DEVELOPMENT AND LICENSE AGREEMENT

[ * ] = C ERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY BRACKETS , HAS BEEN OMITTED AND FILED SEPARATELY WITH THE S ECURITIES AND E XCHANGE C OMMISSION PURSUANT TO R ULE 24 B -2 OF THE S ECURITIES E XCHANGE A CT OF 1934, AS AMENDED .

E XHIBIT 10.5

DEVELOPMENT AND LICENSE AGREEMENT

BY AND BETWEEN

GILEAD SCIENCES, INC.

AND

F. HOFFMANN-LA ROCHE LTD

AND

HOFFMANN-LA ROCHE INC.

SEPTEMBER 27, 1996

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DEVELOPMENT AND LICENSE AGREEMENT

T HIS D EVELOPMENT AND L ICENSE A GREEMENT (the "A GREEMENT " ), dated as of September 27, 1996 (the "E FFECTIVE D ATE " ), is made by and between G ILEAD S CIENCES , I NC . , a Delaware corporation ( "G ILEAD " ), on the one hand, and F. H OFFMANN -L A R OCHE L TD , a corporation organized under the laws of Switzerland, and H OFFMANN -L A R OCHE I NC , a corporation organized under the laws of New Jersey, on the other hand (collectively, "R OCHE " ).

B ACKGROUND

W HEREAS , Gilead has discovered and is developing a series of proprietary compounds which act as influenza neuraminidase inhibitors and may be effective in the prevention and treatment of influenza; and

W HEREAS , Roche, through its divisions and/or subsidiaries, is engaged in the development, production and commercialization of pharmaceuticals, but prior to the date of this Agreement has not established a research program in the area of influenza neuraminidase inhibition or discovered compounds which have such effect; and

W HEREAS , Gilead and Roche desire to enter into a development and license agreement for the worldwide development and marketing of influenza neuraminidase inhibitors for the prevention and treatment of influenza.

N OW , T HEREFORE , in consideration of the foregoing premises and the covenants and obligations set forth in this Agreement, the parties hereby agree as follows:

A RTICLE 1

D EFINITIONS

As used herein, the following terms will have the following meanings:

1.1 "Affiliate" means any entity that directly or indirectly Owns, is Owned by or is under common Ownership with, a party to this Agreement, where "Own" or "Ownership" means direct or indirect possession of at least fifty percent (50%) of the outstanding voting securities of a corporation or a comparable ownership in any other type of entity, provided, however, that if the law of the jurisdiction in which such entity operates does not allow fifty percent (50%) or greater ownership by a party to this

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Agreement, such ownership interest shall be at least forty percent (40%). The term Affiliate shall not include Genentech, Inc., 460 Point San Bruno Boulevard, South San Francisco, California, prior to the time Roche delivers notice to Gilead designating Genentech as its Affiliate.

1.2 "Budget" means the annual budget approved by the parties from time to time pursuant to Section 3.3(d).

1.3 "Cost of Goods Sold" means the manufacturing cost of Product sold by Roche, its Affiliates and sublicensees, calculated in accordance with reasonable cost accounting methods of such parties, provided that such methods comply with generally accepted accounting principles and the further provisions of this Section 1.3. Cost of Goods Sold shall consist of direct labor and materials and a reasonable allocation of indirect labor, facilities expense (including depreciation over the expected life of the buildings and equipment), and administration costs. Cost of Goods Sold shall exclude costs associated with process development, initial Product batches for regulatory approval, plant start-up costs, excess capacity, Third Party royalties, or any costs for which provision has been made in the definition of Net Sales. In the event of any transfer of Product among Roche, its Affiliates or sublicensees, the Cost of Goods Sold shall exclude any profit or other mark-up by any such parties.

1.4 "Cover" (including variations thereof such as "Covered," "Coverage," or "Covering") shall mean that the manufacture, use or sale of a particular product would infringe a Valid Claim of an issued patent in the absence of rights under such patent. The determination of whether a product is Covered by particular patent rights shall be made on a country by country basis.

