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Exhibit 10.23
Confidential
Materials omitted and filed separately with the
Securities and
Exchange Commission. Asterisks denote omissions.
================================================================================
RESEARCH COLLABORATION AND LICENSE AGREEMENT
BY AND BETWEEN
NOVARTIS INSTITUTES FOR BIOMEDICAL RESEARCH, INC.
AND
ALNYLAM PHARMACEUTICALS, INC.
================================================================================
<PAGE>
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This
RESEARCH COLLABORATION AND LICENSE AGREEMENT (this
"Agreement"),
effective as of October 12, 2005 (the "Effective Date"), by and
between Novartis
Institutes for BioMedical Research, Inc., a corporation organized
and existing
under the laws of Delaware, with its principal place of business at
250
Massachusetts Avenue, Cambridge, Massachusetts 02139 ("Novartis"),
and Alnylam
Pharmaceuticals, Inc., a corporation organized and existing under
the laws of
Delaware, with its principal place of business at 300 Third Street,
3rd Floor,
Cambridge, Massachusetts 02142 ("Alnylam").
RECITALS:
WHEREAS,
Novartis is engaged in the business of Discovering,
Developing, Commercializing and Manufacturing products in the Field
(each as
defined below);
WHEREAS,
Alnylam has developed, acquired and licensed technology
useful for the Discovery, Development, Manufacture,
characterization and use of
therapeutic products that function through the mechanism of RNA
interference
("RNAi"); and
WHEREAS,
Novartis and Alnylam desire to enter into a research
collaboration, upon the terms and conditions set forth in this
Agreement, to
identify and optimize RNAi Compounds directed against Selected
Targets (each as
defined below).
NOW,
THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for
other valuable
consideration, the receipt and adequacy of which are hereby
acknowledged,
Alnylam and Novartis agree as follows:
ARTICLE I
DEFINITIONS
For the
purpose of this Agreement, the following terms, whether used
in singular or plural form, shall have the respective meanings set
forth below:
"A List"
shall have the meaning set forth in Section 2.1(a).
"Abandoned
Program" shall have the meaning set forth in Section
2.3(b).
"Accounting
Standards" shall mean, with respect to Alnylam, United
States Generally Accepted Accounting Principles, and with respect
to Novartis,
International Financial Reporting Standards.
"Active
Program" shall have the meaning set forth in Section 2.3(a).
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"Adoption
Consideration" shall have the meaning set forth in Section
4.2(a).
"Adoption
Date" shall have the meaning set forth in Section 3.1(c).
"Adoption
Fee" shall have the meaning set forth in Section 4.2(a).
"Adoption
License" shall have the meaning set forth in Section 3.1(c).
"Adopted
Product" shall mean any product that contains one or more
RNAi Compound(s) that are Discovered, Developed, Commercialized or
Manufactured
pursuant to the Adoption License.
"Adopted
Product Obligations" shall have the meaning set forth in
Section 4.2(a).
"Advisory
Group" shall have the meaning set forth in Section 2.5.
"Affiliate"
shall mean any Person who directly or indirectly controls
or is controlled by or is under common control with a Party to this
Agreement.
For purposes of this definition, "control" or "controlled" shall
mean ownership
directly or through one or more Affiliates, of fifty percent (50%)
or more of
the shares of stock entitled to vote for the election of directors,
in the case
of a corporation, or fifty percent (50%) or more of the equity
interest in the
case of any other type of legal entity, status as a general partner
in any
partnership, or any other arrangement whereby a Party controls or
has the right
to control the Board of Directors or equivalent governing body of a
corporation
or other entity, or the ability to cause the direction of the
management or
policies of a corporation or other entity. The Parties acknowledge
that in the
case of certain entities organized under the laws of certain
countries outside
of the US, the maximum percentage ownership permitted by law for a
foreign
investor may be less than fifty percent (50%), and that in such
case such lower
percentage shall be substituted in the preceding sentence, provided
that such
foreign investor has the power to direct the management and
policies of such
entity. Without expanding the definition of "control", in the case
of Novartis,
"Affiliate" shall also include for purposes hereof Novartis
Institute for
Functional Genomics, Inc., the Friedrich Miescher Institute for
BioMedical
Research, and Novartis Institute for Tropical Diseases Pte.
Ltd.
"Agreement"
shall have the meaning set forth in the Preamble, and
shall include, for the avoidance of doubt, all Exhibits and
Schedules attached
hereto.
"Alnylam"
shall have the meaning set forth in the Preamble.
"Alnylam
Intellectual Property" shall mean Alnylam Know-How and
Alnylam Patent Rights.
"Alnylam
Know-How" shall mean Know-How now or in the future Controlled
by Alnylam, including Broad RNAi Know-How.
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"Alnylam
Opportunity Notice" shall have the meaning set forth in
Section 2.6(b).
"Alnylam
Opportunity Response" shall have the meaning set forth in
Section 2.6(c)(i).
"Alnylam
Opportunity Response Period" shall have the meaning set forth
in Section 2.6(c)(i).
"Alnylam
Patent Rights" shall mean Patent Rights now or in the future
Controlled by Alnylam, including the Broad RNAi Patent Rights.
"Alnylam
Program" shall have the meaning set forth in Section 2.6(b).
"Alnylam
Program Agreement" shall have the meaning set forth in
Section 2.6(c)(i)(B).
"Alnylam
Property" shall have the meaning set forth in Section 7.2(a).
"Alnylam
Sole Inventions" shall have the meaning set forth in Section
6.1(a).
"Annual Net
Sales" shall mean, with respect to a Licensed Product, the
Net Sales of such Licensed Product during a Contract Year.
"Audit
Rights Holder" shall have the meaning set forth in Section
4.9(a).
"Audit Team"
shall have the meaning set forth in Section 4.9(b).
"Auditee"
shall have the meaning set forth in Section 4.9(a).
"B List"
shall have the meaning set forth in Section 2.1(a).
"Bankrupt
Party" shall have the meaning set forth in Section 8.3.
"Bankruptcy
Code" shall have the meaning set forth in Section 8.3.
"Base
Royalty Amount" shall have the meaning set forth in Section
4.4(e)(ii)(B).
"Blocked
Target" shall mean any Target that either (a) is the subject
of a Dedicated Alnylam Program as of the date that Alnylam receives
the Target
List or Supplemental Target List naming such Target, or (b) is
subject to a
contractual obligation under the terms as of the Effective Date of
a
Pre-Existing Alliance Agreement that would be breached by the
inclusion of such
Target as a Selected Target or Supplemental Target under this
Agreement.
"Blocked
Target List" shall have the meaning set forth in Section
2.1(a).
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"Blocking
RNAi Intellectual Property" shall have the meaning set forth
in Section 4.5.
"Broad RNAi
Intellectual Property" shall mean Broad RNAi Know-How and
Broad RNAi Patent Rights.
"Broad RNAi
Know-How" shall mean all Know-How now or in the future
Controlled by Alnylam, that relates to RNAi technology, products or
processes,
including, (a) the general structure, architecture, or design of
nucleic acid
based molecules which engage RNAi mechanisms in a cell; (b)
chemical
modifications of nucleic acids (including any modification to the
base, sugar or
internucleoside linkage, nucleotide mimetics, and any end
modifications) which
do not abolish the RNAi activity of the nucleic acid molecules in
(a); (c)
manufacturing techniques for the nucleic acid based molecules or
chemical
modifications of (a) and (b); and (d) all uses or applications of
nucleic acid
based molecules or chemical modifications in (a) or (b); but
excluding Know-How
which relates solely to (i) a specific Target or small group of
Targets; or (ii)
delivery technologies which may be broadly employed for delivery of
nucleic acid
based molecules.
"Broad RNAi
Patent Rights" shall mean the Patent Rights listed on
Schedule 1(b), the Patents licensed to Alnylam under the Listed
Alnylam Third
Party Agreements, and all other Patents now or in the future
Controlled by
Alnylam that Cover RNAi technology, products or processes,
including, Patents
that Cover (a) the general structure, architecture, or design of
nucleic acid
based molecules which engage RNAi mechanisms in a cell; (b)
chemical
modifications of nucleic acids (including any modification to the
base, sugar or
internucleoside linkage, nucleotide mimetics, and any end
modifications) which
do not abolish the RNAi activity of the nucleic acid molecules in
(a); (c)
manufacturing techniques for the nucleic acid based molecules or
chemical
modifications of (a) and (b); and (d) all uses or applications of
nucleic acid
based molecules or chemical modifications in (a) or (b); but
excluding Patents
which relates solely to (i) a specific Target or small group of
Targets; or (ii)
delivery technologies which may be broadly employed for delivery of
nucleic acid
based molecules.
"Business
Day" shall mean a day on which banking institutions in
Boston, Massachusetts are open for business.
"Change of
Control" shall have the meaning set forth in Section
2.4(b).
"Co-Fund" or
"Co-Funding" shall have the meaning set forth in Section
4.6(b).
"Co-Fund
Negotiation Period" shall have the meaning set forth in
Section 4.6(c).
"Collaboration Product" shall mean any product that contains one
or
more Discovered RNAi Compound(s) as active ingredient(s).
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"Collaboration Success Milestone" shall mean a decision by
Novartis,
at its sole discretion, during the Research Term that the overall
progress of
the Research Collaboration is such that Novartis wishes to
significantly expand
the scope of its activities in the Field beyond those directed to
Selected
Targets.
"Commercialization" or "Commercialize" shall mean any and all
activities directed to marketing, promoting, detailing,
distributing, importing,
having imported, exporting, having exported, selling or offering to
sell a
product, whether before or after Regulatory Approval for such
product has been
obtained.
"Commercially Reasonable Efforts" shall mean, with respect to
the
efforts to be expended by a Party with respect to any objective,
reasonable,
diligent, good faith efforts to accomplish such objective as such
Party would
normally use to accomplish a similar objective under similar
circumstances, it
being understood and agreed that with respect to the Discovery,
Development or
Commercialization of any Collaboration Product, such efforts shall
be
substantially equivalent to those efforts and resources commonly
used by such
Party for a product owned by it or to which it has rights, which
product is at a
similar stage in its development or product life and is of similar
market
potential taking into account efficacy, safety, approved labeling,
the
competitiveness of alternative products in the marketplace, the
patent and other
proprietary position of the product, the likelihood of regulatory
approval given
the regulatory structure involved, the profitability of the
product, alternative
products and other relevant factors. Commercially Reasonable
Efforts shall be
determined on a market-by-market and product-by-product basis, and
it is
anticipated that the level of effort will change over time,
reflecting changes
in the status of the Collaboration Product and the market(s)
involved.
"Confidential Information" shall mean the terms of this
Agreement
(including the list of Selected Targets and the Targets included on
any Target
List) and all Know-How or other information, including proprietary
information
and materials (whether or not patentable) regarding a Party's
technology,
products, business information or objectives, that is treated as
confidential by
the disclosing Party in the regular course of business or is
otherwise
designated as confidential by the disclosing Party.
"Contract
Quarter" shall mean a calendar quarter ending on March 31st,
June 30th, September 30th and December 31st.
"Contract
Year" shall mean each calendar year ending on December 31.
"Control" or
"Controlled" shall mean, with respect to any intellectual
property right or other intangible property, the possession by a
Party (whether
by ownership, license or "control" (as defined in the definition of
"Affiliate"
above) over an Affiliate having possession by ownership or license)
of the
ability to grant access to, or a license or sublicense of, such
rights or
property.
