AMENDED AND RESTATED CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

EXHIBIT 10.54

Exhibit 10.54 to Form 10-K

CONFIDENTIAL PROVISIONS REDACTED

AMENDED AND RESTATED CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This Amended and Restated Co-Development and Commercialization Agreement (the “Agreement” ) is entered into as of October 29, 2005 (the “Amendment Effective Date” ), by and among PROTEIN DESIGN LABS, INC., a Delaware corporation having offices at 34801 Campus Drive, Fremont, California 94555 ( “PDL” ), and HOFFMANN-LA ROCHE INC., a New Jersey corporation having offices at 340 Kingsland Street, Nutley, New Jersey 07110 ( “Roche-Nutley” ) and F. HOFFMANN-LA ROCHE LTD of Basel, Switzerland ( “F. Roche ”) (Roche-Nutley and F. Roche are individually and collectively referred to as “Roche ”).

RECITALS

W HEREAS , Roche currently markets a humanized antibody against the interleukin-2 (IL-2) receptor (Daclizumab), under the trademark Zenapax®, for the prevention of acute organ rejection in patients receiving kidney transplants;

W HEREAS , pursuant to the Amended and Restated Worldwide Agreement between PDL and Roche dated October 1, 2003, as amended (the “Original Worldwide Daclizumab Agreement” ), certain rights previously granted to Roche reverted to PDL, and PDL acquired, among other rights, the sole and exclusive worldwide rights to develop, market and sell Daclizumab for autoimmune indications, and the option to acquire the sole and exclusive worldwide rights to develop, market and sell Daclizumab for all transplant indications;

W HEREAS , pursuant to the Co-Development and Commercialization Agreement between PDL and Roche dated September 14, 2004 (the “Effective Date” ), as amended on May 19, 2005 (the “Original Asthma Agreement” ), PDL and Roche entered into a worldwide collaboration for the joint development and commercialization of Daclizumab for the treatment of asthma and other respiratory diseases; and

 

W HEREAS , PDL and Roche have further amended and restated the Original Worldwide Daclizumab Agreement as of October 28, 2005 to grant PDL the sole and exclusive worldwide rights to develop, market and sell Daclizumab for all transplant indications, except for the form of Daclizumab currently marketed by Roche, to which Roche retains sole and exclusive worldwide rights. Such further amended and restated agreement is referred to herein as the “Worldwide Daclizumab Agreement.”

W HEREAS , PDL and Roche now wish to amend and restate the Original Asthma Agreement to provide for, in addition to the existing asthma collaboration, a worldwide collaboration for the joint development and commercialization of Daclizumab for transplant indications, with an emphasis on transplant maintenance.

N OW THEREFORE , the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 “Affiliate” means any corporation or other business entity controlled by, controlling, or under common control with another entity, with “control” meaning direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of, or more than a fifty percent (50%) interest in the income of, such corporation or other business entity. Notwithstanding anything to the contrary in this paragraph, [****].

1.2 “Asthma Commercialization Plan” shall have the meaning set forth in Section 6.1(a).

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

1.3 “Asthma Co-Promotion Term” shall have the meaning set forth in Section 6.4(a).

1.4 “Asthma Development Plan” shall have the meaning set forth in Section 4.1(a).

1.5 “Asthma Field” means the treatment and/or prevention of asthma or other respiratory diseases.

1.6 “Asthma Joint Development Committee” or “Asthma JDC” shall have the meaning set forth in Section 3.6.

1.7 “Autoimmune Indications” means all indications that involve pathogenic consequences, including tissue injury, produced by autoantibodies or autoreactive T lymphocytes interacting with self epitopes, i.e., autoantigens. Autoimmune Indications shall include, without limitation, asthma, psoriasis, rheumatoid arthritis, systemic lupus erythematosus, scleroderma, juvenile rheumatoid arthritis, polymytosis, Type I diabetes, sarcoidosis, Sjogrens syndrome, chronic active non-pathogenic hepatitis, non-infectious uveitis (Behcets), aplastic anemia, regional non-pathogenic enteritis (including ulcerative colitis, Crohn’s Disease and inflammatory bowel disease), Kawasaki’s disease, post-infectious encephalitis, multiple sclerosis, and tropic spastic paraparesis.

1.8 “cGMP” means current Good Manufacturing Practices pursuant to the U.S. Federal Food, Drug and Cosmetics Act as amended (21 USC 301 et seq.), as well as any equivalent laws or regulations in the European Union pertaining to the manufacture of pharmaceutical products.

1.9 “Change of Control” shall mean a transaction in which a Party: (a) sells, conveys or otherwise disposes of all or substantially all of its property or business; or (b)(i) merges or consolidates with any other entity (other than a wholly-owned subsidiary of such Party); or (ii) effects any other transaction or series of transactions; in each case of clause (i) or (ii), such that the stockholders of such Party immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving entity following the closing of such merger, consolidation, other transaction or series of transactions.

 

1.10 “Closing Date” means, if the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “ HSR Act ”) applies to the transaction contemplated by this Agreement that was not contemplated by the Original Asthma Agreement, two business days after the earlier of (a) the date of approval of such transaction by the Federal Trade Commission or the appropriate US anti-trust authorities or (b) the expiration or termination of all applicable waiting periods and requests for information (and any extensions thereof) under the HSR Act.

1.11 “Collaborative Fields” shall have the meaning set forth in Section 2.5. For clarity, a Collaborative Field (i.e., used in the singular) shall refer either to the [****] or [****].

1.12 “Combination Product” means a Licensed Product that contains one or more therapeutically active ingredients in addition to Daclizumab.

1.13 “Commercial Supply Agreement” shall have the meaning set forth in Section 8.2.

1.14 “Commercialization Plan” means the Asthma Commercialization Plan or the Transplant Commercialization Plan, as applicable.

1.15 “Controlled” means, with respect to any intellectual property right, that the Party has a license to such intellectual property right and has the ability to grant to the other Party a sublicense to such intellectual property right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party existing at the time such Party would be first required hereunder to grant the other Party such sublicense.

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

1.16 “Co-Promotion Term” means the Asthma Co-Promotion Term or the Transplant Co-Promotion Term.

1.17 “Cost of Goods Sold” or “COGS” means, with respect to a Licensed Product (in bulk, vialed or finished product form, as the case may be), the sum of the following, all of which shall be calculated in accordance with U.S. generally accepted accounting principles consistently applied by PDL to all of its products:

[****] provided, however, that Cost of Goods Sold shall not include any costs or expenses included or includible in Distribution Expenses.

1.18 “Daclizumab” means that certain humanized murine monoclonal antibody directed against the p55 component of IL-2R and given the generic name “Daclizumab” by the United States Adopted Names Council. Daclizumab does not include fragments of such antibody or any antibodies having a different amino acid sequence from such antibody.

1.19 “Data Services” shall have the meaning set forth in Section 7.6(b).

1.20 “Detail” or “Detailing” shall mean a [****] presentation by a Party’s sales representative, to one or several medical professional(s) having prescribing authority in the U.S. Territory in a Collaborative Field, as well as to other individuals or entities that have significant impact or influence on prescribing decisions in the U.S. Territory in a Collaborative Field, as identified in the Commercialization Plan approved by the Asthma JDC or the Transplant JCC (as appropriate) (collectively, the “Target Audience” ), in which the principal objective of such presentation is to emphasize the features and function of such Licensed Product in a Collaborative Field. [****].

1.21 “Development” means all activities that relate to (a) obtaining, maintaining or expanding Regulatory Approval of a Licensed Product in a Collaborative

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

Field or (b) developing the ability to manufacture the same. This includes, without limitation, (i) preclinical testing, toxicology, formulation, manufacturing-related technology development, and clinical studies of a Licensed Product in a Collaborative Field; (ii) preparation, submission, review, and development of data or information for the purpose of submission to a governmental authority to obtain and/or maintain Regulatory Approval of a Licensed Product in a Collaborative Field, and outside counsel regulatory legal services related thereto; and (iii) manufacturing process development and scale-up, bulk production and fill/finish work associated with the supply of Licensed Products for preclinical and clinical studies, and related quality assurance technical support activities.

1.22 “Development Expenses” shall have the meaning set forth in Exhibit A.

1.23 “Development Plan” means the Asthma Development Plan or the Transplant Development Plan, as applicable.

1.24 “Diligent Efforts” means the carrying out of obligations or tasks in a diligent, sustained manner using efforts equivalent to the efforts a Party devotes to a product of similar market potential, profit potential and strategic value resulting from its own research efforts, based on conditions then prevailing. Diligent Efforts requires that the Party: (a) promptly assign responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an on-going basis, (b) set and consistently seek to achieve specific and meaningful objectives for carrying out such obligations, and (c) consistently make and implement decisions and allocate resources designed to advance progress with respect to such objectives. The Parties acknowledge that Roche does not, as of the Effective Date, develop, register, market, and sell its products in every country in the Territory, and it is understood that the exercise by Roche of Diligent Efforts shall be judged in light of this fact.

1.25 “Distribution Expenses” means the costs, excluding administration costs, incurred by a Party or for its account, specifically attributable to the distribution of a Licensed Product in the U.S. Territory, to be calculated in the manner set forth in Exhibit A.

 

1.26 “Dollars” or “$” means the legal tender of the U.S.

1.27 “Drug Approval Application” means a Biologics License Application or an equivalent application for Regulatory Approval required before commercial sale or use of a Licensed Product in a Collaborative Field in a regulatory jurisdiction.

1.28 “European Union” means all countries that are officially recognized as member states of the European Union.

1.29 “Executive Officers” means, for Roche, the CEO of the Roche Pharmaceuticals Division (or such individual’s designee), and, for PDL, the Chief Executive Officer of PDL (or such individual’s designee). If either position is vacant or either position does not exist, then the person having the most nearly equivalent position (or such individual’s designee) shall be deemed to be the Executive Officer of the relevant Party.

1.30 “Failure to Supply” shall have the meaning set forth in Section 8.2.

1.31 “FDA” means the U.S. Food and Drug Administration or any successor agency thereto.

1.32 “First Commercial Sale” means, for each Licensed Product in each country in each Collaborative Field, the first sale to a Third Party of such Licensed Product in such country in such Collaborative Field by a Party, its Affiliate, or its sublicensee, after the granting by the relevant governing authorities of all Regulatory Approvals required for commercial sale of the Licensed Product in such country in such Collaborative Field.

1.33 “FTE” means the equivalent of one employee working full time in a Development-related capacity, for or on behalf of a Party for one 12-month period.

1.34 “Generic Product” means a Third Party product (a) that contains Daclizumab or an antibody with a substantially identical amino acid sequence, whether or not the glycosylation pattern of such antibody is identical to Daclizumab; and (b) that has received Regulatory Approval for use in a particular indication in the applicable

 

Collaborative Field through an expedited regulatory approval process governing approval of generic biologics, should such a regulatory approval process ever be implemented. Notwithstanding the foregoing, Generic Products do not include Licensed Products sold by either Party’s sublicensees or distributors pursuant to this Agreement or the Worldwide Daclizumab Agreement or Licensed Products to the extent sold for use outside of the Collaborative Fields.

1.35 “Global Net Sales” means the sum of PDL Net Sales and Roche Net Sales.

1.36 “IL-2R” means the IL-2 receptor.

1.37 “Incremental Development Expenses” means the expenses incurred by Roche or for its account that are attributable to Development performed solely in support of Regulatory Approval with respect to the ROW Territory and that were not requested by either the Asthma JDC or the Transplant JDC (as appropriate) to support Regulatory Approval with respect to the U.S. Territory or the European Union. Such expenses shall include the transfer price paid by Roche, pursuant to Section 8.1(c), for Licensed Product supplied by PDL for such Development.

1.38 “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, physical, biological, chemical, biochemical, toxicological, clinical and veterinary test data, analytical and quality control data, stability data, studies and procedures, dosage regimens and control assays, financial information, procurement requirements, purchasing information, manufacturing information, customer lists, business and contractual relationships, business forecasts, sales and merchandising information, marketing plans, and patent and other legal information or descriptions.

1.39 “Joint Finance Committee” or “JFC” means that subcommittee of the JSC established pursuant to Section 3.3(g).

 

1.40 “Joint Inventions” means any inventions:

(a) related to humanized or chimeric antibodies that bind to IL-2R, whether patented or not, that were jointly made during the period beginning on January 31, 1989 and continuing until the Effective Date by at least one (1) PDL employee or person contractually required to assign or license patent rights covering such inventions to PDL and at least one (1) Roche employee or person contractually required to assign or license patent rights covering such inventions to Roche; or

(b) related to antibodies that bind to IL-2R, whether patented or not, that are jointly made during the period beginning on the Effective Date and continuing until the expiration or termination of this Agreement by at least one (1) PDL employee or person contractually required to assign or license patent rights covering such inventions to PDL and at least one (1) Roche employee or person contractually required to assign or license patent rights covering such inventions to Roche.

1.41 “Joint Patent Committee” or “JPC” means that subcommittee of the JSC established pursuant to Section 3.3(f).

1.42 “Joint Roche-PDL Patents” means all patent applications and patents claiming Joint Inventions.

