CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

Exhibit 10.23

Certain information in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This Co-Development and Commercialization Agreement (the “Agreement”) is entered into as of December 9, 2005, by and between Hoffmann-La Roche Inc., a corporation organized and existing under the laws of the State of New Jersey, with its principal place of business at 340 Kingsland Street, Nutley, New Jersey 07110 (“Roche Nutley”), and F. Hoffmann-La Roche Ltd, a Swiss Corporation, with its principal place of business at Grenzacherstrasse 124, CH-4070 Basel, Switzerland (“Roche Basel”), (Roche Nutley and Roche Basel are collectively referred to as “Roche”) and Maxygen Holdings Ltd., a company organized under the laws of Cayman Islands, British West Indies (“Maxygen”). Roche and Maxygen are each referred to herein individually as a “Party,” and collectively as the “Parties.”

BACKGROUND

 

A.	Maxygen owns or possesses certain Patent Rights (as defined below) and Know-How (as defined below) with respect to certain novel human Factor VII variants, and believes that the Factor VII variants have the potential to be used therapeutically for the treatment of bleeding disorders;

 

B.

Maxygen desires to collaborate with a pharmaceutical company with development and commercialization expertise with regard to drugs useful for the Field (as defined below), so as to realize promptly, the therapeutic and commercial potential of the Factor VII variants, and Roche desires to collaborate with Maxygen in the development and commercialization of Factor VII variants for multiple indications in the Field, and further desires to make the commitment and investment to develop diligently and commercialize Products (as defined herein) worldwide;

 

C.	Roche and Maxygen envision that the scope of this Agreement will include the invention and discovery of Factor VII variants, and means for making, formulating, and using such compounds; and

 

D.	The Parties have agreed that Maxygen shall have certain rights to develop and commercialize certain of its Factor VII variants (other than Licensed Compounds and corresponding Products subject to this Agreement) for use outside the Field, itself or with a Third Party.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

As used in this Agreement, the following capitalized terms shall have the following meanings, and singular forms, plural forms and derivative forms thereof shall be interpreted accordingly:

1.1 “ Accounting Standards ” means generally accepted accounting principles applicable internationally and/or in a particular country (e.g., International Accounting Standards, U.S. GAAP), as consistently applied by or on behalf of the relevant Party.

1.2 “ Adjusted Gross Sales ” means, on a Product-by-Product basis, the amount of gross sales of applicable Product invoiced by the Roche Group to independent Third Parties, less the following deductions: returns [****]; in each case, only to the extent such deductions are applied in accordance with applicable Accounting Standards, are actually incurred, are included in the amount of gross sales invoiced and separately identified on the invoice or other documentation maintained in the ordinary course of business and are not otherwise recovered by or reimbursed to the Roche Group. Notwithstanding the foregoing, amounts received by the Roche Group for the sale of Products among members of the Roche Group for resale shall not be included in the computation of Adjusted Gross Sales; provided, however, that if and when such Product is resold to Third Parties, amounts for any such sales shall be included in Adjusted Gross Sales. A “sale” shall include any transfer or other disposition for consideration, and Adjusted Gross Sales shall include the fair market value of all consideration received by the Roche Group in respect of any sale of a Product, whether such consideration is in cash payment, in kind, exchange for value or another form. Roche will use [****] to reconcile amounts included and/or deducted in Adjusted Gross Sales for a particular Product on [****] basis and credit or debit Adjusted Gross Sales accordingly.

If a member of the Roche Group provides services to a Third Party in connection with the sale or use of a Product (except where such Product is provided without consideration pursuant to Section 9.5), then Adjusted Gross Sales shall also include the fair market value of such Product and services, subject to the following paragraph.

In the case of discounts on “bundles” of products and services that include Products, Roche may discount the bona fide list price of a Product by no more than the average percentage discount of all products of the Roche Group in a particular “bundle,” calculated as follows:

 

where A equals the total discounted price of a particular “bundle” of products, and B equals the sum of the undiscounted bona fide list prices of each unit of every product in such “bundle”. Roche shall retain (and in the course of any audit subject to Section 9.5 provide to Maxygen) documentation, establishing such average discount with respect to each “bundle”. If Roche cannot so establish the average discount of a “bundle”, Adjusted Gross Sales shall be based on the undiscounted list price of the Product in the “bundle”. If a Product in a “bundle” is not sold separately, and no bona fide list price exists for such Product, then the Parties shall negotiate in good faith an imputed list price for such Product and Adjusted Gross Sales with respect thereto shall be based on such imputed list price.

 

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1.3 “ Adverse Safety/Tox Results ” means, with respect to a particular Product, either (i) results showing the failure of such Product to meet GLP safety and toxicity studies that are required by the FDA/EMEA prior to introduction of such a biological compound into humans, or (ii) results that provide a reasonable basis for the discontinuance by Roche of all further development or commercialization of such Product for use in the Field because the risk profile of such Product makes it unlikely that Regulatory Approval can be obtained or maintained for such Product in the Major Markets.

1.4 “ Affiliate ” means any corporation or other business entity that controls, is controlled by, or is under common control with a Party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls at least fifty percent (50%) of the outstanding shares or other voting rights of the other corporation or entity having the right to elect directors (other than Genentech, Inc. and Chugai Pharmaceutical Company Ltd, neither of which shall be a Roche Affiliate nor be entitled to the rights of a Roche Affiliate under this Agreement unless Roche in its sole discretion opts for one or both of them to be a Roche Affiliate, and Codexis, Inc., which shall not be a Maxygen Affiliate or entitled to the rights of a Maxygen Affiliate under this Agreement) or such lesser percentage that is the maximum permitted to be owned by a foreign entity in those jurisdictions where majority ownership by foreign entities is prohibited, or (a) in the absence of the ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of a corporation, or (b) in the case of a non-corporate business entity, if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or non-corporate business entity, as applicable, whether through the ownership or control of voting securities, by contract or otherwise.

1.5 “ Animal [****] Result ” means with respect to a Product: (a) results showing [****] as described on Exhibit F of the Program Plan and Budget, [****] in (i) a [****] model, or (ii) [****] model, or (iii) another animal model [****] approved by [****]; or (b) a [****] decision by [****] to file an IND.

1.6 “ Backup Compound ” means an E Compound that Roche has designated as such pursuant to Section 3.5.1, and any replacement thereof selected by Roche.

1.7 “ BLA ” means a Biological License Application, as defined in the U.S. Public Health Service Act and the regulations promulgated thereunder, or any corresponding foreign application, registration or certification, filed with a Regulatory Agency with respect to a Product, or any corresponding foreign application, registration or certification.

1.8 “ Budgeted Costs ” means the costs and expenses budgeted and approved by the JMC, from time to time, for the conduct of the activities in the R&D Program and/or Product commercialization, which costs and expenses are expressly included in the Program Plan and Budget.

1.9 “ CMC Costs ” has the meaning set forth on Exhibit A .

 

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1.10 “ Collaboration Costs ” means (a) R&D Costs worldwide, and (b) M&P Costs allocated to the U.S. by the Finance Team, in each case, actually incurred and/or accrued in accordance with applicable Accounting Standards and guidelines established by the Finance Team, in connection with the conduct of R&D Program activities pursuant to the Program Plan and Budget.

1.11 “ Commencement ” means, with respect to a clinical trial, the date upon which the first human subject receives the first dose of the Product that is the subject of such clinical trial.

1.12 “ Commercial Manufacturing Costs ” has the meaning set forth on Exhibit A .

1.13 “ Commercially Reasonable Efforts ” means the level of efforts and resources reasonably appropriate to diligently develop and/or commercialize (as applicable) a Licensed Compound or Product in a sustained manner, consistent with the efforts and resources a similarly situated biopharmaceutical company would typically devote to a product of similar market potential, profit potential, and/or proprietary protection, based on market conditions then prevailing.

1.14 “ [****] Process Result ” means (i) results demonstrating in [****] a) the ability to grow cells expressing an E Compound in [****] cultures for [****] and maintain an [****], and b) the ability to reach the [****] followed by at least [****] of an E compound in a bioreactor working volume of at least [****], and (c) [****], and (d) the ability to purify an E compound with at least a [****] final recovery yield per [****] campaign as compared to the recovery yield described in “Satisfactory [****] Culture Results” with a consistent Product quality in terms of [****], and (e) complete written documentation through Standard Operating Procedures for the [****] process; or (ii) a decision by [****] to utilize a [****] process to manufacture a Product for Phase III clinical trials and commercial use.

1.15 “ Completion of Phase IIa ” means for a particular Initial Indication, the date immediately after the completion of the Phase IIa clinical trial program for such Initial Indication (i.e., when the clinical database is locked for such trial). As used in this Agreement, Phase IIa clinical trial means the initial Phase II clinical trial designed to demonstrate proof of concept for a Product, and may be included within a single Phase II clinical trial if no separate Phase IIb clinical trial is needed for the applicable indication.

1.16 “ Compound ” shall mean [****] that was made, conceived, reduced to practice or otherwise developed (a) by Maxygen on or before the Effective Date, or (b) by Maxygen or Roche or jointly by the Parties in connection with the R&D Program.

1.17 “ Confidential Information ” means any proprietary or confidential information disclosed by one Party to the other hereunder that (a) is in written or graphic form and marked as “Confidential” at the time it is delivered to the receiving Party, (b) is disclosed orally hereunder that is identified as confidential or proprietary when disclosed or within thirty (30) days thereafter, or (c) the proprietary or confidential nature of which would be reasonably apparent to the recipient in view of the context and/or circumstances of disclosure.

 

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1.18 “ Control ” or “ Controlled ” means the possession by a Party of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party that exists at the time such Party would be granting to the other Party such license or sublicense.

1.19 “ Data Package ” means, in respect to any Product, all (a) Regulatory Filings, (b) databases containing clinical and/or safety data relating to such Product, including, the master database, and all data in such databases, (c) pre-clinical data, including any CMC data, and/or data from any clinical trial, whether or not contained in any IND, (d) records of any and all communications with any Regulatory Agency, and (e) information relating to any adverse events whether or not reported to any Regulatory Agency.

1.20 “ Derivative ” means any E Compound that is [****].

1.21 “ [****] Therapeutic [****] Result ” means (i) results with an E Compound proving [****] in agreed animal model(s) (a) described in Exhibit E of the Program Plan and Budget, or (b) otherwise [****] agreed by [****], or (ii) a decision [****] to commence GLP toxicology studies with a Product.

1.22 “ Distribution Costs ” has the meaning set forth on Exhibit A .

1.23 “ Dollars ” or “ $ ” means U.S. dollars.

1.24 “ E Compound ” means (a) any Compound that Tests Positively, and (b) any Derivative.

1.25 “ Effective Date ” means the later of (a) the date in the caption to this Agreement, or (b) if an HSR filing is made, the second business day immediately following the earlier of: (i) the date upon which the waiting period under the Hart Scott Rodino Antitrust Improvement Act (“HSR”) expires or terminates early or (ii) the date upon which all requests to the Parties by the Federal Trade Commission or the Justice Department, as the case may be, with regard to the transaction contemplated by this Agreement have been satisfactorily met and no objection on the part of the Federal Trade Commission or the Justice Department remain.

1.26 “ EMEA ” means the European Medicines Agency, and any successor agency(ies) thereto.

1.27 “ [****] Decision Point ” means with respect to a decision by Maxygen to opt-out of further sharing of Collaboration Costs, the date that Maxygen gives Roche notice of such decision, which date is at least [****] before the [****], which meeting date was previously disclosed by Roche to Maxygen pursuant to Section 4.7.3.