"Controlled
Contractor" shall mean either (a) a Third Party contractor
such as a contract research organization, contract employee,
consultant and the
like who
5
<PAGE>
merely conducts activities on behalf of a Party, is subject to
Party's
supervision and control, and will not have any rights (other than
non-exclusive
research rights) in any intellectual property created in connection
with such
activities, or (b) a Third Party contract manufacturer.
"Cover",
"Covered" or "Covering" shall mean, with respect to a Patent
Right, that, in the absence of a license granted to a Person under
a Valid Claim
included in such Patent Right, the practice by such Person of an
invention
claimed in such Patent Right would infringe such Valid Claim (or,
in the case of
a Patent Right that is a Patent Application, would infringe a Valid
Claim in
such Patent Application if it were to issue as a Patent).
"CRT
Sublicense Agreement" shall have the meaning set forth in
Section
3.1(f)(ii).
"Dedicated
Alnylam Program" shall mean a bona fide Alnylam Discovery,
Development or Commercialization program directed towards a Target
(a) that is
conducted pursuant to a written research, Development or
Commercialization plan,
and (b) to which Alnylam has dedicated at least [**] immediately
preceding
Alnylam's receipt of the Target List or Supplemental Target List
naming such
Target.
"Dedicated
Novartis Program" shall mean a bona fide Novartis
Discovery, Development or Commercialization program directed
towards a Target
(a) that is conducted pursuant to a written research, Development
or
Commercialization plan, and (b) to which Novartis has dedicated at
least [**]
immediately preceding Novartis's receipt of the Target Inquiry
naming such
Target.
"Develop" or
"Development" shall mean any and all preclinical and
clinical drug development activities, including test method
development and
stability testing, toxicology, animal efficacy studies,
formulation, quality
assurance/quality control development, statistical analysis,
clinical studies,
clinical trials and testing, regulatory affairs, product approval
and
registration, chemical development and development Manufacturing,
packaging
development and Manufacturing and development documentation efforts
in support
of development activities anywhere in the world.
"Discover"
or "Discovery" shall mean any and all research or discovery
activities.
"Discovered
RNAi Compound" shall mean an RNAi Compound directed to a
Selected Target that is Discovered during the course of an Active
Program
(excluding Abandoned Programs that do not become Active Programs
pursuant to
Sections 2.3(b) or 2.6(c)) together with all derivatives of such
RNAi Compound.
For purposes of this definition, "derivative" shall mean a compound
that may
contain modified nucleotides or may have been modified by chemical
or molecular
genetic means but which still, at least in vitro, functions through
an RNAi
mechanism against the same Target.
"Effective
Date" shall have the meaning set forth in the Preamble.
6
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"Encumbered
Field" shall mean:
(a) Until
[**], the treatment, prophylaxis and diagnosis of ocular
microvascular disease in humans with RNAi Products, where "ocular
microvascular
disease" means age-related macular degeneration and [**], including
[**],
including [**]; but specifically excluding [**], such as (by way of
example
only) [**].
(b) Until
[**], or potentially sooner under certain circumstances:
(i) The treatment of any neurodegenerative disease, but
excluding
[**], where "neurodegenerative disease"
means a disease of the brain and/or
spinal cord in humans that is
characterized by the chronic and progressive
death of neurons which leads to the loss
of normal neural function,
including Parkinson's disease,
Huntington's disease, Alzheimer's disease,
and amyotrophic lateral sclerosis, but
excluding [**], using
(ii) [**], where "direct delivery to the human nervous system"
does not encompass [**].
(c) After
any joint decision by Alnylam and a Pre-Existing Alliance
Party to develop a human therapeutic product that includes siRNA(s)
as active
pharmaceutical ingredient(s) to be delivered or approved for
delivery via an
implanted infusion device directly to the human nervous system:
(i) Until [**] years after the date of such decision, or
potentially sooner under certain
circumstances, [**]; and
(ii) For so long as such therapeutic product is under
development
and until its commercial launch, [**];
and
(iii) Following [**] until [**] such product delivered or
approved for delivery via an implanted
infusion device to the human nervous
system.
"Event of
Bankruptcy" shall have the meaning set forth in Section 8.3.
"Excess
Amount" shall have the meaning set forth in Section
4.4(e)(ii)(B).
"Exclusivity
Term" shall mean the term commencing on the Effective
Date and terminating upon the Exclusivity Termination Date. The
"Exclusivity
Termination Date" shall mean (a) the date of termination of the
Research Term,
if this Agreement is terminated pursuant to Section 8.1(a)(ii); (b)
the second
(2nd) anniversary following the expiration or termination of the
Research Term,
if the Selection Term is less than five (5) years in length (except
for the case
where this Agreement is terminated pursuant to Section 8.1(a)(ii));
and (c) the
third (3rd) anniversary following the expiration or termination of
the Research
Term, if the Selection Term is at least five (5) years in
length.
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"Executive
Officers" shall mean Novartis's Chief Executive Officer (or
the officer or employee of Novartis then serving in a substantially
equivalent
capacity) or his/her designee of substantially equivalent rank, and
Alnylam's
Chief Executive Officer (or the officer or employee of Alnylam then
serving in a
substantially equivalent capacity).
"FDA" shall
mean the United States Food and Drug Administration or any
successor agency thereto.
"Field"
shall mean all human, veterinary or agricultural applications,
including processes and products directed to the treatment,
palliation,
diagnosis or prophylaxis of any or all Indications.
"First
Animal Study" shall have the meaning set forth in Section
4.4(a).
"First
Commercial Sale" shall mean the first sale of a Licensed
Product by Novartis or an Affiliate or sublicensee of Novartis to a
Third Party
in a country following Regulatory Approval of such Licensed Product
in that
country or, if no such Regulatory Approval or similar marketing
approval is
required, the date upon which such Licensed Product is first
commercially
launched in such country.
"FTE" shall
mean, in case of an Abandoned Program, Active Program,
Dedicated Alnylam Program, Dedicated Novartis Program or Target
identification/validation services, respectively, the equivalent of
the work of
one (1) scientist, full time for one (1) year, for or on behalf of
a Party,
which equates to a total of [**] per year of scientific work
directly related to
such Abandoned Program, Active Program, Dedicated Alnylam Program,
Dedicated
Novartis Program or Target identification/validation services,
respectively, and
the direct scientific management thereof.
"Gatekeeper"
shall have the meaning set forth in Section 3.1(e)(iv).
"IND" shall
mean an application submitted to a Regulatory Authority to
initiate human clinical trials, including (a) an Investigational
New Drug
application or any successor application or procedure filed with
the FDA, or any
foreign equivalent thereof, and (b) all supplements and amendments
that may be
filed with respect to the foregoing.
"Indemnified
Party" shall have the meaning set forth in Section
9.1(c)(i).
"Indemnifying Party" shall have the meaning set forth in
Section
9.1(c)(i).
"Indication"
shall mean any disease or condition, sign or symptom of a
disease or condition, or symptom associated with a disease or
syndrome.
"Infrastructure Fee" shall have the meaning set forth in
Section
4.3(c).
"Intellectual Property" shall have the meaning set forth in
Section
7.2(a).
8
<PAGE>
"Invalidity
Claim" shall have the meaning set forth in Section 6.4(c).
"IP
Contracts" shall have the meaning set forth in Section 7.2(b).
"Joint
Intellectual Property" shall have the meaning set forth in
Section 6.1(b).
"Joint
Steering Committee" shall have the meaning set forth in Section
2.2(a).
"Know-How"
shall mean any information, inventions, trade secrets or
technology, whether or not proprietary or patentable and whether
stored or
transmitted in oral, documentary, electronic or other form,
Controlled by a
Party that is necessary or useful to (a) the activities
contemplated by the
Research Collaboration, (b) the Discovery, Development,
Commercialization or
Manufacture of RNAi Compounds or RNAi Products, or (c) the practice
of the RNAi
mechanism or technology. Know-How shall include ideas, concepts,
formulas,
methods, procedures, designs, compositions, plans, documents, data,
discoveries,
developments, techniques, protocols, specifications, works of
authorship,
biological materials, and any information relating to research and
development
plans, experiments, results, compounds, therapeutic leads,
candidates and
products, clinical and preclinical data, clinical trial results,
and
Manufacturing information and plans (but excluding any scientific,
regulatory,
pre-clinical or clinical information or data regarding specific
Indications and
any marketing, financial, commercial, personnel and other business
information
and plans); in each case, to the extent necessary or useful to the
activities
contemplated by the Research Collaboration or to the Discovery,
Development,
Commercialization or Manufacture of the RNAi Compounds or RNAi
Products.
"Law" shall
mean any law, statute, rule, regulation, ordinance or
other pronouncement having the effect of law of any federal,
national,
multinational, state, provincial, county, city or other political
subdivision,
domestic or foreign.
"Licensed
Products" shall mean: (a) the Collaboration Products, and
(b) the Adopted Products.
"Licensed
Property" shall have the meaning set forth in Section
7.2(a).
"Listed
Alnylam Third Party Agreement" shall mean an agreement listed
on Schedule 1(l).
"Listed
Alnylam Third Party Payments" shall have the meaning set forth
in Section 4.4(e)(ii)(A).
"Listed
Counterparties" shall mean the Third Party counterparties to
Listed Alnylam Third Party Agreements and their respective
successors in
interest.
"Major
Market Country" shall mean, individually and collectively, the
United Kingdom, France, Germany, Italy, Spain and Japan.
9
<PAGE>
"Manufacture" or "Manufacturing" shall mean any and all activities
and
operations involved in or relating to the manufacturing, quality
control testing
(including in-process, release and stability testing), releasing or
packaging,
for pre-clinical, clinical or commercial purposes.
"Minimum
Quarterly Payment" shall have the meaning set forth in
Section 4.4(e)(iii).
"NDA" shall
mean an application submitted to a Regulatory Authority
for marketing approval of a product, including (a) a New Drug
Application,
Product License Application or Biologics License Application filed
with FDA or
any successor applications or procedures, or any foreign equivalent
thereof, and
(b) all supplements and amendments that may be filed with respect
to the
foregoing.