1.43 “Joint Steering Committee” or “JSC” shall have the meaning set forth in Section 3.1.

1.44 “Know-How” means all inventions, discoveries, trade secrets, information, experience, data, formulas, procedures and results related to antibodies that bind to IL-2R, and improvements thereon, including any information regarding the physical, chemical, biological, toxicological, pharmacological, clinical, and veterinary data, dosage regimens, control assays and specifications of Licensed Products.

1.45 “Licensed Product” shall mean any pharmaceutical product having as an active ingredient Daclizumab, but excluding Nutley Dac.

 

1.46 “ Major Pharmaceutical Company ” shall mean any entity that, together with its Affiliates, has annual worldwide pharmaceutical sales of [****] or more for the last full fiscal year preceding the date of consummation of a Change of Control.

1.47 “Major Regulatory Jurisdiction” means the [****].

1.48 “ Medical Activities ” shall mean continuing medical education, scientific communication and exchange and medical liaison activities.

1.49 “Non-Registrational Trial” means a clinical trial in a Collaborative Field for a Licensed Product that (a) is initiated or ongoing after completion of the first Phase III Trial in such Collaborative Field, and (b) is not conducted to obtain, maintain or expand Regulatory Approval of the Licensed Product in such Collaborative Field. A Non-Registrational Trial shall be deemed initiated upon the enrollment of the first patient.

1.50 “Nutley Dac” means the FDA-approved form of the pharmaceutical product containing Daclizumab manufactured at Roche’s Nutley, New Jersey facility, as of the Amendment Effective Date.

1.51 “Operating Expenses” shall have the meaning set forth in Exhibit A.

1.52 “Party” means PDL or Roche individually, and “Parties” means PDL and Roche collectively.

1.53 “PDL Adjusted Gross Sales” means the gross invoice price of Licensed Products sold or otherwise disposed of for consideration in the U.S. Territory by PDL, its Affiliates or sublicensees (other than Roche and its Affiliates hereunder) to independent Third Parties (not Affiliates of the seller) for use in a Collaborative Field, reduced by the following amounts: (a) [****] and (b) [****] [****].

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

In the case of the sale by PDL, its Affiliates or sublicensees (other than Roche and its Affiliates hereunder) in such Collaborative Field in the U.S. Territory of Combination Products for which a Licensed Product and each of the other therapeutically active ingredients contained in the Combination Product have established market prices when sold separately, PDL Adjusted Gross Sales shall be determined by multiplying [****] by [****]. When such separate market prices are not established, then the Parties shall negotiate in good faith to determine the method of calculating PDL Adjusted Gross Sales for such Combination Product.

If PDL or its Affiliates or sublicensees receive non-cash consideration for Licensed Products sold or otherwise transferred to an independent Third Party (not an Affiliate of the seller or transferor), the fair market value of such non-cash consideration on the date of the transfer will be [****] and shall be deemed [****].

1.54 “PDL Gross Margin” means, with respect to a particular Collaborative Field and calendar quarter during the Co-Promotion Term for such field, PDL Adjusted Gross Sales for Licensed Products sold in the U.S. Territory in such quarter for use in such field minus [****].

1.55 “PDL House Marks” means the corporate name of PDL and associated logos and designs.

1.56 “PDL Know-How” means, except as otherwise set forth in this Section 1.56, all Know-How that is possessed, as of the Effective Date, by PDL or by any entity that is a PDL Affiliate as of the Effective Date, or that is developed during the term of this Agreement by PDL or by any entity while it is a PDL Affiliate, and which Know-How is owned or Controlled by PDL or its Affiliates and is reasonably required or useful for seeking registration of, using or selling Licensed Products in the Collaborative Fields;

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

provided, however, that PDL Know-How excludes any know-how of any kind concerning generic methods of manufacturing, designing, developing or preparing antibodies including, but not limited to, methods of humanizing antibodies, methods of reducing the immunogenicity of antibodies, and methods of increasing the affinity of antibodies.

1.57 “PDL Net Sales” means the amount determined by deducting [****] from PDL Adjusted Gross Sales to account for standard deductions from gross sales such as shipping, insurance, taxes (to the extent not included in calculations of PDL Adjusted Gross Sales).

1.58 “PDL Patents” means all patent applications owned or Controlled by PDL or its Affiliates alone or with a Third Party ( “Sole PDL Patents” ) and all Joint Roche-PDL Patents claiming Licensed Products or their manufacture or use in the Collaborative Fields, which are filed prior to or during the term of this Agreement in the U.S. or any foreign jurisdiction, including any addition, continuation, continuation-in-part or division thereof or any substitute application therefor; any patent issued with respect to such patent application, any reissue, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and any other U.S. or foreign patent or inventor’s certificate covering Licensed Products in the Collaborative Fields.

1.59 “PDL Technology” means PDL Know-How and PDL Patents.

1.60 “PDL Trademarks” means all trademarks owned by PDL (except for any PDL House Marks or trade names) and used by PDL or its sublicensee(s) in connection with the marketing, promotion, and sale of Licensed Products in the Collaborative Fields and all trademark registrations and applications therefor, and all goodwill associated therewith. The PDL Trademarks shall not include the Zenapax Trademark.

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

1.61 “Phase II Trial” means a human clinical trial in a Collaborative Field performed to evaluate the effectiveness of a Licensed Product for a particular indication or indications in patients with the disease or condition under study and to determine the common short-term side effects and risks associated with the drug, as described in 21 CFR 312.21(b). For the purposes of Section 9.3, a Phase II Trial shall be deemed initiated upon the dosing of the first patient.

1.62 “Phase IIa Trial” means a human clinical trial performed to estimate the biologic or clinical effect of a pharmaceutical product in a target population. A Phase IIa Trial shall be deemed initiated upon the dosing of the first patient.

1.63 “Phase IIb Trial” means a human clinical trial performed to gain evidence of the efficacy of a pharmaceutical product in a target population, and to establish the optimal dosing regimen for such product. A Phase IIb Trial shall be deemed initiated upon the dosing of the first patient.

1.64 “Phase III Trial” means a human clinical trial in a Collaborative Field performed to gain evidence of the efficacy of a Licensed Product in a target population, and to obtain expanded evidence of safety for such Licensed Product that is needed to evaluate the overall benefit-risk relationship of such Licensed Product and provide an adequate basis for physician labeling, as described in 21 CFR 312.21(c). For the purposes of Sections 9.2 and 9.3, a Phase III Trial shall be deemed initiated upon the dosing of the first patient.

1.65 “Phase IV Trial” means a clinical trial in the Asthma Field or Transplant Field for a Licensed Product that (a) is initiated or ongoing after completion of the first Phase III Trial in the Asthma Field or Transplant Field, respectively, and (b) is not a Non-Registrational Trial in such field. A Phase IV Trial shall be deemed initiated upon the enrollment of the first patient.

1.66 “Post-Launch Product R&D Expenses” shall have the meaning set forth in Exhibit A.

 

1.67 “Promotion” or “Promote” shall mean the marketing and advertising of a Licensed Product in the Asthma Field in the U.S. Territory in accordance with the Asthma Commercialization Plan or in the Transplant Field in the U.S. Territory in accordance with the Transplant Commercialization Plan, including information and communication and market development, but not including Detailing or Medical Activities.

1.68 “Queen Patents” means those worldwide PDL Patents claiming priority to U.S. Patent Application Serial No. 07/290,975, filed December 28, 1988.

1.69 “Region” shall mean each region set forth in Exhibit F, provided that such Exhibit may be modified by Roche with PDL’s written consent, such consent not to be unreasonably withheld, if Roche modifies the regions that it uses to generally manage its pharmaceuticals business.

1.70 “Regulatory Approval” means all approvals (including pricing and reimbursement approvals), product and/or establishment licenses, registrations or authorizations of any regional, federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for the manufacture, use, storage, import, export, transport or sale of Licensed Products in the Collaborative Fields in a regulatory jurisdiction.

1.71 “Roche Adjusted Gross Sales” means the gross invoice price of Licensed Products sold or otherwise disposed of for consideration by Roche, its Affiliates or sublicensees (other than PDL and its Affiliates hereunder) to independent Third Parties (not Affiliates of the seller), reduced by the following amounts: (a) [****] and (b) [****].

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

When calculating the Roche Adjusted Gross Sales, the amount of such sales in foreign currencies shall be converted into Dollars at the average rate of exchange at the time for the applicable calendar quarter in accordance with Roche’s then-current standard practices. Roche shall provide reasonable documentation of the calculation and reconciliation of the conversion figures on a country-by-country basis as part of its report of Roche Adjusted Gross Sales for the period covered under the report.

In the case of the sale by Roche, its Affiliates or sublicensees (other than PDL and its Affiliates hereunder) of Combination Products for which a Licensed Product and each of the other therapeutically active ingredients contained in the Combination Product have established market prices when sold separately, Roche Adjusted Gross Sales shall be determined by multiplying [****] by [****]. When such separate market prices are not established, then the Parties shall negotiate in good faith to determine the method of calculating Roche Adjusted Gross Sales for such Combination Product.

If Roche or its Affiliates or sublicensees receive non-cash consideration for Licensed Products sold or otherwise transferred to an independent Third Party (not an Affiliate of the seller or transferor), the fair market value of such non-cash consideration on the date of the transfer will be [****]and shall be deemed [****].

1.72 “Roche Fill/Finish Costs” shall have the meaning set forth in Section 8.3(a).

1.73 “Roche Gross Margin” means, with respect to a particular calendar quarter during the Transplant Co-Promotion Term, Roche Adjusted Gross Sales for Licensed Products sold in the U.S. Territory in such quarter for use in the Transplant Field minus (a) [****]; and (b) [****].

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

1.74 “Roche Inventions” means all inventions that (a) relate to or are useful with antibodies that bind the IL-2 receptor (IL-2R) and (b) are made during the term of this Agreement by employees of Roche or persons contractually required to assign or license patent rights covering such inventions to Roche, in the course of performing Roche’s obligations, or exercising Roche’s rights, under this Agreement.

1.75 “Roche Know-How” means, except as otherwise set forth in this Section 1.75, all Know-How that is possessed, as of the Effective Date, by Roche or by any entity that is a Roche Affiliate as of the Effective Date, or that is developed during the term of this Agreement by Roche or by any entity while it is a Roche Affiliate, and which Know-How is owned or Controlled by Roche or its Affiliates and is reasonably required or useful for seeking registration of, manufacturing, using or selling the Licensed Products; provided, however, that Roche Know-How excludes any Know-How of any kind concerning generic methods of manufacturing, designing, developing or preparing antibodies including, but not limited to, methods of humanizing antibodies, methods of reducing the immunogenicity of antibodies, and methods of increasing the affinity of antibodies.

1.76 “Roche Net Sales” means the amount determined by deducting [****] from Roche Adjusted Gross Sales to account for standard deductions from gross sales such as shipping, insurance, taxes (to the extent not included in calculations of Roche Adjusted Gross Sales).

1.77 “Roche Patents” means all patent applications owned or Controlled by Roche or its Affiliates ( “Sole Roche Patents” ) alone or with a Third Party, and all Joint Roche-PDL Patents claiming Licensed Products or their manufacture or use in the Collaborative Fields, which are filed prior to or during the term of this Agreement in the

 

****	Certain information on this page has been omitted and filed separately with the commission. Confidential treatment has been requested with respect to the omitted portions.

 

U.S. or any foreign jurisdiction, including any addition, continuation, continuation-in-part or division thereof or any substitute application therefor; any patent issued with respect to such patent application, any reissue, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and any other U.S. or foreign patent or inventor’s certificate covering Licensed Products in the Collaborative Fields.

1.78 “Roche Technology” means Roche Know-How and Roche Patents.

1.79 “ROW Commercialization Activities” has the meaning set forth in Section 7.1.

1.80 “ROW Territory” means all parts of the Territory not included in the U.S. Territory.

1.81 “[****] Daclizumab” means a [****] humanized murine monoclonal antibody prepared against the p55 component of IL-2R [****] and covered by claims under [****].

1.82 “Sole PDL Patents” shall have the meaning set forth in Section 1.58.

1.83 “Sole Roche Patents” shall have the meaning set forth in Section 1.78.

1.84 “Successful GMP Audit” shall have the meaning set forth in Exhibit B.

1.85 “Target Audience” shall have the meaning set forth in Section 1.20.

1.86 “Territory” means all countries of the world.

1.87 “Third Party” means any person or entity other than a Party or its Affiliates.

 

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1.88 “Third Party License” means (a) any of the license agreements set forth on Exhibit C and (b) any other license agreement entered into by a Party with a Third Party after the Amendment Effective Date that the Parties agree in writing is necessary for the use, manufacture, sale, offering for sale, or importation of Licensed Product in a Collaborative Field in the Territory under this Agreement.

1.89 “Transfer Price” means, with respect to a particular unit of Licensed Product, the amount paid by Roche to PDL for supply of such unit of Licensed Product pursuant to the Commercial Supply Agreement in either bulk or finished form.

