AGREEMENT

EXHIBIT 10.215

 

Portions of this exhibit marked [*] are requested to be treated confidentially.

 

AGREEMENT

 

THIS AGREEMENT (“Agreement”) is entered into as of July 13, 2005 between Takeda San Diego, Inc., a Delaware corporation having its principal place of business at 10410 Science Center Drive, San Diego, CA 92121, (formerly known as Syrrx, Inc.) (“TSD”), TAKEDA PHARMACEUTICAL COMPANY LIMITED, a corporation organized under the laws of Japan, having its principal place of business at 1-1 Doshomachi 4-chome, Chuo-ku, Osaka, Japan (hereinafter “TPC”), Development Partners, LLC, a Delaware limited liability company having its principal place of business at 3151 South 17th Street, Wilmington, NC 28412 (“PPD”), and Pharmaceutical Product Development, Inc., a North Carolina corporation having its principal place of business at 3151 South 17th Street, Wilmington, NC 28412 (“PPD, Inc.”). TSD, TPC, and PPD and PPD, Inc. are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, TSD, PPD and PPD, Inc. entered into a Collaboration Agreement (as defined below);

 

WHEREAS, pursuant to the Collaboration Agreement, PPD acquired the exclusive worldwide right to co-develop serine protease dipeptidyl peptidase IV inhibitors with TSD;

 

WHEREAS, Takeda America Holdings, Inc., a New York corporation having its principal place of business at New York, NY (“Takeda”), acquired TSD effective March 16, 2005;

 

WHEREAS, the Parties now desire to, among other things, (i) terminate the Collaboration Agreement, (ii) reallocate ownership and responsibilities for the future development and commercialization of Products (as defined below) and the rights related thereto; and (iii) provide for up-front and milestone cash payments and royalty payments based on Net Sales of Products (as defined below) to PPD by TSD, all in accordance with the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and the premises and conditions set forth herein, the Parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1 “Affiliate” means, (a) with respect to TSD, (i) TPC; (ii) Takeda or (iii) a particular person, corporation, partnership, or other entity that controls, is controlled by or is under common control with TSD, TPC or Takeda; and (b) with respect to PPD, (i) PPD, Inc. or (ii) a particular person, corporation, partnership, or other entity that controls, is controlled by or is under common control with PPD or PPD, Inc. For the purposes of

the definition in this Section 1.1, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

 

1.2 “BLA” means a biologics license application with the FDA as more fully described at 21 CFR § 601.2, or successor equivalent.

 

1.3 “Collaboration Agreement” means the collaboration agreement entered into among PPD, PPD, Inc. and TSD (then Syrrx, Inc.) effective as of November 19, 2003 to discover, develop, and commercialize serine protease dipeptidyl peptidase IV inhibitors as human drug products.

 

1.4 “Collaboration Compound” means any serine protease dipeptidyl peptidase IV inhibitor [*] that (a) has [*] as measured internally by TSD using a [*] assay specific for the Target; or (b) has [*] and has not been shown to have [*] the Target, a list of which has been delivered to PPD by TSD.

 

1.5 “Collaboration Patent Estate” means (a) those Patents set forth in Schedule 1.5 and any continuation, division, continuation-in-part or foreign equivalents thereof, and (b) any Patents and any continuation, division, continuation-in-part or foreign equivalents thereof that claim a Collaboration Compound, regardless of the nature of the claim (i.e. composition of matter, process, method, etc.).

 

1.6 “Combination Product” means a formulation including two or more active pharmaceutical ingredients, or a package including two or more different pharmaceutical products, which includes Compound as one of the active pharmaceutical ingredients but does not include a Takeda Proprietary Compound as one of the active pharmaceutical ingredients.

 

1.7 “Compound” means (a) any Collaboration Compound; and (b) any serine protease dipeptidyl peptidase IV inhibitor discovered by TSD [*] that falls within the scope of the Collaboration Patent Estate. For sake of clarity, an inhibitor of the Target is specifically excluded from the definition of a Compound if such inhibitor (a) has [*] and has been shown to have [*] the Target, or (b) was Controlled by Takeda or an Affiliate of Takeda other than TSD [*].

 

1.8 “Confidential Information” shall have the meaning set forth in Section 8.1.

 

1.9 “Control” means, with respect to an item of Information, Material or Intellectual Property right that a Party owns or has a license to, that the Party has the ability to disclose, assign and/or grant a license or sublicense as provided for by this Agreement under such Information, Material or Intellectual Property right without violating the terms of any agreement or other arrangement with any Third Party.

 

1.10 “CTM” means a Product that is in a finished pharmaceutical dosage form that is (a) suitable for administration and dosing to humans in clinical trials, but (b) not suitable for commercial sale (for example, without limitation, not in packaged form such as blister packs or other containers and not including external packaging and package inserts).

