Profit-Share Territory and product liability insurance premiums for policies covering the Development, Manufacture or Commercialization of Licensed Product in the Field in the Profit-Share Territory (other than Losses entitled to indemnification under Section 10.11(c)(i) or (ii)).

 

Section 1.92  “ Profit-Share Territory ”.  Profit-Share Territory means, subject to Section 4.7, North America.

 

Section 1.93  “ Product Trademark ”.  Product Trademark means the trademark(s) and service mark(s) for use in connection with the distribution, marketing, promotion and sale of Licensed Product, or accompanying logos, trade dress or indicia of origin.  Product Trademarks specifically excludes the corporate names and logos of the Parties and their Affiliates.

 

Section 1.94   “ Regulatory Approval ”.  Regulatory Approval means the approval of the applicable Regulatory Authority necessary for the marketing and sale of Licensed Product for a particular indication in a country, excluding separate pricing or reimbursement approvals that may be required, and including the expansion or modification of the label for such indication.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.95  “ Regulatory Authority ”.  Regulatory Authority means any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the manufacturing, marketing, sale or use of a pharmaceutical product in a country, including the FDA in the United States and the EMEA in the EU.

 

Section 1.96  “ Regulatory-Based Exclusivity Period ”.  Regulatory-Based Exclusivity Period means, with respect to a Licensed Product in a country in the Royalty Territory, that period of time during which Cubist or any of its Related Parties has been granted the exclusive legal right by a Regulatory Authority (or is otherwise entitled to the exclusive legal right by operation of applicable Law) in such country to market and sell the active ingredient contained in such Licensed Product in such country.

 

Section 1.97  “ Related Party ”.  Related Party means (a) with respect to Cubist, any of Cubist’s Affiliates or Sublicensees, and, (b) with respect to Alnylam, any of Alnylam’s Affiliates or Sublicensees and Alnylam’s Asian Partner.

 

Section 1.98  “ RNAi Product ”.  RNAi Product means a double-stranded oligonucleotide molecule designed to act primarily through an RNA interference mechanism that is not a microRNA, microRNA antagonist or microRNA mimic and which consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridizable to one another along a substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridizable to itself by self-complementary base-pairing along a substantial portion of its length to form a hairpin, in either case that inactivates, including inactivation resulting from cleavage, a target mRNA, which encodes a protein product, via a double-stranded RNase, such as those involved in the RNA interference mechanism.

 

Section 1.99  “ Royalty Territory ”.  Royalty Territory means, subject to Section 4.7, the entire Territory other than North America.

 

Section 1.100  “ RSV ”. RSV means all strains of the respiratory syncytial virus.

 

Section 1.101  “ RSV01 Product ”.  RSV01 Product means any product containing Alnylam’s proprietary composition known as ALN-RSV01.  ALN-RSV01 is described on Exhibit B .

 

Section 1.102  “ RSV02 Product ”.  RSV02 Product means any product containing Alnylam’s proprietary composition designated by the JSC as ALN-RSV02.

 

Section 1.103  “ Safety Data ”.  Safety Data means adverse event information and other information (if any) required by one (1) or more Regulatory Authorities to be collected or to be reported to such Regulatory Authorities under applicable Laws.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 1.104  “ Sales Representative ”.  Sales Representative means an individual, who engages in or manages sales calls and other promotional efforts with respect to Licensed Product and who is employed by a Party or an Affiliate of a Party.

 

Section 1.105  “ Second Opt-Out Milestone ”.  Second Opt-Out Milestone means the earlier to occur of: (a) []*.  For the avoidance of doubt, if there is a deadlock at the JSC with respect to the determination in clause (b), then []*.

 

Section 1.106  “ Sublicensee ”.  Sublicensee, as to a Licensed Product, means any Third Party to whom a Party or any of its Affiliates grants a sublicense (a) in the case of Cubist or its Affiliates, under any Alnylam Technology to Develop, Manufacture or Commercialize any Licensed Product in the Field in the Territory, and (b) in the case of Alnylam or its Affiliates, under any Cubist Technology licensed to Alnylam pursuant to Section 3.2 or Section 11.3; provided that the term “Sublicensee” does not include []*.

 

Section 1.107  “ Sublicense Income ”.  Sublicense Income means (a) with respect to Cubist, any payment Cubist or any of its Affiliates receives from a licensee or Sublicensee for the grant to such licensee or Sublicensee of a sublicense to the rights to Alnylam Technology licensed to Cubist under this Agreement or a license to the Cubist Technology with respect to Licensed Product in the Field in the Profit-Share Territory, or, in the event Alnylam exercises the Opt-Out Option, any payment Cubist or any of its Affiliates receives from a licensee or Sublicensee for the grant to such licensee or Sublicensee of a sublicense to the rights to Alnylam Technology licensed to Cubist under this Agreement or a license to the Cubist Technology with respect to Licensed Product in North America, (b) with respect to Alnylam, any payment Alnylam or any of its Affiliates receives from a licensee or Sublicensee for the grant to such licensee or Sublicensee of a sublicense to the rights to Cubist Technology licensed to Alnylam or a license to Alnylam Technology under this Agreement with respect to Licensed Product in the Field in the Profit-Share Territory, in each case to the extent permitted by the JSC under this Agreement, and (c) with respect to Alnylam, in the event Cubist terminates this Agreement after the Second Opt-Out Milestone, any payment Alnylam or any of its Affiliates receives from a licensee or Sublicensee for the grant to such licensee or Sublicensee of a sublicense to the rights to Cubist Technology or a license under Alnylam Technology with respect to Licensed Product in the Field in North America, in each case including []*.  As used in this Section 1.107, “licensee” does not include []*.

 

                The foregoing provisions of this Section 1.107 notwithstanding, Sublicense Income shall not include:

 

(a)           []*;

 

(b)           []*;

 

(c)           []*;

 

(d)           []*; and

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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(e)           []*.