1.90 “Transplant Branded Product” shall mean a Licensed Product that is marketed in the U.S. Territory using the Transplant Trademark. If the FDA does not allow for use of different registered trademarks to market the Licensed Product in the Collaborative Fields, then the Licensed Product shall be deemed a Transplant Branded Product for the U.S. Territory only for so long as the Licensed Product has received Regulatory Approval in the Transplant Field and not the Asthma Field.

1.91 “Transplant Commercialization Plan” shall have the meaning set forth in Section 6.1(b).

1.92 “Transplant Co-Promotion Term” shall have the meaning set forth in Section 6.4(b).

1.93 “Transplant Development Plan” shall have the meaning set forth in Section 4.1(b).

1.94 “Transplant Field” means the Transplant Indications.

1.95 “Transplant Indications” means all indications that involve the suppression of rejection of transplanted organs, bone marrow or other tissue, including, without limitation, solid organ transplantation (including tolerance induction and xenotransplantation), bone marrow transplantation, graft versus host disease and cell transplantation. In any event, if a given indication satisfies the criteria for both an Autoimmune Indication and a Transplant Indication, such indication shall be deemed a

 

Transplant Indication and not an Autoimmune Indication, provided that an Autoimmune Indication shall not be deemed a Transplant Indication merely because it may cause the need for a transplant (e.g., Type I diabetes, even if it causes the need for an organ transplant).

1.96 “Transplant Joint Commercialization Committee” or “Transplant JCC” shall have the meaning set forth in Section 3.18.

1.97 “Transplant Joint Development Committee” or “Transplant JDC” shall have the meaning set forth in Section 3.12.

1.98 “Transplant Trademark” shall have the meaning set forth in Section 13.1.

1.99 “U.S.” means the United States of America.

1.100 “U.S. Territory” means the U.S. and its territories and possessions.

1.101 “Valid Claim” means a claim in any unexpired and issued patent in the PDL Patents or Roche Patents that has not been disclaimed, revoked, or held invalid or unenforceable by a final unappealable decision of a court or government agency of competent jurisdiction.

1.102 “Zenapax Trademark ” means the trademark “Zenapax ^® ,” and all trademark registrations and applications therefor, and all goodwill associated therewith.

 

ARTICLE 2

LICENSES AND OPTION

2.1 Grants to Roche.

(a) U.S. Territory

(i) Technology License . Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche a co-exclusive license (together with PDL), under the PDL Technology, to develop Licensed Products in the Collaborative Fields with respect to the U.S. Territory and the European Union, in accordance with the Asthma Development Plan and Transplant Development Plan, and to import and use Licensed Products for such purposes. The foregoing licenses include the right to perform Development outside the U.S. Territory and European Union in accordance with the Asthma Development Plan and Transplant Development Plan with respect to any Licensed Product, solely in order to obtain Regulatory Approval of such Licensed Product in the Collaborative Fields in the U.S. Territory or the European Union.

(ii) Asthma Promotion Right . Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche a co-exclusive (together with PDL), non-transferable (subject to Section 19.1) right to Promote and Detail Licensed Products in the Asthma Field in the U.S. Territory, in accordance with applicable law and the Asthma Commercialization Plan. If not sooner terminated pursuant to Article 17, such right shall terminate at the end of the Asthma Co-Promotion Term.

(iii) Commercialization in the Transplant Field .

(1) Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche the exclusive (even as to PDL) license, under the PDL Technology, to (a) offer for sale and sell Transplant Branded Products in the Transplant Field in the U.S. Territory in accordance with the Transplant Commercialization Plan, and (b) use and import Transplant Branded Products in the Transplant Field in the U.S. Territory for such purposes; provided, however, that the license granted under this Section 2.1(a)(iii)(1) with respect to the Queen Patents shall be nonexclusive. If not sooner terminated pursuant to Article 17, such license shall terminate at the end of the Transplant Co-Promotion Term or, if there is no Transplant Trademark and Regulatory Approval of the Licensed Product in the Asthma Field in the U.S. Territory is received prior to the end of the Transplant Co-Promotion Term, upon such Regulatory Approval.

 

(2) Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche, the exclusive (except to the extent of PDL’s right to co-promote pursuant to Sections 2.2(b) and 6.2(c)), right and license to use the PDL Trademarks solely in connection with the marketing, promotion, detailing, offering for sale and sale of Transplant Branded Products in the Transplant Field in the U.S. Territory in accordance with the Transplant Commercialization Plan. If not sooner terminated pursuant to Article 17, such right and license shall terminate at the end of the Transplant Co-Promotion Term or, if there is no Transplant Trademark and Regulatory Approval of the Licensed Product in the Asthma Field in the U.S. Territory is received prior to the end of the Transplant Co-Promotion Term, upon such Regulatory Approval.

(3) Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche a co-exclusive (together with PDL), non-transferable (subject to Section 19.1) right to Promote and Detail Licensed Products (other than Transplant Branded Products) in the Transplant Field in the U.S. Territory, in accordance with applicable law and the Transplant Commercialization Plan. If not sooner terminated pursuant to Article 17, such right shall terminate at the end of the Transplant Co-Promotion Term.

(iv) Sublicenses. The rights granted to Roche in Sections 2.1(a)(i), 2.1(a)(ii) and 2.1(a)(iii) are sublicensable, without the prior written consent of PDL, only to Roche’s Affiliates, provided, however, that the license granted to Roche in Section 2.1(a)(iii)(2) is sublicensable only to a sublicensee of the licenses set forth in Section 2.1(a)(iii)(1).

(b) ROW Territory

(i) Technology License . Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche and Roche’s Affiliates the exclusive (even as to PDL) license, under the PDL Technology, to (1) develop Licensed Products in the Collaborative Fields in the ROW Territory (other than the European Union), (2) use and import Licensed Products in the Collaborative Fields in the ROW Territory (other than the European Union) for such Development purposes, (3) offer for sale and

 

sell Licensed Products in the Collaborative Fields in the ROW Territory, (4) use and import Licensed Products in the Collaborative Fields in the ROW Territory for such commercialization purposes; provided, however, that the license granted under this Section 2.1(b)(i) with respect to the Queen Patents shall be nonexclusive. The foregoing licenses include the right to perform Development in the European Union and the U.S. Territory in accordance with the Asthma Development Plan and Transplant Development Plan with respect to any Licensed Product, solely in order to obtain Regulatory Approval of such Licensed Product in the Collaborative Fields in the ROW Territory (other than the European Union). Notwithstanding the exclusivity of the foregoing license, PDL retains the right to perform Development activities in the ROW Territory (other than the European Union) with respect to the Licensed Product solely in order to obtain Regulatory Approval of the Licensed Product in the Collaborative Fields in the U.S. Territory or the European Union, in accordance with the Development Plan or as approved by the JSC.

(ii) Trademark License. Subject to the terms and conditions of this Agreement, PDL hereby grants to Roche and Roche’s Affiliates, the exclusive right and license to use the PDL Trademarks solely in connection with the development, use, marketing, promotion, detailing, offering for sale and sale of Licensed Products in the Collaborative Fields in the ROW Territory; provided, however, that Roche’s license under this Section 2.1(b)(ii) shall be co-exclusive (together with PDL) with respect to Development in the European Union. PDL agrees to execute any required documents, to provide on request any required records, and otherwise to cooperate fully with Roche as may be necessary to accomplish the recordation of the license set forth in this Section 2.1(b)(ii) in any jurisdiction in the ROW Territory that Roche seeks such recordation. In such event, the documented expenses for recordation (not including any PDL internal costs) will be borne by Roche.

(iii) Sublicenses . The licenses granted to Roche and its Affiliates in Sections 2.1(b)(i) and 2.1(b)(ii) are sublicensable only with the prior written consent of PDL, which shall not be unreasonably withheld. It shall be deemed reasonable for PDL to withhold consent with respect to sublicense by Roche of the

 

license set forth in Section 2.1(b)(i) to any other entity that is [****] [****] in the [****] for which the Parties are selling, developing or planning to develop the Licensed Product. Roche and its Affiliates may use Third Party distributors in the ROW Territory in accordance with their customary practices. The license granted to Roche in Section 2.1(b)(ii) is sublicensable only to a sublicensee of the licenses set forth in Section 2.1(b)(i).

2.2 Grants to PDL.

(a) Technology License. Subject to the terms and conditions of this Agreement, Roche hereby grants to PDL, under the Roche Technology, Roche Inventions, and all patents claiming Roche Inventions, (i) a co-exclusive license (together with Roche) to develop in accordance with the Asthma Development Plan and Transplant Development Plan and use Licensed Products in the Collaborative Fields with respect to U.S. Territory and the European Union, (ii) a co-exclusive license (together with Roche) to import Licensed Products in the Collaborative Fields into the European Union for such Development purposes, (iii) an exclusive license to import, offer for sale and sell Licensed Products in the Collaborative Fields in the U.S. Territory, and (iv) an exclusive license to make Licensed Products in the Collaborative Fields in the Territory. The foregoing licenses include the right to perform Development outside the U.S. Territory and the European Union in accordance with the Development Plan with respect to any Licensed Product solely in order to obtain Regulatory Approval of such Licensed Product in the Collaborative Fields in the U.S. Territory or the European Union. The license granted to PDL in Section 2.2(a)(i) shall, with respect to the U.S. Territory, automatically convert from a co-exclusive license to an exclusive license: (i) at the end of the Asthma Co-Promotion Term (but only in the Asthma Field); and (ii) at the end of the Transplant Co-Promotion Term (but only in the Transplant Field). If there is a

 

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Transplant Branded Product and a Transplant Trademark, then the license set forth in Section 2.2(a)(iii) shall not go into effect with respect to the Transplant Field until the end of the Transplant Co-Promotion Term. If there is a Transplant Branded Product but no Transplant Trademark, then the license set forth in Section 2.2(a)(iii) shall not go into effect with respect to the Transplant Field until the earlier of (1) Regulatory Approval in the U.S. Territory for Licensed Product in the Asthma Field or (2) the end of the Transplant Co-Promotion Term. Roche hereby covenants that it and its Affiliates will not grant to any Third Party a license that overlaps with the scope of the licenses granted to PDL under Sections 2.2(a)(i) and 2.2(a)(ii) and that it and its Affiliates will not practice the Roche Technology and Roche Inventions within the scope of the licenses granted to PDL under Sections 2.2(a)(i) and 2.2(a)(ii) on behalf of or for the benefit of any Third Party.

(b) Transplant Promotion Right. Subject to the terms and conditions of this Agreement, Roche hereby grants to PDL a co-exclusive (together with Roche), non-transferable (subject to Section 19.1) option to Promote and Detail Transplant Branded Products in the Transplant Field in the U.S. Territory, in accordance with applicable law and the Transplant Commercialization Plan. If not sooner terminated pursuant to Article 17, such option shall terminate at the end of the Transplant Co-Promotion Term or, if there is no Transplant Trademark and Regulatory Approval in the U.S. Territory in the Asthma Field is received prior to the end of the Transplant Co-Promotion Term, upon such Regulatory Approval.

(c) Additional Licenses to Roche Inventions. Subject to the terms and conditions of this Agreement, Roche hereby grants to PDL, under the Roche Inventions and all patents claiming Roche Inventions (i) a co-exclusive license to develop, make, use, import, offer for sale and sell products containing antibodies that bind to IL-2R (other than Nutley Dac, Licensed Products, and Excluded Products) in the Collaborative Fields in the Territory; and (ii) a co-exclusive license to develop, make, use, import, offer for sale, and sell Licensed Products and other products containing antibodies that bind to IL-2R (other than Nutley Dac and Excluded Products) outside the Collaborative Fields in the Territory. For the purpose of this Section 2.2(c), the term

 

“Excluded Products” shall have the meaning given to such term in the Worldwide Daclizumab Agreement. Roche hereby covenants that it and its Affiliates will not grant to any Third Party a license that overlaps with the scope of the licenses granted to PDL under Section 2.2(c)(i) and Section 2.2(c)(ii) and that it and its Affiliates will not practice the Roche Inventions within the scope of the licenses granted to PDL under Sections 2.2(c)(i) and 2.2(c)(ii) on behalf of or for the benefit of any Third Party.

(d) Sublicenses. Prior to the end of the Asthma Co-Promotion Term, the license granted to PDL in Section 2.2(a) is sublicensable in the Asthma Field: (i) without the prior written consent of Roche, only to PDL’s Affiliates; and (ii) with Roche’s consent (such consent not to be unreasonably withheld) to subcontractors performing, on behalf of PDL, PDL’s obligations under, and consistent with, the Asthma Development Plan or the Asthma Commercialization Plan. After the Asthma Co-Promotion Term, PDL may grant sublicenses in the Asthma Field under the licenses granted to PDL in Section 2.2(a) without the consent of Roche. Prior to the end of the Transplant Co-Promotion Term, the licenses granted to PDL in Sections 2.2(a) and 2.2(b) are sublicensable in the Transplant Field: (i) without the prior written consent of Roche, only to PDL’s Affiliates; and (ii) with Roche’s consent (such consent not to be unreasonably withheld) to subcontractors performing, on behalf of PDL, PDL’s obligations under, and consistent with, the Transplant Development Plan or the Transplant Commercialization Plan. After the Transplant Co-Promotion Term, PDL may grant sublicenses in the Transplant Field under the licenses granted to PDL in Section 2.2(a) without the consent of Roche. PDL may grant sublicenses under the license granted to PDL in Section 2.2(c) without the consent of Roche.