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

1.11 “Development Plan” means the 322 Development Plan and such other development plans that TSD or its Affiliates may prepare in the future (for other Compounds), by which TSD or its Affiliates intend to achieve Regulatory Approval of a Product, including, but not limited to, a description of the CMC, preclinical, clinical, and regulatory activities, with estimated timelines necessary to achieve such approval in the Field in the Territory.

 

1.12 “322 Development Plan” means the Development Plan for SYR110322 as shown in Schedule 1.12.

 

1.13 “Diligent Efforts” means the carrying out by TSD, its Affiliate or its licensees or subcontractors of obligations or tasks in a sustained manner consistent with the commercially reasonable efforts TSD and its Affiliates devote to a research, development or marketing project for a pharmaceutical product or products of similar market potential, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing. Diligent Efforts includes, but is not limited to the requirement that TSD and its Affiliates use commercially reasonable efforts to carry out its obligations in accordance with timelines set forth in a Development Plan by: (a) promptly assigning responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an on-going basis, (b) setting and consistently seeking to achieve specific and meaningful objectives for carrying out such obligations, and (c) consistently making and implementing decisions and allocating resources designed to advance progress with respect to such objectives. The Parties understand and agree that delays outside the control of TSD may occur with regard to the clinical development of Compounds and that the occurrence of such delays, in and of themselves, shall not be grounds for PPD to claim that a material breach of this Agreement has occurred so long as TSD used Diligent Efforts to avoid the occurrence of such delays, and is using Diligent Efforts to reduce the impact of such delays following their occurrence.

 

1.14 “Drug Substance” means a Compound together with any formulation ingredients, that is suitable for administration and dosing to animals, other than humans.

 

1.15 “Effective Date” means the last date on which the Parties executed this Agreement.

 

1.16 “EMEA” means the European Medicine Agency.

 

1.17 “EU” means the European Union established under the Maastricht Treaty on February 7, 1992, as amended from time to time.

 

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

 

1.19 “Field” means all treatments of humans using a Product.

 

1.20 “Finished Product” means a Product in a finished pharmaceutical dosage form that is suitable for commercial sale (for example, without limitation, in packaged form such as blister packs or other containers and including external packaging and package inserts).

 

1.21 “First Commercial Sale” means the first sale of a Product by TSD, its Affiliates or its licensees for use, consumption or resale of such Product in a country

where Regulatory Approval of such Product has been obtained by TSD, its Affiliates or its licensees. Sale of a Product by TSD to an Affiliate of TSD or a licensee of TSD shall not constitute a First Commercial Sale unless such Affiliate or such licensee is the end user of the Product.

 

1.22 “Good Clinical Practices” or “GCP” means current Good Clinical Practices as specified in the United States Code of Federal Regulations, at the time of testing, and all FDA and ICH guidelines, including the ICH Consolidated Guidelines on Good Clinical Practices.

 

1.23 “Good Laboratory Practices” or “GLP” means current Good Laboratory Practices as specified in the United States Code of Federal Regulations at 21 CFR §58 at the time of testing and all applicable ICH guidelines.

 

1.24 “Good Manufacturing Practices” or “GMP” means current Good Manufacturing Practices and standards as provided for (and as amended from time to time) in European Community Directive 91/356/EEC (Principles and Guidelines of Good Manufacturing Practice for Medicinal Products) and in the Current Good Manufacturing Practice Regulations of the United States Code of Federal Regulations Title 21 (21 CFR §§210-211) in relation to the production of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients, and subject to any arrangements, additions or clarifications agreed from time to time between the Parties.

 

1.25 “HSR Act” means Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

 

1.26 “IND” means an Investigational New Drug Application for a Product filed with the FDA necessary to commence human clinical trials in conformance with applicable laws and regulations.

 

1.27 “Information” means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, databases, inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and patent and other legal information or descriptions.

 

1.28 “Intellectual Property” means (a) all Regulatory Documentation, all Regulatory Filings and all Regulatory Approvals; and (b) any and all inventions, developments, results, know-how and other Information (including physical, chemical or biological materials) made, conceived or reduced to practice by PPD or its Affiliates before the Effective Date or during the Term of this Agreement, whether alone or jointly with TSD and its Affiliates or a Third Party that (i) relates to the composition of matter, manufacture or use of a Compound, or (ii) is incorporated into any Product or its use, or (iii) is necessary for the discovery, identification, manufacture, development, or commercial use or sale of any Product.

 

1.29 “Joint Development Committee” or “JDC” means a committee composed as set forth in Section 4.5 and having the duties set forth in Section 4.6.

 

1.30 “MAA” means Marketing Authorization Application submitted to the EMEA.

1.31 “Marketing Authorization” means any Regulatory Approval required to market and sell a Product in any country.