1.28 “ Entry into Humans ” or “ EIH ” means with regard to a particular Product, the date of dosing of the first human subject in the first clinical trial of the applicable Product.

1.29 “ Exit Costs ” means the Collaboration Costs that will be shared by the Parties following either (a) an opt-out by Maxygen pursuant to Section 4.7, or (b) a termination by

 

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Roche pursuant to Section 18.4 for (i) then-ongoing clinical activities conducted pursuant to the most recent agreed update of the Program Plan and Budget, and (ii) non-cancelable obligations for other activities ongoing as of the date of opt-out or notice of termination, as applicable, conducted pursuant to the most recent update of the Program Plan and Budget [****]. Exit Costs shall not include any amounts for (x) [****], (y) cancelable obligations of other on-going activities being conducted pursuant to the most recent update of the Program Plan and Budget (except [****], or (z) any other activities [****] notice by the Party receiving such notice.

1.30 “ FDA ” means the U.S. Food and Drug Administration and any successor entity thereto.

1.31 “ Field ” means the [****]. By way of illustration, but without limitation, the Field includes: [****].

1.32 “ Finance Team ” means the committee described in Section 2.5.

1.33 “ First Commercial Sale ” means the first sale of a Product to a Third Party following the receipt of any Regulatory Approval required for the sale of such Product.

1.34 “ FTE ” means a full-time equivalent person-year of effort undertaken in connection with the conduct of the R&D Program.

1.35 “ Hemophilia ” means hemophilia A, hemophilia B, acquired hemophilia, genetic Factor VII deficiency and Glanzman thombasthenia.

1.36 “ ICH ” means intracerebral hemorrhage.

1.37 “ IND ” means an Investigational New Drug application, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated thereunder, including all subsequent filings in support of the initial filing(s), or any corresponding foreign application, registration or certification (e.g., a CTA).

1.38 “ Indication ” means any human bleeding disorder or injury in the Field.

1.39 “ Initial Indication ” means each of trauma and ICH, unless otherwise agreed to by the Parties pursuant to Section 3.1.2 (c).

1.40 “ Initial Period ” means the period from the Effective Date until the earlier of: (a) [****], or (b) the date [****] after the Effective Date, provided, however, if the [****] Culture Result with [****] is not achieved on or before [****], and as a result, [****], such [****] period shall be extended by a period equal to the time between [****] and the date that a [****] Culture Result is achieved, provided, further, if any E Compound other than [****] is selected as the Lead Compound, the foregoing [****] period shall be [****] and [****].

1.41 “ Invention(s) ” means any and all useful ideas, concepts, methods, procedures, processes, improvements, inventions, discoveries, and reductions to practice, whether or not patentable, which arise from or are first made, conceived or first reduced to practice in the course of the joint or separate activities of the Parties conducted in connection with the R&D Program

 

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1.42 “ Joint Management Committee ” or “ JMC ” means the committee described in Section 2.2.

1.43 “ Joint Program Team ” or “ JPT ” means the committee described in Section 2.3.

1.44 “ Know-How ” means all non-patented data, information, methods, procedures, processes, materials (including any Material) and other know-how. Know-How includes but is not limited to: biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, analytical and stability information and data (other than such information and data that is or becomes the subject of a patent or patent application). Know-How does not include any inventions otherwise included in the Patent Rights.

1.45 “ Lead Compound ” means the E Compound that is selected as such by [****] pursuant to Section 3.5.1, and any replacement thereof selected by [****].

1.46 “ Legal Requirement ” means any present and future multinational, national, state, local or similar laws (whether under statute, rule, regulation or otherwise); requirements under permits, orders, decrees, judgments or directives, and requirements of applicable Regulatory Agencies (including, without limitation, current Good Manufacturing Practices, Good Laboratory Practices, Good Clinical Practices); and regulations pertaining to Investigational New Drug Applications (as amended or revised from time to time).

1.47 “ Licensed Compound ” means any E Compound that is then a Lead Compound or a Backup Compound.

1.48 “ Major Country ” means each of the United Kingdom, France, Germany, Italy or Spain.

1.49 “ Major Markets ” means all Major Countries, the U.S., Canada, Australia and Japan.

1.50 “ Marketing and Promotion Costs ” or “ M&P Costs ” has the meaning set forth on Exhibit A .

1.51 “ Materials ” means any chemical or biological substances including any: (a) organic or inorganic chemical or compound; (b) gene; (c) vector or construct, whether plasmid, phage, virus or any other type; (d) host organism, including bacteria and eukaryotic cells; (e) eukaryotic or prokaryotic cells, cell line or expression system; (f) protein, including any peptide or amino acid sequence, enzyme, antibody or protein conferring targeting properties and any fragment of a protein or peptide or enzyme; (g) genetic material, including any genetic control element (e.g., promoters); (h) virus; or (i) assay or reagent.

1.51.1 “ Roche Materials ” means any Materials provided by Roche to Maxygen pursuant to this Agreement other than those that are Maxygen Materials.

 

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1.51.2 “ Maxygen Materials ” means any Materials provided by Maxygen to Roche pursuant to this Agreement. It is understood and agreed that all Compounds shall be Maxygen Materials.

1.51.3 “ Program Materials ” means all Materials that are first developed or made or discovered during and in connection with the R&D Program.

1.52 “ Maxygen Compound ” shall mean E Compounds that Maxygen has selected to develop and/or commercialize for Hemophilia as described in Section 6.3.

1.53 “ Maxygen Technology ” means the Maxygen Separate Technology and Maxygen’s ownership interest in the Program Technology.

1.54 “ Net Sales ” means with respect to a particular Product, the amount calculated by subtracting from the amount of Adjusted Gross Sales a [****] deduction of [****] percent [****] of Adjusted Gross Sales for sales in the U.S., and [****] percent [****] of Adjusted Gross Sales for sales outside the U.S. in lieu of sales-related deductions not specifically provided for in the definition of Adjusted Gross Sales (e.g., [****])). For clarity, such deductions shall not be used in the calculation of Adjusted Gross Sales nor shall any amount for any such deductions be included in Distribution Costs, Commercialization Costs or any other category of Collaboration Costs.

1.55 “ Patent Rights ” means U.S. and foreign patent applications (including, without limitation, all continuations, continuations-in-part, substitutions and divisions thereof) and patents (including all reissues, renewals, extensions, confirmations, re-registrations, re-examinations, revalidations and patents of addition, supplementary protection certificates, or other governmental actions that extend the term of any of the patents).

1.56 “ Phase I ” means the first phase of human clinical trials using a limited number of human subjects to gain evidence of the safety and tolerability of a Product and information regarding pharmacokinetics and potential pharmacological activity for such Product, which human clinical trials are usually completed prior to the initiation of Phase II, as described with respect to the U.S. in 21 C.F.R. §312.21(a), as may be amended, and, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction.

1.57 “ Phase II ” means the second phase of human clinical trials of a Product in human subjects to gain evidence of the efficacy in one or more indications and expanded evidence of the safety of such Product, as well as an indication of the dosage regimen required, as described with respect to the U.S. in 21 C.F.R. §312.21(b), as may be amended, and, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction. A Phase I/II clinical trial shall be considered a Phase II trial.

1.58 “ Phase III ” means the third phase of human clinical trials of a Product, which are large-scale trials to gain evidence of the efficacy and safety in a number of human subjects sufficient to support registration for such Product, as described with respect to the U.S. in 21 C.F.R. §312.21(c), as may be amended, and, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction. A Phase II/III clinical trial shall be considered a Phase III trial.

 

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1.59 “ Phase IV ” means the phase of human clinical trials of a Product conducted after such Product receives Regulatory Approval for commercial sale and is marketed to (a) delineate additional information regarding the use of such Product for a particular indication to confirm safety in human subjects for such indication or to support marketing of such Product, as described with respect to the U.S. in 21 C.F.R. §312.85, as may be amended, and, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction, or (b) otherwise to support sales of such Product.

1.60 “ [****] Decision Point ” means with respect to a decision by Maxygen to opt-out of further sharing of Collaboration Costs, the date that Maxygen gives Roche notice of such decision, which date is at least [****].

1.61 “ [****] Decision Point ” means with respect to a decision by Maxygen to opt-out of further sharing of Collaboration Costs, the date that Maxygen gives Roche notice of such decision, which date is at least [****] before the [****], which [****] was previously disclosed by [****] pursuant to Section 4.7.3.

1.62 “ Product ” means a pharmaceutical composition intended for use in the Field (in any dosage form and/or formulation) containing one or more Licensed Compounds as an active ingredient. Products containing one or more different Licensed Compounds shall be considered as different Products.

1.63 “ Product Commercialization Team ” or “ PCT ” means the committee described in Section 2.4.

1.64 “ Product Liaison Team ” or “ PLT ” means the committee established pursuant to Section 2.7.

1.65 “ Program Plan and Budget ” means the overall plan and budget described in Section 3.3 governing the collaborative research and development of Products and commercialization of Products for the Initial Indications, as may be amended from time to time by the JMC.

1.66 “ Program Technology ” means Know-How and Patent Rights, in each case, that are (a) made or conceived or reduced to practice or otherwise developed by Maxygen or Roche or jointly by Maxygen and Roche or their respective Affiliates, in each case, in connection with the R&D Program or other activities subject to this Agreement, and (b) necessary or useful for the manufacture, use or commercialization of any Product. Notwithstanding the foregoing, Program Technology shall not include any Shuffling Technology.

1.67 “ R&D Costs ” shall have the meaning set forth in Exhibit A hereto.

1.68 “ R&D Program ” means the activities undertaken by the Parties pursuant to the Program Plan and Budget to develop at least one Product for the Initial Indications, in each case, through BLA Approval for the applicable Product, and such other activities with regard to Compounds and Products as the Parties may agree in writing.

 

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1.69 “ R&D Program Term ” shall have the meaning set forth in Section 3.4

1.70 “ Regulatory Agency ” means, with respect to any particular country or, where applicable, a multinational jurisdiction, the governmental authority, body, commission, agency or other instrumentality of such country or multinational jurisdiction (e.g., the EMEA with respect to the European Union), with the primary responsibility for the approval of pharmaceutical products before a Product can be tested, marketed, promoted, distributed or sold in such country or multinational jurisdiction, including such governmental bodies, if any, that have jurisdiction over the pricing of such pharmaceutical product. The term “Regulatory Agency” includes, without limitation, the FDA, EMEA and MHW.

1.71 “ Regulatory Approval ” means, with respect to a nation or, where applicable, a multinational jurisdiction, such approvals, licenses, registrations or authorizations that are required to be obtained from a Regulatory Agency prior to the marketing and sale of a Product for use in the Field in such country or multinational jurisdiction (including, where applicable, pricing approvals necessary to obtain reimbursement).

1.72 “ Regulatory Filing ” means any filing with a Regulatory Agency relating to a Product and/or its use or potential use in humans, including any documents submitted to any Regulatory Agency and all supporting data (e.g., pharmacology, toxicology, CMC, etc.). Regulatory Filing includes, without limitation, any IND and/or BLA.

1.73 “ Rest of World ” means all countries and territories excluding the U.S. and Japan.

1.74 “ Roche Group ” means, collectively, Roche and its Affiliates and Sublicensees.

1.75 “ Roche Technology ” means the Roche Separate Technology and the ownership interest of Roche in the Program Technology.