2.3 Negative Covenants

(a) Roche hereby covenants that it shall not, nor shall it cause any Affiliate or sublicensee to knowingly use or practice, directly or indirectly, any PDL Know-How, PDL Patents or PDL Trademarks for any purposes other than those expressly permitted by this Agreement or any other written agreements between the Parties which are currently in existence (including, without limitation, the Worldwide Daclizumab Agreement), or which may later be entered into by the Parties.

 

(b) PDL hereby covenants that it shall not, nor shall it cause any Affiliate or sublicensee to: knowingly use or practice, directly or indirectly, any Roche Know-How, Roche Patents or Roche Inventions for any purposes other than those expressly permitted by this Agreement or any other written agreements between the Parties which are currently in existence (including, without limitation, the Worldwide Daclizumab Agreement), or which may later be entered into by the Parties.

(c) Subject to the terms and conditions of any grant of existing rights under the Queen Patents with respect to Licensed Products in the Collaborative Fields on or after the Effective Date, PDL hereby covenants that it shall not, nor shall it cause any Affiliate to, grant to any Third Party a license under the Queen Patents to: (1) develop Licensed Products in the Collaborative Fields in the ROW Territory (other than the European Union), (2) use and import Licensed Products in the Collaborative Fields in the ROW Territory (other than the European Union) for such Development purposes, (3) offer for sale and sell Licensed Products in the Collaborative Fields in the ROW Territory, (4) use and import Licensed Products in the Collaborative Fields in the ROW Territory for such commercialization purposes.

2.4 [****] Daclizumab.

(a) For the purpose of keeping Roche informed as to the status and results of [****] involving [****] Daclizumab, PDL’s presentation of an update on such matters shall be specifically listed as an agenda item for [****] Asthma JDC meetings and [****] Transplant JDC meetings per year.

(b) When PDL first obtains [****] in the Asthma Field from a [****] for a

 

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product containing [****] Daclizumab, PDL shall notify Roche in writing and provide a detailed summary of such data to Roche. Upon Roche’s request, Roche may [****] on [****] Daclizumab in the Asthma Field for up to [****] after Roche’s receipt of such summary, and PDL shall reasonably cooperate with Roche with respect to such [****] activities. Upon Roche’s further request, PDL and Roche shall [****]. If the Parties do not [****], then PDL [****], provided that PDL does not [****] with respect to the [****] of [****]. If Roche has previously provided [****] to PDL to [****] and the Parties have not [****], then within [****] of [****], PDL shall [****]. Roche shall have [****] following receipt to notify PDL [****] that [****]. For clarity, PDL shall not [****] until the earlier of: (i) expiration of the [****] period after Roche’s receipt of PDL’s summary of [****], without Roche [****], and (ii) expiration of the [****] after Roche’s receipt of such summary, without [****]n the [****].

(c) When PDL first obtains [****] in the Transplant Field from a [****] for a product containing [****] Daclizumab, PDL shall notify Roche in writing and provide a detailed summary of such data to Roche. Upon Roche’s request, Roche may [****] on [****] Daclizumab in the Transplant Field for up to f[****]after Roche’s receipt of such summary, and PDL shall reasonably cooperate with Roche with respect to [****] activities. Upon Roche’s further request, PDL and Roche shall [****]. If the Parties do not [****], then PDL is [****], provided that PDL does not [****] with respect to the [****] of such [****]. If Roche has previously provided [****] to PDL to [****] and the Parties have not [****], then within [****] of [****], PDL shall [****] [****]. Roche shall have [****] following receipt to notify PDL [****] that [****]. For clarity, PDL shall not [****] until the earlier of: (i) expiration of the [****] period after Roche’s receipt of PDL’s summary [****], without Roche r[****], and (ii) expiration of the [****] after Roche’s receipt of such summary, without [****] in the [****].

 

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2.5 Collaborative Fields. This Agreement is intended to govern the Parties’ development and commercialization of the Licensed Product in both the Asthma Field and the Transplant Field (together, the “Collaborative Fields” ). Notwithstanding the foregoing, to the extent that the Parties’ rights in either the Asthma Field or the Transplant Field are terminated pursuant to various provisions of Article 17, the term “Collaborative Fields” shall be deemed to exclude the field (i.e., Asthma Field or Transplant Field) with respect to which the rights are so terminated.

ARTICLE 3 [****]

GOVERNANCE

3.1 Joint Steering Committee; Minutes . Prior to the Amendment Effective Date, PDL and Roche formed a Joint Steering Committee ( “JSC” ) consisting of three [****] representatives from PDL and [****] representatives from Roche. Each Party may replace its JSC representatives at any time upon prior written notice to the other Party. [****] designated the first chairperson of the JSC, whose term shall run until [****], and the right to designate the chairperson of the JSC shall thereafter alternate between the Parties on a calendar year basis. The JSC chairperson shall be responsible for providing an agenda for each JSC meeting at least fifteen (15) days in advance of such meeting. The Party not chairing the JSC shall prepare written draft minutes of all JSC meetings in reasonable detail and distribute such draft minutes to all members of the JSC for comment and review within thirty (30) days after the relevant meeting. The members of the JSC shall have fifteen (15) days to provide comments. The Party preparing the minutes shall incorporate timely received comments and distribute revised minutes to all members of the JSC for their final review and approval within forty-five (45) days of the relevant meeting.

 

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3.2 Meetings of the JSC. The JSC shall meet at least [****], on such dates and at such times as agreed to by Roche and PDL, with all scheduled in-person meetings to alternate between Fremont, California and a Roche site to be designated by Roche prior to such meeting, or at such other locations as determined by the Joint Steering Committee. Meetings may be held by audio- or videoconference with the consent of each Party. The JSC shall hold at least [****] per calendar year in person; provided, however, if such [****] not reasonably possible, then the JSC may meet by videoconference in lieu of such [****]. Each Party may permit such visitors to attend meetings of the Joint Steering Committee. Each Party shall be responsible for its own expenses for participating in the JSC. Meetings of the JSC shall be effective only if at least one representative of each Party is present or participating.

3.3 Responsibilities of the JSC. The JSC shall have the responsibility and authority to:

(a) define and oversee the implementation of the strategy for developing and commercializing Licensed Products in the Collaborative Fields;

(b) review the efforts of the Asthma JDC, Transplant JDC and Transplant JCC (as appropriate) in the conduct of the development and commercialization programs for Licensed Products in the Collaborative Fields;

(c) review and revise, as required, the budget forecasts for the Asthma Development Plan, Asthma Commercialization Plan, Transplant Development Plan, and Transplant Commercialization Plan, including any [****] with respect to [****], all in accordance with the schedule set forth in Exhibit A.

(d) review and approve the Asthma Commercialization Plan, Transplant Commercialization Plan and any proposed amendments or updates to the

 

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Asthma Development Plan, Asthma Commercialization Plan, Transplant Development Plan, or Transplant Commercialization Plan;

(e) review and approve the [****] and [****] of the [****] for Licensed Products in the Collaborative Fields, and the commercialization of Licensed Products in the Collaborative Fields in the U.S. Territory; and review the commercialization of Licensed Products in the Collaborative Fields in the ROW Territory, including the [****] of [****] and such [****] and the [****] of the Licensed Products in the Collaborative Fields;

(f) create and oversee the Joint Patent Committee which will address intellectual property issues with respect to Licensed Products in the Collaborative Fields;

(g) create and oversee the Joint Finance Committee which will address [****] and related finance and accounting issues with respect to the Asthma Development Plan, Asthma Commercialization Plan, Transplant Development Plan, and Transplant Commercialization Plan;

(h) address disputes or disagreements arising in the Asthma JDC, Transplant JDC, Transplant JCC, JPC, or JFC;

(i) relax any deadlines and timeframes specified in this Article 3;

(j) select trademarks in accordance with Section 13.1;

(k) manage the implementation of sales tracking in accordance with Section 10.3(b);

 

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(l) prior to the filing of the second Drug Approval Application (at least one of which, despite the definition in Section 1.27, shall be for an indication outside the Collaborative Fields) establish a mechanism (pursuant to Section 7.6(e)) for use in the event of Cross-Field Sales; and

(m) perform such other functions as the Parties may agree in writing.

3.4 Areas Outside the JSC’s Authority . The JSC shall have no authority other than that expressly set forth in Section 3.3 and, specifically, shall have no authority to amend this Agreement. The JSC shall have no authority to make any decisions that would commit a Party to incur an expense that it had not previously agreed to incur or that would increase any expenses a Party is otherwise responsible for, without obtaining the agreement of that Party as evidenced by written notice of approval by the appropriate internal decision-making bodies of that Party. No reference in this Agreement to the consent or approval of the JSC (or a subordinate body) shall be interpreted to diminish the requirement set forth in the preceding sentence. For clarity, each Party, by its entry into this Agreement, has agreed to pay [****] of those expenses, to the extent incurred, that are set forth in the budget associated with the Asthma Development Plan as of the Amendment Effective Date and Transplant Development Plan as of the Amendment Effective Date.

3.5 JSC Decisions.

(a) Consensus; Good Faith; Action Without Meeting. The JSC shall decide all matters by [****], with each Party [****]. Consistent with Section 3.24, the members of the JSC shall act in good faith to cooperate with one another and to reach agreement with respect to issues to be decided by the JSC. Action that may be

 

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taken at a meeting of the Joint Steering Committee also may be taken without a meeting if a written consent setting forth the action so taken is signed by all members of the Joint Steering Committee.

(b) Failure to Reach Consensus. If the members of the JSC cannot come to consensus [****] with respect to any matter over which the JSC has authority and responsibility, then the JSC shall submit the respective positions of the Parties with respect to such matter for discussion in good faith by the [****]. If such [****] are not able to mutually agree upon the resolution to such matter within [****] of its submission to them, then PDL shall have the right to decide such matter in good faith, giving due consideration to the input of [****] and the economic interests of both Parties under this Agreement, except that any decision that primarily pertains to (i) the sale and marketing of Licensed Products in the Collaborative Fields in the ROW Territory, (ii) the Development of Licensed Products in the Collaborative Fields [****]that[****], (iii) the determination of a [****] in the Asthma Field for the purpose [****] of [****], (iv) selection or FDA approval of a Transplant Trademark or (v) [****] during the Transplant Co-Promotion Term, shall be decided by [****] in good faith, giving due consideration to the input of [****] and the economic interests of both Parties under this Agreement. With regard to 3.5(b)(v), if there is a dispute regarding the scope of the [****] not otherwise targeted by [****], then [****] shall have the right to decide such matter in good faith, giving due consideration to the input of [****] and the economic interests of both Parties under this Agreement. Any dispute regarding the Parties’ relative percentages of [****] obligations in the Transplant Field pursuant to Section 6.2(c) shall be decided pursuant to Section 18.2. Notwithstanding the foregoing, any decision: (1) related to [****] and [****] in the Transplant Field, (2) to initiate a development program for [****] for Licensed Products in a Collaborative Field, or (3) to select a vendor for such a [****], shall be made [****], and [****] shall have the right to make such decision if the JSC and the

 

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Executive Officers fail to reach agreement. Any dispute related to the establishment or implementation of a reimbursement mechanism to be used in the event of Cross-Field Sales shall be decided pursuant to Section 18.2. Furthermore, nothing in this Section 3.5(b) shall be interpreted to limit Roche’s rights under Section 17.7 as a result of a delay in Development in the Asthma Field.

3.6 Asthma Joint Development Committee; Minutes . Prior to the Amendment Effective Date, PDL and Roche formed an Asthma Joint Development Committee ( “Asthma JDC” ) consisting of [****] representatives from PDL and [****] representatives from Roche, or such number(s) of representatives as set from time to time by the JSC. Each Party may replace its Asthma JDC representatives at any time upon prior written notice to the other Party. [****] designated the first chairperson of the Asthma JDC, whose term shall run until [****], and the right to designate the chairperson of the Asthma JDC shall thereafter alternate between the Parties on a calendar year basis. The Asthma JDC chairperson shall be responsible for providing an agenda for each Asthma JDC meeting at least fifteen (15) days in advance of such meeting. PDL shall prepare written draft minutes of all Asthma JDC meetings in reasonable detail and distribute such draft minutes to all members of the Asthma JDC for comment and review within thirty (30) days after the relevant meeting. The members of the Asthma JDC shall have fifteen (15) days to provide comments. PDL shall incorporate timely received comments and distribute revised minutes to all members of the Asthma JDC for their final review and approval within forty-five (45) days of the relevant meeting.

3.7 Subcommittees. The Asthma JDC shall have the right to establish subcommittees, which may include, but will not be limited, to the following: a [****] subcommittee, a [****] subcommittee, a [****], a [****], and a [****].