 

1.32 “Marketing Plan” means an annual marketing plan prepared by TSD, its Affiliates or licensees or subcontractors, that includes, but is not limited to, a prospective description of TSD’s commercial objectives for the upcoming year with respect to a Product throughout the Territory and the strategy by which TSD intends to achieve such objectives.

 

1.33 “Material” means any tangible material that comprises, consists of, or incorporates a Collaboration Compound and any precursor, prodrug, metabolite, ionized form (e.g., salt), solvate (e.g., hydrate), stereoisomer (e.g., enantiomer, diastereomer, mixture of isomers), resonant form, or tautomer thereof.

 

1.34 “NDA” means a New Drug Application submitted and filed with the FDA necessary for approval of a Product in conformance with applicable laws and regulations.

 

1.35 “Net Sales” means the total gross amount billed or invoiced in United States dollars (or converted into US dollars in accordance with this Agreement) by TSD, its Affiliates, or licensees for sales of Products to a Third Party less, to the extent included within the amount invoiced to and paid by the customer, deductions for: (a) transportation charges, and other charges, such as insurance, relating thereto, (b) sales and excise taxes, customs and any other taxes, all to the extent imposed upon the sale of the Products and paid by the selling party and not refundable in accordance with applicable law (but not including taxes assessed against the income derived from such sale), (c) rebates or allowances actually granted or allowed to group purchasing organizations, managed health care organizations and to governments, including their agencies, or to trade customers, in each case that are not Affiliates or licensees of TSD, (d) quantity discounts, cash discounts or chargebacks actually granted, allowed or incurred in the ordinary course of business in connection with the sale of the Products, and (e) allowances or credits to customers, not in excess of the selling price of the Products, on account of governmental requirements, rejection, outdating recalls or return of the Products. Such amounts shall be determined from the books and records of TSD maintained in accordance with GAAP or another generally accepted accounting method agreed by the Parties, consistently applied. In the event a Product is sold as part of a Combination Product or a Takeda Combination Product, Net Sales for purposes of determining royalty and milestone payments hereunder, shall be as follows:

 

(i) Net Sales in United States of Combination Products and Takeda Combination Products [*]: As long as [*], Net Sales of a Combination Product or a Takeda Combination Product, as the case may be, for purposes of determining royalty and milestone payments hereunder, shall be [*]% of Net Sales of such Combination Product or Takeda Combination Product, as the case may be. For sake of clarity, [*] shall not, in and of themselves, cause a Combination Product or a Takeda Combination Product to be [*] pursuant to this Subsection 1.35(i).

 

(ii) Net Sales in United States of Takeda Combination Products Not Subject to Section 1.35(i) [*]: In regard to Takeda Combination Products that are not subject to Section 1.35(i), for the [*] period commencing on [*], Net

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

Sales of such Takeda Combination Product for purposes of determining royalty and milestone payments hereunder, shall be [*]% of Net Sales of such Takeda Combination Product. For sake of clarity, [*] shall not, in and of themselves, cause a Takeda Combination Product to be [*] pursuant to this Subsection 1.35(ii).

 

(iii) Net Sales in United States of Combination Products or Takeda Combination Products Not Subject to Sections 1.35(i-ii) [*]: In regard to Combination Products and Takeda Combination Products that are not subject to Sections 1.35(i-ii), for the [*] period commencing on [*], Net Sales of such Combination Product or Takeda Combination Product, as the case may be, for purposes of determining royalty and milestone payments hereunder, shall be [*]% of Net Sales of such Combination Product or Takeda Combination Product, as the case may be. For sake of clarity, [*] shall not, in and of themselves, cause a Combination Product or a Takeda Combination Product to be [*] pursuant to this Subsection 1.35(iii).

 

(iv) Net Sales in United States of Takeda Combination Products Not Subject to Sections 1.35(i-iii) [*]: In regard to Takeda Combination Products that are not subject to Sections 1.35(i-iii), for the period commencing on [*], Net Sales of a Takeda Combination Product for purposes of determining royalty and milestone payments hereunder, shall be [*]% of Net Sales of such Takeda Combination Product.

 

(v) Net Sales in United States of Combination Products Not Subject to Section 1.35(i) or Section 1.35(iii) [*]: In regard to Combination Products that are not subject to Section 1.35(i) or Section 1.35(iii), for the period commencing on [*], Net Sales of such Combination Product for purposes of determining royalty and milestone payments hereunder, shall be [*]% of Net Sales of such Combination Product.

