RESTATED DEVELOPMENT AND COMMERCIALIZATION COLLABORATION AGREEMENT

Exhibit 10.12

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RESTATED

DEVELOPMENT AND COMMERCIALIZATION

COLLABORATION AGREEMENT

between

OTSUKA PHARMACEUTICAL CO., LTD.

and

BRISTOL-MYERS SQUIBB COMPANY

TABLE OF CONTENTS

 

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APPENDICES:

 

 

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RESTATED

DEVELOPMENT AND COMMERCIALIZATION

COLLABORATION AGREEMENT

This Restated Development and Commercialization Collaboration Agreement (this “Agreement”) is made and entered into as of October 23, 2001 (the “Restated Agreement Date”), by and between OTSUKA PHARMACEUTICAL CO., LTD. (“Otsuka”), a corporation organized and existing under the laws of Japan, having a principal place of business at 2-9, Kanda Tsukasa-cho, Chiyoda-ku, Tokyo, Japan, and BRISTOL-MYERS SQUIBB COMPANY (“BMS”), a corporation organized and existing under the laws of Delaware, having a principal place of business at Route 206 and Province Line Road, Princeton, New Jersey 08540, USA. This Agreement amends and restates that certain Development and Commercialization Collaboration Agreement between Otsuka and BMS dated September 20, 1999. The Effective Date of the Agreement, as amended and restated here, remains September 20, 1999.

RECITALS

A. Otsuka has developed a compound known as Aripiprazole (the “Compound”) and possesses certain patent rights, know-how, data and information related to such Compound;

B. BMS has considerable experience developing, obtaining regulatory approval of, and commercializing prescription drugs worldwide;

C. In order to complete the development of the Compound into an approved prescription drug and to bring the product to market at the earliest appropriate time, Otsuka has decided that it is necessary to contract with BMS for drug development and commercialization services on Otsuka’s behalf, and BMS agrees to provide such services, on the terms and conditions set forth in this Agreement; and

D. The parties believe this collaboration is essential to complete the development of the Compound and to optimize its commercial potential, to their financial benefit and to the benefit of human health worldwide.

AGREEMENT

NOW, THEREFORE, Otsuka and BMS agree as follows:

 

 

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1. DEFINITIONS

1.1. “Affiliate” of a party shall mean any corporation, firm, association, joint venture, partnership or other entity that directly or indirectly owns or controls, is owned, or controlled by or is under common ownership or control with such party. “Control” of an entity shall mean beneficial ownership of at least fifty percent (50%) of the voting equity or other ownership interests of the entity in question, conferring on the entity who holds such interests the power directly or indirectly to elect a majority of the board of directors or other managing authority of the entity or otherwise to direct the affairs of such corporation, firm, association, joint venture, partnership or other entity.

1.2. “Attributable Bulk” shall have the meaning set forth in Section 5.11.2.

1.3. “BMSLC” shall mean Bristol-Myers Squibb Laboratories Company, a wholly-owned subsidiary of BMS.

1.4. “BMS-OAPI Product Supply Agreement” shall mean, collectively, those certain agreements by which BMS supplies Product for sale in the United States, as described in Section 5.11.6.

1.5. “Bulk Tablets” shall mean the Product containing Compound in tablet form, supplied in bulk (not packaged) quantities, the formulation and specification of such tablets to be as used in the Ongoing Clinical Studies or in such other form(s) as the PDC deems appropriate. For the avoidance of doubt, the Bulk Tablets formulation excludes, and is different from, the Product in the “flash-melt” formulation.

1.6. “Business Days” shall mean the work days (exclusive of weekends and holidays) at the principal place of business of the party burdened with the obligation or undertaking under this Agreement to respond or act within a specified number of Business Days.

1.7. “Call” shall mean a visit by a professional sales representative to a physician or other health care professional licensed to prescribe, dispense or administer prescription drugs, or to an authorized representative of a prospective organizational purchaser of Product, which visit is for the purpose of promoting the sale of Product.

1.8. “Carcinogenicity Study” shall mean that certain two-year carcinogenicity study in rats being conducted by BMS pursuant to a Memorandum of Agreement between BMS and Otsuka effective as of March 29, 1999.

1.9. “Commercialization” shall mean advertising, marketing, promotion, sale and distribution of a product, and activities related thereto, including without limitation those specified in Section 5.3.2(b). When used as a verb, “Commercialize” means to engage in such activities.

 

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1.10. “Competitive Product” shall have the meaning set forth in Section 7.2.

1.1 1. “Compound” shall mean the chemical compound with the following formula: 7-{4- [4-(2,3-dichlorophenyl)-1-piperazinyl]butoxy}-3,4-dihydro-2(1 H)-quinolinone, in the chemical form as used in the Ongoing Clinical Studies, known as Aripiprazole.

1.12. “Compound Form” shall mean any of the salts, esters, amides, hydrates, solvates and metabolites of the Compound.

1.13. “Co-Promotion” shall mean promotion of the Product by BMS and Otsuka (and their Affiliates) under a single regulatory approval, registration and Trademark. When used as a verb, “Co-Promote” shall mean to engage in such activities.

1.14. “Co-Promotion Countries” shall mean the United States of America and its territories and possessions, France, Spain, Germany and the United Kingdom, and Italy if it becomes legally permissible to Co-Promote in Italy.

1.15. “Distributor” shall have the meaning set forth in Section 5.3.12.

1.16. “Effective Date” shall mean September 20, 1999.

1.17. “EMEA” shall mean the European Agency for the Evaluation of Medicinal Products.

1.18. “European Union” shall mean (i) the member countries of the European Union (i.e., as of the Restated Agreement Date, Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxemburg, Netherlands, Austria, Portugal, Finland, Sweden and the United Kingdom); (ii) those additional countries that here after become members of the European Union; and (iii) for purposes of this Agreement (except to the extent expressly provided otherwise), Norway, Switzerland and Iceland.

1.19. “FDA” shall mean the United States Food and Drug Administration, or the successor thereto.

1.20. “Field” shall mean, in the case of Product containing Compound or a Compound Form, prescription pharmaceutical agents for all uses and indications in humans; in the case of Product containing a Related Compound, “Field” shall mean prescription pharmaceutical agents for all Neuroscience Indications in humans. For the sake of clarification, “Field” excludes, and the scope of the Commercialization rights granted by Otsuka to BMS in this Agreement does not include, any products containing a Related Compound for any uses or indications other than Neuroscience Indications in humans.

 

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1.21. “First Commercial Sale” shall mean, in each country of the Territory, the date that Product (or a Competitive Product, as applicable in Section 7) is first sold pursuant to an approved NDA or MAA in a commercial transaction intending that Product (or Competitive Product, as the case may be) be used by an end user. For the sake of clarification, Product (or Competitive Product, as the case may be) sold, distributed or used only for clinical trials or experimental purposes shall not establish the date of First Commercial Sale.

1.22. “Global Floor Price-Based Adjustment” shall have the meaning set forth in Section 5.11.3.

1.23. “Improvements” shall have the meaning set forth in Section 4.5.5.

1.24. “IND” shall mean Investigational New Drug Application fled with the FDA.

1.25. “JCC” shall mean the Joint Commercialization Committee described in Section 5.1.

1.26. “Launch Date” shall mean the first date on which the Product is actively detailed in a country in the Territory.

1.27. “MAA” shall mean a Marketing Authorization Application or other application fled with the regulatory authorities of a country, or with an agency representing a group of countries, including the EMEA, outside the United States to obtain marketing authorization for a pharmaceutical product in such country or countries. “MA” shall mean the Marketing Authorization resulting from the approval of an MAA.

1.28. “Marketing Plan(s)” shall have the meaning set forth in Section 5.2.