 

Section 1.108  “ Territory ”.  Territory means the entire world, except for Asia.

 

Section 1.109  “ Third Party ”.  Third Party means any Person other than a Party or any of its Affiliates.

 

Section 1.110  “ United States ” or “ U.S. ”.  United States or U.S. means the United States of America and its territories and possessions.

 

Section 1.111  “ Valid Claim ”.  Valid Claim means a claim (a) of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise or (b) of any patent application that has been filed with a good faith belief that claims are reasonably likely to issue that Cover Licensed Product and which such application has not been cancelled, withdrawn or abandoned or been pending for more than []* as measured from the earliest claimed priority date of such patent application.

 

Section 1.112  Additional Definitions .  Each of the following definitions is set forth in the Section of this Agreement indicated below:

 

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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ARTICLE II

 

MANAGEMENT OF COLLABORATIVE ACTIVITIES

 

Section 2.1  Joint Steering Committee .  The Parties hereby establish a joint committee to facilitate the Collaboration in the Profit-Share Territory as follows:

 

(a)           Composition of the Joint Steering Committee .  The Collaboration in the Profit-Share Territory shall be conducted under the direction of a joint steering committee (the “ JSC ”) comprised of three (3) named representatives of Cubist and three (3) named representatives of Alnylam or such other number of representatives as the Parties may from time to time mutually agree.  Each Party shall appoint its respective representatives to the JSC from time to time, and may substitute one or more of its representatives, in its sole discretion, effective upon notice to the other Party of such change.  Each Party shall have at least one JSC representative who is a senior employee (vice president level or above), and all JSC representatives shall have appropriate expertise and ongoing familiarity with the Collaboration.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

 

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Additional representatives or consultants may from time to time, by mutual consent of the Parties, be invited to attend JSC meetings, provided such representatives’ and consultants are subject to written obligations that are no less stringent than the confidentiality obligations and restrictions on use set forth in Article IX.  All proceedings for the JSC shall take place in English.  Each Party shall bear its own expenses relating to attendance at such meetings by its representatives.

 

(b)           JSC Chairperson .  The chairperson of the JSC (the “ JSC Chairperson ”) shall rotate every twelve (12) months between Alnylam and Cubist.  The initial JSC Chairperson shall be a representative of Alnylam.  The JSC Chairperson’s responsibilities shall include (i) scheduling meetings at least []* per Calendar Quarter, but more frequently if the JSC determines it necessary; (ii) setting agendas for meetings with solicited input from other members; and (iii) confirming and delivering minutes to the JSC for review and final approval.

 

(c)           Meetings .  The first JSC meeting shall be held within []* after the Effective Date, and the JSC shall meet in accordance with a schedule established by mutual agreement of the Parties, but no less frequently than []* each Calendar Quarter, with the location for such meetings alternating between Alnylam and Cubist facilities in Massachusetts (or such other locations as are determined by the JSC).  Alternatively, the JSC may meet by means of teleconference, videoconference or other similar communications equipment, but at least []* meetings per Calendar Year shall be conducted in person.

 

(d)           JSC Responsibilities .  The JSC shall have the following responsibilities with respect to the Collaboration:

 

(i)            providing updates regarding the Development of Licensed Product in the Territory;

 

(ii)           monitoring, planning and coordinating the Development of Licensed Product in the Profit-Share Territory and the Parties’ respective commitments relating to shared Development Costs;

 

(iii)          reviewing and approving (A) each annual update to the Development Plan, and (B) any modifications to the Development Plan within []* after each submission thereof to the JSC (or sooner as circumstances warrant);

 

(iv)          regularly assessing the progress of the Parties in their conduct of the Development Plan against the timelines and budgets contained therein, reviewing relevant data, and considering issues of priority;

 

(v)           overseeing Manufacturing activities related to the Development of Licensed Product for the Territory;

 

(vi)          reviewing information and data relating to the Development of Licensed Products by Alnylam and its Related Parties for Asia;

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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(vii)         coordinating with the JCT regarding Commercialization matters related to the Profit-Share Territory, as necessary or appropriate;

 

(viii)        []*.

 

(ix)           performing such other activities as the Parties agree in writing shall be the responsibility of the JSC; and

 

(x)            attempting to resolve any and all disputes relating to the conduct of the Collaboration in the Profit-Share Territory by consensus.

 

For purposes of clarity, it is expected that with respect to the sharing of information regarding Licensed Product, (A) each Party will, through the JSC and through regular communication between each Party’s designated Collaboration Manager, keep the other Party informed at a detailed level about all activities related to the Development, Manufacture and Commercialization of Licensed Product in the Field in the Profit-Share Territory, and will provide all information requested of such Party by the other Party related to the Development, Manufacture and Commercialization of Licensed Product in the Field in the Profit-Share Territory, (B) Cubist will regularly share information with Alnylam through the JSC regarding its activities in the Royalty Territory, consistent with keeping Alnylam reasonably informed of the progress and results of Development, Manufacture and Commercialization in the Royalty Territory, and (C) Alnylam will regularly share information with Cubist through the JSC regarding the activities of Alnylam and its Related Parties with respect to Development, Manufacture and Commercialization of Licensed Product for Asia consistent with keeping Cubist reasonably informed of the progress and results of Development, Manufacture and Commercialization of Licensed Product for Asia.

 

For purposes of clarity, the JSC shall not have the authority to modify the terms of this Agreement.

 

Section 2.2  Appointment of Subcommittees, Project Teams and Collaboration Managers .  The JSC shall be empowered to create such subcommittees of itself and project teams as it may deem appropriate or necessary. Each such subcommittee and project team shall report to the JSC, which shall have authority to approve or reject recommendations or actions proposed thereby subject to the terms of this Agreement.  Each Party shall also designate a collaboration manager (each a “ Collaboration Manager ”), who shall be responsible for the day-to-day coordination of the Collaboration and will serve to facilitate communication between the Parties with respect to both the Profit-Share Territory and the Royalty Territory.  Each Party may change its designated Collaboration Manager from time to time upon written notice to the other Party.