 

(vi) Net Sales outside of United States of Takeda Combination Products and Combination Products: Net Sales outside of the United States for Takeda Combination Products and Combination Products, for the purpose of determining royalty and milestone payments hereunder, shall be determined on a country by country basis by multiplying the actual Net Sales of the Takeda Combination Product or Combination Product by the fraction [*], where A is [*] and B is [*]. Where available in a given country, the [*] or [*] for the other product(s) in the given country will be used as [*]. In the event that such [*] cannot be determined for either the Product or other product(s) in the Combination Product or the Takeda Combination Product, Net Sales for purposes of determining royalty payments hereunder shall be calculated by multiplying the Net Sales of the Combination Product or Takeda Combination Product by the fraction [*], where C is [*] and D is [*], determined in accordance with GAAP or another generally accepted accounting method agreed by the parties, consistently applied. PPD shall have the right to inspection to verify the accuracy of the calculation of the Net Sales in accordance with Section 6.5.

 

A sale of Product shall be deemed to have occurred upon the invoicing of such Product to a Third Party; or if not invoiced, then when delivered, shipped, or paid for, whichever

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

first occurs, provided that there shall be no double counting of sales if a sale is deemed to have occurred when Product is delivered to a Third Party. For purposes of clarification, a sale of a Product shall be deemed to be made in a particular country when the Product sold is intended for use by consumers in such country. In the case of a sale or other disposal of a Product for value other than in an arm’s-length transaction exclusively for money, such as barter or counter-trade, the amount of such sale shall be calculated using the fair market value of such Product (if higher than the stated sales price) in the country of disposition.

 

1.36 “Party” or “Parties” shall have the meaning set forth in the first paragraph of this Agreement.

 

1.37 “Patent” means (a) an unexpired letters patent (including inventor’s certificates) issued anywhere in the world which has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof, or (b) a pending application for a letters patent pending anywhere in the world, including without limitation any continuation, division or continuation-in-part thereof and any provisional applications.

 

1.38 “Permitted Seller” means TSD and any Affiliate, licensee or sublicensee having the right to sell Product, including without limitation, TPC and any permitted licensee of TPC.

 

1.39 “Phase II Trial” means a clinical trial of a Product on patients, including possibly pharmacokinetic and dose ranging studies, the principal purposes of which are to make a preliminary determination that such Product is safe for its intended use and to obtain sufficient information about such Product’s efficacy to permit the design of further clinical trials, and generally consistent with 21 CFR §312.21(b).

 

1.40 “Phase III Trial” means that portion of the clinical development program that provides for the pivotal human clinical trials of a Product, which trial(s) is/are designed to (a) establish that such Product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the Product in the dosage range to be prescribed; (c) be a pivotal study for submission of a NDA; and (d) be generally consistent with 21 CFR §312.21(c).

 

1.41 “Phase III Development Costs” means all development costs incurred by either Party with TSD’s prior approval under the Collaboration Agreement for (a) direct support of the performance of a Phase III Trial or (b) process development for a Product in a Phase III Trial. For clarity, Phase III Development Costs include costs to formulate and manufacture Phase III Trial CTM.

 

1.42 “PMDA” means the Pharmaceutical and Medical Devices Agency in Japan.

 

1.43 “PPD Product” means a human therapeutic product that comprises SYR110322, SYR110619, [*] that PPD develops under this Agreement by electing to exercise its option as to a PPD Product pursuant to Article 12.

 

1.44 “Product” means a human therapeutic product that comprises, consists of, or

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

incorporates a Compound that has less than [*], or has [*] and has not been shown to have [*] the Target, including a prodrug, metabolite, ionized form (e.g., salt), solvate (e.g., hydrate), stereoisomer (e.g., enantiomer, diastereomer, mixture of isomers), resonant form, or tautomer of such Compound together with any formulation ingredients, regardless of the formulation or mode of administration of such Product. For sake of clarity, Product includes Combination Products and Takeda Combination Products.

 

1.45 “Regulatory Approval” means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the EU), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or sale of a Product in a regulatory jurisdiction.

 

1.46 “Regulatory Documentation” means, with respect to a Product, all regulatory filings and supporting documents created, submitted to the FDA or any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the EU) relating to such Product, and all data contained therein, including, without limitation, the contents of any IND(s), NDA(s), BLA(s), Drug Master File, correspondence to and from the FDA or any equivalent agency or governmental authority outside of the United States, minutes from meetings (whether in person or by audio conference or videoconference) with regulatory authorities, registrations and licenses, regulatory drug lists, advertising and promotion documents shared with regulatory authorities, adverse event files, complaint files and manufacturing records.

 

1.47 “Regulatory Filing” means the NDA or BLA or IND or any foreign counterparts thereof and any other filings required by any regulatory agency, department, bureau, commission, council or other governmental entity in a regulatory jurisdiction relating to the study, development, manufacture or commercialization of any Product.