1.76 “ Satisfactory [****] Result ” means, with respect to a Product either (i): (a) a demonstration of [****] between Products made [****] for manufacturing of clinical material for Phase I clinical trials and Phase II clinical trials; and (b) [****] decision [****] to initiate cGMP production of a Product having acceptable [****], as demonstrated by [****] activity for at least [****] at the target storage temperature; and (c) [****] decision [****] to file an IND for the applicable Product, and all [****] needed for Phase I clinical trials is produced and released to allow EIH; or (ii) EIH, if such EIH occurs for [****] or before [****], or such EIH occurs for [****] on or before [****], unless prior to the applicable date, [****] makes a [****] decision to allow EIH, even if all the conditions in (i) above have not all been met, provided in such case, a Satisfactory [****] Result shall not be deemed to have been achieved until all the requirements in (i) above have been achieved (or equivalent data has been generated, as [****] deems appropriate), which may occur after the applicable date described above.

1.77 “ Satisfactory GLP Toxicology Result ” means with respect to a Product: (a) a result of [****] in (i) [****] GLP toxicology studies, in [****] animal species, with a [****],

 

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and (ii) other supporting activities listed in Exhibit D of the Program Plan and Budget, to generate data sufficient to support an IND filing, or (b) [****] decision [****] to file an IND for the applicable Product.

1.78 “ Satisfactory [****] Culture Result ” means results demonstrating (a) the ability to grow cells expressing an E Compound in suspension culture [****] for [****], achieve a [****] throughout the period, and maintain an [****], and (b) in [****] using [****] culture the ability to reach a [****] of inoculation followed by [****] of an E Compound in a bioreactor working volume of at least [****], with [****] and with [****] and (c) the ability to purify an E Compound from the [****] cultures with a [****] yield of [****] mg/L [****] reactor harvest with a consistent Product quality in terms of [****], and (d) complete written documentation of Standard Operating Procedures for the [****] culture process and the purification process.

1.79 “ Satisfactory [****] Culture Result ” means results demonstrating the ability to use a [****] to culture a cell line for at least [****] in a bioreactor working volume of at least [****] and achieve [****] expression of a Product of at least [****] in the harvest, with acceptable Product quality in terms of [****], and with [****].

1.80 “ Separate Technology ” means Patent Rights and Know-How owned, in whole or in part, or Controlled by a Party or its Affiliates (excluding any and all Program Technology), in each case, that are necessary or useful for the performance of the R&D Program and/or for the development, manufacture and/or commercialization of a Product for use in the Field.

1.80.1 “ Maxygen Separate Technology ” means Separate Technology owned, in whole or in part, or Controlled by Maxygen or its Affiliates as of the Effective Date, excluding any Shuffling Technology. A list of the Patent Rights relating to Compounds within the Maxygen Separate Technology as of the Effective Date is attached as Exhibit B hereto.

1.80.2 “ Roche Separate Technology ” means Separate Technology owned, in whole or in part, or Controlled by Roche or its Affiliates as of the Effective Date.

1.81 “ Shuffle ”, “ Shuffled ” and “ Shuffling ” means techniques, methodologies, processes, materials and/or instrumentation for performing recombination-based modification of genetic material for the creation of potentially useful variant nucleic acids and/or proteins.

1.82 “ Shuffling Technology ” means Patent Rights and/or Know-How owned, in whole or part, or Controlled by Maxygen relating to the use of Shuffling.

1.83 “ Sublicensee ” means any Third Party to which Roche has granted a sublicense under one or more of the licenses granted to Roche hereunder or to whom Roche has granted the right to distribute one or more Products.

1.84 “ Territory ” means the entire world, subject to Section 18.7.

1.85 “ Tests Positively ” means that results demonstrate that a Compound has (a) [****], and (b) [****], in each case, [****] in the assays and conditions set forth on Exhibit C of the Program Plan and Budget.

 

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1.86 “ Third Party ” means any party other than Maxygen, Affiliates of Maxygen, and each member of the Roche Group.

1.87 “ [****] Agreement ” means that certain Exclusive License Agreement entered by [****] and Maxygen, Inc. effective [****].

1.88 “ U.S. ” means the United States of America, including its territories, protectorates and possessions.

1.89 “ Valid Claim ” means a claim contained in (a) an issued and unexpired patent included within the (i) Maxygen Separate Technology and/or (ii) Program Technology, that has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and that has not been admitted to be invalid or unenforceable through abandonment, reissue, disclaimer or otherwise, or (b) a pending patent application that is included within the Maxygen Separate Technology and/or the Program Technology, which application claims in the case of any country outside [****], a first priority date of no more than [****] years, and in the case of [****], a first priority date of no more than [****] years, in each case, prior to the date upon which pendency is determined. If a claim of a patent application that ceased to be a Valid Claim under subsection 1.89(b) later issues or grants as a patent within the scope of subsection 1.89(a), then such claim shall again be considered to be a Valid Claim, effective as of the earlier of the grant, allowance, or issuance of such patent.

2. GOVERANCE AND MANAGEMENT

2.1 Senior Executive Meetings . At least annually during the term of this Agreement, members of senior management of Roche and Maxygen shall meet to discuss the activities subject to this Agreement. The Roche participant in such meetings shall be the [****] or a person holding a position of at least equivalent responsibility in Roche, and the Maxygen participant shall be the [****] or a person holding a position of at least equivalent responsibility in Maxygen.

2.2 Joint Management Committee .

2.2.1 Responsibilities . Promptly following the Effective Date, the Parties shall establish a Joint Management Committee (“JMC”) that shall be responsible for overall supervision, direction and management of the activities subject to this Agreement. The responsibilities of the JMC will include, without limitation:

(a) developing strategies for the development and commercialization of Products for each indication in the Field, including the Pre-clinical R&D Plan, the CMC Plan, the Clinical Development Plan, and the U.S Product Plan;

(b) reviewing and approving, on an annual basis, the Program Budget for all activities of the R&D Program, and reviewing such Program Budget at least quarterly;

 

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(c) monitoring the progress of the activities conducted pursuant to the Program Plan and Budget;

(d) determining which indications, if any, shall be pursued in the R&D Program in addition to the Initial Indications, and the priority of each such indication;

(e) determining whether Shuffling Technology should be used in the R&D Program to generate new Compounds;

(f) determining how far the Backup Compound shall be advanced through pre-clinical research;

(g) establishing, supervising and reviewing the activities of any committees, subject to this Agreement (e.g., the JPT, PCT and the Finance Team);

(h) reviewing and discussing intellectual property matters relating to Products and determining whether to seek licenses from Third Parties with respect to intellectual property and/or technology necessary or useful for the conduct of the R&D Program and/or Product commercialization; and

(i) timely resolving any issues that arise relating to the performance of the activities subject to this Agreement.

2.2.2 Membership . The Parties shall each appoint [****] voting representatives to membership on the JMC. At least one representative of each Party on the JMC shall be a member of a senior executive level decision-making group of such Party, with such initial Roche representative being a member of the global research senior management team, or its successor entity from a global development or marketing senior management team. Each Party shall have the power to appoint or replace its own representatives on the JMC with notice to the other Party; provided, however, that at all times, each Party must have on the JMC at least one representative as described in the preceding sentence. If personal attendance by a member of the JMC is not possible, voting by proxy is permissible.

2.2.3 Meetings . During the term of this Agreement, the JMC shall meet to discharge its responsibilities at least semi-annually, but meet more frequently as the JMC may agree; provided, however, that during the initial [****] months of the R&D Program Term, the JMC shall meet at least quarterly. The first meeting of the JMC shall occur within [****] days following the Effective Date.

2.2.4 Decision-Making . Unless Maxygen has opted out of further sharing of Collaboration Costs pursuant to Section 4.7, the JMC shall seek to make all decisions by [****], provided, however, that:

(a) [****] approval of [****] shall be required to (i) make strategic decisions relating to the research and development of Products in the Field; (ii) increase the Program Budget, if such increase would result in projected Collaboration Costs for future expenditures that, in the aggregate, would be greater than [****] of the aggregate Collaboration

 

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Costs in the last Program Budget approved by the JMC for the applicable [****] period; (iii) commence [****] for any Product; (iv) commence development of any Product for any indication other than the Initial Indications; (v) the selection of the [****] for clinical supply of Products; or (vi) amend the exhibits to the Program Plan and Budget;

(b) [****] shall have final decision as to:

(i) [****];

(ii) [****] matters regarding [****]; provided, upon the earlier of: (x) [****], if no Satisfactory [****] Culture Result is achieved on or before [****], or (y) such earlier date, if any, as the data indicate that no Satisfactory [****] Culture Result could be achieved, [****] shall have the final decision thereafter for all [****] matters. Notwithstanding the above, if Satisfactory [****] Culture Result is achieved by [****], then [****] shall remain responsible for [****] matters relating to the manufacture of Products for use in Phase I and IIa clinical trials; and

(iii) whether or not the following have been achieved: (v) [****], or (w) a [****], or (x) a [****], or (y) [****], or (z) a [****], each of which decision(s) will be made on a timely and reasonable basis, considering the available data, and be subject to the terms of Section 19.4 if [****] believes any such decision is not reasonable.

(c) subject to Section 2.2.4(a) and (b) above, [****] shall have the final decision as to all matters in regard to Product development for each of the Initial Indications until the first Product successfully achieves the Completion of Phase IIa for the first Initial Indication (and thereafter [****] shall retain agreed operational responsibility(ies), e.g., clinical development of the second Initial Indication through Completion of Phase IIa); and

(d) subject to Section 2.2.4(a), after the first Product(s) successfully achieves the Completion of Phase IIa for the first Initial Indication, [****] shall have the final decision for all matters relating to Product(s), including all decisions relating to Product development and commercialization (although [****] shall retain agreed operational responsibility(ies), e.g., clinical development of the second Initial Indication through Completion of Phase IIa).

If Maxygen has opted out of further sharing of Collaboration Costs pursuant to Section 4.7, Roche shall have the final authority as to all Product development and commercialization decisions, but may not amend or modify any terms of this Agreement without Maxygen’s written consent.

2.2.5 Disputes . Except where a Party has final decision authority pursuant to Section 2.2.4, if the members of the JMC become deadlocked on a decision which requires [****] approval of the JMC, then either Party may refer the matter to dispute resolution pursuant to Article 19 after written notification to the other Party.

2.2.6 Subcommittees . The JMC shall have the right to establish such other subcommittees with representation from each Party as the JMC deems appropriate to address specific issues relating to Products in detail (e.g., Patent Committee, Product-specific committees).

 

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2.3 Joint Program Team .

2.3.1 Responsibilities . The Parties shall establish a Joint Program Team (“JPT”) that shall report to the JMC and shall be responsible for overall operational oversight and day-to day management of the R&D Program and advancement of the Products into development and through to commercialization, including developing and implementing the strategy for clinical development and obtaining Regulatory Approvals of Products, including objectives and plans for the development and regulatory submissions for Products for each Initial Indication, the manufacture of the Product for clinical studies and commercial supply, and the budgets necessary to implement such activities. The responsibilities of the JPT will include, without limitation:

(a) developing and implementing the Pre-clinical R&D Plan and Budget, including the associated Pre-clinical Plan and Budget, CMC Plan and Budget, and Clinical and Regulatory Plan and Budget, which will reflect the stage of the R&D Program with more detailed information for the activities planned over approximately the next [****] months and less detailed information for later planned activities (e.g., the Plans and Budgets prepared as of the Effective Date will be detailed through IND filing, and more general for activities to be conducted after IND filing), and proposing updates to such Plan and budget to the JMC;

(b) preparing and filing [****] INDs to allow the commencement of human clinical trials for at least [****] for the treatment of each of the Initial Indications;

(c) developing and implementing an overall Product development strategy;

(d) interacting with Regulatory Agencies worldwide to obtain Regulatory Approval of the Products for the Initial Indications, and other indications approved by the JMC, if any; and

(e) developing a multi-year strategic Commercialization Plan for the applicable Product (Roche’s Strategic Launch Concept subsequently modified into a Strategic Launch Plan), including plans for Regulatory Approval of the Product(s) for the Initial Indications and other agreed indications within the Field in at least the Major Markets; and developing the profile(s) of the Product(s), and conducting appropriate pre-launch market research for the Initial Indications and other agreed indications within the Field.