1.29. “NDA” shall mean a New Drug Application fled with the FDA.

1.30. “Net Sales” in a country or region shall mean, with respect to Product, the gross amount invoiced by Otsuka, BMS or their respective Affiliates (or by BMS’s Sublicenses in the Rest of Territory) to non-Affiliate third-party purchasers for the sale or distribution of Product in such country or region, as the case may be, in the Territory, less the following amounts, but only to the extent included in the invoiced amount:

(i) customary trade, quantity and cash discounts actually allowed (exclusive of discounts given to promote sales of product other than Product); (ii) customary rebates, allowances, chargebacks, credits, refunds and other price adjustments actually granted and made to customers for rejected, returned or recalled goods, or price reductions; (iii) rebates, credits, charge-back and prime vendor rebates, fees, reimbursements or similar payments or credits granted or given to wholesalers and other distributors, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance

 

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organizations or other institutions or health care organizations, and price reductions/adjustments required by law, regulations or contract, including, without limitation, those paid in connection with sale of Product to governmental or regulatory authorities or programs; (iv) transportation and insurance costs incidental to the sale of Product; and (v) any tax, tariff customs duties, excise or other duties or other governmental charge (other than an income tax) levied on the sale, transportation or delivery of Product and borne by the seller thereof. Such deductions shall in each case be related specifically to the Product (except to the extent this is not practicable, in which event such deductions shall be allocated in the ratio of gross sales of the Product to the total gross sales of all products to which such deductions apply) and shall be actually allowed to or taken by non-Affiliate third-party purchasers and not otherwise recovered by or reimbursed from the third-party purchasers to BMS, Otsuka or their Affiliates or Sublicensees. For the sake of clarification, no sales to BMS’s, Otsuka’s or their Affiliates’ or Sublicensees’ distributors or agents shall, unless they are non-Affiliate third-party purchasers, be considered as sales for the purpose of this definition, and only sales (and all sales) to non-Affiliate third-party purchasers shall be the basis for determining the amount of Net Sales; provided that, if BMS, Otsuka or their Affiliates or Sublicensees furnish Product directly or indirectly to an end user in a commercial transaction for which BMS, Otsuka or their Affiliates or Sublicensees receive consideration other than in the form of cash, or if BMS, Otsuka or their Affiliates or Sublicensees are the ultimate commercial end users of Product, the value of Product so furnished or used shall be included in Net Sales; in such case, Net Sales of Product so furnished or used by BMS, Otsuka or their Affiliates or Sublicensees shall be determined by multiplying the quantity of Product so furnished or used during a given calendar quarter by the average selling price of Product to non-Affiliate third-party purchasers in the same country during the same calendar quarter. In the case of a Product containing the Compound, a Compound Form or a Related Compound in combination with other active therapeutic ingredients, Net Sales of such combination product shall be determined as follows: Net Sales as defined above shall be multiplied by a fraction, the numerator of which shall be the average selling price of such quantity of Product as contains one (1) gram of the Compound, the Compound Form or the Related Compound as the sole active therapeutic ingredient, and the denominator of which shall be the average selling price of such quantity of combination Product as contains one (1) gram of the Compound, the Compound Form or the Related Compound.

1.31. “Neuroscience Indication” shall mean any indication for the treatment in humans of schizophrenia, schizo-affective disorder, psychotic disorder, anxiety, panic disorder, attention deficit disorder, Alzheimer’s dementia, bipolar disorder, obsessive-compulsive disorder, Huntington’s Chorea, Tourette syndrome and any other indication that rises from the pharmacological action of Compound, a Compound Form or a Related Compound on the central nervous system.

 

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1.32. “Non-Commercial Compound Price” shall have the meaning set forth in Section 5.11.2(a)(5).

1.33. “Non-Patent Country” shall mean any country in the Rest of Territory in which no Patent Rights exist on the date of First Commercial Sale of Product in such country covering the Product being sold.

1.34. “OAPI” shall mean Otsuka America Pharmaceutical, Inc., an Affiliate of Otsuka in the United States.

1.35. “Ongoing Clinical Studies” shall mean those clinical studies identified as such in Appendix C. Ongoing Clinical Studies are a subset of Otsuka Clinical Studies.

1.36. “Otsuka-BMS Compound Supply Agreement” shall mean, collectively, those certain agreements by which Otsuka supplies Compound to BMS for formulation into Product for sale in the United States and the Rest of Territory, as described in Section 5.11.5.

1.37. “Otsuka Clinical Studies” are those clinical studies identified in Appendix C, comprised of the Ongoing Clinical Studies listed in Part A of Appendix C and eight (8) additional specified studies listed in Part B of Appendix C.

1.38. “Patent Country” shall mean any country in the Rest of Territory in which a Patent Right exists on the date of First Commercial Sale of Product in such country covering the Product being sold.

1.39. “Patent Rights” shall mean the patents listed in Appendix A and all other patents and patent applications (and patents issuing from such applications) that become owned, solely or jointly, by Otsuka or any of its Affiliates during the term of this Agreement or to which Otsuka or any of its Affiliates otherwise have or acquire the right to grant licenses or sublicenses in the Territory, and which generically or specifically relate to the Compound, Compound Form(s), Related Compound(s) or Product; in each case including all divisionals, continuations, continuations-in-part, reissues, renewals, reexaminations, extensions and substitutions, and all applications therefor, and all counterparts thereof throughout the Territory.

1.40. “PDC” shall mean the Product Development Committee described in Section 4.1.

1.41. “Primary Position” shall mean a product presentation in a Call in which the sales representative promotes a particular product first in the Call and emphasizes and promotes that product more than any other product in the Call.

 

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1.42. “Product” shall mean any prescription, finished, human pharmaceutical product, in any formulation, in the Field containing Compound, a Compound Form or a Related Compound.

1.43. “Product Development Plan” shall mean that Full Development and Commercialization Plan described in Section 4.2 developed and approved by the PDC, and modifications and updates thereto approved by the PDC from time to time.

1.44. “Purchase Price” shall have the meaning set forth in Section 5.11.2.

1.45. “Quarterly Adjustment” shall have the meaning set forth in Section 5.11.2.

1.46. “Related Agreements” shall mean the Otsuka-BMS Compound Supply Agreement, the BMS-OAPI Product Supply Agreement, and the other agreements described in Section 15.5.

1.47. “Related Compound” shall mean any compound, other than the Compound and Compound Forms, that is covered by U.S. Patent Rights or which, if included in and made, used or sold as products in the United States prior to expiration of the U.S. Patent Rights, would infringe the U.S. Patent Rights.

1.48. “Reserved Territory” shall mean Japan, People’s Republic of China, Republic of China (Taiwan), North Korea, South Korea, The Philippines, Thailand, Indonesia, Pakistan and Egypt, subject to any removal of one or more countries from the Reserved Territory as provided in Section 5.4.2(a).

1.49. “Rest of Territory” shall mean the countries in the Territory outside of the European Union and the United States.

1.50. “Royalty Term” shall mean, with respect to each of the Patent Countries, the period beginning on the date of the First Commercial Sale of Product in such Patent Country and ending either (i) for all Patent Countries taken as a group, and not on a country-by-country basis, on the date when there is no longer any Valid Claim under the Patent Rights covering the Product being sold in any country within the group of Patent Countries, or (ii) on a country-by-country basis within the group of Patent Countries, on the date that is ten (10) years after the last day of the month in which the First Commercial Sale of Product in such country occurred, whichever date occurs later. With respect to each of the Non-Patent Countries, “Royalty Term” shall mean the period beginning on the date of the First Commercial Sale of Product in such Non-Patent Country and ending, on a country-by-country basis within the group of Non-Patent Countries, on the date that is ten (10) years after the last day of the month in which the First Commercial Sale of Product in such country occurred. For purposes of this Section 1.50, “Valid Claim” shall mean a Valid Claim in a Patent Right which would be infringed by the manufacture, use or sale of the Product being sold absent a license under

 

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such Patent Right. The foregoing applies to royalties due on Net Sales in the Rest of Territory, in accordance with Section 5.9.2(a). Royalties due on Net Sales in the United States shall be paid in accordance with Section 5.11.7.