 

1.48 “Serious Adverse Event” means any adverse event related to a Product that results in any of the following outcomes: death, a life-threatening adverse drug experience, inpatient hospitalization or prolongation of existing hospitalization, a persistent or significant disability/incapacity, or a congenital anomaly/birth defect. Important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a Serious Adverse Event when, based upon appropriate medical judgment, they may jeopardize the patient or subject and may require medical or surgical intervention to prevent one of the outcomes listed in this definition.

 

1.49 “Takeda Combination Product” means a formulation including two or more active pharmaceutical ingredients, or a package including two or more different pharmaceutical products, which includes a Compound and at least one Takeda Proprietary Compound.

 

1.50 “Takeda Proprietary Compound” means an active pharmaceutical ingredient that (i) [*], (ii) is not a Compound, (iii) either (x) is Controlled exclusively or

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

semi-exclusively in a country or a region by TSD, TPC or Takeda or an Affiliate thereof, or (y) TSD, TPC or Takeda or an Affiliate thereof has or had exclusive or semi-exclusive rights to commercialize and market such active pharmaceutical ingredient in a country or a region, and (iv) has been incorporated into a pharmaceutical product (including a Product) that was introduced into the commercial market. ACTOS is one example of a Takeda Proprietary Compound.

 

1.51 “Target” means human serine protease dipeptidyl peptidase IV (DP4).

 

1.52 “Term” shall have the meaning assigned to it in Section 10.1.

 

1.53 “Territory” means throughout the world.

 

1.54 “Third Party” means any individual, corporation, partnership, limited liability company or other entity other than (i) TSD, (ii) PPD or (iii) an Affiliate of either of them.

 

ARTICLE 2

 

COLLABORATION AGREEMENT

 

2.1 Termination of Collaboration Agreement.

 

(a) TSD and PPD agree that the Collaboration Agreement is hereby terminated in its entirety as of the Effective Date. As of the Effective Date, the Collaboration Agreement shall have no further force or effect (including, subject to Section 2.1(a)(iii), any provisions that would otherwise survive) and no Party thereto shall have any further right or obligation thereunder except that:

 

(i) PPD shall assign, and TSD shall assume, in an Assignment and Assumption Agreement substantially in the form of Schedule 2.1(a)(i)(1), all contracts with Third Parties under or in connection with the Collaboration Agreement, including investigator sites, that are in existence as of the Effective Date, to the extent assignable; provided, that PPD and TSD shall each use reasonable efforts to obtain any necessary consents from Third Parties promptly after the Effective Date. Schedule 2.1(a)(i)(2) lists all Third Party contracts in existence as of the Effective Date. PPD confirms that it has provided TSD with true and correct copies of all Third Party contracts in existence as of the Effective Date and as listed in Schedule 2.1(a)(i)(2).

 

(ii) TSD shall have the obligations of payment for services to be performed by PPD pursuant to the Collaboration Agreement as set forth in Section 5.4 of this Agreement; and

 

(iii) Articles 12, 14, 15, 16, and 17 and Sections 3.4(e)(ii) and 11.1 of the Collaboration Agreement shall survive termination.

 

(b) Without limiting the generality of the foregoing, following the Effective Date, and except as specifically set forth herein, PPD shall not, directly or indirectly, have any liability or obligation for any cost or expense related to any Compound or Product, including but not limited to costs or expenses for research, development, manufacturing, or commercialization of any Compound or any Product.

 

2.2 Reversion of License Rights in the Collaboration Agreement. Except as otherwise provided in Section 2.1(a) of this Agreement, as of the Effective Date, (a) all

rights and licenses granted by TSD to PPD under the Collaboration Agreement shall terminate and revert to TSD, and (b) all rights and licenses granted by PPD to TSD under the Collaboration Agreement shall terminate and revert to PPD.

 

2.3 End of Collaboration Agreement Report. As soon as possible, but no later than thirty (30) days from the Effective Date, PPD shall provide to TSD a written report summarizing the status of SYR110322 Phase II Trial and API production for Phase III through the Effective Date. The provision of such report shall not relieve PPD from its obligations under Section 3.3. Such report shall identify any and all material written Information related to the API and Phase II Trial known to PPD as of the Effective Date. PPD shall also provide to TSD a final report for the SYR110619 Phase I trial on or about July 31, 2005. Following delivery of such reports, TSD shall have a right to reasonably request through the JDC additional information from PPD relating to the SYR110322 and SYR110619 development programs and results, and PPD shall provide such information.