"Net Sales"
shall mean, with respect to a Licensed Product, the gross
amount invoiced by or on behalf of Novartis or any Novartis
Affiliate, licensee
or sublicensee for that Licensed Product sold to Third Parties
(other than
licensees or sublicensees) in bona fide, arm's-length transactions,
less
customary deductions, determined in accordance with Novartis's
standard
accounting methods and in accordance with International Financial
Reporting
Standards (IFRS) as generally and consistently applied by Novartis,
to the
extent included in the gross invoiced sales price of any Licensed
Product or
otherwise directly paid or incurred by Novartis, its Affiliates or
distributors
with respect to the sale of such Licensed Product, including: (a)
free goods;
(b) cash discounts; (c) direct to customer discounts; (d)
charge-backs; (e)
Medicaid rebates; (f) deductions due for discount card programs;
(g) amounts
repaid or credited by reasons of defects, rejection recalls,
returns; (h)
tariffs, duties, excise, sales, value-added and other taxes (other
than taxes
based on income); (i) delayed ship order credits; (j) all insurance
expense
included in the invoice price; (k) amounts credited for
uncollectible amounts on
previously sold products; (l) deduction of [**] for distribution
and warehousing
expenses; and (m) any other reduction or specifically identifiable
amounts
included in the Licensed Product's gross invoice that are
creditable for reasons
substantially equivalent to those listed above. Sales between or
among Novartis,
its Affiliates or their respective licensees and sublicensees shall
be
disregarded for purposes of calculating Net Sales. Any of the items
set forth
above that would otherwise be deducted from the invoice price in
the calculation
of Net Sales but which are separately charged to Third Parties
shall not be
deducted from the invoice price in the calculation of Net
Sales.
i) In the
case of any sale or other disposal of a Licensed Product
between or among Novartis and its Affiliates, licensees and
sublicensees, for
resale, Net Sales shall be calculated as above only on the value
charged or
invoiced on the first arm's-length sale thereafter to a Third
Party;
ii) In the
case of any sale which is not invoiced or is delivered
before invoice, Net Sales shall be calculated at the time of
shipment or when
the Licensed Product is paid for, if paid for before shipment or
invoice;
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iii) In the
case of any sale or other disposal for value, such as
barter or counter-trade, of any Licensed Product, or part thereof,
other than in
an arm's-length transaction exclusively for money, Net Sales shall
be calculated
as above on the value of the non-cash consideration received or the
fair market
price (if higher) of the Licensed Product in the country of sale or
disposal;
iv) In the
event the Licensed Product is sold in a finished dosage
form in combination with one or more other active ingredients (a
"Combination
Product"), the Net Sales of the Licensed Product, for the purposes
of
determining royalty payments, shall be determined by multiplying
the Net Sales
(as defined above) of the Combination Product by the fraction,
'A/(A+B)' where
'A' is the weighted (by sales volume) average sale price in the
relevant country
of the Licensed Product when sold separately in finished form and
'B' is the
weighted average sale price in that country of the other product(s)
sold
separately in finished form. In the event that such average sale
price cannot be
determined for both the Licensed Product and the other product(s)
in the
Combination Product, Net Sales for purposes of determining royalty
payments
shall be agreed by the Parties based on the relative value
contributed by each
component, such agreement shall not be unreasonably withheld.
"Non-Bankrupt Party" shall have the meaning set forth in Section
8.3.
"Novartis"
shall have the meaning set forth in the Preamble.
"Novartis
Intellectual Property" shall mean all Patent Rights and
Know-How now or in the future Controlled by Novartis that are
necessary or
useful for the conduct of the activities contemplated by the
Research
Collaboration and all Patent Rights that Cover the foregoing
Know-How.
"Novartis
Overpayment" shall have the meaning set forth in Section
4.4(e)(ii)(B).
"Novartis
Sole Inventions" shall have the meaning set forth in Section
6.1(a).
"Owned
Know-How" shall have the meaning set forth in Section 7.2(a).
"Owned
Patents" shall have the meaning set forth in Section 7.2(a).
"Owned
Property" shall have the meaning set forth in Section 7.2(a).
"Party"
shall mean Alnylam or Novartis; "Parties" shall mean Alnylam
and Novartis.
"Patent
Offices" shall have the meaning set forth in Section 7.2(f).
"Patent
Rights" shall mean utility and design patents and all
substitutions, divisions, continuations, continuations-in-part,
reissues,
reexaminations and extensions thereof and supplemental protection
certificates
relating thereto, and all counterparts
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<PAGE>
thereof or substantial equivalents in any country, including
utility models and
industrial designs (collectively, "Patents") and any applications
or provisional
applications for any of the foregoing ("Patent Applications").
"Person"
shall mean any corporation, limited or general partnership,
limited liability company, joint venture, trust, unincorporated
association,
governmental body, authority, bureau or agency, any other entity or
body, or an
individual.
"Phase I
Study" shall mean a study of a product in human volunteers or
patients the purpose of which is preliminary determination of
safety and
tolerability of a dosing regime and for which there are no primary
endpoints (as
recognized by FDA) in the protocol relating to efficacy.
"Phase II
Study" shall mean (a) a dose exploration, dose response,
duration of effect, kinetics, dynamic relationship or preliminary
efficacy and
safety study of a product in the target patient population, or (b)
a controlled
dose ranging clinical trial to evaluate further the efficacy and
safety of a
product in the target patient population and to define the optimal
dosing
regimen.
"Phase III
Study" shall mean a controlled pivotal clinical study of a
product that is prospectively designed to demonstrate statistically
whether such
product is effective and safe for use in a particular Indication in
a manner
sufficient to obtain Regulatory Approval to market such
product.
"Post-IND
Alnylam Program" shall have the meaning set forth in Section
2.6(c)(i)(B).
"Pre-Existing Alliance Agreements" shall mean the agreements set
forth
on Schedule 1(p).
"Pre-Existing Alliance Parties" shall have the meaning set forth
in
Section 3.1(e)(i).
"Pre-IND
Alnylam Program" shall have the meaning set forth in Section
2.6(c)(i)(A).
"Pre-Paid
Adopted Product Fees" shall have the meaning set forth in
Section 4.2(a).
"Product
Liability Claim" shall have the meaning set forth in Section
9.1(a).
"Program
Data" shall have the meaning set forth in Section 6.1(d).
"Redacted
Research Collaboration and License Agreement" shall have the
meaning set forth in Section 5.1.
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"Registration Filing" shall mean an application submitted to a
Regulatory Authority to initiate human clinical trials or for
marketing approval
of a product, including an IND, NDA, a Biologics License
Application, any
equivalent of the foregoing in any jurisdiction, and all
supplements and
amendments that may be filed with respect to the foregoing.
"Regulatory
Approval" shall mean, with respect to a product in a
country, the approval of the applicable Regulatory Authority
necessary for the
marketing and sale of such product in such country.
"Regulatory
Authority" shall mean any federal, national,
multinational, state, provincial or local regulatory agency,
department, bureau
or other governmental entity with authority over the marketing,
pricing or sale
of a pharmaceutical product in a country, including the FDA.
"Research
Collaboration" shall mean the activities of the Parties
under Research Plans to identify and optimize RNAi Compounds
directed against
Selected Targets and develop improved RNAi technology to enable and
enhance the
utility of such RNAi Compounds, upon and subject to the terms and
conditions set
forth in this Agreement.
"Research
Institution" shall mean an academic, non-profit research
institution or hospital that conducts Discovery or Development
activities on
behalf of or in collaboration with Alnylam and to which Alnylam
does not grant
any Commercialization rights under Alnylam Intellectual Property
with respect to
any RNAi Compounds or RNAi Products provided by Alnylam or
Discovered or
Developed in the course of such Discovery or Development
activities.
"Research
Plan" shall have the meaning set forth in Section 2.3(a).
"Research
Term" shall have the meaning set forth in Section
8.1(a)(iii).
"RNAi" shall
have the meaning set forth in the Recitals.
"RNAi
Compound" shall mean any compound that in vitro or otherwise
functions through the mechanism of RNAi and consists of or
encodes
double-stranded RNA, and which double-stranded RNA is optionally
chemically
modified to contain modified nucleotide bases or non-RNA
nucleotides, and
optionally may be administered in conjunction with a delivery
vehicle or vector.
"RNAi
Product" shall mean any product that contains one or more RNAi
Compounds as an active ingredient.
"RNAi
Therapeutic Rights" shall mean the right to Discover, Develop,
Commercialize or Manufacture RNAi Compounds and RNAi Products for
therapeutic
uses.
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"Royalty
Term" shall mean, separately with respect to each Licensed
Product in each country, the period commencing on the First
Commercial Sale of
such Licensed Product in such country and concluding on the later
of (a) the
expiration of the last to expire Alnylam Patents containing a Valid
Claim
Covering the Development, Commercialization or Manufacture of such
Licensed
Product in that country, or (b) [**] after the date of First
Commercial Sale of
such Licensed Product in that country.
"Selected
Target" shall have the meaning set forth in Section 2.1(a).
"Selected
Target Threshold" shall have the meaning set forth in
Section 2.1(a).
"Selection
Term" shall have the meaning set forth in Section
8.1(a)(i).
"Severed
Clause" shall have the meaning set forth in Section 9.4.
"Significant
Pharmaceutical Company" shall have the meaning set forth
in Section 2.4(b).
"Sole
Inventions" shall have the meaning set forth in Section 6.1(a).
"sPOC" shall
mean the selection by Novartis, in its sole discretion,
of a Discovered RNAi Compound for the clinical phase of Development
by Novartis.
The specific criteria used to determine sPOC on a Discovered
RNAi
Compound-by-Discovered RNAi Compound basis shall be set forth in
the applicable
Research Plan.
"Stacking
Reduction" shall have the meaning set forth in Section
4.4(e)(iii).
"Stock
Purchase Agreement" shall mean that certain Stock Purchase
Agreement, dated as of September 6, 2005, between Alnylam and
Novartis Pharma
AG, together with that certain Investor Rights Agreement, between
Alnylam and
Novartis Pharma AG, dated as of September 6, 2005.
"Successful
Completion" shall mean the execution of a study approved
by the Joint Steering Committee in material compliance with all
criteria set
forth by the Joint Steering Committee (but without regard to
results).
"Supplemental Target" shall have the meaning set forth in
Section
2.1(b)(ii).
"Supplemental Target List" shall have the meaning set forth in
Section
2.1(b)(ii).
"Supplemental Target Response Notice" shall have the meaning set
forth
in Section 2.1(b)(ii).
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"Supplemental Target Threshold" shall have the meaning set forth
in
Section 2.1(b)(ii).
"Target"
shall mean: (a) a polypeptide or entity comprising a
combination of at least one polypeptide and other macromolecules,
that is a site
or potential site of therapeutic intervention by a therapeutic
agent; or a
nucleic acid which is required for expression of such polypeptide;
(b) variants
of a polypeptide, cellular entity or nucleic acid described in
clause (a); (c) a
defined non-peptide entity, including a microorganism, virus,
bacterium or
single cell parasite; provided that the entire genome of a virus
shall be
regarded as a single Target; or (d) a naturally occurring
interfering RNA or
microRNA or precursor thereof.
"Target
Inquiry" shall have the meaning set forth on Section
3.1(e)(ii).
"Target
List" shall have the meaning set forth in Section 2.1(a).
"Target
Response Notice" shall have the meaning set forth in Section
2.1(a).
"Third
Party" shall mean any Person other than Alnylam or Novartis and
their respective Affiliates.
"Third Party
Adoption" shall have the meaning set forth in Section
4.2(b).
"Third Party
Adoption Consideration" shall have the meaning set forth
in Section 4.2(b).
"Third Party
Infringement Claim" shall have the meaning set forth in
Section 6.4(a).
"Unblocking
Amount" shall have the meaning set forth in Section
4.4(e)(iii).
"Valid
Claim" shall mean 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 not been cancelled, withdrawn or abandoned, or
been pending
for more than [**].
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ARTICLE II
RESEARCH COLLABORATION
2.1
SELECTION OF TARGETS FOR INCLUSION INTO THE RESEARCH
COLLABORATION.
(a) Initial
Thirty(30) Targets. Within thirty (30) days following the
Effective Date, and from time to time thereafter, Alnylam shall
provide to the
Gatekeeper a list of Targets that are Blocked Targets (a "Blocked
Target List").
During the Selection Term, Novartis may from time to time deliver
to the
Gatekeeper one or more lists of Targets (each such list, a "Target
List") that
Novartis desires to include in the Research Collaboration. Within
two (2) days
following the Gatekeeper's receipt of the Target List, the
Gatekeeper shall
notify Novartis in writing (a "Target Response Notice") which, if
any, of the
Targets identified on such Target List are on the Blocked Target
List most
recently delivered by Alnylam to the Gatekeeper. All of the Targets
on the
Target List that are not on such Blocked Target List shall be
deemed "Selected
Targets" for the purposes of this Agreement, and the Gatekeeper
shall notify
both Parties of the identity of such Selected Targets within the
same two (2)
day time period. Selected Targets that are or have been the subject
of an Active
Program shall be deemed to be on the "A List," and Selected Targets
that are not
nor have not been the subject of an Active Program shall be deemed
to be on the
"B List." Subject to Section 2.1(b), Novartis shall be entitled to
submit
Targets for designation as Selected Targets until an aggregate of
Thirty(30)
Selected Targets (the "Selected Target Threshold") have been
identified pursuant
to the foregoing procedure. Novartis shall submit the first Target
List, which
shall contain at least [**] Targets, within [**] after the
Effective Date.