 

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3.8 Meetings of the Asthma JDC. The Asthma JDC shall meet as frequently as members of the Joint Development Committee determine is required (but in no event, less frequently than [****] [****] following the Effective Date and [****] thereafter), on such dates and at such times as agreed to by Roche and PDL, with all scheduled in-person meetings to alternate between Fremont, California and a Roche site to be designated by Roche prior to such meeting, or at such other locations as determined by the Asthma JDC. Meetings may be held by audio or video conference with the consent of each Party, provided that at least [****] shall be held in person at locations to which both Parties have mutually consented. Each Party may permit such visitors to attend meetings of the Asthma Joint Development Committee as the Asthma Joint Development Committee determines. All out-of-pocket expenses incurred by a Party as a result of its participation in the Asthma JDC, to the extent not captured in the FTE rate set forth in Section 4.6(b) (which shall only apply to Asthma JDC and Transplant JDC members), shall be borne solely by such Party. Meetings of the Asthma JDC shall be effective only if at least [****] of each Party are present or participating.

3.9 Responsibilities of the Asthma JDC. The Asthma JDC shall have the responsibility and authority to:

(a) oversee all aspects of the execution of the JSC-approved Development and commercialization of Licensed Products in the Asthma Field;

(b) review and comment upon, and where appropriate, recommend to the JSC for approval, all updates or amendments to the Asthma Development Plan thereto, in accordance with Sections 4.1 and 4.2;

(c) review and comment upon, and where appropriate, recommend to the JSC for approval, the Asthma Commercialization Plan and amendments and updates thereto, in accordance with Section 6.1;

 

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(d) monitor the Development of Licensed Products in the Asthma Field in the Territory against the applicable Asthma Development Plan;

(e) review the overall strategy for and design of all clinical trials and other studies conducted under the Asthma Development Plan;

(f) discuss the requirements for Regulatory Approval in the Asthma Field in applicable countries in the Territory and oversee and coordinate regulatory matters in the Asthma Field with respect to Licensed Products in the Territory;

(g) establish subcommittees pursuant to Section 3.7, oversee the activities of all subcommittees so established, and address disputes or disagreements arising in all such subcommittees;

(h) oversee and approve a multi-year estimate of supply requirements with respect to the Asthma Field to be used for capacity planning purposes;

(i) present disputes not resolvable by the Asthma JDC to the JSC for resolution;

(j) discuss Roche Development activities in the Asthma Field in the ROW Territory;

(k) select CROs and other non-manufacturing vendors needed to carry out the Asthma Development Plan, except for any CRO or other non-manufacturing vendor whose agreement with the relevant Party has, or is anticipated to have, [****];

(l) propose and discuss possible manufacturing vendors to carry out activities associated with clinical or commercial supply of the Licensed Product (provided that [****] alone shall be responsible for ultimately selecting such manufacturing vendors);

 

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(m) perform the functions set forth in Sections 1.20, 4.6(a), 4.6(c), 5.1(a), 6.3(c), and 8.1(a) and Exhibit D; and

(n) perform such other functions as the Parties may agree in writing.

3.10 Areas Outside the Asthma JDC’s Authority . The Asthma JDC shall have no authority other than that expressly set forth in Section 3.9.

3.11 Asthma JDC Decisions.

(a) Consensus; Good Faith; Action Without Meeting. The Asthma JDC shall decide all matters by consensus, with each Party having one collective vote. Consistent with Section 3.24, the members of the Asthma JDC shall act in good faith to cooperate with one another and to reach agreement with respect to issues to be decided by the Asthma JDC. Action that may be taken at a meeting of the Asthma JDC also may be taken without a meeting if a written consent setting forth the action so taken is signed by all of the Asthma JDC members.

(b) Failure to Reach Consensus. In the event that the members of the Asthma JDC cannot come to consensus within thirty (30) days with respect to any matter over which the Asthma JDC has authority and responsibility, the Asthma JDC shall submit the respective positions of the Parties with respect to such matter to the JSC for decision.

3.12 Transplant Joint Development Committee; Minutes . Within [****], PDL and Roche shall form a Transplant Joint Development Committee ( “Transplant JDC” ) consisting of [****] representatives from PDL and [****] representatives from Roche, or such number(s) of representatives as set from time to time by the JSC. Each Party may

 

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replace its Transplant JDC representatives at any time upon prior written notice to the other Party. [****] shall have the right to designate the first chairperson of the Transplant JDC, whose term shall run until [****], and such right shall thereafter alternate between the Parties on a calendar year basis. The Transplant JDC chairperson shall be responsible for providing an agenda for each Transplant JDC meeting at least fifteen (15) days in advance of such meeting. PDL and Roche shall take alternating turns preparing written draft minutes of Transplant JDC meetings in reasonable detail and distributing such draft minutes to all members of the Transplant JDC for comment and review within thirty (30) days after the relevant meeting. The members of the Transplant JDC shall have fifteen (15) days to provide comments. The Party that prepared such draft minutes shall incorporate timely received comments and distribute revised minutes to all members of the Transplant JDC for their final review and approval within forty-five (45) days of the relevant meeting.

3.13 Subcommittees. The Transplant JDC shall have the right to establish subcommittees, which may include, but will not be limited, to the following: a [****]subcommittee, a [****]subcommittee, and a [****]subcommittee.

3.14 Meetings of the Transplant JDC. The Transplant JDC shall meet as frequently as members of the Transplant Joint Development Committee determine is required (but in no event, [****]), on such dates and at such times as agreed to by Roche and PDL, with all scheduled in-person meetings to alternate between Fremont, California and a Roche site to be designated by Roche prior to such meeting, or at such other locations as determined by the Transplant JDC. Meetings may be held by audio or video conference with the consent of each Party, provided that at least [****] shall be held in person at locations to which both Parties have mutually consented. Each Party

 

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may permit such visitors to attend meetings of the Transplant Joint Development Committee as the Transplant Joint Development Committee determines. All out-of-pocket expenses incurred by a Party as a result of its participation in the Transplant JDC, to the extent not captured in the FTE rate set forth in Section 4.6(b) (which shall only apply to Asthma JDC members and Transplant JDC members), shall be borne solely by such Party. Meetings of the Transplant JDC shall be effective only if at [****] of each Party are present or participating.

3.15 Responsibilities of the Transplant JDC. The Transplant JDC shall have the responsibility and authority to:

(a) oversee all aspects of the execution of the JSC-approved Development of Licensed Products in the Transplant Field;

(b) review and comment upon, and where appropriate, recommend to the JSC for approval, all updates or amendments to the Transplant Development Plan thereto, in accordance with Sections 4.1 and 4.2;

(c) monitor the Development of Licensed Products in the Territory in the Transplant Field against the applicable Transplant Development Plan;

(d) review the overall strategy for and design of all clinical trials and other studies conducted under the Transplant Development Plan;

(e) discuss the requirements for Regulatory Approval in the Transplant Field in applicable countries in the Territory and oversee and coordinate regulatory matters in the Transplant Field with respect to Licensed Products in the Territory;

(f) establish subcommittees pursuant to Section 3.13, oversee the activities of all subcommittees so established, and address disputes or disagreements arising in all such subcommittees;

 

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(g) prior to the formation of the Transplant JCC, oversee and approve a multi-year estimate of supply requirements with respect to the Transplant Field to be used for capacity planning purposes;

(h) present disputes not resolvable by the Transplant JDC to the JSC for resolution;

(i) discuss Roche Development activities in the Transplant Field in the ROW Territory;

(j) select CROs and other non-manufacturing vendors needed to carry out the Transplant Development Plan, except for any CRO or other non-manufacturing vendor whose agreement with the relevant Party has, or is anticipated to have, [****];

(k) propose and discuss possible manufacturing vendors to carry out activities associated with clinical supply of the Licensed Product (provided that [****] alone shall be responsible for ultimately selecting such manufacturing vendors);

(l) perform the functions set forth in Sections 4.6(a), 4.6(c), 5.1(b), and 8.1(a); and

(m) perform such other functions as the Parties may agree in writing.

3.16 Areas Outside the Transplant JDC’s Authority . The Transplant JDC shall have no authority other than that expressly set forth in Section 3.15.

3.17 Transplant JDC Decisions.

(a) [****]; Good Faith; Action Without Meeting. The Transplant JDC shall decide all matters [****], with each Party having [****]. Consistent with Section

 

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3.24, the members of the Transplant JDC shall act in good faith to cooperate with one another and to reach agreement with respect to issues to be decided by the Transplant JDC. Action that may be taken at a meeting of the Transplant JDC also may be taken without a meeting if a written consent setting forth the action so taken is signed by all of the Transplant JDC members.

(b) [****]. If the members of the Transplant JDC cannot [****] within [****] with respect to any matter over which the Transplant JDC has authority and responsibility, then the Transplant JDC shall submit the respective positions of the Parties with respect to such matter to the JSC for decision.

3.18 Transplant Joint Commercialization Committee; Minutes . At least [****]to the anticipated commencement of the first Phase III Trial of the Licensed Product for the Transplant Field, PDL and Roche shall form a Transplant Joint Commercialization Committee ( “Transplant JCC” ) consisting of [****] representatives from PDL and [****] representatives from Roche, or such number(s) of representatives as set from time to time by the JSC. Each Party may replace its Transplant JCC representatives at any time upon prior written notice to the other Party. [****] shall have the right to designate the first chairperson of the Transplant JCC, whose term shall run until [****] of the first full calendar year in which the Transplant JCC is formed. Thereafter, such right shall alternate between the Parties on a calendar year basis. The Transplant JCC chairperson shall be responsible for providing an agenda for each Transplant JCC meeting at least fifteen (15) days in advance of such meeting. PDL and Roche shall take alternating turns preparing written draft minutes of Transplant JCC meetings in reasonable detail and distributing such draft minutes to all members of the Transplant JCC for comment and review within thirty (30) days after the relevant

 

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meeting. The members of the Transplant JCC shall have fifteen (15) days to provide comments. The Party that prepared such draft minutes shall incorporate timely received comments and distribute revised minutes to all members of the Transplant JCC for their final review and approval within forty-five (45) days of the relevant meeting.

3.19 Subcommittees. The Transplant JCC shall have the right to establish subcommittees.

3.20 Meetings of the Transplant JCC. The Transplant JCC shall meet as frequently as members of the Joint Commercialization Committee determine is required (but in no event, [****]), on such dates and at such times as agreed to by Roche and PDL, with all scheduled in-person meetings to alternate between Fremont, California and a Roche site to be designated by Roche prior to such meeting, or at such other locations as determined by the Transplant JCC. Meetings may be held by audio or video conference with the consent of each Party, provided that at [****] shall be held in person at locations to which both Parties have mutually consented. Each Party may permit such visitors to attend meetings of the Joint Commercialization Committee as the Joint Commercialization Committee determines. All out-of-pocket expenses incurred by a Party as a result of its participation in the Transplant JCC shall be borne solely by such Party. Meetings of the Transplant JCC shall be effective only if at [****] of each Party are present or participating.

3.21 Responsibilities of the Transplant JCC. The Transplant JCC shall have the responsibility and authority to:

(a) oversee all aspects of the execution of the JSC-approved commercialization of Licensed Products in the Transplant Field including Detailing, Promotion and Medical Activities;

 

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(b) review and comment upon, and where appropriate, recommend to the JSC for approval, the Transplant Commercialization Plan and amendments and updates thereto, in accordance with Section 6.1;

(c) establish subcommittees pursuant to Section 3.19, oversee the activities of all subcommittees so established, and address disputes or disagreements arising in all such subcommittees;

(d) oversee and approve a multi-year estimate of supply requirements with respect to the Transplant Field to be used for capacity planning purposes;

(e) present disputes not resolvable by the Transplant JCC to the JSC for resolution;

(f) discuss ROW Commercialization Activities in the Transplant Field;

(g) propose and discuss possible manufacturing vendors to carry out activities associated with commercial supply of the Licensed Product (provided that PDL alone shall be responsible for ultimately selecting such manufacturing vendors);

(h) specify in detail each Party’s obligations, consistent with Sections 6.1 through 6.5, with respect to Licensed Product Promotion and Detailing in the Transplant Field in the U.S. Territory during the Transplant Co-Promotion Term;

(i) perform the functions set forth in Sections 1.20, 6.2(c), and 6.3(c); and

(j) perform such other functions as the Parties may agree in writing.

3.22 Areas Outside the Transplant JCC’s Authority . The Transplant JCC shall have no authority other than that expressly set forth in Section 3.21.

 

3.23 Transplant JCC Decisions.

(a) [****]; Good Faith; Action Without Meeting. The Transplant JCC shall decide all matters [****], with each Party having [****]. Consistent with Section 3.24, the members of the Transplant JCC shall act in good faith to cooperate with one another and to reach agreement with respect to issues to be decided by the Transplant JCC. Action that may be taken at a meeting of the Transplant JCC also may be taken without a meeting if a written consent setting forth the action so taken is signed by all of the Transplant JCC members.

(b) Failure to Reach [****]. If the members of the Transplant JCC cannot come to consensus within [****] with respect to any matter over which the Transplant JCC has authority and responsibility, then the Transplant JCC shall submit the respective positions of the Parties with respect to such matter to the JSC for decision.

3.24 Operating Principles. The deliberations and decision-making of the JSC, Asthma JDC, Transplant JDC, Transplant JCC, JPC, JFC and any subcommittee established by the Asthma JDC, Transplant JDC or Transplant JCC shall be in accordance with the following operating principles:

(a) Time is of the essence in addressing the market for Licensed Products in the Collaborative Fields.