 

2.4 Mutual Release From Claims Arising Under the Collaboration Agreement. Each Party, on behalf of itself and its predecessors, successors, parents, subsidiaries, Affiliates, segments or divisions, and present and former shareholders, officers, directors, employees, agents, assigns and representatives and their heirs, family members and executors, hereby releases the other Party and its predecessors, successors, parents, subsidiaries, Affiliates, segments or divisions, and present and former members, shareholders, officers, directors, agents, employees, representatives, attorneys, and assigns from any and all claims, demands, obligations, or liability of whatever kind, that it has, had, or may have against the other Party, whether asserted or otherwise and whether known or unknown, for any claims, actions, or matters of any kind arising through the Effective Date in relation to the Collaboration Agreement, provided however, that such release shall not extend to any claims, demands, obligations, or liability of whatever kind, that it may have against the other Party either under this Agreement or under the Collaboration Agreement arising after the Effective Date, or claims for indemnity under Article 15 of the Collaboration Agreement for matters covered under such indemnification provisions that arose before the Effective Date.

 

2.5 California Civil Code Section 1542. The Parties represent that they are not aware of any claims other than the claims that are released by this Agreement. The Parties also acknowledge that they have been advised by legal counsel and each Party hereby waives the provisions of California Civil Code Section 1542, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

ARTICLE 3

 

ASSIGNMENT and LICENSE

 

3.1 Assignment. Subject to all of the terms and conditions of this Agreement, PPD hereby irrevocably sells, assigns, delivers, conveys, transfers and sets over to TSD, its successors and assigns the entire right, title and interest to Intellectual Property that PPD or an Affiliate of PPD Controls as of the Effective Date or during the Term of this Agreement.

 

3.2 License. To the extent that PPD is unable to assign any Intellectual Property Controlled by PPD or an Affiliate of PPD as of the Effective Date or during the Term of this Agreement, PPD hereby grants and shall grant to TSD a perpetual, worldwide, exclusive license (even as to PPD), with the right to grant sublicenses as is reasonably necessary for TSD to achieve Rgulatory Approval and commercialize Products, to such Intellectual Property. To the extent that PPD is unable to grant an exclusive license to any Intellectual Property Controlled by PPD or an Affiliate of PPD as of the Effective Date or during the Term of this Agreement, PPD hereby grants and shall grant to TSD a perpetual, worldwide, non-exclusive license, with the right to grant sublicenses as is reasonably necessary for TSD to achieve Rgulatory Approval and commercialize Products, to such Intellectual Property. TSD agrees to perform under and abide by the terms and conditions of any underlying licenses to such Intellectual Property.

 

3.3 Delivery of Documents and Materials. Promptly following the Effective Date, PPD shall deliver to TSD any and all data and documentation in PPD’s Control related to the development of a Compound or Product, and not in the possession of TSD, on the Effective Date. Following the Effective Date, PPD shall promptly notify TSD if it later discovers any data or documentation in PPD’s Control related to the development of a Compound or Product that was not previously delivered to TSD and shall promptly deliver such to TSD. Promptly following the Effective Date, PPD shall transfer to TSD the legal title to the associated INDs presently on file and any comparable filings in other countries of the Territory for SYR110322 and SYR110619. PPD shall transfer to TSD ownership of all Drug Substance, CTM and Finished Product of SYR110322 and SYR110619 and any other Material in its possession as of the Effective Date of this Agreement, the amounts of which are listed on Schedule 3.3.

 

3.4 Notice of New Intellectual Property Developed by PPD After the Effective Date. PPD shall promptly provide TSD with notice of any Intellectual Property that PPD develops following the Effective Date. PPD will promptly provide to TSD information and access to personnel reasonably requested by TSD that is necessary for seeking protection of such Intellectual Property. All expenses incurred by TSD associated with seeking protection of Intellectual Property shall be paid by TSD.

 

ARTICLE 4

 

DEVELOPMENT

 

4.1 Control over Development. Subject to Section 4.3 and its obligations to use Diligent Efforts, TSD shall, directly or through its Affiliates or licensees or subcontractors, have full control over implementation of all aspects of a Product’s development, marketing and commercialization throughout the Term of this Agreement, and shall be solely responsible for all costs and expense associated therewith.

4.2 Design and Modifications to the Development Plan. Except as set forth in Section 4.3, TSD shall consult PPD with regard to the design and implementation of a Development Plan as well as modifications to a Development Plan and take PPD’s suggestions into consideration. Except as set forth in this Section 4.2 and Section 4.3, TSD shall have the right, in its sole reasonable discretion, to modify a Development Plan after TSD consults with PPD about any proposed material changes to a Development Plan and TSD shall give full consideration to any reasonable comments or suggestions by PPD. TSD shall at all times exercise Diligent Efforts in the design, development, implementation, and modification of a Development Plan.