2.3.2 Membership . The Parties shall each appoint [****] voting representatives to the JPT. Each Party shall have the power to appoint or replace its own representatives on the JPT with notice to the other Party.

2.3.3 Decision-Making . The Parties shall seek to make all decisions of the JPT by [****] consent; provided, however, that [****] shall retain final decision on the selection of the manufacturing process for commercial supply of each Product, and the global commercialization strategy for all Products.

 

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2.3.4 Effect of Opt-Out . If Maxygen elects to opt-out of further sharing of Collaboration Costs pursuant to Section 4.7, the JPT shall be dissolved.

2.4 Product Commercialization Team .

2.4.1 Responsibilities . Promptly after first Completion of Phase IIa for a Product for an Initial Indication, the Parties shall form a Product Commercialization Team (“PCT”) to plan and manage Product commercialization in the U.S., including, without limitation, the marketing, promotion and sale of the Product in the U.S. and associated budgets.

2.4.2 Membership . Each PCT shall have a number of Maxygen representatives representing [****] of the total PCT number of representatives but no less than [****] Maxygen representatives. Each Party shall have the power to appoint or replace its own representatives on the PCT with notice to the other Party. A [****] member shall act as the chair of the PCT. Each representative of the PCT shall have one vote.

2.4.3 Decision-Making . The Parties shall seek to make all decisions of the PCT by [****]; provided, however, that [****] shall have the final decision for matters relating to [****].

2.4.4 Effect of Opt-Out . If Maxygen elects to opt-out of further sharing of Collaboration Costs pursuant to Section 4.7, the PCT shall be dissolved but shall be replaced with a Product Liaison Team as described in Section 2.7.

2.5 Finance Team .

2.5.1 Responsibilities . Promptly after the Effective Date, the JMC shall establish a Finance Team that will include individuals with expertise and responsibilities in the areas of project management and accounting, cost allocation, budgeting and financial reporting. The Finance Team shall operate under the direction of the JMC to (a) oversee and facilitate the exchange between the Parties of financial information relating to the Program Budget, including without limitation, Budgeted Costs and Collaboration Costs, and (b) provide services to and consult with the JMC in order to address the financial, budgetary and accounting issues that arise in connection with the activities performed under the Program Plan and Budget.

2.5.2 Membership . The Parties shall each appoint two (2) voting representatives to the Finance Team. Each Party shall have the power to appoint or replace its own representatives on the Finance Team with notice to the other Party.

2.5.3 Decision-Making . The Parties shall seek to make all decisions of the Finance Team by unanimous consent.

 

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2.5.4 Effect of Opt-Out . If Maxygen opts out of further sharing of Collaboration Costs pursuant to Section 4.7, then the Finance Team shall be dissolved after the end of the applicable Transition Period described in Section 4.7.4.

2.6 General .

2.6.1 Meetings . Each committee described in Sections 2.3, 2.4 and 2.5 shall establish a schedule for its meetings; provided, however, that during the term of this Agreement, each committee shall meet at least quarterly unless otherwise agreed in writing by the members of the applicable committee. The location of committee meetings shall alternate between the offices of Maxygen and Roche, or as otherwise agreed upon by the members of the applicable committee. At least two meetings every year will be face-to-face, unless the committee members of both Parties of the applicable committee agree to other methods of communication, such as teleconferences and/or videoconference, for a particular meeting. Each committee may from time-to-time invite the participation of additional ad hoc non-voting attendees from either Party as the need arises and with the consent of all members of the applicable committee may invite Third Parties to attend such meetings as it deems appropriate.

2.6.2 Minutes . Each of the JMC, JPT and PCT, and any other committees established by the JMC, shall select a member of such committee or their designee to prepare written minutes of their meetings and a written record of all decisions of the applicable committee, whether made at a formal meeting or otherwise. Draft minutes shall be prepared within [****] days after each meeting and, after review and revision by the representatives of each Party on the applicable committee, shall be adopted in final form by the members of the applicable committee. Minutes of the committee meetings shall be treated as Confidential Information of both Parties.

2.6.3 Lead Representatives . To coordinate interactions between the Parties on each committee, Roche and Maxygen shall each appoint one representative from such Party as their Lead Representative for each committee. The Lead Representative shall coordinate communications between its representatives on the committee with the other Party, and serve as an initial point of contact for such interactions.

2.6.4 Communication; Annual Meetings . The JMC shall ensure that there is close and frequent communication and interaction between the committees subject to this Agreement to facilitate the accomplishment of the goals of each committee. To ensure efficient communication between the JMC, JPT and PCT, the JMC shall ensure that at least annually all such committees meet together at a time and location selected by the JMC.

2.6.5 Voting . If personal attendance by a member of the applicable committee is not possible, voting by proxy is permissible.

2.6.6 Disputes . If the voting members of the JPT, Finance Team or any committee established by the JMC, become deadlocked on any decision, then either Party may refer the dispute to the JMC for resolution.

 

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2.6.7 Limitations on Authority . No committee described in this Article 2 shall have the authority to amend the terms of this Agreement or waive compliance with, or any breach of, this Agreement.

2.7 If Maxygen Opt-Out .

2.7.1 Effect . If Maxygen elects to opt-out of further sharing of Collaboration Costs pursuant to Section 4.7, then the JPT and PCT shall dissolve immediately, and the Finance Team shall dissolve at the end of the applicable Transition Period. After the dissolution of the applicable Team, Roche shall have the final decision authority at the JMC for all decisions relating to Product development and commercialization previously made by the applicable Team, but may not amend or modify any terms of this Agreement without Maxygen’s written consent.

2.7.2 Product Liaison Team . Promptly after the date, if any, that Maxygen elects to opt-out of further sharing of Collaboration Costs pursuant to Section 4.7, the Parties shall establish a Product Liaison Team (“PLT”) to provide a forum through which Maxygen shall be informed on the strategy, plans and timelines for the worldwide development and commercialization of Products and the progress of activities relating to the development and commercialization of Products completed since the prior PLT meeting. The PLT shall not be a decision-making body. The PLT shall have representatives from the Roche team(s) in charge of clinical development and commercialization of Product(s) and [****] representatives from Maxygen.

2.7.3 Meetings . The PLT shall meet at least semiannually during the Term of the Agreement so long as Roche retains an exclusive license to the applicable Product. At each PLT meeting, the PLT will review the strategy, plans, timelines for further clinical trials, Regulatory Approval, CMC and commercialization of Products, and Roche will provide Maxygen with a written summary of activities and plans related to Regulatory Approval with respect to the applicable Product, as well as a summary report on the results of any clinical trials and anticipated future developmental activities and time lines, and Roche’s commercialization activities with regard to the applicable Product in the Major Markets. If Maxygen makes reasonable requests for additional information regarding the applicable Product(s), Roche agrees to provide such information to Maxygen if Roche maintains or collects such information as part of its customary practices; provided, however, that Roche shall not need to adapt, modify or extend in any way its then-current practices and procedures to satisfy such request. With the agreement of the PLT, other Maxygen or Roche employees may be invited to PLT meetings.

2.7.4 Status Reports . Through the PLT, Roche shall keep Maxygen apprised of the status of the development of, plans and activities for, and any issues that arise relating to efforts to obtain Regulatory Approval of, and/or commercialization of, such Product(s) by providing Maxygen with a written report promptly after the end of each calendar year detailing such activities with respect to each applicable Product. Such reports shall describe the status of, without limitation, (a) all Products that have been brought into pre-clinical development or clinical trials, including all clinical trials then in progress, (b) all Products for which Roche has sought or obtained Regulatory Approval, including progress toward Regulatory Approval throughout the Territory, and (c) commercialization activities by Roche and/or its Affiliates or

 

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Sublicensees at least throughout the Major Markets, and other information sufficient to allow Maxygen to monitor Roche’s compliance with this Agreement, including without limitation, Roche’s obligations in Article 7 and the accomplishment of the events that would result in Event Payments subject to Article 8. Such reports shall contain or be based on information that Roche maintains or collects as part of its customary practices, and Roche shall have no obligation to adapt, modify or extend its then-current practices and procedures to generate different information.

3. R&D PROGRAM

3.1 Collaborative Development .

3.1.1 Focus . Subject to the terms and conditions set forth herein, Roche and Maxygen will work together to diligently conduct a mutually agreed research and development program (the “R&D Program”) pursuant to the Program Plan and Budget, with the goals of (a) identifying E Compounds with potential utility for the treatment of each of the Initial Indications, (b) timely conduct of activities to enable at least [****] INDs for [****] Products for the Initial Indications, and (c) rapidly developing Product(s) for the Initial Indications.

3.1.2 Other Indications . With the [****] agreement of [****], the R&D Program may be expanded to include the development of Products for indications in the Field other than the Initial Indications, through (a) the line extension of Products previously developed for an Initial Indication for one or more other indications, and/or (b) the development of additional Product(s) for such other indications, and/or (c) the substitution of one or more new indication(s) for one or more of the Initial Indications, and/or (d) the addition of one or more new indication(s).

3.2 Responsibilities .

3.2.1 Efforts . Roche and Maxygen shall each use Commercially Reasonable Efforts to perform their respective tasks and obligations in conducting all activities ascribed to it in the then-current Program Plan and Budget approved by the JMC, in accordance with the time schedules set forth therein.

3.2.2 Conduct . Each Party understands and agrees that time is of the essence in addressing the market for the Products in the Field. Each Party shall conduct itself and its activities hereunder consistent with that understanding, sound and ethical business and scientific practices, and in accordance with the then-current Program Plan and Budget.

3.2.3 Responsibilities .

(a) Pre-clinical R&D . Maxygen shall be primarily responsible for the implementation of activities subject to the Pre-clinical R&D Plan.

(b) CMC . The CMC Plan will establish the responsibilities of each Party with respect to Product manufacturing, including, process development, assay development, scale-up, manufacturing clinical and commercial supplies, release testing, quality

 

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assurance, formulation, stability and other CMC-related activities. It is anticipated that each Party will have significant responsibilities for specified activities under the CMC Plan, with [****] primarily responsible for the [****] with regard to such process, and [****] primarily responsible for [****] with regard to such process, including [****].

(c) Clinical Development . The Clinical Development Plan will establish the responsibilities of each Party with respect to clinical development. Maxygen shall have primary operational responsibility for the clinical development of each Product until [****]. Thereafter, Roche shall assume primary operational responsibility for all further clinical development of such Product. Maxygen and Roche shall be responsible for regulatory matters as described in Article 12.

(d) Commercialization . As described in Article 6, Roche shall have sole responsibility for commercialization of the Products worldwide so long as Roche retains an exclusive license for the applicable Product, indication and/or geographic region.

3.3 Plans and Budgets .

3.3.1 Program Plan and Budget .

(a) The Parties will conduct the overall R&D Program in accordance with a written plan (the “Program Plan”) and budget (the “Program Budget”) (collectively, the “Program Plan and Budget”) with more detailed information for the activities planned over approximately the next [****] months and less detailed information for later planned activities. The initial Program Plan and Program Budget for the conduct of the activities to be conducted pursuant to this Agreement from the Effective Date through BLA filing for at least one Product for the treatment of each of the Initial Indications, has been agreed in writing by the Parties prior to the Effective Date.