Without limiting the provisions of Sections 2.6(b) and (c), the
Parties agree
that none of the genes of respiratory syncytial virus (RSV) shall
be available
as a "Selected Target" under the provisions of this Section
2.1.
(b)
Additional Targets. In the event that the Selected Target
Threshold has been reached, Novartis may from time to time during
the Selection
Term either:
(i) upon
written notice to Alnylam, withdraw (for any reason) a B List
Target from treatment as a Selected Target. Thereafter Novartis
shall be free to
designate substitute Targets pursuant to Section 2.1(a) at any
time, up to the
Selected Target Threshold (for the avoidance of doubt, such
substitute Targets
shall not be considered "Supplemental Targets"); or
(ii) deliver
to the Gatekeeper one or more lists of additional
Target(s) (each such list, a "Supplemental Target List"). Within
two (2) days
following the Gatekeeper's receipt of a Supplemental Target List,
the Gatekeeper
shall notify Novartis in writing (a "Supplemental Target Response
Notice")
which, if any, of the Targets identified on such Supplemental
Target List are on
the Blocked Target List most recently delivered by Alnylam to the
Gatekeeper.
All of the Targets on the Supplemental Target List that are not are
on such
Blocked Target List (each such Target, a "Supplemental Target"),
shall be deemed
"Selected Target(s)" for the purposes of this Agreement, and
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the Gatekeeper shall notify both Parties of the identity of such
Supplemental
Targets within the same two (2) day time period. Novartis shall
pay, or cause to
be paid, the payment set forth in Section 4.3(a). Novartis may
designate no more
than ten(10) Supplemental Targets in the aggregate (the
"Supplemental Target
Threshold").
(c) In the
event that a Blocked Target ceases to be a Blocked Target,
Alnylam shall promptly advise the Gatekeeper thereof and it shall
be removed
from the Blocked Target List. In the event that (i) Novartis was
unable to
select a Target as a Selected Target under Section 2.1(a) or a
Supplemental
Target under Section 2.1(b) because such Target was on the Blocked
Target List
as of the date such Target List or Supplemental Target List, as the
case may be,
was received by the Gatekeeper, and (ii) such Target subsequently
ceases to be a
Blocked Target, the Gatekeeper shall promptly notify Novartis
thereof, and
Novartis shall thereafter be permitted to select such Target
subject, in the
applicable case, to the Selected Target Threshold or the
Supplemental Target
Threshold.
2.2 JOINT
STEERING COMMITTEE.
(a)
Constitution; Representatives. The Parties will establish a
Joint
Steering Committee ("Joint Steering Committee"), comprised of three
(3)
representatives designated by Alnylam and three (3) representatives
designated
by Novartis, each of which representatives shall be of the
seniority and
experience appropriate for participation on the Joint Steering
Committee in
light of the functions, responsibilities and authority of such
committee. Each
Party shall make its designation of its representatives not later
than thirty
(30) days after the Effective Date. Each Party may change any one
or more of its
Joint Steering Committee representatives at any time upon written
notice to the
other Party. If a Party's representative is unable to attend a
meeting, such
Party may designate an alternate to attend such meeting in place of
the absent
representative. In addition, each Party may, subject to the other
Party's
consent (not to be unreasonably withheld or delayed), invite
non-voting
employees, and, with the consent of the other Party, consultants or
scientific
advisors (provided they are engaged as such under obligations of
confidentiality
no less protective of the Parties' Confidential Information than as
set forth in
Article V) to attend the meetings of the Joint Steering Committee.
The Joint
Steering Committee shall be dissolved and its activities and
authority
terminated upon the expiration or termination of the Research
Term.
(b)
Authority. The Joint Steering Committee shall be responsible
for
overseeing, managing and auditing the Research Collaboration.
Such
responsibilities shall include:
(i) Providing general oversight of the Active Programs,
including
allocating the appropriate number of
FTEs;
(ii) Periodically reviewing the overall goals, strategy and
progress of the Research
Collaboration;
(iii) Initiating Active Programs;
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(iv) Reviewing proposed Research Plans and considering
additions,
updates or amendments to extant Research
Plans;
(v) Prioritizing the allocation of resources dedicated to the
Research Collaboration;
(vi) Determining whether and which Third Party contractors
should
be engaged in connection with any aspect
of the Research Collaboration;
(vii) Monitoring the pre-clinical Development of Discovered
RNAi
Compounds;
(viii) Resolving any disagreement between the Parties relating
to
the matters set forth in clauses (i)
through (vi) in accordance with the
decision-making procedure set forth in
Section 2.2(e); and
(ix) Discussing any other issues submitted to it by the
Parties.
(c)
Meetings. The Joint Steering Committee shall meet to discuss
the
business of the Research Collaboration within thirty (30) days
after the
Effective Date and, thereafter, at least quarterly until the end of
the Research
Term. In addition, a Party may call a meeting of the Joint Steering
Committee
upon reasonable notice to the other Party, such notice requirement
being deemed
waived by a Party's attendance and participation. The location of
Joint Steering
Committee meetings, when in person, shall alternate between
Novartis's and
Alnylam's offices unless otherwise agreed by the Joint Steering
Committee. The
Joint Steering Committee may also meet by means of a telephone or
video
conference call, and may take action by vote at a meeting or
telephone or video
conference call, or pursuant to a written vote.
(d) Project
Teams. The Joint Steering Committee shall have the
authority to create project teams for the Research Collaboration,
each of which
will meet (via telephone or video conference or in person) no less
frequently
than monthly, and which will report to the Joint Steering Committee
on the
progress of the activities performed on the Research Collaboration
no less
frequently than quarterly. The Joint Steering Committee shall also
have the
authority to create additional subcommittees as needed.
Notwithstanding the
foregoing, the Joint Steering Committee shall not have the
authority to amend or
modify the terms of this Agreement.
(e)
Decision-Making. All decisions of the Joint Steering Committee
shall be made by unanimous vote of the Joint Steering Committee
representatives,
with each Party's Joint Steering Committee representatives
collectively having
one (1) vote, and the goal of all decision making shall be to
achieve consensus.
Upon thirty (30) days prior written notice, either Party may
convene a special
meeting of the Joint Steering Committee for the purpose of
resolving any failure
to reach agreement on a matter within the scope of the authority
and
responsibility of the Joint Steering Committee. If the matter is
not resolved by
the Joint Steering Committee within thirty (30) days after referral
to the Joint
Steering Committee, then: (i) if such failure to reach agreement
relates to a
matter identified in Section 2.2(b)(iv), then Novartis shall have
the right to
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<PAGE>
decide the matter, and (ii) if such failure to reach agreement
relates to a
matter identified in Sections 2.2(b)(i), (ii), (iii), (v), (vi) or
(vii), then
such matter shall be referred to the Executive Officers for
resolution. If such
matter is not resolved by the Executive Officers within fifteen
(15) days after
referral to the Executive Officers, then Novartis shall have the
right to decide
the matter. In exercising its decision-making authority under this
Section
2.2(e), Novartis shall be consistent with the provisions of Section
2.4.
(f) Dispute
Resolution. Any dispute between the Parties with respect
to a matter not within the scope of Sections 2.2(b)(i) through
(vii) (including
whether specific milestone events have occurred) shall be referred
to the
Executive Officers for resolution. If such matter is not resolved
by the
Executive Officers within fifteen (15) days after referral thereto,
then either
Party may seek any and all remedies available under law or equity
with respect
to such dispute.
2.3 ACTIVE
PROGRAMS; RESEARCH PLANS.
(a)
Initiation and Modification of an Active Program. From time to
time during the Selection Term, the Joint Steering Committee shall
initiate,
subject to Section 2.4, one or more research programs (each such
program, an
"Active Program") (i) to identify or optimize RNAi Compounds
directed to a
Selected Target, or (ii) to develop RNAi technology to enable or
enhance the
utility of Discovered RNAi Compounds in the Field. Under the
supervision of the
Joint Steering Committee, Discovery activities to be undertaken
with respect of
each such Active Program shall be set forth in a research plan
(each such plan,
a "Research Plan") that will set forth the Parties' respective
obligations with
respect to such Active Program, including, workflow, deliverables,
timelines,
and budgets, it being understood that Novartis representatives on
the Joint
Steering Committee shall be subject to Novartis's standard budget
procedures.
Any representative of the Joint Steering Committee may, at any time
or from time
to time, submit, on behalf of the Party it represents, a proposed
Research Plan,
or proposed additions, updates or amendments to an extant Research
Plan for its
review. Any such proposed Research Plans or proposed additions,
updates or
amendments shall not become effective until approved, subject to
Section 2.2(e),
in writing by the Joint Steering Committee. The Joint Steering
Committee shall
review and consider any such Research Plans or additions, updates
or amendments
of an extant Research Plan on an expeditious basis, and all such
additions,
updates and amendments approved as set forth above shall, subject
to Section
2.2(e), constitute and be deemed part of this Agreement for all
purposes and
incorporated herein.
(b)
Discontinuation of an Active Program.
From time to
time during the Research Term, the Joint Steering
Committee may elect to discontinue one or more Active Programs
(each such
discontinued Active Program, an "Abandoned Program") and any
such
discontinuation shall constitute a termination of the applicable
Research Plan
governing such Abandoned Program. Alnylam shall be free to continue
any
Abandoned Program on its own in accordance with the following: (x)
until such
time as Alnylam adds substantive value to such Abandoned Program,
Alnylam shall
be permitted to enter into an agreement with a
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Third Party, not subject to Section 2.6(b) and (c), for the
Development or
Commercialization of RNAi Compounds Discovered during the course of
such
Abandoned Program, and (y) at or following such times as Alnylam
adds
substantive value to such Abandoned Program, Alnylam may enter into
an agreement
with a Third Party, subject to compliance with the provisions of
this Section
2.6(b) and Section 2.6(c), for the Development or Commercialization
of RNAi
Compounds Discovered during the course of such Abandoned Program.
From time to
time during the Selection Term, the Joint Steering Committee may
reinstate any
such Abandoned Program and Research Plan, whereby such Abandoned
Program shall
thereafter again be an "Active Program," unless Alnylam has
initiated a bona
fide research program (pursuant to a written research plan) with
respect to such
Abandoned Program and has dedicated [**] the Joint Steering
Committee's decision
to reinstate such Abandoned Program. For the avoidance of doubt,
following the
Joint Steering Committee's election to deem an Active Program as an
Abandoned
Program, Novartis's rights under the "Discovered RNAi
Compound(s),"
"Collaboration Product(s)," and "Selected Target(s)" that are the
subject of
such Abandoned Program shall terminate unless and until such
Abandoned Program
subsequently becomes an Active Program pursuant to Sections 2.3(b)
or 2.6(c).
2.4
STAFFING; INFRASTRUCTURE.
(a) During
the Research Term, the Joint Steering Committee shall
allocate approximately [**] FTEs (the exact number of FTEs to be
determined by
the Joint Steering Committee) to staff each Active Program.