 

4.3 Development and Commercialization of SYR110322. During the term of this Agreement, TSD shall be responsible for the remainder of clinical and non-clinical development of SYR110322 in accordance with the 322 Development Plan, and TSD shall be solely responsible for all costs and expenses associated therewith. TSD shall have the right to modify the 322 Development Plan from time to time as reasonably necessary, [*]. TSD will use Diligent Efforts to submit applications for regulatory approval to market a Product comprising SYR110322 in the United States, EU and Japan, and will use Diligent Efforts to file an MAA in the European Union for a Product comprising SYR110322 with the EMEA within [*] of acceptance of an NDA filing for a Product comprising SYR110322. Upon approval in a country, TSD shall use Diligent Efforts to market such Product in such country. TSD shall promptly notify PPD in writing of the First Commercial Sale of a Product in each country. TSD shall use Diligent Efforts to exploit the lifecycle of the Product including, where appropriate, carrying out clinical trials and/or other studies on the Product and obtaining Marketing Authorizations. TSD shall use Diligent Efforts to commercialize Product, including deploying sales personnel as necessary to promote the Product, taking into account the sales volume of the Product, the number of competitors, the regulatory environment, and the potential for sales in a geographic area. TSD shall use Diligent Efforts to maximize the Net Sales of Products.

 

4.4 Development and Commercialization of Backup Product. Should TSD cease to develop and commercialize a Product comprising SYR110322 despite using Diligent Efforts, then TSD shall use Diligent Efforts (and shall cause any Affiliates, licensees or subcontractors participating in the subject matter of this Agreement to use Diligent Efforts) to develop and introduce a Product comprising one of SYR110619 [*] to the commercial market and to market such Product. Should TSD cease to develop and commercialize such Product despite using Diligent Efforts, then TSD shall use Diligent Efforts (and shall cause any licensees or subcontractors participating in the subject matter of this Agreement to use Diligent Efforts) to develop and introduce a Product comprising [*] SYR110619 [*] to the commercial market and to market such Product. With respect to this Section 4.4, TSD will use Diligent Efforts to submit applications for regulatory approval to market the SYR110619 [*] Product in the United States, EU and Japan. Should TSD cease to develop and commercialize such Product despite using Diligent Efforts, then TSD shall not have any further obligation to develop alternative Compound(s) under this Agreement.

 

4.5 Joint Development Committee. Within thirty (30) days of the Effective Date, PPD and TSD shall assemble a JDC. Initially, the JDC will be composed of at least two, but no more than six, representatives, with an equal number appointed by each of PPD and TSD, or their Affiliates. A list shall be provided to the other Party within thirty (30) days after the Effective Date. Each Party will promptly notify the other Party in writing of any change in its appointed representatives. The chairperson of the JDC will be one of TSD’s or its Affiliate’s representatives.

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

4.6 Duties of JDC. The duties of the JDC shall include, but not be limited to, (a) reporting the progress of all Development and Marketing Plans; (b) providing updates describing the progress made in designing and implementing new Development or Marketing Plan(s); (c) discussing potential modifications to any Development Plan; (d) reporting the results of any efforts, if any, to evaluate potential therapeutic applications for Compounds other than type II diabetes; and (e) providing updates on discovery, non-clinical and preclinical, clinical development or marketing of Compounds other than SYR110322. TSD shall promptly provide PPD with copies, through the JDC, of all Development Plans and Marketing Plans. TSD shall also provide PPD with copies through the JDC of all Regulatory Filings, Regulatory Documentation and communications with regulatory agencies within ten (10) days of mailing or receipt of Regulatory Filings, Regulatory Documentation or communications, as the case may be, with a regulatory agency. TSD shall provide to PPD copies of all final clinical study reports. A PPD JDC member shall have the right to consult with the JDC if the PPD JDC member reasonably believes information is needed from TSD in order to protect PPD’s interests, as the case may be, in the subject matter of this Agreement, and TSD through the JDC shall reasonably cooperate in connection therewith. To accomplish its objectives, the JDC will meet quarterly, or more often if mutually agreed upon by the Parties, during the term of any Development Plan or during any period of post-marketing regulatory activity, and will meet at least annually thereafter. The JDC may meet in person or by telephone or video conference. In-person JDC meetings will be held in Chicago, IL or such other sites that the Parties may mutually agree upon. Each Party will bear all expenses of its personnel arising from attending such meetings. Among other duties, one of TSD’s JDC members shall prepare and promptly circulate to the other JDC members written minutes of each such meeting, which minutes will, without limitation, record the updates given at the meetings describing the progress made in discovery, development, and commercialization of a Product. Both Parties acknowledge and agree that they intend to be as transparent as reasonably possible with each other on all material issues relating to development and commercialization of Product, and that the forum for achieving such transparency shall be the JDC.

 

4.7 Decision Making By the JDC. TSD shall have a sole and final vote on any issue and matter in the JDC after taking into account TSD’s obligation to use Diligent Efforts as set forth in Article 4.

 

4.8 Serious Adverse Event. TSD shall immediately inform PPD in writing of the occurrence of any Serious Adverse Event with regard to a Product.