(b) The Program Plan will set forth (i) the activities of the R&D Program and the resources that will be dedicated to the activities contemplated within the scope of the R&D Program for at least [****] for each Initial Indication, and (ii) specific objectives and timelines for each Product. The Program Plan and Budget shall include, without limitation, the component plans described in Section 3.3.2.

(c) The Program Budget will include detailed budgets for all activities to be conducted in connection with the Program Plan, including activities to be conducted by the Parties and by Third Parties on behalf of the Parties. The Program Budget shall establish Budgeted Costs against which Collaboration Costs shall be compared, on a quarter-by-quarter basis, by Party. The Program Budget shall not include the commercial budget for countries other than the U.S.

(d) The Program Plan and Budget shall be reviewed, updated and approved at least semi-annually by the JMC, with such changes as the JMC may deem appropriate. Any changes to the Program Plan and/or Program Budget shall be reflected in the official JMC meeting minutes; provided, in the case of any change to the Program Budget, such minutes must be signed by the lead representative of each Party.

 

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3.3.2 Component Plans . The JMC shall ensure that at least the following plans and budgets shall be prepared with respect to Products, and updated at least prior to each JMC meeting until the subject activities have been completed.

(a) Pre-clinical R&D Plan and Budget . To facilitate the advancement of Products for the Initial Indications to IND filing, the JPT shall develop a Pre-clinical R&D Plan and Budget that will describe in detail the specific activities, timelines and budgets for advancement of Products for each of the Initial Indications until IND filing, which shall include activities to assess efficacy and safety and validate Licensed Compound selection.

(b) CMC Plan and Budget . To facilitate the manufacture of Products, the JPT shall develop a CMC Plan and Budget for the applicable Product describing in detail the specific activities, timelines, and budgets for (i) selection of the manufacturing process; and (ii) manufacture of pre-clinical R&D materials, clinical trial and commercial supplies of such Product.

(c) Clinical Development Plan and Budget . To facilitate the clinical development of Products, the JPT shall develop a Development Plan and Budget for the applicable Product describing in detail the specific activities, timelines and budgets for advancement of Products for the Initial Indications from IND filing through at least BLA filing.

(d) Commercialization Plan and Budget . To facilitate commercialization of each Product, the PCT shall [****], develop a multi-year strategic Commercialization Plan that describes (i) the proposed strategy, and plans for Regulatory Approval for the applicable Product (Strategic Launch Concept subsequently modified into a Strategic Launch Plan) in at least the Major Markets; and (ii) the proposed strategy, plans and proposed budgets for commercialization of the Product in the U.S. (U.S Product Plan and Budget), for each Initial Indication, including: [****], as well as advertising and other promotional materials to be used in the Product marketing in the U.S.

3.4 R&D Program Term . The R&D Program shall commence on the Effective Date and, unless otherwise agreed in writing by the Parties or the Agreement is earlier terminated pursuant to Article 18, shall continue until BLAs are filed for at least [****] for each of the Initial Indications. Notwithstanding the above, if Maxygen has not opted out of sharing Collaboration Costs pursuant to Section 4.7, and the Parties are developing any Products for indications other than the Initial Indications pursuant to Section 3.1.2, the R&D Program shall continue until BLAs are filed for at least each of such indications or the Parties agree to the termination of development of such indications.

3.5 Licensed Compound Selection Process .

3.5.1 Initial Period . To the extent not already provided to Roche, promptly following the Effective Date, Maxygen shall provide to Roche summaries of all data in its possession relating to the [****] of then existing Compounds (described on Exhibit C of the Program Plan and Budget). During the Initial Period, all Compounds that have not been previously tested in at least one E Compound screening assay(s) described on Exhibit C of the

 

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Program Plan and Budget shall be tested in the assays listed on Exhibit C and such other assays as the JMC may agree, to determine if they are E Compounds; provided, the JMC may decide to test any Compound in any assay listed in Exhibit C . Roche shall have the right to evaluate all E Compounds as potential Licensed Compounds; provided, the preliminary Lead Compound shall be [****], and the preliminary Backup Compound shall be [****]. At any time during [****], if [****] wishes for any reason to [****], then [****], including without limitation, [****]. The Lead Compound and Backup Compound shall each be a Licensed Compound. When for at least one E Compound (a) [****] (as described in Exhibit D of the Program Plan and Budget) is available, and (b) [****] has been achieved, Roche shall with notice to Maxygen select one E Compound as the Lead Compound for development in the Field. At any time during the Initial Period, Roche may also select one other E Compound as a Backup Compound for advancement in the Field.

3.5.2 After Initial Period .

(a) After the Initial Period, after consultation with Roche, Maxygen may, at its sole discretion, select any [****] E Compounds, excluding any Licensed Compound, for development and commercialization for Hemophilia by Maxygen, pursuant to Section 6.3.

(b) After the Initial Period, Roche may not select as a replacement Lead Compound or Backup Compound [****] Maxygen Compounds (as defined in Section 6.3) selected by Maxygen for Hemophilia unless Maxygen relinquishes rights to such Maxygen Compound as described in Section 6.4.

(c) Roche shall have the right to evaluate all E Compounds not selected by Maxygen for Hemophilia as potential Licensed Compounds.

(d) All E Compounds not selected by Maxygen for Hemophilia shall remain available to Roche for exclusive development and commercialization in the Field under the Agreement, subject to Sections 3.5.4 and 6.3.

3.5.3 Roche Exclusive Rights . Once a particular E Compound is selected by Roche as a Licensed Compound, Maxygen will not conduct any further evaluation of any such Licensed Compound for Hemophilia, subject to Sections 3.5.4 and 6.3.

3.5.4 Relinquishment . If at any time during the Initial Period or after the Initial Period during the term of this Agreement, Roche determines that it does not wish to retain its rights to a particular Lead Compound or Backup Compound, then it shall promptly notify Maxygen. In any such event, such E Compound shall cease to be a Licensed Compound, and such Compound shall again be an E Compound subject to the terms of this Agreement, and Roche may select as a replacement Licensed Compound any other E Compound that is not then a Maxygen Compound.

3.5.5 Licensed Compound Exclusivity . To ensure that a Third Party cannot obtain license rights to any Licensed Compound to which Roche retains rights under this Agreement, Maxygen will not grant to any Third Party any license or other rights with respect to any E Compound except the Maxygen Compounds.

 

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3.6 Materials; Limited Use .

3.6.1 Transfer of Materials . With written approval of the JPT, each Party shall transfer Compounds and other Materials to the other Party (“Transferred Materials”). The Transferred Materials shall be used by the recipient Party solely for activities expressly approved in advance in writing by the JMC or JPT or in practicing its rights under this Agreement.

3.6.2 Limited Use . Except in connection with the practice of the rights expressly granted to Roche with regard to Compound(s) and Products in the Field pursuant to this Agreement, Roche shall not, without the express prior written consent of Maxygen: (i) transfer any Compound, or materials derived therefrom, including without limitation, DNA, RNA or protein, to any of its Affiliates, Sublicensees or to any Third Party; (ii) use any data or information obtained from the research activities conducted using any Compound, or other Materials provided by Maxygen (including, without limitation, any sequence information regarding the DNA of any Compound or any protein encoded thereby) for any purpose; (iii) permit any Affiliate, Sublicensee or Third Party to obtain or use any Compound or materials derived therefrom, including without limitation, DNA, RNA or protein for any purpose; or (iv) use, or attempt to use, any data or information relating to any Compound or other Materials provided by Maxygen, including without limitation, consensus sequences or structural motifs, to reverse engineer, reconstruct, synthesize or otherwise modify or copy any Compound, or any materials derived therefrom, including without limitation, DNA, RNA or protein.

3.6.3 Use of Compounds . Roche shall not have any right to use any of the Compounds for any use except the development and commercialization of Products in the Field pursuant to the licenses granted to it in Section 5.2.1. Maxygen shall not have any right to use any of the Compounds for any use except (a) for the development of Products in the Field pursuant to this Agreement, and/or (b) as permitted by Sections 5.7 and 5.8 and Articles 6 and 18.

3.6.4 Program Technology . All Program Technology shall be treated as Confidential Information of both Parties. Nothing in this Section 3.6.4 shall be construed to limit the ability of either Party to disclose Program Technology as necessary to perform patent prosecution and related activities allocated or permitted to be conducted by such Party pursuant to Article 13.

3.7 Reports and Records .

3.7.1 Records . The Parties shall maintain records that will properly reflect all work done and results achieved in the performance of the R&D Program (including all data in the form required under any applicable governmental regulations and as directed by the JMC), including laboratory records sufficient to establish the dates of first conception and reduction to practice of any inventions within the Program Technology. Upon request during the term of this Agreement and for one year thereafter, the Parties shall provide each other reasonable access to such records relating to any Products during ordinary business hours.

 

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3.7.2 Reports .

(a) Status Reports . Each Party shall keep the other Party apprised of the status of all activities conducted by it pursuant to this Agreement since the last JMC meeting by providing the JMC, at least [****] days prior to the next scheduled JMC meeting, a written report describing the activities (pre-clinical, CMC, clinical and, if applicable, regarding commercialization) conducted with respect to worldwide development of each Product. Such reports shall detail and summarize the progress of the activities performed by the Parties in connection with the R&D Program since the last written report, in the level of detail requested by the JMC. All material Program Technology made by either Party will be promptly disclosed to the other, with significant discoveries or advances being communicated as soon as practical after such information is obtained or its significance is appreciated.

(b) Scientific Reports . Each Party shall provide to the other Party as soon as practicable, written final reports summarizing the results obtained (e.g., research reports, pharmacology, toxicology, process development, technical SOPs, etc.) by such Parties in connection with the R&D Program, in the level of detail and format agreed by the Parties, which shall include at least final results, protocols, specifications, etc. For technical SOPs that embody Know-How within either Party’s Separate Technology (i.e., developed outside the R&D Program), such SOPs shall only be disclosed to the other Party as needed and treated as Know-How of the other Party pursuant to Section 5.6.2 or 5.6.3, as applicable.

4. COLLABORATION COSTS

4.1 Collaboration Costs .

4.1.1 Sharing of Collaboration Costs . Subject to the terms of this Article 4, Maxygen and Roche shall share Collaboration Costs incurred in connection with the development and commercialization of Products, as follows:

(a) subject to the terms of Section 4.7, Maxygen and Roche shall [****] share R&D Costs for Products; and

(b) subject to the terms of Section 4.7: (i) Maxygen shall pay [****] and Roche shall pay [****] of M&P Costs incurred in connection with the commercialization of Products in the U.S., and (ii) Roche shall pay one hundred percent (100%) of M&P Costs incurred in connection with the commercialization of such Products outside the U.S.; and

The Parties agree that R&D Costs and/or M&P Costs do not include, and Maxygen shall not pay any share of, any Commercial Manufacturing Costs and/or any Distribution Costs with regard to any Product.

4.1.2 Cost Tracking . The Finance Team shall establish an agreed mechanism, consistent with Exhibit A , the Accounting Standards and the standard practices of the Parties, for tracking of Collaboration Costs and comparing such expenses to the Budgeted Costs for the applicable period, by Party. Collaboration Costs shall, at a minimum, be tracked by expense category, on a Product-by-Product basis, and to the extent feasible, on an indication-by-indication basis.