1.5 "Development Costs" mean the costs incurred by Gilead or for its account after the Effective Date which are consistent with the Development Plan and are specifically attributable to the development of Products. Such costs shall mean the direct costs and the indirect costs of all Gilead development personnel and any third party costs, all of them incurred to further the Product development program. Indirect costs related to the Development Plan shall include but not be limited to salaries, employee benefits, use of facilities and equipment, personnel, travel materials and supplies, which shall be absorbed into the Development Costs based on generally accepted accounting principles and methods approved by Roche, such approval not to be unreasonably withheld.

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1.6 "Development Plan" means the plan for the development of Products approved from time to time pursuant to Section 3.3. The initial Development Plan, reflecting the mutual objectives of the parties with respect to the sequence of events leading up to the filing of regulatory submissions, has been agreed to by the parties as of the Effective Date.

1.7 "European Union" or "EU" means the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

1.8 "First Commercial Sale" means the first sale, in any particular country, by Roche or its Affiliates or sublicensees of Product for use by the general public after required marketing and pricing approval has been granted by the governing health authority of that country.

1.9 "Generically Equivalent Product" shall mean a product marketed by a Third Party, not under license from Roche, which contains as an active ingredient an influenza neuraminidase inhibitor the composition of matter of which is within the scope of a Gilead Patent Right or a Joint Patent Right.

1.10 "Gilead Know-How" means all proprietary inventions, technology, trade secrets, clinical and preclinical results, and any physical, chemical or biological material, or other information excluding Gilead Patent Rights and Joint Patent Rights, owned or acquired with right to sublicense during the term of this Agreement by Gilead or any Affiliate of Gilead, which are necessary or useful to Roche in the development, formulation, manufacture, use or sale of Products.

1.11 "Gilead Patent Rights" mean the rights under patents and patent applications, both foreign and domestic, which (a) Cover an influenza neuraminidase inhibitor, or its manufacture, formulation or use, including intermediates for the manufacture or use thereof, (b) are based on an invention made at any time prior to the fifth anniversary of the Effective Date and (c) are owned by or licensed to Gilead or any Gilead Affiliate with the right to sublicense. Notwithstanding the foregoing, Gilead Patent Rights shall exclude Joint Patent Rights but shall include "Gilead Patents," which are defined as those patents and patent applications owned by or licensed to Gilead or any Gilead Affiliate with the right to sublicense that are encompassed within Gilead Patent Rights. Set forth as Exhibit A is a list of the Gilead Patents as of the Effective Date. Such Exhibit shall be updated no more frequently than annually upon Roche’s request.

1.12 "IND" (or "Investigational New Drug Application") means an application as defined in the United States Food, Drug and Cosmetic Act and applicable

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regulations promulgated thereunder to the United States Food and Drug Administration (the "FDA") or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence clinical testing of Products in humans.

1.13 "Joint Patent Rights" mean the rights under patents and patent applications, both foreign and domestic, which (a) Cover an influenza neuraminidase inhibitor, or its manufacturing formulation or use, including intermediates for the manufacture or use thereof, (b) are based on an invention made at any time prior to the fifth anniversary of the Effective Date, and (c) are owned jointly by Gilead and Roche. Exhibit A shall be amended to include Joint Patents when such patent applications are first filed.

1.14 "NDA" (or "New Drug Application") means an application as defined in the United States Food, Drug and Cosmetic Act and applicable regulations promulgated thereunder to the United States FDA or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence commercial sale of Products.

1.15 "Net Sales" means the gross sales invoiced by Roche, its Affiliates or sublicensees for Product to Third Parties other than sublicensees, less deductions of returns (including withdrawals and recalls), rebates (price reductions, including Medicaid and similar types of rebates, e.g. chargebacks), volume (quantity) discounts, discounts granted at the time of invoicing, sales taxes and other taxes directly linked to and included in the gross sales amount as computed on a product by product basis for the countries concerned (hereinafter referred to as "Adjusted Gross Sales").

From the Adjusted Gross Sales there shall be a lump sum deduction of [ * ] for those sales-related deductions which are not accounted for on a product by product basis (e.g., outward freights, transportation insurance, packaging materials for dispatch of goods, custom duties, discounts granted later than at the time of invoicing, cash discounts and other direct sales expenses).

In the case of Products being sold as part of a combination product containing the Product and one or more other therapeutically active ingredients, the parties shall negotiate an appropriate royalty adjustment to reflect the relative significance of each such ingredient, based on the estimated fair market value of each such therapeutically active ingredient.