Novartis agrees that
(i) within [**] following the Effective Date, it shall cause the
Joint Steering
Committee to initiate at least [**] Active Programs and allocate at
least [**]
Alnylam-provided FTEs to Active Programs, and (ii) for each year
thereafter
during the Research Term, it shall cause the Joint Steering
Committee to
administer at least [**] Active Programs and allocate at least
[**]
Alnylam-provided FTEs to Active Programs. Novartis or its
Affiliates will fund
the FTEs provided by Alnylam at the rate set forth in Section
4.3(b). Starting
in [**], the Joint Steering Committee will, by [**] of each
Contract Year, give
notice to Alnylam as to how many Alnylam-provided FTEs the Joint
Steering
Committee will allocate to Active Programs for the following
Contract Year, and
Novartis agrees to fund such forecasted FTEs in the aggregate (or
such higher
number as is agreed upon by the Joint Steering Committee). Novartis
or its
Affiliates will also pay Alnylam a quarterly Infrastructure Fee in
support of
each Active Program in accordance with Section 4.3(c).
(b) In the
event of a public announcement that Alnylam has entered
into a definitive agreement to undergo a Change of Control,
Novartis shall have
the right to suspend all of Alnylam's activities (together with
Novartis's
obligations to fund such activities) under each Active Program
until such time
as either (i) Alnylam undergoes such Change of Control, or (ii)
there is a
public announcement that such Change of Control will not occur. The
duration of
the Selection Term shall be tolled for the duration of such
suspension. In the
event that Alnylam undergoes a Change of Control, Novartis shall
have the right,
upon written notice to Alnylam within thirty (30) days after a
Change of
Control, to immediately terminate Novartis's obligations under
Section 2.4(a)
and Alnylam's rights under Section 3.2 (which shall not constitute
a termination
of this Agreement for purposes of Article VIII). In the event that
Novartis
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exercises such termination rights, Alnylam shall immediately cease
working on
all Active Programs and shall promptly return all of Novartis's
Know-How,
Program Data and Confidential Information. For purposes of this
Section 2.4(b),
a "Change of Control" of Alnylam shall be deemed to occur if
Alnylam is involved
in a merger, reorganization or consolidation in which its
shareholders
immediately prior to such transaction would hold less than fifty
percent (50%)
of the securities or other ownership or voting interests
representing the equity
of the surviving entity immediately after such merger,
reorganization or
consolidation, or if there is a bona fide sale of all or
substantially all of
Alnylam's assets or business relating to this Agreement to a Third
Party, or if
a "Significant Pharmaceutical Company" (as defined below)
effectively acquires
control of the management and policies of Alnylam. A "Significant
Pharmaceutical
Company" is a pharmaceutical company, biotechnology company, or
group of such
companies acting in concert, with aggregate annual sales of
pharmaceutical
products greater than [**] U.S. dollars ($[**]).
2.5
SCIENTIFIC STRATEGY AND ADVISORY GROUP.
Promptly
following the Effective Date, the Parties will establish a
scientific strategy and advisory group ("Advisory Group") to
consider overall
strategy for the relevant science and clinical applications of the
Research
Collaboration and the field of RNAi. The Advisory Group will
include the
scientific founders and scientific leadership of Alnylam, including
Dr. Philip
Sharp or his successor as the chair of Alnylam's Scientific
Advisory Board,
together with at least three of the senior scientists of Novartis,
including Dr.
Mark Fishman or his successor in title. The Advisory Group shall
meet with such
frequency as may be established by the Advisory Group (but in no
event less
often than three (3) times per year), and at such times and
locations (or by
telephone or video conference call) as may be established by the
Advisory Group.
The Advisory Group will annually designate an Advisory Group Chair,
and the
Parties shall alternate responsibility for chairing the meetings of
the Advisory
Group, beginning with Novartis. The Advisory Group shall not have
any authority
over the Research Collaboration, including any Research Plan or
Active Program.
No Advisory Group member may delegate his/her participation in the
Advisory
Group.
2.6
RESTRICTIONS ON ALNYLAM.
(a)
Exclusivity. Without limitation to the exclusive rights granted
to
Novartis under Section 3.1, Alnylam shall not, and shall ensure
that its
Affiliates do not (either alone or, directly or indirectly, in
conjunction with
a Third Party) conduct any activities directed towards: (i) the
Discovery
(except in connection with an Active Program) of any RNAi Compound
or RNAi
Products directed to a Selected Target (other than Selected Targets
that are the
subject of Abandoned Programs that do not become Active Programs
pursuant to
Sections 2.3(b) or 2.6(c)) during the Selection Term, or (ii) the
Discovery
(except in connection with an Active Program), Development,
Commercialization or
Manufacture of (A) Discovered RNAi Compounds or Collaboration
Products, or (B)
RNAi Compounds or RNAi Products directed to Selected Targets that
are or were
the subject of an Active Program (other than Abandoned Programs
that do not
become Active Programs pursuant to Sections 2.3(b) or 2.6(c)).
For
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the avoidance of doubt, Alnylam shall not, and shall ensure that
its Affiliates
do not, grant to any Third Party any rights under Alnylam
Intellectual Property
to engage in any of the foregoing activities.
(b)
Permitted Activities Subject to Right of First Offer. So long
as
such activities do not violate the terms of Section 2.6(a) or
Novartis's
exclusive rights under Section 3.1, Alnylam shall retain the right
to Discover,
Develop, Commercialize or Manufacture RNAi Compounds and RNAi
Products directed
at one or more Targets (each, an "Alnylam Program"); provided,
however, that (x)
during the Exclusivity Term, Alnylam or its Affiliates may enter
into agreements
with Research Institutions to Discover or Develop one or more RNAi
Compounds or
RNAi Products or engage Controlled Contractors; and (y) if, during
the
Exclusivity Term, Alnylam or any of its Affiliates seek, directly
or indirectly
in conjunction with a Third Party (other than with a Controlled
Contractor or a
Research Institution or as expressly contemplated pursuant to the
terms as of
the Effective Date of a Pre-Existing Alliance Agreement), to
Discover, Develop,
Commercialize or Manufacture, or to license any Third Party (other
than with a
Controlled Contractor or a Research Institution or as expressly
contemplated
pursuant to the terms as of the Effective Date of a Pre-Existing
Alliance
Agreement) the right to Discover, Develop, Commercialize or
Manufacture any RNAi
Compounds or RNAi Products pursuant to an Alnylam Program, Alnylam
shall first
provide written notice thereof, together with a reasonably detailed
description
of such Alnylam Program (including the relevant Target(s),
Indications and data
showing the performance of the RNAi Compounds involved (to the
extent available,
but not the identity of the RNAi Compounds involved), to Novartis
(an "Alnylam
Opportunity Notice"), and the provisions of Section 2.6(c) will
apply.
(c) Right of
First Offer.
(i) If Novartis notifies Alnylam in
writing within [**] after receipt of
the Alnylam Opportunity Notice (the "Alnylam Opportunity Response
Period"; such
notice, the "Alnylam Opportunity Response") that it wishes to
Discover, Develop
or Commercialize the RNAi Compounds or RNAi Products under such
Alnylam Program,
then:
(A) if such
Alnylam Program is directed to a product with respect to
which the applicable Regulatory Authority
in the United States or one of
the Major Market Countries has not
accepted a bona fide IND filing (a
"Pre-IND Alnylam Program"), then such
Alnylam Program and related RNAi
Compound, product and Targets shall
thereafter be included under this
Agreement with each being treated as an
"Active Program," "Discovered RNAi
Compound," "Collaboration Product," and
"Selected Targets" (provided that
such Targets shall not be treated as
Selected Targets or Supplemental
Targets for the purposes of calculating
the Selected Target Threshold or
Supplemental Target Threshold
respectively) respectively; provided,
however, that without prejudice to the
binding nature of the foregoing, the
Parties [**] to agree upon [**], provided
that in no event shall such [**]
be less than the [**], which [**] shall
include all [**] (determined in
accordance with the [**] under this
Agreement) for the [**] involved in
such Alnylam Program, all [**] with
respect to such Alnylam
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<PAGE>
Program, the Infrastructure Fees which
would have been payable by Novartis
pursuant to Section 4.3(c) if the Alnylam
Program had been an Active
Program, and all milestones which would
have been payable by Novartis
pursuant to Section 4.4(c) if the Alnylam
Program had been an Active
Program; or
(B) if such
Alnylam Program is directed to a product with respect to
which the applicable Regulatory Authority
in the United States or one of
the Major Market Countries has accepted a
bona fide IND filed by Alnylam (a
"Post-IND Alnylam Program"), the Parties
shall use commercially reasonable
efforts to negotiate and execute a
definitive agreement to reflect the
rights and obligations of each Party with
respect to such RNAi Compound (an
"Alnylam Program Agreement") within [**]
after the date Novartis received
the Alnylam Opportunity Notice. The
Alnylam Program Agreement shall include
(i) non-financial terms which are
substantially similar to the terms set
forth herein applicable to "Active
Programs," "Discovered RNAi Compounds"
and "Collaboration Products," (provided
that any Targets covered by such
Alnylam Program shall not be treated as
Selected Targets or Supplemental
Targets for the purposes of calculating
the Selected Target Threshold or
Supplemental Target Threshold,
respectively) and (ii) appropriate financial
consideration after giving effect to the
maturity of Alnylam's Discovery,
Development and Commercialization
activities up through and including the
Alnylam Opportunity Notice. During the
period in which the Parties are
using commercially reasonable efforts to
negotiate and execute an Alnylam
Program Agreement, Alnylam shall give
reasonable consideration to any
Novartis input on any agreements that
Alnylam desires to enter into with
any Research Institution with respect to
such Alnylam Program.
During the Alnylam Opportunity Response Period, Alnylam shall
provide, at
Novartis's reasonable request, information (but not the identity of
the RNAi
Compounds involved) that would be relevant in making a decision
about whether or
not to participate in such Alnylam Program.
(ii) If: (A) Novartis indicates during the
Alnylam Opportunity Response
Period that it has no interest in a Pre-IND Alnylam Program; or (B)
with respect
to Post-IND Alnylam Programs, Novartis and Alnylam are unable,
after using
commercially reasonable efforts, to enter into an Alnylam Program
Agreement
within [**] after the date Novartis received the Alnylam
Opportunity Notice,
then Alnylam and its Affiliates shall for a period of [**]
thereafter be free,
without any further obligation to Novartis, to enter into an
agreement with a
Third Party seeking to Discover, Develop or Commercialize, or to
license any
Third Party to Discover, Develop and Commercialize, any RNAi
Compounds and RNAi
Products pursuant to such Alnylam Program on terms no more
favorable, overall,
to such Third Party than those offered to Novartis under Section
2.6(c)(i).
(iii) If: (A) Novartis indicates during
the Alnylam Opportunity Response
Period that it has no interest in a Post-IND Alnylam Program; or
(B) Novartis
fails to provide Alnylam an Alnylam Opportunity Response prior to
the expiration
of the
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<PAGE>
Alnylam Opportunity Response Period with respect to either a
Pre-IND Alnylam
Program or a Post-IND Alnylam Program, then Alnylam and its
Affiliates shall be
free, without any further obligation to Novartis, to enter into an
agreement
with a Third Party seeking to Discover, Develop or Commercialize,
or to license
any Third Party to Discover, Develop and Commercialize, any RNAi
Compounds and
RNAi Products pursuant to such Alnylam Program.
(d)
Alnylam's Acquisition of Third Party Intellectual Property.