 

Section 2.3  Reports and Minutes .  Each Party shall prepare and deliver to the JSC, by no later than each []* (for the period ending December 31 of the prior Calendar Year), written reports summarizing such Party’s Development activities for Licensed Product in the Field for the Territory performed to date (or updating such report for activities performed since the last such report submitted hereunder, as applicable).  Such reports may be provided in any reasonable

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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written form determined by the reporting Party, including in a presentation slide format that reasonably summarizes such activities.  Alnylam shall also, at the same time it submits a written report under this Section 2.3 regarding activities in the Territory, also provide a written report to the JSC summarizing the status, progress and results of activities performed by Alnylam and its Asian Partner with respect to Development, Manufacture or Commercialization of Licensed Product for Asia.  In addition, Cubist shall provide Alnylam with prompt written notice of the achievement by Cubist of any milestone event set forth in Section 7.2.  Each Party will provide the members of the JSC with copies, which may be in electronic format, of all materials it intends to present at a JSC meeting.  The JSC may also request at any time specific data or information related to Collaboration activities or any other data to which the JSC is entitled under this Agreement or that a written report be prepared in advance of any meeting summarizing certain material data and information arising out of the conduct of the Collaboration any other data to which the JSC is entitled under this Agreement and the Party or appropriate committee to whom such request is made shall promptly provide to the other Party or the JSC such report, data or information.  A secretary shall be appointed for each meeting and shall prepare minutes of the meeting, it being understood that the secretary and the JSC Chairperson shall not be representatives of the same Party (that is, if the JSC Chairperson is a representative of Cubist, the secretary shall be a representative of Alnylam, and vice versa).

 

Section 2.4  Decision-Making .  Decisions within the purview of the JSC shall be made by the JSC by consensus, with the representatives of each Party collectively having one vote on behalf of such Party.  For each meeting of the JSC, at least two (2) representatives of each Party shall constitute a quorum.  Action on any matter may be taken at a meeting, by teleconference, videoconference or by written agreement.

 

Section 2.5  Deadlocks .  The JSC shall attempt to resolve any and all disputes relating to the Collaboration by consensus.  If the JSC is unable to reach a consensus with respect to a dispute, then the dispute shall be submitted to escalating levels of Alnylam and Cubist senior management for review.  If such dispute cannot be resolved despite escalation, then the Chief Executive Officers of Alnylam and Cubist shall attempt to resolve such dispute.  If the Chief Executive Officers cannot reach an agreement regarding such dispute within []* days after submission to them for resolution, then if the dispute is one over which the JSC has authority pursuant to Section 2.1(d) or if the dispute relates to the Royalty Territory, then Cubist shall have the final decision-making authority subject to Sections 2.5(a) and (b).  Notwithstanding anything in this Agreement to the contrary, any decision within the purview of the JSC for which Cubist has exercised its final decision-making authority shall be considered a decision or approval of the JSC.

 

(a)           Notwithstanding anything in this Agreement to the contrary, Cubist (i) has no final decision-making authority over the Development or Commercialization of Licensed Product for Asia or outside the Field, or the Manufacture of Licensed Product by Alnylam or its Related Parties for such purposes, (ii) may not conduct, sponsor, fund or otherwise support a Clinical Study or Post-Approval Study of Licensed Product that would []* the Development or Commercialization of Licensed Product in the Field in Asia without Alnylam’s prior written

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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consent; (iii) may not effect a transfer of responsibility for the Manufacture of API Bulk Drug Substance or Finished Product from Alnylam to Cubist, it being understood that any such decisions shall be made by the Parties in accordance with Article VI; (iv) may not exercise its final decision-making authority to resolve any disputes between the Parties regarding the []*; (v) may not exercise its final decision-making authority to []*; (vi) may not exercise its final decision-making authority with respect to decisions about whether []*, (vii) may not exercise its final decision-making authority to resolve any dispute regarding []*; and (viii) may not exercise its final decision-making authority to (A) require Alnylam to use other than Diligent Efforts to perform its obligations under the Collaboration, (B) require Alnylam to perform any activities for which it is not responsible under this Agreement, to amend the Development Plan or Commercialization Plan to impose additional obligations on Alnylam without Alnylam’s consent, including for purposes of clarity, to approve any change in the budgets for the Development Plan or the Commercialization Plan pursuant to Section 4.5 or Section 5.3(b), it being understood that Cubist shall have final decision-making authority regarding implementation of the activities set forth in the Development Plan and the Commercialization Plan, including pricing of Licensed Product in the Territory; (C) resolve any dispute as to what level of effort constitutes Diligent Efforts, (D) require Alnylam to take any action that would, or fail to take any action where the failure to take such action would, violate any applicable Law, rule or regulation or any agreement with any Third Party ( provided , that , in entering into any such agreement, Alnylam is not in breach of its obligation under this Agreement) or infringe the intellectual property rights of Third Parties, or (E) expand or narrow the responsibilities of the JSC or JCT; and

 

(b)           with respect to all disputes between the Parties under this Agreement that are not subject to Cubist’s final decision-making authority, the dispute resolution provisions of Article XII shall apply.

 

Section 2.6  Dissolution of JSC .  The JSC shall be dissolved upon the earlier to occur of (a) []*; provided that , after the []* of the Effective Date, Alnylam shall have the right, but shall not be obligated, to participate on the JSC.  In the event the JSC is dissolved or Alnylam elects not participate under the preceding sentence, (i) decisions within the purview of the JSC shall be made by Cubist subject to the limits on Cubist’s decision-making authority set forth in Section 2.5 (a) and subject to Section 2.5(b), and (ii) information sharing shall continue as set forth in Section 4.8

 

Section 2.7  Collaboration Guidelines .