1.51. “Secondary Position” shall mean a product presentation in a Call in which the sales representative promotes a particular product second in the Call and emphasizes and promotes that product more than any other product in the Call except for the product in the Primary Position.

1.52. “Sublicensee” shall mean any person or entity to which BMS sublicenses any of the rights granted in Section 5.4 of this Agreement pursuant to Sections 5.4.1(b) or 5.4.2.

1.53. “Target Product Profile” shall be as set forth in Appendix B hereto.

1.54. “Tentative Price” shall have the meaning set forth in Section 5.11.2(b).

1.55. “Territory” shall mean the entire world except for the Reserved Territory; provided that hereafter countries may be removed from and added to the Territory in accordance with the provisions of this Agreement.

1.56. “Trademark” shall mean any trademark, trade name, domain name, brand name, logo and design, whether registered or not, used during the term of this Agreement in connection with the identification, promotion, marketing or sale of Product in the Territory.

1.57. “U.S. Patent Rights” shall mean U.S. Patent No. 4,734,416 (including, for the sake of clarification, its divisional: U.S. Patent No. 4,824,840) and U.S. Patent No. 5,006,528, and all divisionals, continuations, continuations-in-part, reissues, renewals, reexaminations, extensions and substitutions, and all applications therefor.

1.58. “Valid Claim” shall mean a claim in a Patent Right which has not expired, lapsed, been canceled or become abandoned and has not been finally found to be invalid or unenforceable by an unreversed or an unappealable final decision or judgment of a court of other governmental authority of competent jurisdiction.

2. BACKGROUND AND SCOPE OF COLLABORATION

Through years of extensive and costly research and development, Otsuka has developed the Compound, which it believes can be developed into Product having considerable worldwide commercial and therapeutic potential. Recognizing the high cost and complexity of necessary further development, and the significant accompanying commercial risks, Otsuka has concluded that, in order to achieve the full potential of the Compound and Product, it is necessary to collaborate with another company. BMS has

 

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considerable experience developing, obtaining regulatory approval of and commercializing prescription drugs worldwide, and BMS shares Otsuka’s views as to the commercial and therapeutic potential of the Compound and Product.

Accordingly, as provided in this Agreement, Otsuka and BMS agree to collaborate on the continued development and Commercialization of Product. The parties believe this collaboration, on the terms and conditions set forth in this Agreement, is essential to achieve the goal of completing the development of Product and making it available to customers throughout the Territory at the earliest possible time. The parties hope to achieve commercial success through this collaboration, and they also believe that this collaboration will be to the benefit of human health worldwide.

As described in detail in this Agreement, Otsuka hereby retains BMS, as a contract service provider on behalf of Otsuka in the United States and the European Union, to continue the development of Product in collaboration with Otsuka and to Commercialize the Product in collaboration with Otsuka. Otsuka or its Affiliates will be the holder of the Product NDA in the United States and the MA(s) in the European Union, and, to the maximum extent permissible, BMS will Commercialize Product in the United States and the European Union on behalf of Otsuka, under Otsuka Trademark(s), recording Product sales in the name of Otsuka or its Affiliates. Otsuka retains the option to Co-Promote Product in the United States and the other Co-Promotion Countries in the European Union. Otsuka also retains the Reserved Territory for its Commercialization.

As provided below, BMS has an exclusive license to Commercialize Product in the Rest of Territory (countries in the Territory outside the United States and the European Union).

3. MILESTONE PAYMENTS

3.1. Milestone Payments .

In partial consideration of the commercialization rights granted to it in this Agreement, BMS shall pay the following amounts to Otsuka, in accordance with Section 5.9.6, at the times indicated:

3.1.1 Execution of the Agreement .

[*] within ten (10) Business Days of the Effective Date of this Agreement;

3.1.2 NDA .

[*] within thirty (30) days of the filing of the first NDA for Product in the United States.

 

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3.1.3 MAA .

[*] within thirty (30) days of the fling of the first MAA for Product in the European Union or any country thereof.

3.1.4 NDA Approval .

[*] within thirty (30) days of the first NDA approval for Product in the United States.

3.1.5 MAA Approval .

[*] within thirty (30) days of the first MAA approval for Product in the European Union or any country thereof.

3.2. No Refunds; Other Payments .

Except only as provided in Section 12.2(b) (referring to the refund of certain milestone payments in the event of termination due to QTc problem), under no circumstances are the payments under Section 3.1 refundable to BMS, or creditable against royalties or any other payments due from BMS to Otsuka, or subject to setoff against amounts due from Otsuka to BMS. The payments described in Section 3.1 are in addition to other payments to be made by BMS to Otsuka, and by Otsuka to BMS, as provided elsewhere in this Agreement. Otsuka shall have the right to retain all milestone and other payments received from BMS prior to any early termination of this Agreement, except as provided in Section 12.2(b).

4. PRODUCT DEVELOPMENT; REGULATORY MATTERS

4.1. Product Development Committee .

4.1.1 Formation of the PDC .

Immediately after the Effective Date, BMS and Otsuka formed a Product Development Committee (the “PDC”), which committee shall coordinate, oversee and direct the development efforts and related regulatory matters for Product throughout the Territory and the parties’ efforts and activities in connection therewith. It is intended that each party have equal status, representation and decisionmaking power with respect to all PDC matters.

4.1.2 PDC Composition and Governance .

Each party shall have equal representation and participation on the PDC. Each party shall have (in its discretion) up to seven (7) members on the PDC, shall designate members on the PDC in writing, and shall promptly advise the other party if it substitutes

 

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any of its members. If one or more members of the PDC are unable to attend by a meeting, the party that appointed the non-attending member or members may designate a substitute or substitutes, as the case may be, to serve in place of the absent member or members. The parties shall each be entitled to cause such other representatives as they may deem necessary or appropriate to attend and participate in PDC meetings from time to time.

The PDC shall be co-chaired by an Otsuka member and a BMS member (each a “Co-Chair”) designated by the respective parties. All decisions of the PDC shall be approved in writing by both Co-Chairs. All decisions shall require the unanimous, affirmative vote of the parties, with each party entitled to one vote on the PDC regardless of the number of members attending the meeting. Each party’s vote shall be cast by its Co-Chair or the Co-Chair’s designee. In the event that the parties fail to reach a unanimous decision on any issue before the PDC, the issue shall be referred to and resolved as quickly as reasonably possible by the joint decision of the respective heads of the parties’ research and development divisions (currently Mr. Kazuhiro Tomita in the case of Otsuka, and Dr. Peter S. Ringrose in the case of BMS); disagreements not resolved at that level shall be referred to and resolved in accordance with Section 14.

The PDC shall establish such PDC subcommittees as it deems appropriate to address the issues falling within its purview, such subcommittees to have equal representation and participation by both parties, with the same governance as described above (each party to appoint a Co-Chair; each Co-Chair to have one vote; decisions to be unanimous, failing which they shall be referred up to the PDC). The PDC shall coordinate closely with the JCC, including (without limitation) with respect to studies to be conducted under the authority of the PDC deemed by the JCC to be advisable to optimize the commercialization of Product.