Alnylam may enter into agreements with Third Parties to acquire or
license
rights from such Third Parties so long as Alnylam complies with the
provisions
of Sections 2.6(b) and (c), as applicable, in connection
therewith.
2.7
TECHNOLOGY TRANSFER.
(a)
Information. On a periodic basis as agreed by the Parties, and
promptly following Novartis's reasonable request from time to time,
Alnylam
shall deliver to Novartis or its designated Affiliate, for no
additional
consideration, (i) all Alnylam Intellectual Property specifically
relating to
the Discovered RNAi Compounds, (ii) all Alnylam Intellectual
Property relating
to the Research Collaboration (including each of the Active
Programs), and (iii)
all Alnylam Intellectual Property necessary or useful to the
Discovery,
Development, Commercialization or Manufacture of Discovered RNAi
Compounds or
Collaboration Products. Following the Adoption Date, on a periodic
basis as
agreed by the Parties, and promptly following Novartis's reasonable
request from
time to time, Alnylam shall deliver to Novartis, for no
additional
consideration, all Broad RNAi Intellectual Property that is
necessary or useful
to the exercise of Novartis's rights under the Adoption License.
The information
to be delivered pursuant to the foregoing provisions of this
Section 2.7 shall
include copies of all Patent Rights, Know-How documentation,
copyright
registrations, and applications thereof, Program Data, and all
other
documentation relating to the intellectual property embodied in the
Discovered
RNAi Compounds, whether in human or machine readable form (such
form to be
acceptable to Novartis), and un-redacted copies of agreements that
directly or
indirectly grant or restrict rights in Alnylam Intellectual
Property subject to
compliance with applicable documented confidentiality obligations
and provided
that Alnylam may redact terms that do not relate to Novartis's
rights or
obligations under this Agreement; provided, that, until the earlier
of (x) the
expiration of the Selection Term or (y) such time as Novartis
acquires the
Adoption License, Alnylam will use commercially reasonable efforts
to ensure
that Novartis is granted access to un-redacted copies of agreements
thereafter
entered into directly or indirectly granting or restricting rights
in Alnylam
Intellectual Property (provided that Alnylam may redact terms that
do not relate
to Novartis's rights or obligations under this Agreement).
Additionally, with
respect to each Licensed Product that is not directed to the same
Indication as
an Alnylam product that is the subject of a Dedicated Alnylam
Program, Alnylam
shall deliver to Novartis or its designated Affiliate, for no
additional
consideration, all scientific, regulatory, pre-clinical or clinical
information
or data regarding specific Indications and all marketing,
financial, commercial,
personnel and other business information and plans that are
necessary or useful
to the Discovery, Development, Commercialization or Manufacture of
such Licensed
Product and its related RNAi Compound(s).
24
<PAGE>
(b)
Technology. On a periodic basis as agreed by the Parties, and
promptly following Novartis's reasonable request from time to time,
Alnylam
shall deliver to Novartis or its designated Affiliate, for no
additional
consideration, physical embodiments of (i) the Discovered RNAi
Compounds, (ii)
all Know-How now or in the future Controlled by Alnylam that is
used in the
course of the Research Collaboration (including each of the Active
Programs),
and (iii) all Know-How now or in the future Controlled by Alnylam
that is
necessary or useful to the Discovery, Development,
Commercialization or
Manufacture of Discovered RNAi Compounds or Collaboration Products.
Following
the Adoption Date, on a periodic basis as agreed by the Parties,
and promptly
following Novartis's request from time to time, Alnylam shall
deliver to
Novartis, for no additional consideration, all Know-How Controlled
by Alnylam
that is necessary or useful to the exercise of Novartis's rights
under the
Adoption License.
(c) Without
limiting the generality of any other provision of this
Agreement, Alnylam shall, until the fifth (5th) anniversary of the
termination
or expiration of the Research Term, make its relevant scientific
and technical
personnel available to Novartis to answer any questions or provide
instruction
as reasonably requested by Novartis concerning the items delivered
pursuant to
Section 2.7, in connection with Novartis's Development,
Commercialization and
Manufacture of the Discovered RNAi Compounds and the Licensed
Products.
ARTICLE III
GRANT OF RIGHTS
3.1 ALNYLAM
GRANTS.
(a) Research
Term. Subject to the terms and conditions of this
Agreement (including Sections 3.1(e) and (f)), Alnylam hereby
grants to Novartis
and its Affiliates a worldwide, royalty-free, non-sublicensable
right and
license under Alnylam Intellectual Property to, during the Research
Term, (i)
perform Novartis's obligations under the Research Collaboration,
(ii) engage in
the Discovery of RNAi Compounds in the Field, and (iii) Discover
RNAi Compounds
directed at the Selected Targets (other than Selected Targets that
are the
subject of Abandoned Programs that do not become Active Programs
pursuant to
Sections 2.3(b) or 2.6(c)). The rights granted under clauses (i)
and (ii) shall
be non-exclusive, and the rights granted under clause (iii) shall
be exclusive,
subject to Alnylam's right (itself or through its Affiliates) to
perform its
obligations under the Research Collaboration or to pursue Abandoned
Programs
that do not become Active Programs pursuant to Sections 2.3(b) or
2.6(c).
25
<PAGE>
(b)
Collaboration Products. Subject to the terms and conditions of
this Agreement (including Sections 3.1(e) and (f)), Alnylam hereby
grants to
Novartis and its Affiliates an exclusive (subject to Alnylam's
right (itself or
through its Affiliates) to perform its obligations under the
Research
Collaboration), worldwide, royalty-bearing, sublicensable (subject
to Section
3.1(d)) right and license under Alnylam Intellectual Property to
(i) Discover,
Develop, Commercialize or Manufacture Collaboration Products for
all
applications in the Field, and (ii) to Develop, Commercialize or
Manufacture
Discovered RNAi Compounds.
(c)
Adoption. Upon Novartis's written election during the Research
Term (following such time as the Collaboration Success Milestone
has been
achieved) and Novartis's or its Affiliate's tender to Alnylam of
the Adoption
Consideration (the date of such tender, the "Adoption Date"),
Alnylam hereby
grants, in addition to the licenses granted in Sections 3.1(a) and
(b), to
Novartis and its Affiliates a non-exclusive, worldwide, perpetual,
irrevocable,
royalty-bearing right and license, subject to the terms and
conditions of this
Agreement (including Sections 3.1(e) and (f)), under Broad RNAi
Intellectual
Property to engage in any and all activities in the Field,
including all
Discovery, Development, Commercialization and Manufacturing
activities directed
to the Field (the "Adoption License"). Novartis's rights under the
Adoption
License are non-sublicensable; provided, however, that Novartis may
engage Third
Party contractors, including contract research organizations,
contract
employees, consultants, contract manufacturers and the like.
(d) Novartis
Sublicense Rights. The sublicensing of Novartis's rights
under Section 3.1(b) will be subject to the following provisions:
(i) Novartis's
sublicensees shall have no right to grant further sublicenses
without Alnylam's
written consent, which consent shall not be unreasonably withheld
or delayed;
and (ii) Novartis shall be primarily liable for any failure by its
sublicensees
to comply with, and Novartis guarantees to Alnylam the compliance
by each of its
sublicensees with, all relevant restrictions, limitations and
obligations in
this Agreement.
(e)
Reservation of Rights.
(i) Novartis
acknowledges and agrees that the grants by Alnylam under
Alnylam Intellectual Property set forth in Sections 3.1(a) through
(c) are
subject to, and are limited to the extent of, the rights that
Alnylam has
previously granted and is required to grant under Alnylam
Intellectual Property
to Third Parties (the "Pre-Existing Alliance Parties") under the
terms as of the
Effective Date of the Pre-Existing Alliance Agreements. As and to
the extent
that such rights previously or subsequently granted to Pre-Existing
Alliance
Parties under Alnylam Intellectual Property lapse, terminate or
otherwise revert
to Alnylam, they shall be automatically included in the rights
under Alnylam
Intellectual Property granted to Novartis under Sections 3.1(a)
through (c).
Without limiting the foregoing, (x) Alnylam covenants not to amend
or extend any
Pre-Existing Alliance Agreements in a manner that would further
narrow or limit
the scope of Novartis's rights under Section 3.1(a) through (c),
and (y) Alnylam
covenants not to grant any exclusive rights or licenses under any
Broad RNAi
Intellectual Property except in connection with Alnylam Programs
that are not
acquired by Novartis pursuant to
26
<PAGE>
Section 2.6(c) or as expressly contemplated pursuant to the terms
as of the
Effective Date of Pre-Existing Alliance Agreements, provided, that
the
provisions of this clause (y) shall terminate upon the expiration
of the
Research Term if Novartis has not elected to obtain the Adoption
License. Until
such time as Novartis is no longer precluded as a result of rights
granted under
the terms as of the Effective Date of one or more Pre-Existing
Alliance
Agreements from engaging in Target identification or Target
validation, Alnylam
shall, at its cost and expense, allocate up to [**] in furtherance
of the
Research Collaboration.
(ii)
Novartis further acknowledges that a Pre-Existing Alliance
Party
may from time to time request rights under Alnylam Intellectual
Property with
respect to a particular Target that Alnylam is required, pursuant
to the terms
as of the Effective Date of a Pre-Existing Alliance Agreement, to
grant such
rights to such Pre-Existing Alliance Party with respect to such
Target unless,
among other conditions, such Target is already the subject of an
active program
of Discovery, Development or Commercialization of RNAi Compounds
directed to
such Target by Novartis. In order for Alnylam to fulfill its
obligations under
the Pre-Existing Alliance Agreements, following the Adoption Date,
Novartis
shall, within twenty (20) days following Novartis's receipt of a
written inquiry
from Alnylam (through the Gatekeeper mechanism described in Section
3.1(e)(iv))
with respect to a specified Target (a "Target Inquiry"), notify
Alnylam (through
the Gatekeeper mechanism described in Section 3.1(e)(iv)) in
writing whether or
not such Target is the subject of a Dedicated Novartis Program. If
Novartis so
notifies Alnylam that such Target is the subject of a Dedicated
Novartis
Program, Alnylam shall not grant to such Pre-Existing Alliance
Party the
requested rights under the Broad RNAi Intellectual Property with
respect to such
Target. If Novartis so notifies Alnylam that such Target is not the
subject of a
Dedicated Novartis Program, then Alnylam may grant to such
Pre-Existing Alliance
Party the relevant rights under Broad RNAi Intellectual Property
with respect to
such Target, and Novartis's rights under Sections 3.1(a) or (c)
shall be subject
to such Pre-Existing Alliance Party's rights with respect to such
Target.
Notwithstanding the foregoing, in no event will Alnylam directly or
indirectly
notify or communicate to any Third Party the contents or the
existence of
Novartis's response hereunder without Novartis's prior written
consent, which
may be withheld at Novartis's sole discretion.
(iii) From
time to time during the Research Term, and after the
Adoption Date, following an affirmative decision by Novartis to
initiate a
program directed to the Discovery, Development or Commercialization
of RNAi
Compounds directed to a particular Target, Novartis may inquire of
the
Gatekeeper in writing whether or not such Target is on the Blocked
Target List
by virtue of being subject to a then-current exclusive or
co-exclusive grant
under a Pre-Existing Alliance Agreement or subject of an option,
right of first
refusal or similar right under a Pre-Existing License Agreement in
the
Encumbered Field. The Gatekeeper shall, within two (2) days
following the
Gatekeeper's receipt of such written request from Novartis, notify
Novartis in
writing whether or not such Target is or may be excluded; provided,
however,
that in no event will the Gatekeeper directly or indirectly notify
or
communicate to Alnylam the contents or the existence of Novartis's
inquiry
hereunder without Novartis's prior written consent, which may be
withheld at
Novartis's sole discretion. In the event that such
27
<PAGE>
Target is not on such Blocked Target List, Novartis shall be free
to Discover,
Develop, Commercialize or Manufacture RNAi Compounds and Licensed
Products
directed to such Targets. Notwithstanding the foregoing, a
Pre-Existing Alliance
Party may subsequently request exclusive or co-exclusive rights
from Alnylam
with respect to a particular Target as described in Section
3.1(e)(ii) and the
provisions of Section 3.1(e)(ii) shall control.