(b) The Parties’ mutual objective is to maximize the clinical and commercial success of the Licensed Products in the Collaborative Fields, consistent with sound and ethical business and scientific practices.

 

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ARTICLE 4

DEVELOPMENT

4.1 Development Plans.

(a) Development in the Asthma Field with respect to the U.S. Territory and the European Union shall be governed by an asthma development plan ( “Asthma Development Plan” ), which shall set forth all anticipated Development activities and timelines for obtaining, maintaining, or expanding (to the extent mutually agreed) Regulatory Approval in such countries or jurisdictions, allocate responsibility for carrying out such activities between PDL and Roche (including the anticipated minimum and maximum number of FTEs to be expended by each Party on Development in the Asthma Field with respect to the U.S. Territory and the European Union on a quarterly basis), include an associated twelve (12) month development budget, and specify the extent to which each Party is anticipated to use internal or external (i.e. subcontractors) resources to fulfill its obligations. Prior to the Amendment Effective Date, the Parties agreed to an initial Asthma Development Plan, and a copy of the Asthma Development Plan in existence of the Effective Date was attached to the Original Asthma Agreement as Exhibit D. The Asthma Development Plan has subsequently been amended by the Parties in accordance with the procedures set forth in the Original Asthma Agreement.

(b) Development in the Transplant Field with respect to the U.S. Territory and the European Union shall be governed by a transplant development plan ( “Transplant Development Plan” ), which shall set forth all anticipated Development activities in the Transplant Field and [****]. As of the Amendment Effective Date, the Parties have agreed to an initial Transplant Development Plan and have attached such initial Transplant Development Plan to a [****] between the Parties dated as of the

 

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Amendment Effective Date. The Parties anticipate that promptly following the Amendment Effective Date and the formation of the Transplant JDC, the Transplant JDC shall review in detail the initial Development Plan [****].

4.2 Updating the Development Plans.

(a) The Asthma JDC may decide from time to time to propose for approval by the JSC updates to the Asthma Development Plan on a rolling basis as necessary to reflect changes in the progress, strategy, or costs of Development in the Asthma Field with respect to the U.S. Territory and the European Union. In any event, so long as the JSC intends to continue Development in the Asthma Field with respect to the U.S. Territory and the European Union, the Asthma JDC shall confirm, or propose for JSC approval an update to, the Asthma Development Plan in accordance with the schedule set forth in Exhibit A. Any proposed change shall, for the appropriate time period as determined by the JSC, set forth all anticipated Development activities in the Asthma Field and timelines for obtaining, maintaining, or expanding (to the extent mutually agreed) Regulatory Approval in the Asthma Field in such countries or jurisdictions, allocate responsibility for carrying out such activities between PDL and Roche (including a maximum number of FTEs to be expended by each Party on Development in the Asthma Field with respect to the U.S. Territory and the European Union on a quarterly basis), and include an associated development budget. All mutually agreed activities directed toward the expansion of Regulatory Approval in the Asthma Field with respect to the U.S. Territory and/or the European Union shall be included in the updated Asthma Development Plan. The JSC shall not approve an updated Asthma Development Plan that is inconsistent with or contradicts the terms of this Agreement without the written consent of the Parties, and in the event of any inconsistency between the Asthma Development Plan and this Agreement, the terms of this Agreement shall prevail.

 

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(b) The Transplant JDC may decide from time to time to propose for approval by the JSC updates to the Transplant Development Plan on a rolling basis as necessary to reflect changes in the progress, strategy, or costs of Development in the Transplant Field with respect to the U.S. Territory and the European Union. In any event, so long as the JSC intends to continue Development in the Transplant Field with respect to the U.S. Territory and the European Union, the Transplant JDC shall confirm, or propose for JSC approval an update to, the Transplant Development Plan in accordance with the schedule set forth in Exhibit A. Any proposed change shall, for the appropriate time period as determined by the JSC, set forth all anticipated Development activities in the Transplant Field and timelines for obtaining, maintaining, or expanding (to the extent mutually agreed) Regulatory Approval in the Transplant Field in such countries or jurisdictions, allocate responsibility for carrying out such activities between PDL and Roche (including a maximum number of FTEs to be expended by each Party on Development in the Transplant Field with respect to the U.S. Territory and the European Union on a quarterly basis), and include an associated development budget. All mutually agreed activities directed toward the expansion of Regulatory Approval in the Transplant Field with respect to the U.S. Territory and/or the European Union shall be included in the updated Transplant Development Plan. The JSC shall not approve an updated Transplant Development Plan that is inconsistent with or contradicts the terms of this Agreement without the written consent of the Parties, and in the event of any inconsistency between the Transplant Development Plan and this Agreement, the terms of this Agreement shall prevail.

4.3 Goals of Joint Development. The Parties hereby acknowledge and agree that the goals for joint development of Licensed Products hereunder will be to obtain and maintain Regulatory Approval for use in the Asthma Field and in the Transplant Field (and, in particular, in transplant maintenance) for the Licensed Product in the U.S. Territory and the European Union.

4.4 Standards of Conduct. Each Party shall perform, or shall ensure that its Third Party contractors perform, the Development activities for which it is responsible under the Development Plans or which it undertakes independent of the Development

 

Plans in good scientific manner and in compliance with applicable laws, rules and regulations. At each Asthma JDC meeting and each Transplant JDC meeting, each Party will keep the Asthma JDC or Transplant JDC (as appropriate) fully informed regarding the progress and results of such Party’s Development activities in the appropriate field with respect to Licensed Products in the Territory.

4.5 Diligent Development. Each of the Parties shall use Diligent Efforts to achieve the goals set forth in Section 4.3 and to execute and carry out the Development Plans within the associated budget. Roche shall use Diligent Efforts to obtain Regulatory Approval for use in the Asthma Field for the Licensed Product in each country in the ROW Territory (other than the European Union). Roche’s efforts in this regard shall be discussed with PDL through the Asthma JDC. Roche shall use Diligent Efforts to obtain Regulatory Approval for use in the transplant maintenance setting for the Licensed Product in each country in the ROW Territory (other than the European Union). Roche’s efforts in this regard shall be discussed with PDL through the Transplant JDC. Roche from time to time (but in any event no less frequently than yearly) shall provide PDL with written updates discussing in reasonable detail its clinical trial activities and plans with respect to Development for all countries of the ROW Territory outside the European Union for which Roche has current or contemplated activities and plans. Each of the Parties agrees to cooperate with the other in carrying out the Development Plans.

4.6 Development Expenses.

(a) All Development Expenses shall be shared [****] by the Parties as set forth in greater detail in Section 4.6(c). [****] shall be responsible for [****] of all Incremental Development Expenses. Any expenses incurred by a Party for Development activities that do not fall within the definitions of [****] or [****] shall be borne [****] unless the Asthma JDC or Transplant JDC determines otherwise.

 

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(b) The Development Expenses of each Party that are attributable to Development activities performed by its employees pursuant to the Development Plan shall be calculated on an FTE basis. Each Party shall keep accurate records of its FTEs expended with respect to such Development activities, and shall report such FTE expenditures relating to Development in the Asthma Field to the Asthma JDC, and such FTE expenditures relating to Development in the Transplant Field to the Transplant JDC, in each case on a quarterly basis as part of the report filed pursuant to Section 4.6(c). All FTE expenditures shall be converted to Development Expenses at an initial rate of [****], subject to [****] effective as of [****], beginning [****].

(c) Each Party shall keep detailed records of the Development Expenses it incurs, including all supporting documentation for such expenses. Each Party shall keep such records for at least [****] after the date that such expense was incurred. The Parties shall only share pursuant to this Section 4.6 those Development Expenses in the Transplant Field that are incurred on or after [****]. For the purposes of the preceding sentence, Development Expenses attributable to the manufacture prior to [****] of Licensed Products that are used on or after [****] in a clinical trial or for formulation or other Development purposes in the Transplant Field shall be deemed expenses incurred at the time of such use. Within [****] after the end of each calendar quarter, each Party shall provide to the JFC representatives of the other Party a report specifying and documenting, both in reasonable detail, such Party’s Development Expenses in the Asthma Field and Development Expenses in the Transplant Field for such quarter. Within [****] after the end of each calendar quarter, each Party shall provide (i) [****] (ii) [****]. Each Party shall promptly provide all additional information and documentation requested by the JFC, Asthma JDC or Transplant JDC to verify such Development Expenses. Within [****] after the end of each such calendar quarter, each Party shall provide the other Party with one or more invoices (the format and

 

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accounting detail of such invoices to be agreed upon by the JFC) that together equal [****] of such Party’s Development Expenses in the Collaborative Fields for such quarter. Each Party shall pay to the other Party the amount specified in any invoice delivered under this Section 4.6(c) within [****] of its receipt of such invoice, provided that each Party shall have the right to dispute in good faith through the JFC any Development Expenses not reasonably documented or supported by appropriate accounting detail. A Party shall be entitled to withhold only those amounts in dispute until verified or agreed upon by the JFC. In the event that the JFC does not reach consensus on a disputed amount, such dispute shall be referred to the JSC for resolution.

(d) To the extent a Party has previously paid a share of the cost of any item included in Development Expenses (including the cost of manufacturing clinical supply of Licensed Product), then that Party shall receive a credit for the amounts paid in the event that such item is subsequently used for development to obtain Regulatory Approval outside of the U.S. Territory and European Union or sold outside of the U.S. Territory (i.e., no double payments for amounts previously paid). For example and without limitation, if Roche desires to use, in a clinical trial intended to obtain Regulatory Approval in Japan, one hundred (100) [****] of Licensed Product that were originally ordered for the purposes of a clinical trial intended to obtain Regulatory Approval in the U.S. Territory or the European Union and the cost of supplying such one hundred (100) [****] was previously included as a Development Expense, then Roche shall pay PDL the amount it normally would for supplying such one hundred (100) [****] less [****] already paid by Roche with respect to the supply of such one hundred (100) [****].

 

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ARTICLE 5 [****]

REGULATORY

5.1 Drug Approval Applications in U.S. Territory.

(a) Asthma Field.

(i) Consistent with the Asthma Development Plan but subject to the remainder of this Section 5.1(a), PDL shall be responsible for preparing and filing Drug Approval Applications and seeking Regulatory Approvals for Licensed Products in the Asthma Field in the U.S. Territory. All such Drug Approval Applications shall be filed in the name of PDL, and PDL alone shall be responsible for all communications and other dealings with the regulatory agencies relating to the Licensed Products in the Asthma Field in the U.S. Territory. The Asthma JDC shall develop and implement a set of procedures for drafting and review of such Drug Approval Applications, which shall provide sufficient time for Roche to provide substantive comments and which shall be consistent with the procedures developed by the Transplant JDC for drafting and review of Drug Approval Applications pursuant to Section 5.1(b). Roche shall have the right of cross-reference to all such Drug Approval Applications for the purposes set forth in Section 5.2.

(ii) After receipt of any Regulatory Approval of the Drug Approval Application for the Licensed Product in the Asthma Field in the U.S. Territory hereunder, PDL shall retain primary responsibility for dealings with any regulatory agency with respect thereto, including filing all supplements and other documents with such agency with respect to such Drug Approval Application. Notwithstanding the foregoing, the reporting of all adverse drug experiences and other safety issues relating to Licensed Products shall be handled in accordance with Sections 5.3 and 5.5. In the

 

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event that any regulatory agency threatens or initiates any action to remove a Licensed Product from the market in the Asthma Field in the U.S. Territory during the Asthma Co-Promotion Term, PDL shall notify Roche of such communication within one business day of receipt by PDL. PDL agrees to provide Roche with a copy (which may be wholly or partly in electronic form) of all filings to regulatory agencies with respect to Licensed Products in the Asthma Field in the U.S. Territory that it makes hereunder. PDL shall provide Roche with reasonable advance notice of any scheduled meeting with a regulatory agency relating to Development and/or a Drug Approval Application in the Asthma Field in the U.S. Territory, and Roche shall have the right to observe and, if the Parties mutually agree in advance, participate in any such meeting. PDL shall promptly furnish Roche with copies of all material correspondence or minutes of material meetings with any regulatory agency in each case relating to Development and/or a Drug Approval Application in the Asthma Field in the U.S. Territory. As between the Parties, PDL shall be the legal and beneficial owner of all Drug Approval Applications and related approvals in the Asthma Field in the U.S. Territory.

(b) Transplant Field.

(i) Consistent with the Transplant Development Plan but subject to the remainder of this Section 5.1(b) and Section 5.1(c), Roche shall be responsible for preparing and filing Drug Approval Applications and seeking Regulatory Approvals for Licensed Products in the Transplant Field in the U.S. Territory. All such Drug Approval Applications shall be filed in the name of Roche, and Roche alone shall be responsible for all communications and other dealings with the regulatory agencies relating to the Licensed Products in the Transplant Field in the U.S. Territory. The Transplant JDC shall develop and implement a set of procedures for drafting and review of such Drug Approval Applications, which shall provide sufficient time for PDL to provide substantive comments and which shall be consistent with the procedures developed by the Asthma JDC for drafting and review of Drug Approval Applications pursuant to Section 5.1(a). PDL shall have the right of cross-reference to all such Drug Approval Applications.