4.1.3 Meetings .

The PDC shall meet as frequently as either party may reasonably request and at such times and places as they select but, in any event, at least twice yearly throughout the term of this Agreement (unless the parties mutually agree that no further meetings are necessary). Unless the Co-Chairs agree otherwise in writing, the location of meetings of the PDC shall alternate between the offices of BMS and the offices of Otsuka, with the first meeting to be held at BMS’s offices. All costs of participation by each member in the activities of the PDC shall be borne by the party appointing such member. The Co-Chairs shall appoint a secretary who shall maintain the records of the PDC and shall keep minutes of the meetings of the PDC. The records and minutes shall be subject to written ratification by the Co-Chairs, and the secretary shall distribute minutes to all members of the PDC. Any PDC matter may be decided by the Co-Chairs jointly without submission for review by all PDC members.

 

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4.1.4 Responsibilities of the PDC .

As provided in Section 4.2, the PDC shall meet promptly after the Effective Date in order to approve a plan (the Product Development Plan) for the rapid and orderly continuation of the development of Product in conformity with all applicable regulatory requirements and for the carrying out of clinical studies to be sponsored by BMS and Otsuka, respectively. The PDC shall be an ongoing, operational committee (and not merely an advisory body) responsible for both decisionmaking and supervision of the implementation of all phases of the development process, including post-marketing development, and all related regulatory matters. The PDC shall have final authority regarding necessary or advisable clinical studies to be conducted in order to optimize the Commercialization of Product, shall review the implementation of the Product Development Plan, and shall discuss and agree upon any additions or modifications to the Product Development Plan. In addition (and without limitation), the PDC shall discuss and agree upon the regulatory approval, including product labeling, for Product in the Territory, related strategies, and any issues or questions raised by any governmental agency or regulatory body in the Territory regarding Product or its development or regulation. Further, the PDC shall discuss and approve plans for, and the status of efforts in connection with, the development of new Product indications and formulations. Without limiting the above, the PDC shall have responsibility for decisionmaking regarding, and supervision of the implementation of new indications and formulations; all pre-launch and post-launch clinical studies (including, without limitation, Phase IIIb and Phase IV studies); pharmacoeconomic studies; registration and ongoing regulatory matters (FDA, DDMAC, EMEA or otherwise); product labeling; and chemistry, manufacture and control (CMC; including specifcations for Compound and Product); but excluding government reimbursement pricing, which shall be the responsibility of the JCC.

4.2. Product Development Plan .

After the Effective Date, BMS developed a proposed overall, continuing plan for the development, regulatory approval and continuing study of Product in the Territory. BMS submitted a draft of the plan (the Full Development and Commercialization Plan) to the PDC for its consideration, modification as it deemed appropriate, finalization and approval. After such consideration and modification, the PDC approved the plan (as indicated by the written approval of the Co-Chairs of the PDC). The Full Development and Commercialization Plan approved by the PDC is set forth or incorporated by reference in Appendix D and is hereby incorporated into this Agreement (such plan, as it is approved and as it may hereafter be modified and updated by the PDC, is referred to as the “Product Development Plan”). Each party shall use all commercially reasonable efforts to carry out its respective obligations under the Product Development Plan. The Product Development Plan sets forth, and shall continue to set forth, the detailed outlines and timelines of the scientific, medical, clinical, regulatory and other activities to be

 

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undertaken for the purpose of obtaining, as soon as reasonably practicable, initial and subsequent marketing approvals, providing market support, and developing any and all indications, formulations, dosage and dosing regimes for Product, all of which activities shall be undertaken by BMS and Otsuka at their respective risk and expense in accordance with the delineation of obligations set forth in Sections 4.3.2 and 4.3.3 (unless the parties mutually agree otherwise in writing). Such timelines shall include, without limitation, projected fling dates for the NDA in the United States and an MAA in the European Union. In developing and modifying the proposed Product Development Plan, and during the course of its implementation, BMS shall take into consideration such of Otsuka’s clinical, regulatory, commercial and scheduling requirements for the development, regulatory approval and marketing of Product in the Reserved Territory as Otsuka communicates to the PDC from time to time. Without limiting the above, BMS recognizes that there will be certain clinical studies, identified in Appendix E, that are essential to regulatory approval of Product in Japan (part of the Reserved Territory), and that may also be required or desirable for the registration or Commercialization of Product in the Territory; to the extent practicable, the parties, in developing and implementing the Product Development Plan, shall give consideration to Otsuka’s desire that BMS expeditiously complete such studies (and analyze the results of, and obtain final reports regarding, such studies); provided, however , if the PDC determines that any study listed in Appendix E is not required or desirable for registration or Commercialization of Product in the Territory, then BMS shall have no obligation to perform or pay for such study. BMS and Otsuka will also cooperate with one another, and with governmental agencies, in complying with requests from such agencies for the verification of clinical data and the inspection of foreign clinical sites relating to the approval and marketing of Product.

4.3. Obligations for Product Development .

4.3.1 Co-Development .

The parties intend that the development of Product be a joint endeavor between them, not only with respect to decisionmaking, but also in the implementation of the Product Development Plan. Accordingly, as provided in greater detail in Section 5.7 below, representatives of Otsuka shall be closely involved in the implementation of the Product Development Plan and all other plans and programs adopted by the PDC and in the activities and deliberations, including at the staff level, leading to the formulation of strategy and plans prior to PDC decisions and thereafter. BMS agrees to involve Otsuka as participant in all activities with respect to planning, development (including protocol development) and implementation of the clinical studies to be carried out by BMS.

 

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4.3.2 Otsuka Obligations for Product Development .

Otsuka shall be and shall remain (subject to the terms of this Agreement) ultimately and solely responsible for carrying out to completion the Otsuka Clinical Studies listed in Appendix C, at its sole cost, expense and risk. Notwithstanding the foregoing, Otsuka shall be deemed to have completed the Otsuka Clinical Studies upon providing raw datasets, tables and listings to BMS; whereupon BMS shall, at its sole cost, expense and risk, be responsible for data compilation and analysis and preparation of study reports based thereon, in each case with the full participation and involvement of Otsuka. Otsuka shall also fund the Carcinogenicity Study being conducted by BMS.

4.3.3 BMS Obligations for Product Development .

Other than the Otsuka Clinical Studies undertaken by Otsuka as provided in Section 4.3.2, BMS shall be and shall remain (subject to the terms of this Agreement) ultimately and solely obligated, at its expense, to implement all decisions of the PDC relating to the development, clinical studies and regulatory approval and regulatory compliance of Product in the Territory. Without limiting the foregoing, BMS shall be ultimately and solely obligated for carrying out to completion all pre-launch and post-launch clinical studies and all other Product-related studies as the PDC deems appropriate, at its sole cost, expense and risk (including, without limitation, the Olanzapine Comparison Study and the Bipolar Depression Study).

BMS will conduct with due diligence and all commercially reasonable efforts, consistent with the objective of this Agreement as set forth in Sections 2 and 5.10, and with no less a commitment of effort and resources than BMS commits to the development of products with similar market potential, and at its sole risk, responsibility and expense (except for Otsuka’s funding and responsibility in respect of the Otsuka Clinical Studies and its funding of the Carcinogenicity Study), all Product development work and regulatory activities required to obtain and maintain marketing approval in each country of the Territory (including, without limitation, post-marketing surveillance and pharmacovigilance), and any and all additional Product development work (including Phase IIIb and Phase IV), and additional studies for marketing purposes (including pharmacoeconomic studies), that may be necessary or desirable for the optimal Commercialization of Product, all under the direction of the PDC. In addition, at its sole expense, BMS will diligently use all commercially reasonable efforts, through further research and development, to develop new Product indications (including, without limitation, bipolar disorder) and formulations (such as IM, Depot, etc.), to the extent supportable by scientific and clinical data and information, appropriate or desirable for the optimal Commercialization of Product.