 

(a)           In conducting activities under this Agreement, neither Party shall prejudice the value of Licensed Product by reason of such Party’s activities outside of the Collaboration.  Except as specifically provided in Article III or Section 10.1, the foregoing shall not require either Party to limit the development, manufacture or commercialization of products other than Licensed Product.  Without limiting the provisions of this Section 2.7(a), Alnylam agrees that it will not conduct, sponsor, fund or otherwise support without Cubist’s prior written consent, and will use Diligent Efforts to prevent any Related Party from, conducting, sponsoring,

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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funding or otherwise supporting, a clinical study of any Licensed Product for Asia that would []* the Development or Commercialization of Licensed Products in the Territory.  In all matters relating to this Agreement, the Parties shall seek to comply with good pharmaceutical and environmental practices.

 

(b)           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.

 

ARTICLE III

 

LICENSE GRANTS

 

Section 3.1  Alnylam Grants .

 

(a)           Development License .  Subject to the terms of this Agreement, Alnylam hereby grants to Cubist (i) a co-exclusive (with Alnylam, to the extent of Alnylam’s rights and obligations under this Agreement) right and license, with the right to grant sublicenses, under the Alnylam Technology, to Develop Licensed Products in the Field for the Profit-Share Territory, and (ii) an exclusive right and license, with the right to grant sublicenses, under the Alnylam Technology, to Develop Licensed Products in the Field for the Royalty Territory.  Such licenses shall be (A) royalty-bearing for the Royalty Term of Licensed Product in each country of the Royalty Territory, and (B) subject to the Parties’ rights and obligations with respect to N.A. Pre-Tax Profit or Loss in the Profit-Share Territory for the Term in accordance with Section 7.4.  Upon expiration of the Royalty Term in the case of a country in the Royalty Territory, the license granted under clause (ii) shall convert to an exclusive, perpetual, fully paid-up, non-royalty-bearing licenses to Develop Licensed Products in the Field in the applicable country(ies).  Notwithstanding anything in this Agreement to the contrary, Alnylam shall not be entitled to multiple royalty or other payments by reason of the split of the license granted to Cubist under this Article III into a Development, Commercialization and a Manufacturing license.

 

(b)           Commercialization License .  Subject to the terms of this Agreement, Alnylam hereby grants to Cubist an exclusive right and license, with the right to grant sublicenses, under the Alnylam Technology to Commercialize Licensed Products in the Field in the Territory.  Such license shall be (i) royalty-bearing for the Royalty Term of Licensed Product in each country of the Royalty Territory, and (ii) subject to the Parties’ rights and obligations with respect to N.A. Pre-Tax Profit or Loss in the Profit-Share Territory for the Term.  Upon expiration of the Royalty Term in the case of a country in the Royalty Territory, the license granted under clause (i) shall convert to an exclusive, perpetual, fully paid-up, non-royalty-bearing license to Commercialize Licensed Products in the Field in such country(ies).

 

(c)           Manufacturing License .  Subject to the terms of this Agreement, including Alnylam’s rights as set forth in Article VI, Alnylam hereby grants to Cubist a co-exclusive (with Alnylam, to the extent of Alnylam’s rights and obligations under Article VI) right and license, with the right to grant sublicenses, to the extent consistent with Article VI, under the Alnylam

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Technology, to Manufacture or have Manufactured Licensed Products for Development and Commercialization in the Field for the Territory.

 

(d)           Limitation on Exclusivity .  For purposes of clarity, notwithstanding anything to the contrary in Section 3.1(a), 3.1(b) or 10.1, Alnylam has previously and retains the right after the Effective Date to grant non-exclusive licenses to Third Parties to Develop, Manufacture and Commercialize RNAi Products for the Territory under Alnylam Technology other than under the Alnylam Sequence Specific Patent Rights or Alnylam Sequence Specific Know-How; provided , that , neither Alnylam nor any of its Affiliates (i) will license or will disclose  Licensed Product-specific data, sequence information or other Licensed Product-specific Know-How to any Third Party other than to a Related Party for purposes of enabling Alnylam to fulfill its obligations under this Agreement or with respect to the Development and Commercialization of Licensed Products in Asia, (ii) has or will allow any Third Party to rely on Licensed Product-specific regulatory filings or pre-clinical or clinical work, or, except as specified in a Development Plan for purposes of the Collaboration, collaborate with any Third Party other than a Related Party regarding Licensed Products in any manner, including in any manner that conflicts with Section 3.1(a), 3.1(b) or 10.1, or (iii) will, after the Effective Date, grant a right or license to any Third Party under any Patent Rights or Know-How that would allow such Third Party to Develop, Manufacture and Commercialize Licensed Products other than pursuant to options or other rights existing on the Effective Date under the agreements listed in Exhibit D .

 

(e)           Affiliates; Sublicenses .

 

(i)            Cubist shall have the right to grant sublicenses under the licenses granted to it pursuant to Sections 3.1(a), (b) and (c), and the right to grant licenses of its rights under any Joint Collaboration IP, to an entity that is its Affiliate for so long as such entity remains an Affiliate of Cubist and complies in all material respects with the obligations of Cubist under this Agreement.  Cubist hereby guarantees the full payment and performance of its Affiliates under this Agreement.

 

(ii)           Subject to Sections 3.1(f), 3.3 and 10.1, and for the Profit-Share Territory []*, Cubist has the right to grant sublicenses of its rights and the licenses granted to it under this Agreement (and the right to grant sublicenses under Alnylam’s interest in any Joint Collaboration IP) to Third Parties to Develop and Commercialize Licensed  Product in the Field in the Territory (A) []*.