 

(ii) After receipt of any Regulatory Approval of the Drug Approval Application for the Licensed Product in the Transplant Field in the U.S. Territory hereunder and until the end of the Transplant Co-Promotion Term, Roche shall retain primary responsibility for dealings with any regulatory agency with respect thereto, including filing all supplements and other documents with such agency with respect to such Drug Approval Application. Notwithstanding the foregoing, the reporting of all adverse drug experiences and other safety issues relating to Licensed Products shall be handled in accordance with Sections 5.3 and 5.5. In the event that any regulatory agency threatens or initiates any action to remove a Licensed Product from the market in the Transplant Field in the U.S. Territory during the Transplant Co-Promotion Term, Roche shall notify PDL of such communication within one business day of receipt by Roche. Roche agrees to provide PDL with a copy (which may be wholly or partly in electronic form) of all filings to regulatory agencies with respect to Licensed Products in the Transplant Field in the U.S. Territory that it makes hereunder. Roche shall provide PDL with reasonable advance notice of any scheduled meeting with a regulatory agency relating to Development and/or a Drug Approval Application in the Transplant Field in the U.S. Territory, and PDL shall have the right to observe and, if the Parties mutually agree in advance, participate in any such meeting. Roche shall promptly furnish PDL with copies of all material correspondence or minutes of material meetings with any regulatory agency in each case relating to Development and/or a Drug Approval Application in the Transplant Field in the U.S. Territory. As between the Parties until the end of the Transplant Co-Promotion Term (or, if there is no Transplant Trademark and Regulatory Approval in the U.S. Territory in the Asthma Field is received prior to the end of the Transplant Co-Promotion Term, then until such Regulatory Approval), Roche shall be the legal and beneficial owner of all Drug Approval Applications and related approvals in the Transplant Field in the U.S. Territory.

(iii) Immediately following the end of the Transplant Co-Promotion Term or, if there is no Transplant Trademark and Regulatory Approval in the U.S. Territory in the Asthma Field is received prior to the end of the Transplant Co-Promotion Term, then immediately following such Regulatory Approval, Roche shall assign to PDL its entire right, title and interest in and to all Drug Approval Applications

 

and related approvals in the Transplant Field in the U.S. Territory, and PDL shall be the legal and beneficial owner of such applications and approvals. Thereafter, Roche may keep a copy of such Drug Approval Applications and related approvals in the Transplant Field and, PDL shall have sole responsibility for (1) dealings with any regulatory agency with respect thereto, including filing all supplements and other documents with such agency with respect to such Drug Approval Application and (2) preparing and filing any additional Drug Approval Applications and seeking additional Regulatory Approvals for Licensed Products in the Transplant Field in the U.S. Territory and communicating with regulatory agencies with regard thereto. Notwithstanding the foregoing, the reporting of all adverse drug experiences and other safety issues relating to Licensed Products shall be handled in accordance with Sections 5.3 and 5.5. Roche shall have the right of cross-reference to all such Drug Approval Applications for the purposes set forth in Section 5.2.

(c) Manufacture of Licensed Product. PDL shall be responsible for obtaining appropriate regulatory approvals in the U.S. Territory for the manufacture of bulk Licensed Product by PDL or its Third Party manufacturer(s). Roche shall have the right of cross-reference to all such Drug Approval Applications for the purposes set forth in Sections 5.1(b)(i), 5.1(b)(ii) and 5.2.

5.2 Drug Approval Applications in ROW Territory.

(a) Roche shall be responsible for preparing and filing Drug Approval Applications and seeking Regulatory Approvals for Licensed Products in the Collaborative Fields in the ROW Territory. The Parties intend that such Drug Approval Applications will be comprised of the Drug Approval Application submitted to the FDA, plus such additional data and reports not required to be submitted to the FDA. All such Drug Approval Applications shall be filed in the name of Roche, and Roche alone shall be responsible for all communications and other dealings with the regulatory agencies relating to the Licensed Products in the Collaborative Fields in the ROW Territory. The Asthma JDC and Transplant JDC shall together develop and implement procedures for review of such Drug Approval Applications, which procedures shall be equivalent to

 

those procedures developed pursuant to Section 5.1(a) with respect to Roche’s review of Drug Approval Applications for the U.S. Territory and shall provide sufficient time for PDL to provide substantive comments. Roche shall be responsible for obtaining appropriate regulatory approvals in the ROW Territory for the manufacture of bulk Licensed Product by PDL or its Third Party manufacturer(s). PDL shall have the right of cross reference to all such Drug Approval Applications filed in the ROW Territory.

(b) If required to support Regulatory Approvals in the ROW Territory in the Asthma Field, PDL shall be responsible for providing to Roche, in the format required by the FDA, the data and information required to be submitted to the FDA in the Asthma Field, and such additional data and information relating to the Development activities in the Asthma Field for which it was responsible, including all clinical trials performed by it and all manufacturing and controls information.

(c) In connection with all Drug Approval Applications being prosecuted by Roche hereunder, Roche agrees to provide PDL with a copy (which may be wholly or partly in electronic form) of all filings to regulatory agencies in each Major Regulatory Jurisdiction that it makes hereunder. Roche will provide PDL with reasonable advance notice of any scheduled meeting with any regulatory agency relating to Development and/or any Drug Approval Application in the ROW Territory, and PDL shall have the right to observe and, if the Parties mutually agree in advance, participate in any such meeting. Roche also shall promptly furnish PDL with copies of all material correspondence or minutes of material meetings with any regulatory agency in each case relating to Development and/or a Drug Approval Application in the ROW Territory. Within thirty (30) days following the end of each calendar quarter, Roche shall report to PDL regarding the status of each pending and proposed Drug Approval Application in the ROW Territory. In the event that any regulatory agency threatens or initiates any action to remove such Licensed Product from the market in any country in the Collaborative Fields in the ROW Territory, Roche shall notify PDL of such communication within one business day of receipt by Roche. As between the Parties, Roche shall be the legal and beneficial owner of all Drug Approval Applications and related approvals in the ROW Territory.

 

5.3 Adverse Event Reporting.

(a) Each Party shall notify the other of all information coming into its possession concerning any and all side effects, injury, toxicity, pregnancy or sensitivity events associated with commercial or clinical uses, studies, investigations or tests with Licensed Products, throughout the world, whether or not determined to be attributable to Licensed Products ( “Adverse Event Reports” ). Pursuant to the Worldwide Daclizumab Agreement, the Parties have already identified a person from each Party to coordinate the exchange of Adverse Event Reports ( “Report Coordinators” ) so as to enable timely reporting of such Adverse Event Reports to appropriate governmental and regulatory authorities consistent with all laws, rules and regulations. The Parties, through their Report Coordinators, have agreed in writing on formal procedures for such exchange, which are embodied in the Pharmacovigilance Agreement executed by the Parties immediately prior to the Amendment Effective Date ( “Pharmacovigilance Agreement” ), which replaced and superseded the Procedure for the Exchange of Licensed Product Adverse Event Reports between the Parties dated December 2000. The Pharmacovigilance Agreement (and any subsequent amendments thereto) shall survive the end of the Co-Promotion Term.

(b) Roche and PDL agree that discussions between Roche, PDL and any of PDL’s Third Party co-developers of Licensed Product would be desirable for confirming an aligned strategy with respect to pharmacovigilance obligations. Discussions with any of PDL’s Third Party co-developers of Licensed Product will be initiated through the JSC.

5.4 Copies of Responses . Within a reasonable time frame prior to submission of responses to any regulatory authority on product safety issues regarding Licensed Products, a copy of a near final draft response will be provided to the other Party for review. Final copies of responses submitted to any regulatory authority will be provided to the other Party within [****] of document finalization.

 

5.5 Regulatory Actions . The Party responsible for interacting with regulators on a specific safety issue regarding Licensed Products must communicate any action requested by regulators to the other Party without delay. Such actions may include, for example, change in label, Dear Doctor letter, trial on hold for clinical safety reasons and the like.

ARTICLE 6

COMMERCIALIZATION IN U.S. TERRITORY

6.1 Commercialization Plans.

(a) During the Asthma Co-Promotion Term, all commercialization of Licensed Products in the Asthma Field in the U.S. Territory shall be conducted pursuant to a commercialization plan (the “Asthma Commercialization Plan” ), which shall set forth the anticipated activities (including without limitation Medical Activities, market studies, launch plans, Detailing and Promotion in the Asthma Field) and timelines, shall allocate responsibility for carrying out such activities between PDL and Roche, and shall include an associated budget. No later than [****] after [****] for a Licensed Product in the Asthma Field, and on an annual basis thereafter until the end of the Asthma Co-Promotion Term, PDL (or, at the Asthma JDC’s election, a subcommittee established by the Asthma JDC) shall submit to the Asthma JDC an initial or updated Asthma Commercialization Plan, which the Asthma JDC and JSC shall review and the JSC

 

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(after consulting with the Asthma JDC) shall approve or reject on a timely basis. It is understood that the initial Asthma Commercialization Plan may be very preliminary but nevertheless shall be effective for the purposes of commencing the Party’s sharing of Operating Expenses in the Asthma Field. Each updated Asthma Commercialization Plan shall include the plan for Detailing and Promotion activities for the Licensed Product in the Asthma Field in the U.S. Territory for the next [****] and timelines for performing such activities. Once approved by the JSC, such updated Asthma Commercialization Plan shall become effective and supersede the previous Asthma Commercialization Plan as of the date of such approval or at such other time decided by the JSC. The JSC shall not approve an updated Asthma Commercialization Plan that is inconsistent with or contradicts the terms of this Agreement without the written consent of the Parties, and in the event of any inconsistency between the Asthma Commercialization Plan and this Agreement, the terms of this Agreement shall prevail.

(b) During the Transplant Co-Promotion Term, all commercialization of Licensed Products in the Transplant Field in the U.S. Territory shall be conducted pursuant to a commercialization plan (the “ Transplant Commercialization Plan ”), which shall set forth the anticipated activities (including without limitation Medical Activities, market studies, launch plans, Detailing and Promotion in the Transplant Field) and timelines, shall allocate responsibility for carrying out such activities between PDL and Roche, and shall include an associated budget. No later than [****] after [****] for a Licensed Product in the Transplant Field, and on an annual basis thereafter until the end of the Transplant Co-Promotion Term (or Regulatory Approval of Licensed Product in the U.S. Territory in the Asthma Field, if earlier and if there is no Transplant Trademark), the Party responsible for booking sales of Licensed Product in the U.S. Territory in the Transplant Field shall submit to the Transplant JCC an initial or updated Transplant Commercialization Plan, which the Transplant JCC and JSC shall review and the JSC (after consulting with the Transplant JCC) shall approve or reject on a

 

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timely basis. It is understood that the initial Transplant Commercialization Plan may be very preliminary but nevertheless shall be effective for the purposes of commencing the Party’s sharing of Operating Expenses in the Transplant Field. Each updated Transplant Commercialization Plan shall include a plan for Detailing and Promotion activities for the Licensed Product in the Transplant Field in the U.S. Territory for the next [****] and timelines for performing such activities. Once approved by the JSC, such updated Transplant Commercialization Plan shall become effective and supersede the previous Transplant Commercialization Plan as of the date of such approval or at such other time decided by the JSC. The JSC shall not approve an updated Transplant Commercialization Plan that is inconsistent with or contradicts the terms of this Agreement, including but not limited to Section 6.2(c) herein, without the written consent of the Parties, and in the event of any inconsistency between the Transplant Commercialization Plan and this Agreement, the terms of this Agreement shall prevail. If Roche is the party responsible for the booking of sales of Licensed Product in the U.S. Territory in the Transplant Field, then the Transplant Commercialization Plan that covers the last year of the Transplant Co-Promotion Term (or the year in which Regulatory Approval of Licensed Product in the U.S. Territory in the Asthma Field is expected, if such approval is expected prior to the end of the Transplant Co-Promotion Term and if there is no Transplant Trademark) shall include provisions addressing the manner in which responsibility for booking sales and other Licensed Product commercialization-related activities shall be transferred from Roche to PDL at the end of the Transplant Co-Promotion Term or upon Regulatory Approval in the U.S. Territory in the Asthma Field, as applicable.