Except for Otsuka’s obligations with respect to the Otsuka Clinical Studies and Carcinogenicity Study and the provision of free drug as provided in Section 4.4, all other

 

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Product development work, studies, regulatory activities and Commercialization activities in the Territory shall be BMS’s obligation and at its sole risk and expense. As part of BMS’s obligation, BMS shall supply all Product required for development, and for all clinical and post-marketing trials and samples, all at no charge to Otsuka subject to Otsuka’s obligations in Sections 4.4 and 5.8.

In fulfilling its obligations under this Agreement, BMS shall closely involve Otsuka in the entire process, including internal BMS staffing meetings related directly to Product issues, as discussed in greater detail in Section 5.7 below.

4.4. Supply of Compound for Product Development .

Otsuka shall supply BMS, free of charge, Compound and/or Bulk Tablets in quantities reasonably necessary to carry out the Product Development Plan, up to a maximum of one thousand kilograms (1,000 kg) of Compound, whether supplied in the form of Compound or as Bulk Tablets, which quantity shall be in addition to the Compound and Bulk Tablets required for the Ongoing Clinical Studies. BMS shall use such supplies to conduct Product development (pre-clinical, clinical and pharmaceutical) for obtaining regulatory approval in each country of the Territory, including completion and sponsorship of Phase IIIb, Phase IV and pharmacoeconomic studies, the development of additional indications and formulations of Product, and as may be necessary for the validation of packaging methods, stability testing or pilot packaging of Product by BMS. BMS shall acquire additional quantities of Compound and Bulk Tablets, beyond the 1,000 kilograms to be provided under this Section 4.4, in accordance with Section 5.11.2(a)(5).

4.5. Data and Information; Improvements and Inventions .

4.5.1 Transfer of Otsuka’s Data, Information and Other Documentation to BMS .

Otsuka shall provide BMS with all relevant pre-clinical, clinical and other Product development data, information and other documentation in Otsuka’s possession or control (in electronic form to the extent available in such form) concerning Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if relevant to PDC development efforts), for use by BMS as it becomes fully involved in the clinical program and pursues regulatory approval of the Product throughout the Territory (including the formulation of Compound into Bulk Tablets) at the earliest possible date; provided that Otsuka shall not (except as set forth below) provide data, information or other documentation regarding the manufacture of Compound (or Compound Forms or Related Compounds) to BMS. Otsuka shall only be obligated to provide such manufacturing-related data, information and other documentation as is necessary to enable BMS to file and receive regulatory approval of Product in the Territory. In such case, to the extent possible, Otsuka shall provide such manufacturing-related data,

 

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information and other documentation in the form of a Drug Master File under seal directly to the appropriate governmental agency, which BMS, its Affiliates and Sublicensees shall be entitled to reference in their regulatory applications, or, if necessary, Otsuka shall provide such data, information and other documentation directly to BMS for inclusion in its regulatory applications, in which case BMS may use such manufacturing-related data, information and other documentation solely for the purpose of filing, receiving and maintaining regulatory approvals of Product in the Territory and for no other purpose.

In addition, Otsuka shall continue during the term of this Agreement to provide BMS with relevant development data, information and other documentation coming into its possession concerning Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if relevant), subject to the limitation in the preceding paragraph regarding manufacturing-related data, information and other documentation. Without limiting the scope of data, information and other documentation to be provided by Otsuka to BMS, Otsuka shall provide BMS with all relevant data, information and other documentation in its possession resulting from product development (pre-clinical, clinical and pharmaceutical) related to Product for use by BMS and its Affiliates in the Territory (and its Sublicensees in the Rest of Territory).

4.5.2 Transfer of BMS Data, Information and Other Documentation to Otsuka .

BMS shall provide Otsuka, in electronic form to the extent available in such form, with all data, information and other documentation coming into its possession or control during the term of this Agreement concerning Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if any), including, without limitation, all data, information and other documentation relating to the manufacture of Product and any and all data, information and other documentation resulting from product development (pre-clinical, clinical and pharmaceutical, including the Otsuka Clinical Studies, Phase III, Phase IIIb, and Phase IV studies, the Carcinogenicity Study, and other studies conducted in connection with Product development or Commercialization) related to Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if any). Subject to the grant of rights to BMS in this Agreement, Otsuka and Otsuka’s Affiliates and sublicensees may use and refer to such data, information and other documentation for development, regulatory and Commercialization purposes in the Reserved Territory, and otherwise as permitted in this Agreement. BMS shall provide the above-described data, information and other documentation to Otsuka on an ongoing basis during the term of this Agreement.

 

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4.5.3 Ownership of Data, Information and Other Documentation .

Otsuka (and not BMS) owns, and shall continue to own, all data, information and other documentation concerning Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if any) transferred by it to BMS during the term of this Agreement, all manufacturing-related data, information and other documentation as described in Section 4.5.1, as well as all data, information and other documentation resulting from the Otsuka Clinical Studies and the Carcinogenicity Study. In addition, Otsuka (and not BMS) shall own all data, information and other documentation (including, without limitation, all scientific, clinical and commercial data, information and documentation) concerning Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if any) developed by BMS as the same pertain to the Reserved Territory, the United States and/or the European Union, while BMS shall own the same in the Rest of Territory during the term of the Agreement. In each case, BMS, its Affiliates and Sublicensees shall have the right to use and reference such Otsuka data, information and other documentation for the purposes of fulfilling BMS’s obligations under this Agreement, and for no other purpose. Otsuka and its Affiliates and Sublicensees shall have the right to use and reference all such BMS data, information and other documentation, at no charge, in the Reserved Territory, the United States, the European Union and countries removed from the Territory during the term of this Agreement, and for all purposes following the expiration or termination of this Agreement.

During the term of this Agreement, all data, information and other documentation of either party, to the extent that they relate to Compound, Bulk Tablets and Product (and Compound Forms and Related Compounds, if any), shall be deemed the confidential information of both parties within the meaning of Section 10 (Confidentiality), each party to be deemed the “Receiving Party” of all such data, information and other documentation, permitted to use it only as permitted above. Upon the termination or expiration of this Agreement, all such data, information and other documentation including that owned by BMS during the term of this Agreement-shall be the confidential information of Otsuka, with BMS being deemed to be the Receiving Party within the meaning of Section 10, and neither BMS nor its Affiliates nor Sublicensees shall thereafter have any further right to use or reference it.

4.5.4 Designated Representatives for Transfer of Information .

To facilitate the smooth and efficient transfer of data, information and other documentation between the parties, each party shall designate a representative, and shall notify the other party of such representative, who shall be authorized to request from time to time data, information and other documentation as described above, and who shall also be the authorized recipient of data, information and other documentation transferred by

 

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the other party hereunder. Either party may, at any time, change its designated representative by notice to the other party.

4.5.5 Improvements and Inventions .

For purposes of this Agreement, “Improvements” shall mean any and all inventions, discoveries, improvements, pharmaceutical formulations, new indications, chemical processes, data (preclinical, clinical or otherwise), information and know-how (whether or not maintained as trade secret), whether or not patented or patentable, relating to the Compound, Compound Forms, Related Compounds, Product or the manufacture or use of any of them.

As a service provider on behalf of Otsuka, BMS will pursue, as part of the Product Development Plan, indications for the Product with respect to the treatment of bipolar disorder and Alzheimer disease-related dementia, other indications, and new formulations, such as IM, Depot and flash-melt, for the administration of Compound for therapeutic use, all in accordance with the Product Development Plan or otherwise in accordance with the written decisions of the PDC. All Improvements made by or on behalf of Otsuka, BMS or any BMS Affiliate (including, for the avoidance of doubt, all patents, patent applications and other intellectual property rights covering the manufacture, use and sale of Improvements) shall be owned by Otsuka; provided, however , that, in the case of patents, patent applications and other intellectual property rights otherwise owned by BMS or its Affiliate(s) covering more than Improvements, such patents, patent applications and other intellectual property rights shall not be deemed to be owned by Otsuka, in which case BMS hereby grants (or shall cause its Affiliate(s) to grant) to Otsuka a perpetual, royalty-free, worldwide, exclusive license (subject to BMS’s exclusive license from Otsuka in the Rest of the Territory during the term of this Agreement), with the right to sublicense, under such patents, patent applications and other intellectual property rights to make, have made, use, sell, import and offer to sell Compound, Compound Forms, Related Compounds and Product incorporating such Improvements.