 

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4.2 Reports of Collaboration Costs .

4.2.1 Quarterly Reports .

(a) So long as Maxygen and Roche are sharing Budgeted Costs under this Agreement, each Party shall furnish the other Party with a written report (the “Quarterly Collaboration Cost Report”) detailing the Collaboration Costs incurred by such Party during such calendar quarter (in the format and level of detail established by the Finance Team in a manner consistent with Section 4.1.2). Each such report shall be provided within [****] days after the end of the calendar quarter to which such report pertains; provided, Roche shall use reasonable efforts to provide Maxygen with a preliminary report within [****] business days after the end of the calendar quarter to which such report pertains.

(b) All such Collaboration Costs shall be reported in Dollars and shall state the exchange rates used in determining the costs incurred. Unless otherwise agreed by the Parties, (i) for Maxygen, the exchange rate used for any such currency conversion shall be made using the exchange rate for conversion of the foreign currency into Dollars, quoted for current transactions for buying Dollars, as reported in The Wall Street Journal , West Coast edition, for the last business day of the calendar quarter to which such payment pertains; and (ii) for Roche, the amount of any such Collaboration Costs shall (x) first be converted for computational purposes into Swiss Francs and the exchange rates used by Roche for any such currency conversion into Swiss Francs shall be made using [****]; and (y) then be converted into Dollars and such conversion shall be made at the average [****] rate of the Swiss Francs to Dollars as retrieved from the Reuters system (or [****]) for the applicable quarter. If amounts are converted from Dollars to Swiss francs and back to Dollars, the same exchange rate will be used.

4.2.2 Verification . The Finance Team shall quarterly (a) review the Quarterly Collaboration Cost Reports provided by each Party to verify the appropriateness and amount of all costs in any such Report, and (b) compare such Collaboration Costs with the Budgeted Costs set out in the then-current updated Program Budget for the applicable quarter and year to assess consistency with such Program Budget. The JMC shall review such reports at JMC meetings.

4.2.3 Certain Costs . If either Party requests additional information regarding any Collaboration Costs incurred by the other Party, the other Party shall promptly provide the requesting Party with any information reasonably requested by the requesting Party. Any JMC member may request that the Finance Team provide further reasonable information regarding any Collaboration Costs; provided, however, that the other Party shall not need to adapt, modify or extend in any way its then-current practices and procedures to satisfy such request.

4.2.4 Forecasts . Unless Maxygen has opted out of further sharing of Collaboration Costs, in the [****] month of each calendar quarter, each Party shall provide the Finance Team a written quarterly rolling forecast of the Collaboration Costs it expects to incur over the next [****] months and shall use reasonable efforts to promptly inform the Finance Team of any expected deviation of [****] or more from such forecasts in any quarter; provided, however, that this requirement shall not oblige a Party to adapt, modify or extend in any way its then-current practices and procedures. Such quarterly rolling forecast shall be updated on a quarterly basis.

 

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4.3 Payments .

4.3.1 Quarterly Balancing Payments . So long as the Parties are sharing Collaboration Costs for any Product, quarterly balancing payments shall be made based on the Collaboration Costs for such Product based on the Quarterly Collaboration Cost Reports provided by each Party pursuant to Section 4.2.1.

(a) Within [****] days after the end of each calendar quarter during the term of the Agreement, to ensure that Collaboration Costs are being shared as set forth in this Agreement, the Finance Team shall (i) compare the total Collaboration Costs incurred by each Party in the preceding quarter to the Budgeted Costs (as reflected in the Program Budget in the then-current Program Plan and Budget) for such quarter, and (ii) determine whether a payment needs to be made by one Party to the other Party so that each Party will have paid its share of the Collaboration Costs for such quarter. Each Party shall send to the Finance Team a written summary of Collaboration Costs actually incurred by such Party in the applicable quarter, and the Finance Team shall determine the amount, if any, due from each Party for the applicable quarter as described in Section 4.3.1(b).

(b) If the Finance Team determines that a payment needs to be made to ensure that each Party has paid its share of the Collaboration Costs for such calendar quarter, then the Party that reported that it incurred and/or accrued the lesser amount in Collaboration Costs for the applicable quarter (the “Reimbursing Party”) shall make a balancing payment (the “Quarterly Balancing Payment”) to the other Party in an amount equal [****] of the total Collaboration Costs incurred and/or accrued for such quarter (by both Parties), less the Collaboration Costs incurred by the Reimbursing Party in such quarter. For example, if in a particular quarter, total Collaboration Costs were one million five hundred thousand Dollars ($1,500,000) and Roche expended one million Dollars ($1,000,000) of such total, and Maxygen expended five hundred thousand Dollars ($500,000) of such total, then for such quarter [****] would pay to [****] a Quarterly Balancing Payment of [****]. Such payments shall be adjusted accordingly to reflect the [****] sharing of M&P Costs allocated to the U.S. for Products.

4.3.2 Limitation . Notwithstanding the above, if in any calendar year the actual CMC Costs and/or M&P Costs exceed the costs budgeted in the most recent update of the applicable Program Budget for such year for CMC Costs and/or M&P Costs, unless otherwise agreed in writing by the Parties pursuant to Section 2.2.4(a) or otherwise, Maxygen shall have no obligation to pay for its share of CMC Costs and/or M&P Costs, as the case may be, in such calendar year, more than the lesser of:

(a) For CMC Costs . [****] of the Budgeted Costs for CMC Costs set forth in the most recent Program Budget for the applicable calendar year that was [****] approved by [****], or [****] of the actual CMC Costs for the applicable year. For example, if in a particular calendar year Budgeted Costs for CMC Costs were [****] and actual CMC Costs were [****], then Maxygen would have no obligation to pay more than [****] for such year (i.e., [****], since such amount is less than [****] of the actual CMC Costs for such year.

 

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(b) For M&P Costs . [****] of the Budgeted Costs for M&P Costs allocated to the U.S. set forth in the most recent Program Budget for the applicable calendar year that was [****] approved by [****], or [****] of the actual M&P Costs allocated to the U.S. for the applicable year.

Notwithstanding the above, this Section 4.3.2 shall not apply to excess expenditures that were (i) approved by the JMC in a Program Budget for a prior calendar year but not incurred in that year but due to a delay in occurrence of any expenses, or (ii) approved by the JMC in a Program Budget for a future calendar year but incurred earlier, due to more rapid progress in the R&D Program than was expected. If the terms of this Section 4.3.2 apply, and Maxygen pays the amount described in Section 4.3.2(a) and/or (b), as applicable, then Maxygen shall be deemed to have paid its share of the Collaboration Costs for such calendar year due pursuant to Section 4.1. Maxygen shall not abuse this limitation to unreasonably avoid the sharing of Collaboration Costs under this Agreement as long as the excess expenditures are reasonably justified by the usual uncertainties related to development and commercialization of pharmaceutical products or external circumstances out of control of the Parties.

4.3.3 No Deductions . All payments of Collaboration Costs shall be made without withholding for taxes or any other charge.

4.4 Audits .

4.4.1 Each Party shall keep complete and accurate records pertaining to Collaboration Costs incurred by it in sufficient detail to permit the other Party to confirm the accuracy of all such costs and for no less than [****] years after the time period(s) to which such records relate.

4.4.2 Upon written request by a Party with at least [****] days prior notice, not more often than [****] per year, each Party may engage an independent certified public accountant selected by the Party, reasonably acceptable to the other Party, to perform an audit of the books and records of the other Party during normal business hours to verify the accuracy of the Collaboration Cost reports furnished by such Party and to confirm payments made hereunder with respect to any quarterly period ending not more than [****] months prior to the date of such request. The auditing party shall bear the costs and expenses of inspections conducted under this Section 4.4.

4.4.3 If a Party determines through an internal audit that any prior report on Collaboration Costs is incorrect for any reason, it shall promptly notify the other Party, and provide a written explanation of the error and a calculation of the amount due and payment of the amount due.

4.4.4 If any audit of Collaboration Costs identifies any apparent discrepancies, the Parties shall discuss any such apparent discrepancies in good faith to clarify and resolve such matter. If the Parties are unable to reach agreement on any such matter, either Party shall have the right to refer such matter to arbitration for resolution pursuant to Section 19.4.

 

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4.5 R&D Program Staffing .

4.5.1 FTE Commitments . On a calendar quarter-by-calendar quarter basis, each Party will devote to the conduct of the R&D Program FTEs in accordance with the average staffing set forth in the then-current R&D Plan.

4.5.2 FTE-Tracking . Roche and Maxygen will track participation of their employees in the conduct of the R&D Program, on an FTE basis. Quarterly, as part of the Quarterly Collaboration Cost Reports, each Party shall provide the JMC with a quarterly written report detailing the average number of its FTEs that participated in the R&D Program during the applicable calendar quarter, by budget activity.

4.5.3 FTE-related Records . Each Party shall maintain written records of the FTEs by such Party devoted to the R&D Program. The other Party shall be entitled to audit such records during ordinary business hours no more often than once each calendar year for purposes of verifying the time such FTEs spent on R&D Program activities.

4.5.4 FTE Requirements . The JMC shall establish the annual FTE requirements for the R&D Program in the Program Plan and Budget. The expenses of such FTEs shall be Collaboration Costs, subject to this Section 4.5, unless otherwise agreed by the JMC.

4.5.5 FTE Rates .

(a) The FTE rate shall be established yearly by the Finance Team, and approved by the JMC for the various activities that will be undertaken in the R&D Program prior to the commencement of the applicable activity. Such FTE rate shall apply equally to both Parties, and shall reflect the weighted average fully burdened cost, material costs included, of the participation of all FTEs in the R&D Program for the applicable year, e.g., for Roche, would reflect the sum of its yearly standard fixed rate (material costs excluded) plus an agreed yearly standard amount for material costs. In determining such rate, expenditures for long-lived assets such as facilities or capital equipment shall be amortized over their useful life, consistent with the periods used for financial reporting by the Parties under the applicable Accounting Standards. The Parties have agreed that in no event shall the FTE rate(s) for activities undertaken pursuant to the Initial Period of the R&D Plan exceed [****] per FTE per year. If a Party does not include material costs in its procedures for calculating its standard FTE rate, then the Parties, when agreeing on the yearly FTE rate, shall agree on a standard amount to be added to the applicable standard FTE rate of that Party to arrive at a yearly FTE rate that ensures both Parties are sharing Collaboration Costs on a comparable basis.

(b) The FTE rate shall be [****]; provided, within [****] days after the Effective Date, the Finance Team shall meet to review the data supporting such FTE rate for each Party, based on the activities to be conducted by such Party in the next [****] month period, and may with the [****] agreement of [****] adjust such FTE rate to reflect the actual costs for such activities. Prior to the [****], and annually thereafter, the Finance Team shall establish the applicable FTE rate for the next year of the R&D Program.

 

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4.6 Other R&D Program Costs .

4.6.1 Subcontracts . With the prior approval of the JMC, either party may enter into agreements with Third Parties for the performance of activities in furtherance of the R&D Program and/or the commercialization of Products. The JMC shall determine which Party shall have the principal responsibility for negotiating and entering into such agreement(s); provided, however, that in general, the Party with final decision-making authority for the activities to which the subcontract directly relates will have principal responsibility for negotiating and entering into such agreement. The Party with principal responsibility for negotiating such agreements shall keep the other Party fully informed with respect to such negotiations, and such other Party shall have the right to review and comment on such agreements prior to execution. Costs and expenses of such agreement(s) shall be considered R&D Costs only to the extent that they are specifically related to activities in furtherance of the R&D Program. If such costs and expenses also benefit activities outside the R&D Program, then the Parties shall agree on the allocation of such costs and expenses to the R&D Costs on the basis of their relative contribution to the R&D Program. The Party that enters any such agreement shall keep the other Party hereto informed with respect to the direction of the activities to be performed by the subcontractor, the performance of the subcontracted activities and any performance problems of which it becomes aware. For clarity, the Parties agree that all costs subject to this Section 4.6.1 shall be Collaboration Costs, unless otherwise agreed in writing by the Parties.