 

(iii)          Subject to Sections 3.1(f) and 3.3 and Article VI, Cubist shall have the right to grant sublicenses of its rights and the license granted under Section 3.1(c) (and the right to grant sublicenses under Alnylam’s interest in any Joint Collaboration IP) to Third Parties to Manufacture the RSV01  Product, the RSV02 Product, any Additional RSV Product, or a Licensed Product sublicensed under Section 3.1(e)(ii) for Development and Commercialization in the Field for the Territory.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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(f)            Alnylam In-Licenses .  All licenses and other rights granted to Cubist hereunder are subject to the rights and obligations of Alnylam under the Alnylam In-Licenses and the Kyowa Agreement.  Cubist shall comply with all terms and conditions of the Alnylam In-Licenses and the Kyowa Agreement in the Territory applicable to a Sublicensee of Alnylam, and shall perform and take such actions in the Territory as may be required of a Sublicensee (and, with respect to the Kyowa Agreement and the []*, as may be required of Alnylam, with respect to Development, Manufacture and Commercialization of Licensed Product for the Territory) to allow Alnylam to comply with its obligations thereunder, including obligations relating to sublicensing, patent matters, confidentiality, reporting, audit rights, indemnification and diligence; provided that in no event shall Cubist be responsible for any payment obligations or other financial obligations of any kind of Alnylam under such agreements except as otherwise specifically set forth in Sections 4.7, 7.6, 7.7, 7.9 and  8.6.  In order to facilitate Cubist’s compliance with this Section 3.1(f), Alnylam will provide Cubist with reasonable notice in advance of any action or information required of Cubist in respect of the Alnylam In-Licenses, including a description regarding Alnylam’s interpretation of such requirements, and Cubist will, to the extent required under this Section 3.1(f), perform such actions and provide such information in accordance with such requirements as reasonably interpreted by Alnylam.

 

(g)           Right of First Negotiation for Asia.   Alnylam hereby grants to Cubist a right of first negotiation to add Asia to the Royalty Territory hereunder (the “ ROFN Right ”) if, during the Term, (i) the Kyowa Agreement terminates and (ii) Alnylam determines to seek an Asian Partner other than Kyowa Hakko for Licensed Products in the Field in Asia.  Prior to initiating formal business discussions with one or more Third Parties other than Kyowa Hakko regarding such opportunity, Alnylam shall notify Cubist of Alnylam’s determination to seek an Asian Partner other than Kyowa Hakko (the “ ROFN Notice ”), and Cubist shall have []* after receipt of the ROFN Notice (the “ Option Period ”) to notify Alnylam in writing that either (A) Cubist is exercising its ROFN Right and is interested in adding Asia to the Royalty Territory hereunder, or (B) Cubist is not interested in adding Asia to the Royalty Territory hereunder and therefore waives its ROFN Right.  Failure by Cubist to provide written notice of its exercise of the ROFN Right within the Option Period shall constitute a waiver by Cubist of its ROFN Right.  If Cubist provides written notice to Alnylam exercising its ROFN Right within the Option Period, the Parties shall negotiate exclusively in good faith for a period of up to []* from the date the ROFN Notice was received by Cubist (or such longer period as the Parties may mutually agree) (the “ Negotiation Period ”) regarding mutually agreeable terms and conditions, including mutually agreeable financial terms and conditions, on which this Agreement would be amended to add Asia to the Royalty Territory hereunder.  If, despite such good faith negotiations, the Parties do not execute such an amendment within the Negotiation Period, or if Cubist waives its ROFN Right, then Alnylam shall thereafter be free to negotiate and execute agreement(s) with one or more Third Parties with respect to such opportunity; provided that for a period of []* after the earlier of Cubist’s waiver of its ROFN Right or the expiration of the Negotiation Period, Alnylam shall not enter into an agreement regarding such opportunity on terms that, in the aggregate, are materially more favorable to the Third Party than those last offered by Alnylam to Cubist.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 3.2  Cubist Grants .

 

(a)           Manufacturing License .  Subject to the terms and conditions of this Agreement, Cubist hereby grants to Alnylam a non-exclusive, fully paid-up, non-royalty-bearing worldwide right and license, with the right to grant sublicenses, subject to Section 3.2(c), under the Cubist Technology, to Manufacture or have Manufactured Licensed Products, but solely to the extent necessary (i) during the Term, to enable Alnylam to fulfill its obligations under this Agreement with respect to the Collaboration, and (ii) during and after the Term, for the Development and Commercialization of Licensed Products for Asia but only to the extent that such []*.

 

(b)           Cubist Technology License .  Subject to the terms and conditions of this Agreement, Cubist hereby grants to Alnylam a non-exclusive, fully paid-up, non-royalty-bearing license, with the right to grant sublicenses, subject to Section 3.2(c), under any Cubist Technology but solely to the extent necessary (i) during the Term, to enable Alnylam to fulfill its obligations under this Agreement with respect to the Collaboration, and (ii) during and after the Term, to Develop and Commercialize Licensed Products for Asia but only to the extent that such []*.

 

(c)           Affiliates; Sublicenses .

 

(i)            Alnylam shall have the right to grant sublicenses under the licenses granted to it pursuant to Sections 3.2(a) and (b), and, subject to the licenses granted to Cubist under Sections 3.1(a), (b) and (c), the right to grant licenses of its rights under any Joint Collaboration IP, to an entity that is an Affiliate for so long as such entity remains an Affiliate of Alnylam and complies in all material respects with the obligations of Alnylam under this Agreement.  Alnylam hereby guarantees the full payment and performance of its Affiliates under this Agreement.

 

(ii)           Subject to Article VI, Alnylam shall have the right to grant sublicenses to Third Parties under the licenses granted to it pursuant to Sections 3.2(a)(i).

 

(iii)          Alnylam shall have the right to grant sublicenses to Third Parties under the licenses granted to it under Section 3.2(b)(i); provided that []*.