In the event Commercialization of the Product, including Product incorporating any Improvement, requires a license from a non-Affiliate third party, any amounts due such third party in order to make, use or sell such Product in the Territory shall be split between the parties as follows: BMS shall pay [*] of any such amounts, and Otsuka shall pay [*]of any such amounts. BMS shall consult with Otsuka regarding any such third-party license and the terms thereof. Otsuka may elect, where possible, to be the licensee in the Territory, or it may elect to be a co-licensee with BMS. Otherwise, BMS shall use commercially reasonable efforts (in consultation with Otsuka) to obtain the right to assign or sublicense such license rights to Otsuka so Otsuka has the right to make, use and sell Product (including Product incorporating Improvements) covered by such license in the Territory (and the right to

 

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sublicense such rights), subject to the terms of this Agreement. BMS shall use its good faith effort to assist Otsuka in obtaining such rights for Otsuka in the Reserved Territory.

The licenses described above shall survive the termination of this Agreement, and, subject to the terms and conditions of the related underlying license agreement between BMS and the third party in question, the term of any sublicenses from BMS to Otsuka of third-party license rights shall continue notwithstanding the termination of this Agreement. BMS shall, upon the reasonable request of Otsuka, during the term of this Agreement and following its expiration or termination, execute appropriate documents and otherwise cooperate with Otsuka in order to vest in Otsuka the title, right and interest in and to the Improvements (including, for the avoidance of doubt the related patents, patent applications and other intellectual property rights) and, where contemplated above, licenses, sublicenses or assignments as described above pertaining to the Product, including Improvements thereto.

Otsuka hereby grants to BMS an exclusive license (insofar as the license under Section 5.4 is and remains in effect) under any and all Improvements owned or controlled by Otsuka to make, have made, use and sell Product (but not to make Compound, Compound Form or any Related Compound) in the Rest of the Territory, subject to the terms and provisions of this Agreement. No additional royalty, other than royalties under Section 5.9.2, shall be payable in respect of such license. Such license to BMS shall include the right to sublicense, but only as an integral part of BMS’s sublicensing pursuant to Section 5.4.1(b).

For the sake of clarification, it is intended that, in connection with any Improvement developed by BMS which has utility other than with respect to Compound, Compound Forms, Related Compounds or Product, BMS’s assignment of ownership rights and interests as provided in the second preceding paragraph and the license granted by Otsuka pursuant to the immediately preceding paragraph shall in each case be limited in scope to use with Compound, Compound Forms, Related Compounds and Product only and shall not be extended to any other product, process or utility.

4.6. Regulatory Matters .

4.6.1 Regulatory Compliance Obligations of BMS .

In the United States and European Union, the NDA and the MAA(s), respectively, shall be filed in the name of Otsuka or its Affiliate (as Otsuka may elect). BMS shall, as an independent contractor, be obligated to provide all necessary and appropriate services to and for Otsuka and its Affiliates in connection with the preparation, fling and maintenance of the NDA, MAA(s) and MA(s), as the case may be, and otherwise as necessary so that Otsuka and its Affiliates fulfill all of their legal and regulatory responsibilities and duties, as holder of the NDA or MA(s), as the case may be, in connection with the development and Commercialization of Product, including, without

 

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limitation, all obligations with respect to pharmacovigilance and post-marketing surveillance. Such services (including, without limitation, the NDA and MAA fling fees) shall be without cost or expense to Otsuka or its Affiliates, other than the compensation to BMS provided in Section 5.9.1. In the Rest of Territory, BMS shall (as exclusive licensee) fulfill all legal and regulatory responsibilities and duties in connection with the development and Commercialization of Product.

In performing all of its obligations with respect to regulatory compliance, BMS shall be under the authority of the PDC and shall act in accordance with and implement the decisions of the PDC - which, as provided in Section 4.1.2, require the written approval of Otsuka’ s PDC Co-Chair. In performing its obligations hereunder, on Otsuka’s behalf, BMS shall not be authorized to sign any regulatory flings or submissions on behalf of Otsuka or compel Otsuka’s signature on any such flings or submissions. Furthermore, BMS shall perform all of its obligations with respect to regulatory compliance in the United States and the European Union in close collaboration with Otsuka personnel, as described in Section 5.7. BMS shall also be obligated promptly to provide Otsuka with copies of all communications - and written summaries of oral communications - to and from regulatory agencies in the United States and the European Union; shall keep Otsuka fully and promptly advised as to all regulatory issues and affairs; shall consult with Otsuka as to all interactions with regulatory agencies and responses to regulatory issues in the United States and the European Union; and shall give Otsuka advance notice, to the extent possible, of all meetings and communications with regulatory agencies in the United States and the European Union and an opportunity for Otsuka personnel to attend and participate in such meetings and communications. As used in this paragraph, references to regulatory matters in the European Union shall mean regulatory matters pertaining to the entire European Union (except for-as of the Restated Agreement Date-Switzerland) under EMEA centralized procedures; regulatory matters pertaining to Switzerland (which, for purposes of this Agreement, is deemed part of the European Union but, as of the Restated Agreement Date, is not subject to EMEA centralized procedures); regulatory matters pertaining to each Co-Promotion Country in the European Union; and, to the extent potentially affecting the Commercialization of Product in the European Union, regulatory matters pertaining to non-Co-Promotion Countries in the European Union.

4.6.2 Product Registrations .

BMS shall implement the decisions of the PDC regarding obtaining marketing approvals for Product throughout the Territory. BMS shall be obligated to, and as soon as reasonably and appropriately practicable BMS shall, at its expense, prepare and file all applications and supporting documentation necessary to obtain and maintain all regulatory approvals, marketing clearances, and price listings and reimbursement approvals, if any, required for Product in each country of the Territory. BMS shall file and seek to obtain the NDA in Otsuka’s (or its Affiliates) name, with Otsuka’s prompt

 

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cooperation as reasonably necessary. Similarly, BMS shall file and seek to obtain the MAA(s) in the European Union in Otsuka’s (or its Affiliates) name, with Otsuka’s prompt cooperation as reasonably necessary.

BMS shall file such applications for marketing approval in accordance with the decisions of the PDC and the Schedule set forth in the Product Development Plan, and in any event, in the case of the United States and the centralized fling in the European Union, not later than thirty-six (36) months from the Effective Date of this Agreement (provided Otsuka completes its obligations regarding the Otsuka Clinical Studies in a timely fashion). BMS shall file such applications in all other countries of the Territory in a commercially reasonable time, consistent with the objectives of this Agreement and whatever Schedule may be set forth in the Product Development Plan. BMS shall make commercially reasonable and diligent efforts to obtain approvals of such applications, and also to obtain price listing and reimbursement wherever appropriate, in a timely manner, and to maintain them once approved.

In the event BMS fails to proceed in a timely fashion with the activities necessary to obtain registration, marketing approval, price listing and reimbursement approval of Product in the United States or in any two or more of the other Co-Promotion Countries, the PDC shall immediately meet and discuss the reason(s) for such failure, as well as measures to remedy the situation. If the PDC fails to agree upon measures to remedy the situation, Otsuka may terminate this Agreement pursuant to Section 12.