(iv)
Gatekeeper. The inquiries and responses made by one Party to
the
other in connection with Sections 2.1 and 3.1(e)(ii) through (iii)
shall be made
in writing to the attention of an independent attorney registered
to practice
before the United States Patent and Trademark Office mutually
agreeable to both
Parties (the "Gatekeeper") who will be bound by confidentiality
obligations to
both Parties. The Gatekeeper's responsibility shall be to ensure
that each Party
complies on an ongoing basis with the terms and conditions of
Sections 2.1 and
3.1(e)(ii) through (iii). Each Party agrees to provide the
Gatekeeper with full
and complete copies of all records and information (including
un-redacted copies
of the relevant Third Party agreements) that are necessary for the
Gatekeeper to
render its determination. In the event that the Gatekeeper
determines that, in
connection with an inquiry or response made by either Party in
connection with
Sections 2.1 or 3.1(e)(ii) through (iii), such Party may not have
complied with
the provisions of one or more of those Sections, the Gatekeeper
shall issue a
written report to both Parties stating with specificity such actual
or suspected
non-compliance, and each Party hereby consents to the disclosure to
the other
Party of any confidential information included in such report
(provided that
such information shall be treated by the Parties' as Confidential
Information
pursuant to Article V). The Parties shall share equally the fees,
costs and
expenses of the Gatekeeper's appointment.
(f)
Contractual Obligations under Listed Alnylam Third Party
Agreements.
(i) For the
avoidance of doubt, the grants by Alnylam under Alnylam
Intellectual Property set forth in Sections 3.1(a) through (c)
include, subject
to Section 3.1(f)(ii), the sublicense of all Alnylam Intellectual
Property that
is not owned by Alnylam, and the license and sublicense of Alnylam
Intellectual
Property acquired or licensed after the Effective Date. Novartis's
rights and
licenses under such Alnylam Intellectual Property are limited to
the rights
granted to Alnylam under Third Party agreements granting Alnylam
rights
thereunder and Novartis shall comply, and cause its Affiliates and
sublicensees
to comply, with those restrictions and other terms applicable to
sublicensees
under such agreements. In the event that Alnylam or its Affiliates
acquires or
licenses any rights under additional Alnylam Intellectual Property
such
additional Alnylam Intellectual Property shall be automatically
included in the
scope of the rights under Alnylam Intellectual Property granted to
Novartis
pursuant to Sections 3.1(a) through (c); provided, however, that in
the event
that such rights thereunder subject Alnylam's or its Affiliates'
sublicensees to
restrictions and other terms, Alnylam shall deliver a copy of such
agreement
(provided that Alnylam may redact terms that do not relate to
Novartis's rights
or obligations under this Agreement). Novartis shall comply, and
cause its
Affiliates and sublicensees to comply, with those restrictions and
other terms
applicable to sublicensees under such agreements. In the course of
acquiring or
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<PAGE>
licensing additional Broad RNAi Intellectual Property or any other
Alnylam
Intellectual Property Covering a Collaboration Product, Alnylam
shall use its
best efforts to ensure that such rights include the right to
sublicense to
Novartis such Broad RNAi Intellectual Property or any other Alnylam
Intellectual
Property Covering a Collaboration Product. Notwithstanding the
foregoing, it
shall not be deemed a breach of this Section 3.1(f)(i) for Novartis
to fail to
comply with a provision of any such Third Party agreement that
Novartis has not
received from Alnylam.
(ii)
Notwithstanding Sections 3.1(a) through (c), the grants by
Alnylam under Alnylam Intellectual Property set forth in Sections
3.1(a) through
(c), shall not include licenses to Patent Rights licensed to
Alnylam or its
Affiliates under the License Agreement between Cancer Research
Technologies
Limited and Alnylam U.S., Inc. (formerly Alnylam Pharmaceuticals,
Inc.) dated
July 18, 2003. The Parties shall simultaneously with the execution
of this
Agreement enter into the agreement substantially in the form set
forth in
Schedule 3.1(f)(ii) (the "CRT Sublicense Agreement").
(g) Alnylam
shall not assign, license or otherwise grant any rights or
dispose of (collectively, a "disposition") with respect to any
Broad RNAi
Intellectual Property or other Alnylam Intellectual Property
Covering a
Collaboration Product without making such disposition expressly
subject to
Novartis's rights under this Agreement.
3.2 NOVARTIS
GRANT.
Novartis
hereby grants to Alnylam and its Affiliates a worldwide,
royalty-free, non-exclusive, non-sublicensable right and license
under Novartis
Intellectual Property to perform Alnylam's obligations under an
Active Program
during the Research Term.
3.3
AFFILIATES.
For the
avoidance of doubt, in granting the rights under Sections 3.1
and 3.2, Alnylam and Novartis are granting, on behalf of their
current and
future Affiliates (other than a Third Party that becomes an
Affiliate of Alnylam
as a result of a Change of Control), such Affiliates' respective
rights under
the Alnylam Intellectual Property and Novartis Intellectual
Property, as the
case may be, that are owned or licensed by such Affiliates. For the
purposes of
this Section 3.3, Novartis's "Affiliates" shall not include
Novartis Institute
for Functional Genomics, Inc., the Friedrich Miescher Institute for
BioMedical
Research or Novartis Institute for Tropical Diseases Pte. Ltd.
3.4 NOVARTIS
FREEDOM TO OPERATE; COMMITMENTS.
Alnylam
acknowledges that Novartis is in the business of Discovering,
Developing, Commercializing and Manufacturing processes and
products in the
Field and nothing in this Agreement or any duties which may be
imposed under
applicable Law shall be construed as restricting such business or
imposing on
Novartis a duty to Discover, Develop, Commercialize or Manufacture
the
Discovered RNAi Compounds or
29
<PAGE>
any Licensed Products to the exclusion of, or in preference to, any
other
process or product, or in any way other than in accordance with its
normal
commercial practices, or to disclose information to Alnylam not
specifically
required hereunder; provided, however, that Novartis shall, itself
or through
its Affiliates, use Commercially Reasonable Efforts to Develop and
Commercialize
Collaboration Products.
ARTICLE IV
FINANCIAL PROVISIONS
4.1 EQUITY
INVESTMENT; UP-FRONT CONSIDERATION.
(a) Equity
Investment. In addition to the monetary payments described
in this Article IV, the Parties have entered into the Stock
Purchase Agreement
and, in connection with the Closing (as defined in the Stock
Purchase
Agreement), Alnylam shall simultaneously with the execution of this
Agreement
issue shares of Alnylam capital stock to Novartis Pharma AG or its
designee upon
payment therefor.
(b) Up-Front
Consideration. In consideration of the rights granted to
Novartis under this Agreement as of the Effective Date, Novartis
shall pay, or
cause to be paid, to Alnylam ten million dollars ($10,000,000)
within ten (10)
Business Days following the Effective Date, of which [**] dollars
($[**]) shall
represent retrospective reimbursement of Alnylam's expenses to date
incurred in
the development of in vivo RNAi technology, and [**] dollars
($[**]) shall
represent an upfront license fee. The foregoing payments shall be
deemed to
include the following amounts: (i) $[**] for a sublicense of the
rights licensed
by Alnylam under the Agreement between the [**] and Alnylam
Pharmaceuticals,
Inc. dated September 17, 2003; and (ii) the payments made in
respect of Section
3.1 of the [**] Sublicense Agreement.
4.2
ADOPTION.
(a) In the
event that Novartis elects, pursuant to the terms of
Section 3.1(c), to exercise its right to acquire the Adoption
License, Novartis
shall, or shall cause one of its Affiliates to, (i) pay to Alnylam
a one-time
technology adoption fee of [**] dollars ($[**]) (the "Adoption
Fee"), and (ii)
advance to Alnylam, in one disbursement, the amount of [**] dollars
($[**])
(such amount, the "Pre-Paid Adopted Product Fees," and together
with the
Adoption Fee, the "Adoption Consideration"). The Pre-Paid Adopted
Product Fees
shall be credited against the unpaid balance of any and all of
Novartis's future
payment obligations with respect to Adopted Products under Section
4.4 (such
future payment obligations, "Adopted Product Obligations") by
applying the
then-current uncredited balance to [**] percent ([**]%) of the
Adopted Product
Obligation owed with respect to each Contract Quarter following the
Adoption
Date, and then reducing the uncredited balance of the Pre-Paid
Adopted Product
Fees by the amount so applied, until the entire amount of the
uncredited balance
has been so credited. The foregoing payments shall be deemed to
include the
following amounts: (i) $[**] for a sublicense of the rights
licensed by Alnylam
under the Agreement between the [**] and
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<PAGE>
Alnylam Pharmaceuticals, Inc. dated September 17, 2003; and (ii)
the payments
made in respect of Section 3.2 of the [**] Sublicense
Agreement.
(b)
Notwithstanding the provisions of Section 4.2(a), in the event
that, during the period of time beginning on the Effective Date and
continuing
until [**] after the Adoption Date, (x) Alnylam or one of its
Affiliates
directly or indirectly grants (by license, option, covenant not to
sue, waiver,
settlement or otherwise) to a Third Party rights that are
substantially similar
to those which may be or have been granted to Novartis under
Section 3.1(c) (a
"Third Party Adoption"), and (y) the aggregate consideration
payable by such
Third Party or obtained by Alnylam or its Affiliates in respect of
such rights
(whether by payment, loan, exercise price, forgiveness of debt,
success
milestones due before such rights may be granted, or otherwise, or
any
combination of the foregoing, or the fair market value thereof, the
"Third Party
Adoption Consideration") is less than the Adoption Consideration
plus the
Collaboration Success Milestone or more favorable to such Third
Party than the
Adoption Consideration plus the Collaboration Success Milestone,
then (A)
Alnylam shall notify Novartis in writing of such Third Party
Adoption
Consideration, and (B) the Adoption Consideration plus the
Collaboration Success
Milestone shall, from time to time, be reduced to the lowest Third
Party
Adoption Consideration then in effect. In the event that the Third
Party
Adoption occurs following Novartis's acquisition of the Adoption
License,
Novartis shall be entitled to deduct the amount of any excess of
the Adoption
Consideration plus the Collaboration Success Milestone over the
Third Party
Adoption Consideration against payment(s) due under Section 4.4.
Compliance with
the terms of this Section 4.2(b) shall be verified by Alnylam's
principal
external auditors (or, if such auditors cannot perform such
verification, a
mutually agreed upon independent Third Party valuation services
firm) who shall,
on an annual basis within ninety (90) days following the end of
each Contract
Year, provide Novartis with written confirmation that shall either
confirm that
the above requirements have been observed in full or, in the case
of
non-compliance, provide full details of the lowest Third Party
Adoption
Consideration.
4.3 RESEARCH
COLLABORATION PAYMENTS.