 

(iv)          Alnylam shall have the right to grant sublicenses to Third Parties under the licenses granted to it pursuant to Sections 3.2(a)(ii) and 3.2(b)(ii).

 

(d)           Payments Owed by Cubist .  Alnylam shall promptly reimburse Cubist for any amounts that Cubist or any of its Affiliates shall owe to any Third Party by reason of the license granted by Cubist to Alnylam under this Section 3.2 or under Section 11.3(a) and any sublicense granted by Alnylam or any of its Affiliates with respect to Development, Manufacture or Commercialization of Licensed Product under any such license, if such Third Party Technology was included in the definition of Cubist Technology in accordance with Section 8.6.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 3.3  Sublicensing Terms; Liability .

 

(a)           Each sublicense granted by a Party pursuant to this Article III shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement.  Each Party shall promptly provide the other Party with a copy of the fully executed sublicense agreement covering any sublicense granted hereunder, and such sublicense agreement shall contain the following provisions:  (i) a requirement that such Sublicensee submit applicable sales or other reports to the Party granting the sublicense to the extent necessary or relevant to the reports required to be made or records required to be maintained under this Agreement; (ii) the audit requirement set forth in Section 7.12; (iii) a requirement that such Sublicensee comply with the confidentiality and non-use provisions of Article IX with respect to both Parties’ Confidential Information; and (iv) any other provisions applicable to a Sublicensee required under any Alnylam In-License or Cubist In-License, as the case may be, of which the other Party is notified in writing.  If a granting Party becomes aware of a material breach of any sublicense by a Sublicensee of the rights granted to such Party under this Article III, the granting Party shall promptly notify the other Party of the particulars of the same and use Diligent Efforts to enforce the terms of such sublicense.

 

(b)           Each Party shall at all times be responsible for the performance of its Sublicensees under this Agreement.

 

Section 3.4  Joint Collaboration IP .  Subject to (i) the rights granted to each Party under this Agreement, including the exclusive licenses granted to Cubist under Section 3.1, (ii) the obligations of the Parties’ set forth in Section 10.1 and (iii) the payment obligations set forth in Article VII, each Party shall have the right to use, sell, keep, license, sublicense or assign its interest in Joint Collaboration IP and otherwise undertake all activities a sole owner might undertake with respect to such Joint Collaboration IP without the consent of and without accounting to the other Party.

 

Section 3.5  Section 365(n) of the Bankruptcy Code .  All rights and licenses granted under or pursuant to any Section of this Agreement, including Sections 3.1 and 3.2 hereof, are rights to “intellectual property” (as defined in Section 101(35A) of Title 11 of the United States Code, as amended (such Title 11, the “ Bankruptcy Code ”)).  Each Party hereby acknowledges that (a) copies of research data, (b) laboratory samples, (c) product samples and inventory, (d) formulas, (e) laboratory notes and notebooks, (f) data and results related to clinical trials, (g) regulatory filings and approvals, (h) rights of reference in respect of regulatory filings and approvals, (i) pre-clinical research data and results, and (j) marketing, advertising and promotional materials, constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy Code.  Each Party agrees not to interfere with the other Party’s exercise of rights and licenses to intellectual property licensed hereunder and embodiments thereof in accordance with this Agreement and agrees to use reasonable efforts to assist the other Party to obtain such intellectual property and embodiments thereof in the possession or control of Third Parties as reasonably necessary for the other Party to exercise such rights and licenses in accordance with this Agreement.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 3.6  Retained Rights .  Any rights of a Party not expressly granted under this Agreement shall be retained by such Party.

 

ARTICLE IV

 

DEVELOPMENT OF LICENSED PRODUCTS;
ADDITIONAL RSV PRODUCTS; OPT-OUT RIGHTS

 

Section 4.1  Overview .  The Parties will collaborate in the further Development of Licensed Product; provided , however , that the Parties will Develop Licensed Product in the Field in the Profit-Share Territory in accordance with the allocations of Development responsibilities set forth in the Development Plan as amended from time-to-time in accordance with Section 4.2, and, subject to the obligation to update the JSC, Cubist will be solely responsible for, and with respect to the Major EU Countries shall use Diligent Efforts with respect to, the Development of Licensed Product in the Field in the Royalty Territory.

 

Section 4.2  Development Plan; Amendments; Development Responsibilities .

 

(a)           The Development of Licensed Product in the Profit-Share Territory shall be governed by the Development Plan, and the Parties shall use Diligent Efforts to conduct all their Development activities relating to Licensed Product in accordance with the Development Plan.  As of the Effective Date, the Development Plan includes an initial overall plan for the Development of Licensed Product in the United States.  The Development Plan as of the Effective Date also includes the initial funding budgeted for each stage of Development in the United States.

 

(b)           The JSC shall review the Development Plan not less frequently than annually and shall develop detailed and specific Development Plan updates, which shall update or include annual Development budgets for the Profit-Share Territory for each Calendar Year until the completion of Licensed Product Development activities in the Profit-Share Territory.  No later than []* of each Calendar Year, the JSC shall prepare a preliminary draft of the update to the Development Plan and budget for the following Calendar Year.  The JSC shall review and agree (subject to the final Board approval of each Party) on a final version of each annual updated Development Plan and budget no later than each []* for the immediately following Calendar Year.  The Parties may also develop and submit to the JSC from time to time other proposed substantive amendments to the Development Plan.  The JSC shall review such proposed amendments and may approve such proposed amendments or any other proposed amendments that the JSC may consider from time to time in its discretion and, upon such approval by the JSC, the Development Plan shall be amended accordingly.  Amendments and updates to the Development Plan, including any budgets for the Profit-Share Territory contained in the Development Plan, shall not be effective without the approval of the JSC.  In connection with each annual update to the Development Plan, the JSC shall review the FTE Cost, and shall recommend to the Parties whether any amendment should be made to the prospective FTE Cost to reflect updated benchmarking information or adjustments to account for FTE skill sets that

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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were not included in the original FTE Cost calculation.  No change to the FTE Cost shall be effective without the written agreement of both Parties.