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Notwithstanding the foregoing, amounts received by Roche or its Affiliates or sublicensees for the sale of Licensed Products among Roche and its Affiliates or sublicensees for resale shall not be included in the computation of Net Sales hereunder.

1.16 "Phase III Clinical Trial" means any clinical trial primarily designed to serve as a pivotal, well-controlled study upon which approval of an NDA will be based, including such a study referred to or denominated as a Phase II/III study in the United States or the equivalent elsewhere.

1.17 "Product(s)" means any pharmaceutical product containing an influenza neuraminidase inhibitor Covered by a Gilead Patent Right, a Roche Patent Right or a Joint Patent Right.

1.18 "Proprietary Information" means, subject to the limitations set forth in Section 12.1 hereof, all information disclosed by a party hereto to the other party pursuant to this Agreement. In particular, Proprietary Information shall be deemed to include, but is not limited to, information relating to research and development programs and results, therapeutic candidates and products, clinical and preclinical data, trade secrets, business strategy, patent applications, licenses, suppliers, manufacturers, product and marketing strategy, customers, market data, personnel and consultants.

1.19 "Roche Know-How" means all proprietary inventions, technology, trade secrets, clinical and preclinical results, and any physical, chemical or biological material, or other information excluding Roche Patent Rights and Joint Patent Rights, owned or acquired with right to sublicense during the term of this Agreement by Roche or any Affiliate of Roche, which are necessary or useful to Roche in the development, formulation, manufacture, use or sale of Products.

1.20 "Roche Patent Rights" means the rights under patents and patent applications, both foreign and domestic, which (a) Cover an influenza neuraminidase inhibitor, or its manufacture, formulation or use, including intermediates for the manufacture or use thereof, (b) are based on an invention made at any time prior to the fifth anniversary of the Effective Date, and (c) are owned by or licensed to Roche or any Roche Affiliate, with the right to sublicense. Notwithstanding the foregoing, Roche Patent Rights shall exclude Joint Patent Rights, but shall include "Roche Patents," which are defined as those patents and patent applications owned by or licensed to Roche or any Roche Affiliate with the right to sublicense that are encompassed within Roche Patent Rights. Exhibit A shall be amended to include Roche Patents when such patent applications are first filed. Such Exhibit shall be updated no more frequently than annually upon Gilead’s request.

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1.21 "Steering Committee" means that committee comprised of an equal number of representatives of Gilead and Roche, but not less than two (2) representatives from each company, which shall have the responsibilities set forth in Section 3.1 and elsewhere in this Agreement.

1.22 "Third Party" means any person or entity other than Gilead, Roche or an Affiliate of either party hereto.

1.23 "Third Party Royalties" means any royalties or license fees owing to a Third Party attributable to the manufacture, use or sale of Products and in consideration of a license under any patent which such Product would otherwise infringe.

1.24 "Valid Claim" means a claim in the Gilead Patent Rights, the Roche Patent Rights, or the Joint Patent Rights, which has not been disclaimed or held invalid by a decision beyond the right of review or otherwise has been finally determined by a court of competent jurisdiction to be unenforceable.

A RTICLE 2

G RANT OF R IGHTS

2.1 License Grant. Subject to the terms of this Agreement, Gilead hereby grants to Roche and its Affiliates a sole and exclusive, worldwide license under the Gilead Patent Rights, Gilead’s interest in the Joint Patent Rights, and the Gilead Know-How only for the manufacture, importation, use, sale and offer for sale of Products for any and all uses. Roche agrees that the Gilead Patents and the Gilead Know-How will not be used for any other purpose.

2.2 Sublicensing. Except as otherwise provided in Section 2.3 below, Roche shall have the right to sublicense the rights granted under Section 2.1 to Third Parties. If Roche grants a sublicense, all of the 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 Gilead for all royalties due under this Agreement by reason of the operations of any such sublicensee.