In preparing and fling applications and supporting documentation necessary to obtain and maintain regulatory approvals and marketing clearances throughout the Territory, BMS shall though it remains ultimately obligated with respect to all such applications and documentation and regulatory compliance in connection therewith - be subject to the direction of the PDC. BMS shall promptly inform Otsuka, through the PDC, of any condition or requirement proposed by a governmental agency or regulatory body as a condition to granting marketing approval of the Product, and the PDC shall have the ultimate authority concerning its response thereto.

BMS and Otsuka shall each, at the other party’s reasonable request, provide the other with copies of all requested regulatory applications and documents and communications to and from governmental/regulatory agencies including, but not limited to, IND, NDA and MAA filings and approvals, price registrations, all related correspondence to and from governmental/regulatory authorities, inspectional observations and warning letters. Each party shall have access to and the right to refer to and cross-reference each other’s filings and supplements thereto consistent with the purposes of this Agreement; provided, however , that BMS shall not have the right to have or use Otsuka’ s manufacturing-related data, information or documentation except as necessary to obtain regulatory approval of Product in the Territory and to formulate the Compound into Bulk Tablets as provided in Section 5.11.1. As contract service provider,

 

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BMS shall be obligated with respect to all contacts and communications with governmental/regulatory authorities in the Territory, in collaboration with Otsuka as provided above.

4.6.3 Labeling .

The PDC shall have ultimate control of the contents of Product labels, as submitted to regulatory agencies in the Territory, and the ensuing negotiations towards the finalization thereof as approved by regulatory agencies. As contract service provider for Otsuka, BMS shall submit to the PDC for review, discussion and approval, as soon as reasonably practicable and not less than fifteen (15) Business Days prior to submitting it to a governmental/regulatory authority, the proposed label for Product in the United States and the proposed Summary of Product Characteristics (SmPC) in the European Union. BMS shall also submit to the PDC for review, discussion and approval BMS’s draft Corporate Product Label Profile (CPLP), at the same time that the draft thereof is being circulated to its internal Labeling Committee for review and approval. The parties agree to have a coordinated, worldwide labeling program for Product, to the extent legally permissible and commercially advisable. The parties recognize, however, that there may not necessarily be a common dosage and dosing regimen throughout the world.

4.6.4 Adverse Events; Post-Marketing Surveillance; Product Complaints .

BMS (in the United States and European Union, as contract service provider for Otsuka, and as Otsuka’s exclusive licensee in the Rest of Territory) shall adhere to and be obligated to comply with all applicable ethical, legal and regulatory standards in Commercializing Product in the Territory, including the establishment and implementation, at its sole expense, of a comprehensive adverse events reporting and post-marketing surveillance system. Such system shall be in full compliance with all then-current requirements of the FDA, the EMEA, and all other governmental/regulatory agencies in the Territory, and shall be more comprehensive and detailed as the PDC reasonably deems appropriate. In this regard, BMS shall implement and maintain a system for recording and addressing all adverse drug reactions, suspected adverse drug reactions and other medical and technical information relevant to the safety of Product, including scanning all relevant literature. BMS shall also maintain a central computer database incorporating all such information.

BMS (in the United States and European Union, as contract service provider for Otsuka, and as Otsuka’s exclusive licensee in the Rest of Territory) shall be obligated to investigate adverse drug reactions (in consultation with Otsuka as appropriate), and to report them to the relevant regulatory authorities in the Territory, when appropriate, in full compliance with the laws and regulations of the Territory, and to respond to all inquiries from regulatory authorities (also in consultation with Otsuka). Each party shall promptly deliver to the other all correspondence which it receives from regulatory

 

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authorities relating to the safety of Product except for procedural, non-substantive communications. BMS shall provide to Otsuka copies of its ICH periodic drug safety updates and each CIOMS I expedited adverse drug reaction report relating to Product when BMS files these with relevant regulatory authorities.

4.6.5 Post-Marketing Surveillance .

Following the Effective Date of this Agreement, the parties discussed and agreed upon a system for adverse events reporting and post-marketing surveillance, which agreement is set forth or incorporated by reference in Appendix F, and which is subject to change as the parties mutually deem appropriate or as necessary to remain in compliance with all applicable laws and regulations. Each party hereby agrees to comply with its respective obligations under such agreement (as the parties may agree to modify it from time to time) and to cause its Affiliates and Sublicensees to comply with such obligations.

4.6.6 Product Complaints .

BMS (in the United States and European Union, as contract service provider to Otsuka, and in the Rest of the Territory as Otsuka’s exclusive licensee) shall be obligated to record in a central database and responding to all material complaints regarding Product in the Territory. Otsuka shall promptly refer any product complaints in the Territory of which it becomes aware to BMS for response. The parties shall promptly provide to each other copies of all relevant documentation and information regarding any such complaints.

4.6.7 Product Recall .

If either BMS or Otsuka discovers or becomes aware of any fact, condition, circumstance or event (whether actual or potential) concerning or related to Product that may reasonably require recall or market withdrawal of Product or a “Dear Doctor” letter relating to Product, such party shall communicate such fact, condition, circumstance or event promptly to the other party. In the event (i) any governmental agency or regulatory body issues a request, directive or order that Product be recalled; (ii) a court of competent jurisdiction orders that Product be recalled; or (iii) the PDC (in the Territory) and Otsuka (in the Reserved Territory) reasonably determine, after mutual consultation, that Product should be recalled or withdrawn from the market or that a “Dear Doctor” letter should be sent relating to use of Product, the parties shall take all appropriate remedial actions with respect thereto; provided, however , that Otsuka, in its sole discretion, shall finally determine any recall matters in the Reserved Territory. To the extent that it is necessary or appropriate to communicate with any person or entity in the Territory, including but not limited to any governmental agency or regulatory body, the media or any customer, concerning any such fact, condition, circumstance or event, BMS (in the United States and European Union, as contract service provider of Otsuka, and as Otsuka’ s exclusive

 

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licensee in the Rest of Territory) shall be the primary contact concerning remedial action. The party that is at fault for giving rise to the fact, condition, circumstance or event resulting in the recall or withdrawal of Product, as determined by an independent testing laboratory or a mutually acceptable regulatory consultant familiar both with the circumstances and with the allocation of responsibilities between the parties under this Agreement, shall bear all expense of the recall or Product withdrawal, including the costs of preparation of customer lists and letters, mailing expenses, media notices and other public announcements and any other necessary notice, destruction or return of the recalled or withdrawn Product, the cost of shipping and freight, and the cost of the recalled or withdrawn Product. If it is determined that the parties share joint responsibility, then they shall share such expense in accordance with their allocated percentage of responsibility.

5. COMMERCIALIZATION

5.1. Joint Commercialization Committee .

5.1.1 Formation of the JCC .

Promptly after the Effective Date, BMS and Otsuka formed a Joint Commercialization Committee (the “JCC”), which committee shall coordinate, oversee and direct the Commercialization efforts (pre-launch and post-launch) for Product throughout the Territory and the parties’ efforts and activities in connection therewith. The JCC shall also have jurisdiction over (i) Product forecasting, ordering, supply and inventory, (ii) price reimbursement and price, and (iii) trademark selection and trade dress.

5.1.2 JCC Composition, Governance and Decisionmaking .

Each party shall have equal representation and participation on the JCC. Each party shall have (in its discretion) up to five (5) members on the JCC, shall designate its standing members on the JCC in writing, and shall promptly advise the other party if it substitutes any of its members. If one or more members of the JCC is unable to attend any meeting, the party that appointed the non-attending member may designate a substitute to participate in lieu of the absent member. The parties shall each be entitled to cause such other representatives as they may deem necessary or appropriate to attend and participate in JCC meetings from time to time.