 

(c)           The Parties anticipate that responsibilities for Development activities for the Profit-Share Territory will initially be allocated between the Parties substantially as set forth in Exhibit E .

 

(d)           Notwithstanding anything in this Agreement to the contrary, Cubist shall not have an obligation to seek JSC approval of development plans and budgets in the Royalty Territory, but will keep the JSC apprised of such plans.

 

Section 4.3  Development Efforts; Manner of Performance; Records and Reports .

 

(a)           Each of Alnylam and Cubist shall use Diligent Efforts to execute and to perform, or cause to be performed, the activities assigned to it relating to the Development Plan and to cooperate with the other in carrying out the Development Plan, in each case in good scientific manner and in compliance with applicable Law, Good Clinical Practice and Good Laboratory Practice.  Notwithstanding anything in this Agreement to the contrary, neither Party will engage or use a Third Party to perform any of the Development activities allocated to it under the Development Plan or provide any Licensed Product to any Third Party in the Profit-Share Territory unless such action, and the form of agreement with such Third Party, have been approved in advance by the JSC.

 

(b)           Each Party will maintain scientific records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which will fully and properly reflect all work done and results achieved in the performance of the Development activities with respect to Licensed Product by such Party and its permitted contractors and permitted Sublicensees.  Each Party will have the right, during normal business hours and upon reasonable notice, to inspect and copy (or request the other Party to copy) all records of the other Party maintained in connection with the work done and results achieved in the performance of such Development activities, but solely to the extent such records relate to Licensed Product or to the extent access to such records is necessary for a Party to exercise its rights under this Agreement.  All such records, and the information disclosed therein, as well as all disclosures made pursuant to Sections 4.3(c) and 4.8, will be maintained in confidence by the recipient in accordance with Article IX and will only be used for purposes of the Collaboration; provided that Alnylam shall be permitted to disclose any such information obtained from Cubist to its Asian Partner for the purpose of assisting such Asian Partner to Develop, Manufacture and Commercialize Licensed Products for Asia, subject to the requirement that, to the extent permissible under Alnylam’s agreements with its Asian Partner, the Asian Partner has an obligation to disclose to Alnylam, and to permit Alnylam to disclose to Cubist, and permit Cubist to use for the purposes set forth in this Agreement, information and records of all work done and results achieved by such Asian Partner in the performance of Development, Manufacture or Commercialization of Licensed Products for Asia, including the information specified in this Section 4.3(b) and the information specified in Section 4.3(c) and Section 4.8.  Alnylam shall use Diligent Efforts to require its

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Asian Partner to permit the disclosures of information and records to Cubist contemplated by the preceding sentence.

 

(c)           In addition to the other disclosure obligations set forth in this Section 4.3, at times and in a manner to be reasonably agreed by the Parties, each Party shall disclose to the other Party a written summary, in a form mutually agreed by the Parties, of clinical data with respect to Licensed Products generated by or under authority of such Party or any Related Party since the last such disclosure.  Upon the request of either Party, the other Party shall provide prompt and complete access to, and the right to use for purposes of the activities for which such requesting Party is licensed hereunder, any Clinical Regulatory Filings and Safety Data generated by such Party or its Related Parties; provided that in any such case the requesting Party provides notice to the other Party reasonably in advance and reimburses the other Party for any reasonably incurred copying costs of providing such access.  Each Party must provide access to its Related Party’s Clinical Regulatory Filings and Safety Data on the same basis as if the Related Parties were such Party.  If requested by either Party or the JSC, the Parties shall discuss any issues relating to such Clinical Regulatory Filings or Safety Data provided by a Party to the other Party.  In addition to the foregoing, if required by a Regulatory Authority(ies) or if it is reasonably necessary for a Party or its Related Party(ies) to have access to the underlying raw data, case report forms or other original documents (including laboratory notebooks) generated by or on behalf of the other Party or its Related Party(ies), then such other Party shall provide, or cause to be provided, access to the originals, of such items.

 

Section 4.4  Joint Development Costs .

 

(a)           The Parties shall share Development Costs as follows:  (i) all Development Costs solely for the Profit-Share Territory shall be shared equally by the Parties, and (ii) all Development Costs incurred with respect to Development of Licensed Product for the Profit-Share Territory but generating data or other Know-How that also has applicability in the Royalty Territory shall be continue to be shared equally by the Parties except that any incremental costs associated specifically with any Development activities not required for the Profit-Share Territory shall be []*.  The Parties shall discuss and attempt to mutually determine in good faith how specific Development Costs are allocated in accordance with the foregoing sentence.  Except as otherwise set forth in this Section 4.4(a), Cubist shall be responsible for its costs associated with Development of Licensed Product for the Royalty Territory.

 

(b)           Development Costs shall initially be borne by the Party incurring the cost or expense, subject to reimbursement as provided in Section 4.5.  Each Party shall calculate and maintain records of Development Costs incurred by it in accordance with procedures to be established by the JSC.  Alnylam and Cubist shall report []* to each other on their Development Costs, with such reports to be submitted within []* after the []* of each Calendar Year.  Notwithstanding the foregoing, within []* after the end of the []*, Alnylam and Cubist shall each provide to the other an estimate of such Party’s Development Costs for such []*. The Parties shall seek to resolve any questions related to such accounting statements within []* after receipt.

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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Section 4.5  Reimbursement of Development Costs .