2.3 Right of First Refusal. In the event Roche desires to sublicense the rights granted pursuant to Section 2.1 above to any Third Party for commercialization in any of the following countries: the [ * ] Roche shall first present an offer to Gilead for such rights. Gilead and Roche shall negotiate such offer in good faith for at least [ * ] from the date the offer is received by Gilead; provided , however , that Roche shall not have an obligation to engage in such negotiations with respect to countries where Gilead has not

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established a sales force or committed to do so prior to the anticipated launch of the Product in such country. If, at the end of such [ * ] period, the parties have been unable to reach agreement on the essential terms of an agreement granting Product rights in such country or countries to Gilead, Roche shall be free to offer the rights to Products in such country or countries to any Third Party; provided, however, that Roche shall not make an offer more favorable to any such Third Party than the offer last made to Gilead by Roche without first giving Gilead at least [ * ] to consider and accept such more favorable offer.

2.4 Gilead Sublicenses. It is the understanding of the parties that the license granted to Roche in Section 2.1 includes any future technology which Gilead may acquire by license, with the right to sublicense, which is relevant to the activities defined in Section 2.1. In the event Gilead obtains under license from a Third Party technology the subject matter of which falls under the license granted herein, Gilead shall promptly advise Roche of such license and the terms which would be applicable to Roche in the event a sublicense is granted hereunder. Roche may decline to accept the sublicense in question. If, following such disclosure, Roche elects to receive such sublicense, then such technology shall automatically be sublicensed to Roche hereunder without further consideration to Gilead. In the event of any such sublicense, the terms of the agreement between Gilead and its licensor shall govern in the event of any inconsistency between such Third Party license agreement and this Agreement, and the rights granted to Roche herein shall be explicitly subject to such Third Party license agreement.

2.5 Disclosure of Gilead Know-How. Following the Effective Date and through the term of this Agreement, Gilead shall make available to Roche, subject to the terms of this Agreement, all Gilead Know-How.

2.6 Related Technology. Roche acknowledges that in consideration of the collaboration established hereby and the enabling nature of the work previously done by Gilead, any influenza neuraminidase inhibitors as to which Roche or its Affiliates acquires rights prior to the fifth anniversary of the Effective Date, whether by reason of their own efforts or under contract from Third Parties, shall be included within the definition of Products under this Agreement, subject to the terms and conditions hereof. Similarly, Gilead acknowledges that its license to Roche hereunder covers all of the influenza neuraminidase inhibitors as to which it has rights or acquires rights prior to the fifth anniversary of the Effective Date.

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A RTICLE 3

D EVELOPMENT AND R EGULATORY A FFAIRS

3.1 Steering Committee.

(a) Steering Committee Membership and Governance. The parties shall establish a Steering Committee to coordinate the activities of the parties with respect to Products. The Steering Committee in turn may establish such working groups or other mechanisms as it desires to achieve this result. Except to the extent otherwise provided in this Agreement, the responsibility of the Steering Committee for each Product in each country shall terminate following the initial commercial launch of such Product in such country. The Steering Committee shall consist of an equal number of representatives of each party, which shall be at least two (2). The size of the Steering Committee may be changed by agreement of the parties. Each party shall within thirty (30) days after the Effective Date select its initial members of the Steering Committee. Each party may select additional representatives to replace the initial Steering Committee members selected by such party as necessary during the term of the Agreement, and may have other representatives attend meetings of the Steering Committee in addition to the members of the committee. Any Steering Committee members selected by one party shall be subject to the reasonable approval of the other party. The Chairperson of the Steering Committee shall alternate annually between a representative of Gilead and a representative of Roche, with the initial Chairperson of the Steering Committee being appointed by Roche. The Chairperson of the Steering Committee shall be responsible for providing an agenda for each meeting of the committee at least ten (10) days in advance of such meeting and shall prepare written minutes of all committee meetings in reasonable detail. The Chairperson shall distribute such minutes to all members of the Steering Committee within twenty (20) days after the relevant meeting. The Steering Committee shall attempt to operate by consensus, and any issues that the Steering Committee is unable to resolve by consensus shall be submitted for resolution pursuant to Article 14 below.