4.6.2 Third Party Technology .

(a) The JMC will be responsible for determining whether licenses to intellectual property or technology of one or more Third Parties are necessary for the conduct of the R&D Program. If the JMC determines that it is necessary for Maxygen or Roche to acquire any license to any intellectual property or technology from a Third Party for the conduct of the R&D Program and/or the manufacture or commercialization of a Product, then except as provided in Section 4.6.2(b) or (c) below, the JMC shall determine which Party shall be responsible for negotiating and entering into any such license; provided, however, that the terms of such a license shall be approved by the JMC before such license is entered by either Party. If such license is entered prior to [****] for a Product, Maxygen shall negotiate and enter into such a license unless otherwise agreed by the JMC, and thereafter Roche shall enter into any such license. Any upfront and/or license fees due to a Third Party pursuant to any such license shall be shared [****] by the Parties.

(b) Notwithstanding Section 4.6.2(a), if any such Third Party technology, intellectual property and/or materials is necessary or useful for the development and/or commercialization of Products in the Field and also necessary or useful for the development and/or commercialization of products outside the Field, then Maxygen shall have the right to negotiate and enter into any such a license. In any such event, any upfront and/or license fees due to a Third Party pursuant to any such license shall be shared by the Parties with Maxygen paying [****] of each such payment and Roche paying [****] of each such payment.

 

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Roche shall be responsible, subject to Sections 9.6 and 9.7, for paying any royalties due under such agreement for activities inside the Field. [****] shall be responsible for paying any royalties due under such agreement for activities outside the Field.

(c) Except as expressly described in Section 4.6.2(b), each Party shall be free, without consulting with or obtaining the agreement of the JMC, to enter into any agreement such Party deems appropriate to gain access to Third Party technology, intellectual property and/or materials that such Party will also use for purposes other than the development and/or commercialization of Products, but shall be fully responsible for any amounts due to such Third Party to obtain or use such technology, intellectual property and/or materials. In any such event, if such technology, intellectual property and/or materials is useful for the R&D Program the Party licensing such technology, intellectual property and/or materials and shall use reasonable efforts to make such technology available for use in the R&D Program. Any upfront and/or license fees due to a Third Party pursuant to such a license shall be shared by Maxygen and Roche as may be negotiated in good faith and agreed to the Parties at the time such license is acquired.

(d) Notwithstanding Sections 4.6.2(a) and (b) above, the Parties agree that any Event Payments and annual license fees due after the Effective Date under the [****] Agreement shall be shared by the Parties, with Maxygen paying [****] of each such payment and Roche paying [****] of each such payment. The Parties further agree that Maxygen shall be solely responsible for paying any amounts due to [****] for Products pursuant to that certain License Agreement entered by Maxygen and [****] effective [****].

(e) Any royalties paid by Roche to Third Parties with regard to Products under agreements subject to this Section 4.6.2 shall be subject to the terms of Sections 9.6 and 9.7.

4.6.3 Manufacturing for Clinical Trials . Unless otherwise agreed in writing by the Parties, subject to Section 12.1, Maxygen shall be responsible, through a Third Party manufacturer approved by Roche, for manufacturing Products for use in pre-clinical development and Phase I and IIa clinical trials. For clarity, the Parties agree that all costs subject to this Section 4.6.3 shall be Collaboration Costs, unless otherwise agreed in writing by the Parties.

4.7 Opt-Out of Collaboration Cost Sharing .

4.7.1 Election . Maxygen shall have the right, with notice to Roche, to elect to opt-out of further sharing of Collaboration Costs at each of the following points: (a) the [****]; and/or (b) the [****], and/or (c) on or after [****]. Any Maxygen opt-out shall be effective as of the date of such notice; provided, any notice of opt-out provided by Maxygen prior to [****] shall not be effective until [****]. For example, at [****] months after the [****] in the U.S. Maxygen could give notice to Roche of Maxygen’s intent to opt-out, in which case, such notice would be effective [****] in the U.S. In the case of any opt-out, Maxygen shall be responsible for its share of Exit Costs for the applicable Transition Period described in Section 4.7.5.

 

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4.7.2 Scope of Opt-Out . If Maxygen provides Roche notice of Maxygen’s opt-out of further sharing of Collaboration Costs for Products, such decision shall be irrevocable, and shall terminate Maxygen’s right and obligation to share further Collaboration Costs other than Exit Costs as expressly described in Section 4.7.4, including, without limitation, its right to co-fund M&P Costs in the U.S.

4.7.3 Disclosures to Maxygen . To provide Maxygen adequate information to allow it to determine whether it wishes to elect to opt-out of further sharing of Collaboration Costs, at least [****] prior to the meeting of the applicable Roche internal committee that will have the relevant decision, Roche shall provide to Maxygen notice of the planned date of such meeting and available drafts of all plans, budget for worldwide development and the U.S. Project Plan and Budget, supporting documents Roche is preparing for such meeting. At least [****] before the date of the applicable committee meeting Roche shall provide to Maxygen written copies of all plans, budgets and supporting documentation that Roche has prepared for any such meeting and/or intends to use at any such meeting or in its decision-making process.

(a) at the [****], such report shall contain information sufficient for Roche to make the [****] and shall include (i) detailed reports and analyses for all clinical trials conducted up to such date, high level strategic plans and supporting documentation for all planned clinical trials of such Product worldwide through at least the [****] (and further if such plans exist, e.g., for Phase IV clinical trials) together with (ii) preliminary plans (Roche’s Strategic Launch Concept) for commercial launch of Products in at least the Major Markets and for marketing of Products in the U.S. through at least [****] years after First Commercial Sale of Products in the U.S., and (iii) the estimated budgets for all R&D Costs and M&P Costs allocated to the U.S. projected to be incurred in the conduct of the activities described in (i) and (ii) above; and

(b) at the [****], such report shall contain information sufficient for Roche to make the [****] and shall include at least: (i) detailed reports and analyses for all clinical trials conducted up to such date, detailed plans and supporting documentation for all planned clinical trials of such Product worldwide, including, without limitation, any anticipated Phase IV trials and/or trials to obtain Regulatory Approval for the Product for indications beyond the Initial Indications, together with (ii) detailed plans (Roche’s Strategic Launch Plan) for commercial launch of Products in at least the Major Markets and for marketing of Products in the U.S. through at least [****] years after First Commercial Sale of Products in the U.S., and (iii) the estimated budgets for all R&D Costs and M&P Costs allocated to the U.S. projected to be incurred in the conduct of the activities described in (i) and (ii) above.

(c) To allow Maxygen to make its decision(s) regarding opt-out with adequate information, Roche shall promptly provide to Maxygen draft versions of all such documents described in this Section as they become available. Maxygen acknowledges that at the time that Roche provides such documents and information to Maxygen, less detail may be available regarding plans and budgets for indications at earlier stages of development than those for more advanced indications

 

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In addition, so that Maxygen can determine if it wishes to opt-out at the [****], following the [****], Roche shall, through the PCT, keep Maxygen fully informed of Product commercialization plans in the U.S. and activities so that Maxygen can decide whether to opt-out at the [****]. Such information shall include at least: (i) plans for all planned clinical trials of such Product worldwide (to the extent covered by Collaboration Costs), including, without limitation, any anticipated Phase IV trials and/or trials to obtain Regulatory Approval for the Product for indications beyond the Initial Indications (except to the extent that Maxygen is not sharing Collaboration Costs for such trials), (ii) all available plans and information for marketing of Products in the U.S., with detailed plans and budgets for at least [****] years, plans and budgets for at [****] years, and high level plans for [****] years after First Commercial Sale of Products in the U.S., and (iii) the estimated budgets for all R&D Costs and M&P Costs allocated to the U.S. projected to be incurred in the conduct of the activities described in (i) and (ii) above.

With regard to any reports provided by Roche to Maxygen pursuant to this Section 4.7.3, Roche shall use reasonable efforts to respond promptly and in good faith to any questions or requests for clarification reasonably posed by Maxygen with regard to any such documents or information if Roche maintains or collects such information as part of its customary practices; provided, however, that Roche shall not need to adapt, modify or extend in any way its then-current practices and procedures to satisfy such request.

4.7.4 Exit Cost Sharing . If Maxygen elects to opt-out of sharing of Collaboration Costs pursuant to Section 4.7.1, then,

(a) with respect to any opt-out by Maxygen at the [****], from the date of notice of opt-out [****] later (the “[****]”), the Parties shall [****] share all Exit Costs.

(b) with respect to any opt-out by Maxygen at the [****], from the date of notice of opt-out [****] later (the “BLA Transition Period”), the Parties shall equally share all Exit Costs.

(c) with respect to any opt-out at the [****], during the [****] period from the effective date of Maxygen’s notice of opt-out (the “[****]”), the Parties shall share ([****], Roche:Maxygen) [****] M&P Costs in the U.S. planned and budgeted prior to the issuance of such notice in the most recent update of the agreed U.S Product Plan and Budget.

(d) except as expressly described above in this Section 4.7.4, in no case shall Maxygen be responsible for any Collaboration Costs (i.e., R&D Costs and/or M&P Costs) incurred for activities initiated by Roche after Roche receives Maxygen’s notice of opt-out. After the applicable Transition Period described above, Roche shall be responsible for all Collaboration Costs subject to this Agreement.

4.7.5 Consequences of Opt-out .

(a) Royalties . If Maxygen elects to opt-out from further sharing of Collaboration Costs at the [****], then Roche shall pay to Maxygen royalty payments with regard to Net Sales of Products as set forth in Section 9.1.2. If Maxygen elects to opt-out from further sharing of Collaboration Costs at the [****], then Roche shall pay to Maxygen royalty

 

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payments with regard to Net Sales of Products as set forth in Section 9.1.3. If Maxygen elects to opt-out from further sharing of Collaboration Costs at the [****], then Roche shall pay to Maxygen royalty payments with regard to Net Sales of Products as set forth in Section 9.1.4.

(b) Events . If Maxygen elects to opt-out from further sharing of Collaboration Costs, then Event Payments for events achieved after the opt-out shall be subject to the terms of Section 8.2.6.

5. LICENSES

5.1 R&D Program Licenses .

5.1.1 License to Roche . Subject to the terms and conditions of this Agreement, Maxygen hereby grants to Roche and its Affiliates a non-exclusive, non-transferable, royalty-free license under the Maxygen Technology solely to conduct the R&D Program.

5.1.2 License to Maxygen . Subject to the terms and conditions of this Agreement, Roche hereby grants to Maxygen, Maxygen, Inc. and Maxygen ApS, non-exclusive, non-transferable, royalty-free license under the Roche Technology solely to conduct the R&D Program.

5.2 Commercial Licenses .

5.2.1 License to Roche . Subject to the terms and conditions of this Agreement, Maxygen hereby grants to Roche, and Roche hereby accepts, an exclusive (subject to Section 5.7) license or sublicense, as the case may be, under the Maxygen Technology, solely to develop, make, have made, use, import, offer for sale and sell Licensed Compounds and corresponding Products for use in the Field in the Territory.