 

(a)                                 The Party that incurs more than its share of the total actual Development Costs for Licensed Product, as allocated under Section 4.4(a), shall be paid by the other Party an amount of cash sufficient to reconcile to its agreed percentage of actual Development Costs in each Calendar Quarter; provided that , except as set forth in Section 4.5(b) total actual Development Costs for a Party for a Calendar Year shall not exceed []* percent ([]*%) of the budgeted Development Costs for such Party for such Calendar Year, as shown in the then current version of the Development Plan, except to the extent the JSC approves the increase over []* percent ([]*%) of the budgeted Development Costs for such Party before the additional costs are incurred.  Subject to Section 4.5(b), if actual Development Costs for a Calendar Year to date incurred by either Party exceed budgeted Development Costs for such Party for such Calendar Year by more than []* percent ([]*%) and the JSC did not approve some or all of such increase before the costs were incurred, the Development Costs deemed to have been incurred by such Party for purposes of determining the balancing payment under the first sentence of this Section 4.5(a) shall be limited to []* percent ([]*%) of such Party’s budgeted Development Costs plus any portion of the increase over such amount that was approved in advance by the JSC or approved under Section 4.5(b).  Decisions of the JSC with respect to Development Cost overruns shall be made in accordance with Section 2.5.  Reconciling payments under this Section 4.5 for any Calendar Quarter shall be made within []* after the end of such Calendar Quarter.

 

(b)                                Notwithstanding anything in Section 4.5(a) to the contrary, the Parties agree to approve a Party’s actual Development Costs in excess of []* percent ([]*%) of such Party’s budgeted Development Costs to the extent the overrun is attributable []*, provided that a contingency for such issue is not already included in the budget for Development Costs for such Calendar Year.

 

Section 4.6  Additional RSV Products .   If, at any time during the Term, the JSC determines to commence Development of a Licensed Product other than the RSV01 Product or the RSV02 Product (an “ Additional RSV Product ”), then the Additional RSV Product shall be included in the Collaboration and the Parties will promptly update the Development Plan accordingly.

 

Section 4.7  Alnylam Opt-Out Option .

 

(a)            Exercise of Option .  At any time after the First Opt-Out Milestone, Alnylam, by written notice to Cubist, shall have the right, in its sole discretion, to opt-out of further Development of all Licensed Products by providing written notice to Cubist citing this Section 4.7 (the “ Opt-Out Option ”), which Opt-Out Option shall, subject to Section 4.7(b), take effect []* after the date of such written notice.  Upon the effective date of Alnylam’s exercise of its Opt-Out Option, the following consequences shall occur:

 

(i)             The Royalty Territory shall thereafter be expanded to comprise the entire Territory;

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

33

 

(ii)           The Profit-Share Territory shall cease to exist;

 

(iii)          The Parties shall cease to share in N.A. Pre-Tax Profit or Loss;

 

(iv)          Except as set forth in 4.7(a)(v) and 4.7(a)(xii) and subject to Section 4.7(b), Alnylam shall cease to share in Development Costs pursuant to Sections 4.4 and 4.5;

 

(v)           For a period of []* following the effective date of Alnylam’s Opt-Out Option, Alnylam shall continue to be responsible for fifty percent (50%) of Development Costs incurred by Cubist under the then current Development Plan; provided that the cumulative Development Costs paid by Alnylam for Licensed Product under this Section 4.7(a)(v) after Alnylam has exercised the Opt-Out Option shall not exceed:  (A) []* Dollars ($[]*) if Alnylam exercised the Opt-Out Option after the First Opt-Out Milestone and prior to the Second Opt-Out Milestone and (B) []* Dollars ($[]*) if Alnylam exercised the Opt-Out Option after the Second Opt-Out Milestone.

 

(vi)          Without limiting Cubist’s obligations under Section 7.2, and subject to Sections 4.7(a)(ix) 4.7(a)(xii), Cubist shall make the non-refundable, non-creditable milestone payments set forth below to Alnylam not later than []* after the earliest date on which the corresponding milestone event set forth below has been achieved:

 

Milestone Event		Payment if Alnylam’s Exercise of the Opt-Out Option Takes Effect After the First Opt-Out Milestone and Prior to the Second Opt-Out Milestone		Payment if Alnylam’s Exercise of the Opt-Out Option Takes Effect After the Second Opt- Out Milestone		Section 4.7(a)(xii) Option I
(A)  Acceptance for filing of an application for Regulatory Approval for a Licensed Product for any indication in the United States		$[]*		$[]*		$[]*
(B)  First Commercial Sale of a Licensed Product in any indication in the United States		$[]*		$[]*		$[]*

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

34

 

Milestone Event		Payment if Alnylam’s Exercise of the Opt-Out Option Takes Effect After the First Opt-Out Milestone and Prior to the Second Opt-Out Milestone		Payment if Alnylam’s Exercise of the Opt-Out Option Takes Effect After the Second Opt- Out Milestone		Section 4.7(a)(xii) Option I
(C)  Acceptance for filing of an application for Regulatory Approval for a Licensed Product for any indication other than the indication with respect to which the milestone event described in Section 4.7(a)(vi)(A) above was achieved in the United States		$[]*		$[]*		$[]*
(D)  Regulatory Approval of a Licensed Product for any indication other than the indication with respect to which the milestone event described in Section 4.7(a)(vi)(A) above was achieved in the United States		$[]*		$[]*		$[]*

 

The milestone payments set forth in this Section 4.7(a)(vi) shall be paid only once, upon the first achievement of the applicable milestone event by the first Licensed Product to achieve such milestone event.

 

(vii)         Without limiting Cubist’s obligations under Section 7.3 (which shall continue to apply to Net Sales of Licensed Product in the Royalty Territory but only as the Royalty Territory was defined immediately prior to Alnylam’s exercise of the Opt-Out Option), and subject to Sections 4.7(a)(ix) and 4.7(a)(xii), in addition to all other amounts payable under this Agreement, Cubist shall make the non-refundable, non-creditable milestone payments set forth below to Alnylam upon the achievement of the milestone events set forth below, such payment to be made as set forth below:

 

*Confidential Treatment Requested.  Omitted portions filed separately with the Commission.

 

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