BMS shall designate one of its JCC members to be Chair of the JCC, and Otsuka shall designate one of its JCC members as the Co-Chair of the JCC. Each party shall have one (1) vote on the JCC, to be cast, respectively, by the Chair and the Co-Chair; provided, however , that, in the event of a tie vote, the Chair’s vote shall prevail, subject to the following limitations:

 

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(a) Neither the Chair, the JCC nor any Marketing Plan approved by the JCC may impose additional expenses or obligations on Otsuka or its Affiliates beyond those specified in this Agreement without the prior written consent of Otsuka;

(b) The BMS Chair of the JCC shall not have the tie-breaking vote with respect to the following JCC matters, on which Otsuka and BMS shall have equal decisionmaking authority: (i) Trademark selection and trade dress, and (ii) forecasting, ordering, supply and inventory. In the event the JCC Chair and Co-Chair are unable to reach agreement on any such matters, the unresolved issue shall be referred to and resolved as soon as reasonably possible by the President of Otsuka and the President of BMS Worldwide Medicines Group; disputes not resolved at that level shall be referred to and resolved in accordance with Section 14; and

(c) In addition, Otsuka’s written approval of advertising and promotional materials shall be required in accordance with Section 5.6 below.

5.1.3 Meetings .

The JCC shall meet as frequently as either party may reasonably request and at such times and places as they select, but, in any event, it shall meet (i) promptly after the Effective Date, and (ii) at least quarterly thereafter. Unless the Chair and Co-Chair agree otherwise in writing, the location of meetings of the JCC shall alternate between the offices of BMS and the offices of Otsuka, with the first meeting to be held at BMS’s offices. All costs of participation by each member in the activities of the JCC shall be borne by the party appointing such member. The Chair of the JCC shall appoint a secretary who shall maintain the records of the JCC and shall keep minutes of the meetings of the JCC. The records and minutes shall be subject to written ratification by the Chair and Co-Chair of the JCC, and the secretary shall distribute minutes to all members of the JCC. JCC issues arising in the ordinary course of the day-to-day Commercialization of the Product may be decided by the Chair and the Co-Chair without submission for review by all JCC members, as reasonably appropriate to facilitate efficiency. The Chair shall maintain a written record of such decisions and promptly distribute such record to all members of the JCC.

5.1.4 Responsibilities of the JCC .

The JCC shall be an ongoing operational (not merely advisory) committee, and Product shall be Commercialized in accordance with plans and budgets approved by the JCC. The JCC shall be responsible for developing, formulating and directing the overall strategy for the marketing and Commercialization of Product in the Territory and for coordinating the implementation of all approved Marketing Plans for the Territory. The goal of the JCC shall be to develop a strategy and Marketing Plans to position Product as

 

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the antipsychotic product of choice throughout the Territory, consistent with its approved labeling and Product efficacy and safety profile. The JCC shall have final decisionmaking authority on all key issues regarding Commercialization of Product excluding those governed by the PDC, subject to Section 5.1.2 above; provided, however , that, should applicable law in any country of the Territory prohibit collaboration by the parties on any aspect of the Commercialization of Product, then the parties shall comply fully with such law and modify the conduct and plans of the JCC accordingly; provided, further, however , that, in countries in the European Union where Otsuka elects to have BMS act as a Distributor of Product pursuant to Section 5.3.12, a JCC-approved price shall be only a recommended resale price, and BMS shall be free to make the final determination of such price in such countries.

In addition to its overall responsibility for overseeing and directing Commercialization of Product throughout the Territory in accordance with this Agreement, the JCC shall, in particular, be responsible for:

(a) establishing an overall strategy for the Commercialization of Product in the United States, the European Union, and the Rest of Territory (each area being referred to here as a “Region”) and detailing such strategy in an annual Territory Marketing Plan and in individual Marketing Plans (Region by Region and, within the European Union, specifically as to the United Kingdom, Germany, France, Spain and Italy, and in such other countries as the JCC deems appropriate) under such Territory Marketing Plan, as described in greater detail in Section 5.2;

(b) preparing and proposing interim adjustments to any annual Territory Marketing Plan and individual Marketing Plans thereunder;

(c) preparing sales projections and overseeing the conduct of such market research as may be necessary or appropriate in connection with Commercialization of the Product in the United States, the European Union and the Rest of Territory;

(d) coordinating the development, review and approval of training, sales and promotional materials to be used in the various Regions of the Territory;

(e) addressing pricing, reimbursement issues, rebates, discounts, Product return and customer credit and return matters and safety-related issues as appropriate, and in full compliance with all applicable laws;

(f) selecting advertising and public relations agencies and other vendors, to be retained by BMS, to assist in the development of promotional and press materials and otherwise in connection with the Commercialization of the Product;

 

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(g) selecting the Trademark(s) and trade dress, to be owned by Otsuka, under which Product shall be marketed and sold throughout the Territory;

(h) approving procedures relating to the ordering, forecasting, supply, packaging and delivery of Compound, Bulk Tablets and Product in the United States, the European Union and the Rest of Territory, and determining appropriate Product inventory levels in each such Region and, as appropriate, individual countries within Regions;

(i) determining Product quantities required for distribution as Product samples;

(j) coordinating closely with the PDC, including (without limitation) with respect to the implementation of research and development programs authorized by the PDC relating to new formulations of Product and new indications for Product;

(k) establishing such JCC subcommittees as appropriate to address specific Commercialization issues falling within the purview of the JCC, such subcommittees to have equal representation and participation of both parties, subject to governance as described above in Section 5.1.2 (the BMS Chair of each subcommittee to have the tie-breaking vote except with respect to the issues, and subject to the limitations, described in Section 5.1.2);

(l) performing such other functions as the parties may decide are appropriate to further the commercial success of the Product in the Territory and the purposes of this Agreement, including the periodic evaluation of actual performance against performance objectives; and

(m) appointing a BMS representative to serve as a liaison to the JCC and to Otsuka regarding Sublicensee issues (if any) in the Rest of Territory.

5.2. Marketing Plans .

As promptly as possible after the Effective Date, the JCC shall consider, modify as it deems appropriate, and approve a detailed marketing plan for the Commercialization of Product throughout the Territory (the “Territory Marketing Plan”) and detailed marketing plans for the United States, the European Union, and the Rest of Territory. When appropriate, closer to the actual commencement of Commercialization, the JCC shall also consider, modify as it deems appropriate, and approve specific marketing plans for each Co-Promotion Country (and other countries it deems appropriate) within the European Union and specific marketing plans for the Rest of Territory as the JCC deems appropriate. The Territory Marketing Plan and each regional and country marketing plan are referred to collectively in this Agreement as the “Marketing Plans.” The Marketing

 

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Plans shall be confidential information of Otsuka within the meaning of Section 10 of this Agreement. BMS, working in close and ongoing collaboration with Otsuka representatives, shall prepare a draft one-year, three-year and five-year Marketing Plan for each of the above-specified regions and shall submit drafts of the Territory Marketing Plan and the regional and country Marketing Plans, and regular updates thereto throughout the term of this Agreement, to the JCC for its consideration, modification as it deems appropriate, and approval. The JCC shall have final authority and responsibility for the development of the Marketing Plans. The Marketing Plans shall set forth in detail the promotional activities, corresponding investment levels, sales forecasts and marketing strategy, Product positioning and related issues for the time periods and regions in question and shall, among other things, include in detail:

(a) complete market analyses to reflect Product opportunities, strengths and weaknesses, threats, critical promotional issues and trends in the Territory and regions and countries within the Territory, with detailed Product sales and market forecasts;

(b) competitive analyses of existing and potential competitors;

(c) proposals as to marketing goals, objectives and strategies;

(d) p