(a)
Supplemental Selected Target Fee. Upon Novartis's election
pursuant to the terms of Section 2.1(b)(ii) to treat a Supplemental
Target as a
Selected Target, Novartis shall pay, or cause to be paid, a
one-time payment of
[**] dollars ($[**])-per-Supplemental Target within [**] following
the receipt
by Novartis of an invoice therefor in accordance with Section
4.7.
(b) FTE
Funding. During the first [**] of the Selection Term, Novartis
or its Affiliates will fund the FTEs provided by Alnylam pursuant
to Section 2.4
at an annual rate per FTE of [**] dollars ($[**]), pro-rated to the
duration
that such FTEs perform work in an Active Program. After the [**] of
the
Selection Term, the Parties shall enter into good faith
negotiations to adjust
the annual FTE rate applicable to FTEs provided by Alnylam, it
being understood
that the Research Collaboration shall continue during such
negotiations.
Novartis shall pay, or cause to be paid, such reimbursement
quarterly, in
arrears, in accordance with Section 4.7.
31
<PAGE>
(c)
Infrastructure Fee. During the Research Term, Novartis shall
pay,
or cause to be paid, to Alnylam an infrastructure fee (the
"Infrastructure Fee")
of [**] dollars ($[**]) per Contract Quarter for each Active
Program meeting
both of the following criteria: (i) such Active Program was active
for at least
[**] during such Contract Quarter, and (ii) Alnylam provided at
least [**]
within such Contract Quarter for such Active Program. Novartis
shall pay, or
cause to be paid, the Infrastructure Fee quarterly, in arrears, in
accordance
with Section 4.7.
4.4
MILESTONE AND ROYALTY PAYMENTS.
(a) Research
Milestone Payments. In connection with the research and
preclinical Development of Discovered RNAi Compounds directed
against Selected
Targets, Novartis shall pay, or cause to be paid, to Alnylam the
following
one-time payments with respect to each Selected Target upon the
achievement of
the milestone events set forth below:
<TABLE>
<CAPTION>
Milestone
Event:
Payment Amount:
----------------
---------------
<S>
<C>
Successful Completion of a first study of a Discovered
RNAi
$[**]
Compound in animals to evaluate pharmacokinetics/
biodistribution or mechanism of action (e.g., evidence of
knock-down) ("First Animal Study"):
Determination by Novartis to nominate a Discovered
RNAi
$[**]
Compound for sPOC:
</TABLE>
Each of the milestone payments under this Section 4.4(a) shall be
payable only
once in relation to each Selected Target. By way of example, in the
event that
Novartis elects not to proceed with the Development or
Commercialization of an
RNAi Compound directed to a Selected Target for which one or both
of the
foregoing milestone payments have been paid, Novartis shall not be
required to
make any milestone payments previously paid under this Section
4.4(a) with
respect to any back-up RNAi Compound(s) directed at such Selected
Target.
(b) Program
Milestone Payments. In connection with the research and
preclinical Development of Discovered RNAi Compounds, Novartis
shall pay, or
cause to be paid, to Alnylam the following one-time payments upon
the
achievement of the milestone events set forth below:
<TABLE>
<CAPTION>
Milestone
Event:
Payment Amount:
----------------
---------------
<S>
<C>
Successful Completion of First Animal Studies for
Discovered
$[**]
RNAi Compounds directed at a cumulative total of [**] Selected
Targets:
Successful Completion of First Animal Studies
for
$[**]
</TABLE>
32
<PAGE>
<TABLE>
<S>
<C>
Discovered RNAi Compounds directed at a cumulative total of
[**] Selected Targets:
Successful Completion of First Animal Studies for
Discovered
$[**]
RNAi Compounds directed at a cumulative total of [**] Selected
Targets:
</TABLE>
(c)
Collaboration Success Milestone. In connection with the
achievement of the Collaboration Success Milestone, Novartis shall
pay, or cause
to be paid, to Alnylam the amount of [**] dollars ($[**]).
(d) Clinical
Milestone Payments. In connection with the clinical
Development of each Licensed Product against a Target, Novartis
shall pay, or
cause to be paid, to Alnylam the following payments upon the
achievement of the
milestone events set forth below:
<TABLE>
<CAPTION>
Payment for Payment for
Collaboration
Adopted
Milestone
Event:
Products: Products:
----------------
------------- -----------
<S>
<C>
<C>
The earlier of: (i) initiation of
Phase
$[**] See below
I Studies (first human, first visit) in
the United States, or (ii) initiation of
Phase I Studies in the first Major
Market Country:
The earlier of: (i) initiation of
Phase
$[**] See below
II Studies (first patient, first visit)
in the United States, or (ii) initiation
of Phase II Studies in the first Major
Market Country:
The earlier of: (i) initiation of
Phase
$[**] See below
III Studies (first patient, first visit)
in the United States, or (ii) initiation
of Phase III Studies in the first Major
Market Country:
The earlier of: (i) acceptance of
the
$[**] See below
dossier for the first submission of a
bona fide NDA by the FDA, or (ii)
acceptance of the dossier for the first
submission of a bona fide NDA by the
applicable Regulatory Authorities in at
least [**] of the Major Market
Countries:
The earlier of: (i) Regulatory
Approval
$[**] See below
in the United States, or (ii) Regulatory
Approval in at least [**] of the Major
Market Countries:
</TABLE>
33
<PAGE>
The payments required to be made under this Section 4.4(d) for
Adopted Products
shall be as follows:
(1) in the event that the Selection Term
continues for [**], or in the
event that this Agreement is terminated by
Novartis pursuant to Sections
8.2 or 8.3, or in the event that Alnylam
undergoes a Change of Control
during the Selection Term, then the
amounts payable in respect of Adopted
Products under this Section 4.4(d) shall
be [**] percent ([**]%) of the
amounts payable in respect of
Collaboration Products;
(2) in the event that the Selection Term
continues for [**], then the
amounts payable in respect of Adopted
Products under this Section 4.4(d)
shall be [**] percent ([**]%) of the
amounts payable in respect of
Collaboration Products; and
(3) in the event that the Selection Term
continues for [**], then the
amounts payable in respect of Adopted
Products under this Section 4.4(d)
shall be [**] percent ([**]%) of the
amounts payable in respect of
Collaboration Products.
Each of the milestone payments under this Section 4.4(d) shall be
payable only
once in relation to each Target for the first Indication only. By
way of
example, in the event that Novartis elects not to proceed with the
Development
or Commercialization of a Licensed Product directed to a Target for
which one or
more of the foregoing milestone payments have been paid, Novartis
shall not be
required to make any milestone payments previously paid under this
Section
4.4(d) with respect to any back-up Licensed Product(s) directed at
such Target.
In addition, in the event that, with respect to the clinical
Development of a
Licensed Product, Novartis satisfies a clinical milestone under
this Section
4.4(d), Novartis shall pay to Alnylam all earlier milestone
payments under this
Section 4.4(d) that have not otherwise been paid with respect to
such Target
(regardless of whether such earlier milestones have been
satisfied).
(e) Product
Royalties.
(i) Base
Rate. During each relevant Royalty Term, Novartis shall pay,
or cause to be paid, to Alnylam the following royalties on Annual
Net Sales of
each Licensed Product:
34
<PAGE>
<TABLE>
<CAPTION>
Incremental Annual Net Sales of a
Licensed Royalty
Rate Royalty Rate
Product (on a Licensed
Product-by-Licensed Applicable
to Applicable to
Product basis) during the applicable Contract
Collaboration Adopted
Year:
Products: Products:
---------------------------------------------
------------- -------------
<S>
<C>
<C>
Less than or equal to
$[**]:
[**]% See below
Greater than $[**], but less than or equal
to
[**]% See below
$[**]:
Greater than
$[**]:
[**]% See below
</TABLE>
The royalty rate applicable to Adopted Products under the chart set
forth above
shall be as follows:
(1) in the event that the Selection Term
continues for [**], or in the
event that this Agreement is terminated by
Novartis pursuant to Sections
8.2 or 8.3, or in the event that Alnylam
undergoes a Change of Control
during the Selection Term, then the
royalty rate in respect of Adopted
Products under this Section 4.4(e)(i)
shall be [**] percent ([**]%) of the
royalty rate applicable to Collaboration
Products;
(2) in the event that the Selection Term
continues for [**], then the
royalty rate in respect of Adopted
Products under this Section 4.4(e)(i)
shall be [**] percent ([**]%) of the
royalty rate applicable to
Collaboration Products; and
(3) in the event that the Selection Term
continues for [**], then the
royalty rate in respect of Adopted
Products under this Section 4.4(e)(i)
shall be [**] percent ([**]%) of the
royalty rate applicable to
Collaboration Products.
Notwithstanding the foregoing:
(A) if a compulsory license is granted to
a Third Party with respect to a
Licensed Product in any country, Novartis
shall pay to Alnylam the
foregoing percentages on amounts it
receives from compulsory licensees in
such country;
(B) (x) upon the abandonment or withdrawal
of a claim of a published Patent
Application of Alnylam Patent Rights in a
country, or
(y) if the
validity of a Valid Claim of an issued Alnylam Patent Right
in a country is the subject of
administrative or legal action and is later
revoked or held unenforceable or invalid
by a decision of a court or
governmental agency of competent
jurisdiction or is disclaimed or admitted
to be invalid or unenforceable through
reissue, disclaimer or otherwise,
that, in the case of clauses (x) or (y),
was the sole basis for the payment
of royalties by Novartis pursuant to this
Section 4.4(e)(i), Novartis shall
be entitled
35
<PAGE>
to credit such paid amounts against any
future royalties or payments to be
made to Alnylam pursuant to this Section
4.4(e)(i) with respect to such
country. If such claim is the last claim
of any Alnylam Patent Rights in
such country upon which a payment under
this Section 4.4(e)(i) would be
owed, Novartis shall be entitled to a
refund of any payments made in
respect thereof (for the avoidance of
doubt, this clause (B) shall not
apply with respect to sales of a Licensed
Product in a country made during
the first [**] after the date of First
Commercial Sale of such Licensed
Product in such country); and
(C) with respect to each Contract Quarter
during any part of the Royalty
Term remaining after the expiration of the
last to expire Alnylam Patent
Rights containing a Valid Claim Covering
the Development, Commercialization
or Manufacture of the relevant Licensed
Product in the United States or
Japan, the foregoing royalties shall,
solely with respect to such
country's(ies') proportionate share of the
worldwide Annual Net Sales of
such Licensed Product in each tier, be
reduced to [**] percent ([**]%) of
the rate otherwise applicable pursuant to
the foregoing.
For the avoidance of doubt, Novartis's
obligation to pay royalties under
this Section 4.4(e)(i) is imposed only
once with respect to the same unit
of Licensed Product, including by reason
of such Licensed Product being
Covered by more than one Valid Claim of
Alnylam Patent Rights. The amounts
payable under this Section 4.4(e)(i) shall
also be adjusted in accordance
with Sections 4.4(e)(ii) and (iii).
(ii) (A)
Payments in Respect of Alnylam In-Licenses. In addition to
any royalty set forth in Section 4.4(e)(i), during the Royalty
Term, Novartis
shall, subject to Section 4.4(e)(ii)(B), reimburse Alnylam for the
clinical
milestones and royalty payments payable (each such payment, a
"Listed Alnylam
Third Party Payment," collectively, the "Listed Alnylam Third Party
Payments")
to Third Parties pursuant to Listed Alnylam Third Party Agreements
in respect of
Licensed Products. Without limiting the provisions of Section 6.5,
the Parties
shall cooperate to coordinate such reimbursements by Novartis in a
manner that
ensures all amounts payable