5.2.2 [****] Agreement .

(a) Sublicense . Subject to the terms and conditions of this Agreement, it is understood and agreed that pursuant to Sections 5.1.1 and 5.2.1, Roche shall have, subject to the retained rights of the [****] and the U.S. Government, a royalty-bearing sublicense under the Patent Rights licensed to Maxygen, Inc. and its Affiliates in the [****] Agreement, solely to develop, make, have made, use, import, offer for sale and sell Licensed Compounds and corresponding Products for use in the Field in the Territory.

(b) Terms of Sublicense . Roche understands and agrees (i) that the sublicense granted to Roche pursuant to Section 5.2.2(a) is subordinate to the [****] Agreement and the sublicense granted to Roche under the [****] Agreement is limited in scope to the rights granted to Maxygen in the [****] Agreement; (ii) the inventions claimed in the patents subject to the [****] Agreement were made, in whole or part, using funds provided by the U.S. government and as a result, the provisions of 35 U.S.C. §200 et seq . apply thereto, including, without limitation, the requirement that certain Products that will be sold in the United States must be manufactured in the United States; (iii) it will comply with all provisions of the [****] Agreement relevant to its activities as a sublicensee; (iv) it will not take any action that would result in a breach of the [****] Agreement; and (v) it will cooperate with and assist Maxygen to meet its obligations under the [****] Agreement.

 

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(c) Acknowledgement . Roche acknowledges that prior to the Effective Date it received from Maxygen and reviewed a copy of the [****] Agreement.

(d) [****] Agreement . After the Effective Date, Maxygen agrees to approach the [****] and use reasonable efforts to discuss possible modifications to the [****] Agreement to make certain terms relating to royalties and reporting in such agreement more consistent with Roche’s customary practices as reflected in this Agreement.

5.2.3 Limited License .

(a) Licensed Compounds . The license in Section 5.2.1 grants to Roche rights to develop and commercialize Licensed Compounds (and corresponding Products) in the Field. Roche agrees that such license does not grant to Roche any right to develop and/or commercialize any Compounds other than Licensed Compounds (and corresponding Products) in the Field, and further agrees that, during the term of this Agreement, Roche will not develop, make, have made, use, import, sell, offer for sale or otherwise commercialize, any Compounds other than Licensed Compounds (and corresponding Products) for use in the Field, and will not authorize, facilitate or assist any Affiliate or Third Party to conduct any such activities. Notwithstanding the above, during the term of the Agreement Roche shall have the right to conduct pre-clinical research with any E Compounds (except those that are then Maxygen Compounds) to assess which such E Compounds Roche wishes to select as Licensed Compounds.

(b) Field Limitation . The license in Section 5.2.1 grants to Roche rights to develop and commercialize Licensed Compounds (and corresponding Products) in the Field. Roche agrees that the license in Section 5.2.1 does not grant to Roche any right to develop and/or commercialize any Compound or Product outside the Field, and agrees that, during the term of this Agreement, Roche will not develop, make, have made, use, import, sell, offer for sale or otherwise commercialize, any Compound or Product for use outside the Field, and will not authorize, facilitate or assist any Affiliate or Third Party to conduct any such activities.

5.3 Right to Sublicense . Roche shall have the right to sublicense the rights granted it under Section 5.2.1 (and Section 5.2.2) to Third Parties. If Roche grants a sublicense, all terms and conditions of this Agreement shall apply to the Sublicensee to the same extent as they apply to Roche for all purposes of this Agreement. Roche assumes full responsibility for the performance of all obligations so imposed on such Sublicensee and will itself pay and account to Maxygen for all Event Payments and royalties due under this Agreement by reason of the operations of any such Sublicensee. Any such sublicense that is inconsistent with the terms of this Agreement shall be null and void to the extent of the inconsistency and each such sublicense shall automatically terminate if the senior license terminates. Within [****] days after the date of effectiveness of any such sublicense, Roche shall notify Maxygen of such sublicense and the identity of each Sublicensee and the scope of rights granted to such Sublicensee. Roche shall not enter into an agreement granting a sublicense hereunder that permits the Sublicensee to grant further sublicenses without seeking and obtaining the prior written consent of Maxygen, which consent shall not be unreasonably withheld.

 

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5.4 Exclusivity .

5.4.1 Licensed Compounds . During the term of this Agreement, for so long as Roche retains its exclusive worldwide license to any Product set forth in Section 5.2.1, Maxygen will not, without Roche’s written consent, develop, make, use or commercialize itself, and will not grant to any Third Party a license, to develop or commercialize any Licensed Compound or corresponding Product.

5.4.2 Field . During the term of this Agreement, for so long as Roche retains its exclusive worldwide license to any Product set forth in Section 5.2.1, Maxygen will not, without Roche’s written consent, develop, make, use or commercialize itself, and will not grant to any Third Party a license, to develop or commercialize any Licensed Compound or Product for use in the Field; provided, however, that Maxygen shall retain the right to (a) perform its responsibilities in connection with the R&D Program as set forth in the Program Plan or as otherwise directed by the JMC, and (b) conduct the activities permitted pursuant to Sections 5.7.

5.5 No Implied Licenses . No rights or licenses are granted or shall be deemed granted under this Agreement with respect to the Maxygen Technology and other intellectual property owned by Maxygen, other than those rights and licenses expressly granted herein.

5.6 Transfer of Know-How . Pursuant to the licenses granted in this Article 5, each Party shall transfer to the other Know-How necessary for the conduct of the R&D Program as determined by the JPT, such as the following:

5.6.1 Initial . Within [****] days following the Effective Date, to the extent it has not already done so, Maxygen shall make available to Roche at Maxygen’s facilities, key personnel familiar with all material Maxygen Know-How that exists as of the Effective Date relating to the E Compounds and is licensed to Roche hereunder.

5.6.2 Maxygen . During the R&D Program, Maxygen shall, from time to time, make periodic transfers to Roche of new Maxygen Know-How licensed hereunder and documents containing such Maxygen Know-How, in electronic format, if available, either at Maxygen’s facilities or as presentations at a JPT meeting. Such Maxygen Know-How shall include, without limitation, information relating to pre-clinical development, manufacturing and regulatory matters.

5.6.3 Roche . During the R&D Program, Roche shall, as needed, from time to time, make periodic transfers to Maxygen of new Roche Know-How licensed hereunder and documents containing such Roche Know-How, in electronic format, if available, either at Roche’s facilities or as presentations at a JPT meeting. Such Roche Know-How shall include, without limitation, information relating to pre-clinical development, manufacturing and regulatory matters.

 

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5.6.4 [****] Know-How . If, on or before [****], Maxygen fails to achieve a Satisfactory [****] Culture Result, then unless the JMC decides that [****], Roche shall promptly transfer to Maxygen [****] Know-How and provide to Maxygen technical assistance to allow Maxygen to try to achieve a Satisfactory [****] Culture Result. Any such [****] Know-How shall be subject to the license granted to Maxygen in Section 5.1.2. In any such event, the terms of Section 8.2.1 and Section 9.2.4 shall apply. For clarity, it is understood that [****] Know-How shall be Roche Separate Technology and shall not be Program Technology.

5.7 Retained Rights .

5.7.1 Permitted Activities . Notwithstanding any other provision of this Agreement, including without limitation the exclusive licenses granted to Roche in Section 5.2.1, Maxygen shall retain the rights to (a) perform activities in connection with the R&D Program as set forth in the Program Plan and Budget and/or as otherwise agreed by the JMC; (b) to develop, make, have made, use, sell, offer for sale and/or otherwise commercialize itself Maxygen Compounds for use outside the Field, and (c) to enter into agreement(s) with any Third Party that would grant such Third Party with a license or other rights with regard to Maxygen Technology (other than the Licensed Compounds) to develop and commercialize any products outside the Field.

5.7.2 Intellectual Property .

(a) Maxygen shall retain all rights under its interest in the Maxygen Technology that are not exclusively granted to Roche in Section 5.2.1. It is understood that Maxygen may, among other things, grant to one or more Third Parties licenses under its interest in the Maxygen Technology for use outside the Field; provided, however, that during the term of this Agreement, Maxygen shall not grant any license to any Third Party with regard to any Maxygen Technology that would be inconsistent with the licenses granted to Roche in Sections 5.1.1 or 5.2.1.

(b) Subject to the rights granted to Maxygen in Sections 5.2.1 and 5.8 and Article 18, Roche shall retain all rights under its interest in the Roche Technology.

5.8 License to Maxygen . In recognition of the fact that Roche may develop Inventions and related Patent Rights as a result of its access to and use of the Compounds and Maxygen Separate Technology, and in partial consideration for such use, Roche hereby grants to Maxygen, the following licenses, which Maxygen shall have the right to accept or decline on a case-by-case basis:

(a) an exclusive, worldwide, royalty-free, license under Roche’s interest in the Program Technology, and

(b) a non-exclusive, worldwide, license to any other Patent Rights owned by Roche or its Affiliates claiming any E Compound and/or Product, or the manufacture, formulation and/or use thereof,

 

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in each case, with the right to grant and authorize sublicenses, to develop, make, have made, use, sell, offer for sale and/or otherwise commercialize products outside the Field. With regard to the Patent Rights subject to Section 5.8 (b), if Maxygen indicates that it wishes to accept such a license, the Parties shall negotiate in good faith the payments that will be due to Roche for such rights, provided, such payment (i) will not exceed [****] of net sales of the applicable product commercialized for use outside the Field, and (ii) if Roche grants to any Third Party a license to any such Patent Rights on any terms more favorable than those provided to Maxygen, Maxygen shall be entitled to the benefit of such more favorable terms.

6. COMPOUNDS AND PRODUCTS FOR HEMOPHILIA

6.1 No Hemophilia Rights . Roche agrees that this Agreement provides Roche no rights to develop or commercialize any Compound(s) and/or Product(s) for Hemophilia, and that Maxygen retains the right to develop and commercialize for Hemophilia any Compounds(s) and corresponding Hemophilia Product(s), subject to the terms of this Article 6.

6.2 Maxygen Rights .

6.2.1 Pre-clinical Activities . At any time during the [****], Maxygen shall have the right to pursue (including by contracting with Third Party service providers and/or not-for-profit entities), at its own cost, the pre-clinical development for Hemophilia of any E Compound that is not then a Licensed Compound to assess the suitability of such E Compound for development and/or commercialization for Hemophilia. During the [****], before commencing any such activities (a) Maxygen will inform the JMC of the pre-clinical activities it would like to conduct [****], (b) until [****], Maxygen will only conduct those activities that [****] has [****] approved, and (c) [****] conducted by it or on its behalf with regard to the evaluation of E Compounds for Hemophilia; provided, however, it is understood that Maxygen shall only [****].

6.2.2 Clinical Activities . Until the end of the [****], Maxygen shall not commence clinical development of any E Compound except for the Initial Indications.

6.3 Maxygen Compounds .

6.3.1 After the end of the [****], after consultation with Roche, Maxygen shall have the right to select any [****] E Compounds that are not then Licensed Compounds for further development and commercialization for Hemophilia. Each such E Compound shall be deemed to be a “Maxygen Compound” as of the date that Maxygen provides to Roche notice of the identity of such E Compound(s).

6.3.2 At any given time during the Agreement no more than [****] E Compounds shall be Maxygen Compounds.

6.3.3 Maxygen shall have the right to develop (including, without limitation, clinically develop) and/or commercialize Maxygen Compound(s) itself, and may enter into agreements with any Third Party(ies) to develop and/or commercialize any such Maxygen Compounds for Hemophilia.