 

4.9 Clinical Development Collaboration. TSD agrees to utilize PPD exclusively for clinical and bioanalytical CRO services related to the Phase II and Phase III Trials of Products that are conducted in support of obtaining Regulatory Approval in the U.S. and in the EU, in all cases, under terms and conditions mutually acceptable to the Parties; provided that (a) PPD provides such services at [*] rates which are applied between PPD, Takeda Global Research and Development Center, Inc. (“TGRD”) and Takeda Europe Research & Development Centre Ltd. (“TeuR&D), and (b) PPD demonstrates that it has and is maintaining the requisite technical expertise and capacity to reliably provide such services in a professional and competent manner. TSD will consider in good faith using PPD for CRO services related to Phase IV trials

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

of the Products and biostatistics and data management services related to Phase II-IV trials of the Products. CRO services performed by PPD pursuant to this Section 4.9 shall be governed by that certain Global Master Agreement, Clinical Research Management Services (Phase II-IV) dated July 1, 2004, that certain Global Master Agreement, Bioanalytical Laboratory Services dated September 1, 2004 and that certain Global Master Agreement, Biostatistics and Data Management Services (Phase II-IV) dated July 13, 2005, each of which is executed among TGRD, TeuR&D and PPD Development, LP (the “Takeda MSAs”). Schedule 4.9 includes a description of initial services that will be performed by PPD under the 322 Development Plan. Individual task orders, which more fully describe the specific types of services and activities to be undertaken by PPD for each study under the 322 Development Plan, will be executed under the appropriate Takeda MSA. Each task order will be signed by TSD, as an affiliate of TGRD and TeuR&D. If PPD is asked to perform CRO services for multiple Products at the same time, PPD shall conduct such CRO services for such multiple Products pursuant to the Development Plan for each such Product, and pursuant to guidance from TSD regarding the coordination between such Products as necessary. In case of conflict between this Agreement and the Takeda MSAs regarding the assignment or license of Intellectual Property to TSD, the terms of this Agreement shall prevail.

 

ARTICLE 5

 

CONSIDERATION

 

5.1 Upfront Payment. Within thirty (30) days after the Effective Date, TSD shall pay to PPD the sum of Fifteen Million Dollars ($15,000,000).

 

5.2 Milestone Payments.

 

(a) TSD shall make the milestone payments set forth below to PPD within thirty (30) days of the occurrence of the related milestone events with regard to a Product. Each such milestone payment shall not come due until the related milestone event occurs and shall only be payable upon the first occurrence of the related milestone event. Once TSD provides PPD with payment for the occurrence of a given milestone event, TSD shall have no further obligation to make any further milestone payments to PPD for any future occurrence of such milestone event whether with the same Product or a different Product. TSD shall give PPD notice of the occurrence of a milestone event within five (5) business days of the occurrence of such milestone event.

 

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

(b) TSD shall pay to PPD milestone payments in accordance with the schedule set forth below with regard to Products, based on total worldwide Net Sales of all Products for the first consecutive twelve month period during which such sales milestone event is achieved, such payment to be made within thirty (30) days after achievement of such milestone event. Each of the milestone payments listed in Section 5.2(b) shall be payable only once under this Agreement regardless of the number of Products that individually achieve the sales milestone event in a given twelve month period or the number of times a given Product achieves such sales milestone event in a given twelve month period.

 

 

5.3 Royalties. In accordance with the terms of Article 6 of this Agreement, TSD shall pay the following running earned royalties on a Compound by Compound basis on cumulative annual (a fiscal year starting on April 1) Net Sales as set forth below for each Product sold. For purposes of clarification and illustration, examples of royalty calculations are set forth on Schedule 5.3.

 

Such royalties shall be payable on cumulative Net Sales on a Compound by Compound basis and on a country-by-country basis beginning upon the First Commercial Sale of a Product in the country until the later of (a) the [*] year anniversary of the First Commercial Sale of that Product in that country or (b) [*] following [*]. For the avoidance of doubt and except as provided in (a) of the preceding sentence, no royalties shall be payable by TSD with respect to Net Sales of Product after the date that is [*]. Royalties under this Section 5.3 shall be based on cumulative Net Sales of Products containing the same Compound, as calculated in accordance with Section 1.35.

 

During the [*] period following expiration of all Patents in the Collaboration Patent Estate which [*], the specified royalty rate shall be reduced [*]. For example, if there is at least one Patent in the Collaboration Patent Estate issued in a country that [*] and the applicable royalty rate is [*]%, then for a period of [*] following [*], the royalty rate will be [*]%.

 

Independent but including the preceding paragraph, the royalty rates set forth in this Section 5.3 shall be reduced by [*] percent ([*]%) if [*]. For example, if the stated royalty rate is [*]%, then the royalty rate is [*]% if [*] and [*]% if the Product [*].

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

(a)

U.S. Net Sales.

 

 

(b)

EU Net Sales.