6.2 Commercialization in the U.S. Territory; Co-Promotion.

(a) PDL will be solely responsible for the booking of sales of Licensed Products in the Asthma Field in the U.S. Territory and the supply and distribution of

 

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Licensed Product in respect to such sales. If there is both a Transplant Branded Product and a Transplant Trademark, then (i) Roche will be solely responsible for the booking of sales of Licensed Products in the Transplant Field in the U.S. Territory during the Transplant Co-Promotion Term and for the distribution of Licensed Product in respect to such sales, (ii) PDL will be solely responsible for the booking of sales of Licensed Products in the Transplant Field in the U.S. Territory after the end of the Transplant Co-Promotion Term and for the distribution of Licensed Product in respect to such sales, and (iii) PDL will be solely responsible for the supply of Licensed Product in respect to all such sales (whether booked by Roche or PDL). Subject to this Section 6.2(a), if there is a Transplant Branded Product but no Transplant Trademark, then (1) Roche will be solely responsible for the booking of sales of Licensed Products in the Transplant Field in the U.S. Territory and for the distribution of Licensed Product in respect to such sales until the earlier of (A) the end of the Transplant Co-Promotion Term or (B) Regulatory Approval in the U.S. Territory in the Asthma Field, (2) PDL will be solely responsible for the booking of sales of Licensed Products in the Transplant Field in the U.S. Territory and for the distribution of Licensed Product in respect to such sales after the earlier of (A) the end of the Transplant Co-Promotion Term or (B) Regulatory Approval in the U.S. Territory in the Asthma Field, and (3) PDL will be solely responsible for the supply of Licensed Product in respect to all such sales (whether booked by Roche or PDL). If there is a Transplant Branded Product but no Transplant Trademark and it is possible that Regulatory Approval in the U.S. Territory in the Asthma Field might be received within [****] of the First Commercial Sale in the U.S. Territory in the Transplant Field, then the Parties shall discuss in good faith whether Roche should book sales of the Transplant Branded Product during the time prior to Regulatory Approval in the U.S. Territory in the Asthma Field or if PDL should book such sales, and if the Parties agree that PDL should book sales, then the terms of this Agreement that are directed to circumstances in which there is no Transplant Branded

 

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Product should nevertheless apply. If there is no Transplant Branded Product, then PDL will be solely responsible for the booking of sales of Licensed Products in the Transplant Field in the U.S. Territory and the supply and distribution of Licensed Product in respect to such sales. The Party responsible for booking sales shall determine the U.S. Territory selling price (including volume discounts, rebates, and similar matters), credit terms, and return policies for all formulations of Licensed Products that are sold for use in a Collaborative Field by such Party.

(b) Detailing in the Asthma Field. During the Asthma Co-Promotion Term, PDL and Roche will co-promote Licensed Products in the Asthma Field in the U.S. Territory in accordance with the Asthma Commercialization Plan. As part of this co-promotion, PDL shall contribute [****] of the Details required by the Asthma Commercialization Plan (measured as an average across each calendar quarter), and Roche shall be responsible for the remaining [****] of such Details. Each Party’s sales force shall promote the Licensed Product in the Asthma Field in the U.S. Territory in a manner that reflects such Party’s capacities and that is consistent with such Party’s promotional efforts for its own products of similar market potential. During the Asthma Co-Promotion Term, Roche and PDL agree to deploy their respective sales forces to Detail Licensed Product in the Asthma Field in the U.S. Territory (i) at such level of effort as is required pursuant to this Section 6.2(b) and (ii) in a manner consistent with the Asthma Commercialization Plan and applicable law. The Parties shall agree upon a sales calling plan, which plan shall include mechanisms to address possible underperformance and failure to perform Detailing in the Asthma Field at the agreed upon levels.

(c) Detailing in the Transplant Field. No later than [****] prior to the anticipated filing of a Drug Approval Application in the Transplant Field in the U.S. Territory, the Transplant JCC shall recommend and the JSC shall approve terms and

 

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conditions under which the Parties will Detail Licensed Product in the Transplant Field in the U.S. Territory. Such terms and conditions shall include that: (i) only one representative from either Party may Detail to any given transplant center to prevent redundancy of field activity; (ii) Roche shall be the Party to Detail Licensed Product to any Target Audience that is a predominantly solid organ transplant center that Roche targets for detailing with respect to Roche’s other products for use in solid organ transplant patients; and (iii) PDL shall have an option to Detail Licensed Product to any Target Audience other than a predominantly solid organ transplant center that Roche targets for detailing with respect to Roche’s other products for use in solid organ transplant patients. Each Party shall be responsible for the actions of its own field force in the Transplant Field. To the extent Roche’s Detailing obligations under this Section 6.2(c) exceed the Detailing obligations of PDL, PDL shall be responsible for [****] of the Sales Force Expenses of Roche that are attributable to Roche’s excess Detailing obligations. For example, if Roche is responsible for eighty percent (80%) of the Detailing in the Transplant Field and PDL is responsible for twenty percent (20%) of such Detailing, then PDL shall reimburse Roche for [****] of Roche’s Sales Force Expenses attributable to the extra sixty percent (60%) Detailing performed by Roche in the Transplant Field. The Transplant Commercialization Plan shall specify each Party’s relative percentage of Detailing obligations in the Transplant Field and the following principles shall be considered when making such determination: (1) only representatives that Detail to transplant centers shall be considered (i.e. Detailing to community nephrologists will not be considered); (2) PDL will not be credited for more than [****] of the total Detailing by both Parties in the Transplant Field; and (3) the number of calls shall not be the sole criterion used to measure responsibility, but other factors, such as the effectiveness of the sales force, shall be considered. If only one Party Details Licensed Product in the Transplant Field (“Promoting Party”), then the other Party (“Non-Promoting Party”) shall be responsible for [****] of all Sales Force

 

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Expenses of the Promoting Party in the Transplant Field. For example, if the Promoting Party’s cost per representative (fully burdened) is $250,000, and the representative carries the Licensed Product and another product for which the Promoting Party equally allocates cost per representative, then the Non-Promoting Party shall be responsible for [****] of the Promoting Party’s Sales Force Expenses in the Transplant Field that are allocated to the Licensed Product. The Promoting Party shall be responsible for the other [****] of such Sales Force Expenses.

(d) Each Party agrees to permit its Detailing records to be examined by the other Party for the purpose of verifying each Parties’ compliance with the Detailing requirements set forth in this Section 6.2. Such audit shall be performed at the request of either Party, but in any event shall not be performed more frequently than [****] per [****] nor more frequently than [****] with respect to Detailing records covering any specific period of time. The expense of any such examination shall be borne by the auditing Party unless such examination reveals a discrepancy of [****] or more in favor of the audited Party, in which case such expense shall be borne by the audited Party.

(e) Following the end of the Asthma Co-Promotion Term, PDL shall have sole responsibility and decision-making authority for the Detailing, marketing, Promotion, Medical Activities, sale and distribution of Licensed Product in the Asthma Field in the U.S. Territory. Except as explicitly provided in Section 10.2(a), PDL shall owe Roche no consideration in respect to sales of Licensed Product in the Asthma Field in the U.S. Territory after the end of the Asthma Co-Promotion Term.

(f) Following the end of the Transplant Co-Promotion Term, PDL shall have sole responsibility and decision-making authority for the Detailing, marketing, Promotion, Medical Activities, sale and distribution of Licensed Product in the Transplant Field in the U.S. Territory. Except as explicitly provided in Section 10.2(b),

 

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PDL shall owe Roche no consideration in respect to sales of Licensed Product in the Transplant Field in the U.S. Territory after the end of the Transplant Co-Promotion Term.

6.3 Sharing of Operating Expenses; Sales Force Expenses

(a) During the Asthma Co-Promotion Term, all Operating Expenses in the Asthma Field shall be shared [****]. [****] will be solely responsible for [****] Sales Force Expenses in the Asthma Field, unless the sales calling plan specifies otherwise due to a Party’s failure to deploy sufficient numbers of sales representatives to meet the number of Details required of such Party under Section 6.2(b).

(b) During the Transplant Co-Promotion Term, all Operating Expenses in the Transplant Field shall be shared [****] and all Sales Force Expenses in the Transplant Field shall be allocated between the Parties as specified in Section 6.2(c). Neither the Sales Force Expenses of a Party in the Transplant Field, nor the amounts paid by a Party to reimburse the other Party for its Sales Force Expenses in the Transplant Field, shall be included in such Party’s Operating Expenses.

(c) During the Asthma Co-Promotion Term and the Transplant Co-Promotion Term, each Party shall keep detailed records of the Operating Expenses it incurs and the Sales Force Expenses it incurs in the Transplant Field, including all supporting documentation for such expenses, in accordance with procedures to be agreed upon between the Parties. Each Party shall keep such records for at [****] after the date that such expense was incurred. Within [****] after the end of each calendar quarter during the Asthma Co-Promotion Term, each Party shall provide to the JFC representatives of the other Party an accounting for its Operating Expenses in the Asthma Field for such quarter. Within [****] after the end of such quarter, each Party shall also provide a report to the Asthma JDC (with a copy to the other Party) specifying

 

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and documenting, in reasonable detail, such Party’s Operating Expenses in the Asthma Field during such quarter. Within [****] after the end of each calendar quarter during the Transplant Co-Promotion Term, each Party shall provide to the JFC representatives of the other Party an accounting for its Operating Expenses in the Transplant Field and Sales Force Expenses in the Transplant Field for such quarter. Within [****] after the end of such quarter, each Party shall also provide a report to the Transplant JCC (with a copy to the other Party) specifying and documenting, in reasonable detail, such Party’s Operating Expenses in the Transplant Field and Sales Force Expenses in the Transplant Field during such quarter. Each Party shall promptly provide all additional information and documentation requested by the Asthma JDC or Transplant JCC to verify the Operating Expenses or Sales Force Expenses submitted to it. Within [****] after the end of each such calendar quarter, the Asthma JDC shall provide each Party with an accounting of the Parties’ Operating Expenses in the Asthma Field for such quarter and the Asthma JDC shall send the Party that incurred lower Operating Expenses in the Asthma Field during such quarter an invoice for an amount equal to one half of the difference between such Party’s Operating Expenses in the Asthma Field for such quarter and the other Party’s Operating Expenses in the Asthma Field for such quarter. Within [****] after the end of each such calendar quarter, the Transplant JCC shall (i) provide each Party with an accounting of the Parties’ Operating Expenses in the Transplant Field and Sales Forces Expenses in the Transplant Field for such quarter, (ii) send the Party that incurred lower Operating Expenses in the Transplant Field during such quarter an invoice for an amount equal to [****] of the difference between such Party’s Operating Expenses in the Transplant Field and the other Party’s Operating Expenses in the Transplant Field for such quarter, and (iii) determine whether either Party is obligated to reimburse the other Party for any Sales Force Expenses incurred in the Transplant Field during such quarter and send such Party an invoice for the amount of such reimbursement obligation. A Party shall pay to the other Party the amount specified in any invoice delivered under this Section 6.3(c) within [****] of its receipt of such invoice.

 

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(d) For each quarter during the Asthma Co-Promotion Term that falls (in whole or in part) in the period commencing [****] in the U.S. Territory and ending on [****] in the U.S. Territory, if the budget for such quarter specifies that Operating Expenses in the Asthma Field will be greater than [****] and if [****] for such quarter exceed [****] for such quarter, then [****] an amount equal to [****] for such quarter, which payment shall be due within [****] after [****] receipt of a written invoice from [****] specifying the amount of such payment. Payments advanced under this Section 6.3(d) shall be credited against any amounts owed by [****] under Section 6.3(c) for the quarter with respect to which [****]. Within [****] following the end of each calendar year to which this Section 6.3(d) applies, [****] shall [****] any payments [****] under this Section 6.3(d) during such calendar year for which [****].

(e) For each quarter during the Transplant Co-Promotion Term that falls (in whole or in part) in the period commencing [****] in the U.S. Territory and ending [****] in the U.S. Territory, if [****] for such quarter exceed [****] [****] for such quarter, then [****] shall [****] an amount equal to [****] which payment shall be due within [****] after [****] receipt of a written invoice from [****] specifying the amount of such payment. Payments advanced under this Section 6.3(e) shall be credited against any amounts owed by [****] in the Transplant Field under Section 6.3(c) for the quarter with respect to which such advance was made to [****]. Within [****] following the end of each calendar year to which this Section 6.3(e) applies, [****] shall [****] any payments [****] under this Section 6.3(e) during such calendar year for which [****].

6.4 Co-Promotion Term.

(a) The Parties’ co-promotion of the Licensed Products in the Asthma

 

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Field in the U.S. Territory shall commence on the date that the first Operating Expense in the Asthma Field is incurred by a Party and shall initially continue until [****] after the First Commercial Sale of Licensed Product in the Asthma Field in the U.S. Territory, subject to any early termination in the U.S. Territory or the Territory pursuant to Section 17.2, 17.3, 17.4, 17.6, or 17.7. At the end of this initial term and each extension thereof, [****] may, at its option, elect to extend the co-promotion for an additional year, provided that [****] makes such election in writing to [****] no later than [****] prior to the end of the initial term or extension term (as the case may be) and provided further that [****] for [****] prior to such election [****]. The initial term of co-promotion and any extensions thereof (in each case, taking into account any early termination in the U.S. Territory or the Territory pursuant to Section 17.2, 17.3, 17.4, 17.6, or 17.7) shall be referred to herein as the “Asthma Co-Promotion Term.”

(b) The Parties’ co-promotion of the Licensed Products in the Transplant Field in the U.S. Territory shall commence on the date that the first Operating Expense in the Transplant Field is incurred by a Party and shall initially continue until [****] after the First Commercial Sale of Licensed Product in the Transplant Field in the U.S. Territory, subject to any early termination in the U.S. Territory or the Territory pursuant to Section 17.2, 17.3, 17.5, or 17.6. At the end of this initial term and each extension thereof, [****] may, at its option, elect to extend the co-promotion for [****], provided that [****] makes such election in writing to [****] no later than [****] prior to the end of the