(b) Steering Committee Meetings and Responsibilities. The Steering Committee shall meet at least two (2) times per year until the First Commercial Sale of a Product in any country, and thereafter as appropriate for the continued development and registration of Products. In addition, either party may request additional meetings as reasonably required. The Steering Committee shall be responsible for overseeing and monitoring the implementation of the Development Plan and the Budget. In particular, the Steering Committee will review and approve each annual Budget pursuant to Section 3.3. The Steering Committee shall also monitor the allocation of research and development work between the parties and shall recommend changes as

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necessary. The parties shall report to the Steering Committee on all significant clinical and regulatory issues relating to Products, and the Steering Committee shall make recommendations and provide strategic guidance with respect to such issues. The Steering Committee shall meet to review and approve a global clinical trial program prior to the conduct of any clinical trials, and shall review and approve the plans for any individual clinical trial of Product in advance of the anticipated commencement date thereof. Neither party shall commence any clinical trial of a Product until the Steering Committee has approved the plans therefor, provided , however , that such requirement for prior approval shall not apply to post-marketing clinical trials which are not directed towards a change in the labeling of the Product. In addition to its responsibilities related to research and development, the Steering Committee shall oversee manufacturing activities related to the Products and plans for the initial commercial launch and country-by-country roll out of Products, and Roche shall report to the Steering Committee in reasonable detail regarding its current and planned activities in these areas.

3.2 Clinical Development and Regulatory Filings.

(a) Clinical Development. The collaborative clinical development program will follow the most expeditious path to achieve global registration of Products with both parties playing a significant role in the execution of clinical development activities. Gilead will focus its efforts towards the conduct of clinical trials in the United States, and Roche will initially focus its efforts towards the conduct of clinical trials outside the United States. Both parties will contribute to the conduct of clinical trials as necessary to support the global program. The final distribution of responsibility will be the decision of the Steering Committee.

(b) Regulatory Filings. Gilead shall prepare and file in its own name the IND for Products in the United States. The IND in the United States will be transferred to Roche shortly before the commencement of Phase III registrational studies. The particular responsibility for filings, interactions with regulatory authorities and the appropriate time for transfer of regulatory responsibility to Roche will be decided by the Steering Committee. In any event, prior to the transfer of the IND in the United States, Roche shall receive copies of all material correspondence with the FDA and shall have the right to be present at all meetings with the FDA related to Products. Beginning at the time of transfer of ownership of the IND to Roche, Roche shall be primarily responsible with Gilead’s assistance for all regulatory affairs in the United States related to Products. In addition, Gilead shall either transfer ownership of, or provide Roche with letters of access to, any drug master files or other regulatory dossiers containing information necessary or useful to Roche in connection with its regulatory filings for Product, with the choice between transfer or providing letters of access to be made in the discretion of Gilead. In all countries, Gilead shall be entitled to receive copies of material

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correspondence with regulatory authorities, including filings made by Roche, with respect to Products, and Gilead shall have the right to be present at all meetings with regulatory authorities related to Products.

(c) Diligence. Roche and Gilead will each diligently carry out the global development of Products as provided in this Section 3.2, subject to the Budgets approved under Section 3.3(d). Without limitation of the foregoing, such efforts shall include the assignment of appropriate personnel and the allocation of sufficient resources to carry out such party’s responsibilities under the Development Plan.

3.3 Development Costs.

(a) General. Roche shall pay all its own research and development expenses in carrying out the Development Plan, as modified from time to time by the Steering Committee, and shall reimburse Gilead for all its Development Costs incurred pursuant to the Development Plan and the Budget in effect at the time.

(b) Audit Rights. Gilead shall keep complete and accurate records pertaining to the Development Costs incurred pursuant to this Agreement in sufficient detail to permit Roche to confirm the accuracy of such Costs. At Roche’s request, Gilead will cause its independent certified public accountants to prepare abstracts of Gilead’s relevant business records for review by Roche’s independent certified public accountants. If, based on a review of such abstracts, Roche reasonably believes that a full audit of said business records would be necessary for the confirmation of the accuracy of the Development Costs, Roche’s independent certified public accountants shall have full access to review all work papers and supporting documents pertinent to such abstracts, and shall have the right to discuss such documentation with Gilead’s independent certified public accountants. [ * ] Such audit rights may be exercised no more often than once a year, within three (3) years after the period to which such records relate, upon notice to Gilead and during normal business hours. Roche will bear the full cost of such audit unless such audit discloses an overpayment of Development Costs by Roche of more than five percent (5%) from the amount due. Gilead shall promptly refund any such overpayment. The terms of this Section 3.3(b) shall survive any termination or expiration of this Agreement for a period of three (3) years.

(c) Reimbursement of Prior Research Expenses. In addition to the payment of Development Costs as provided herein, Roche shall, within ten (10) days after the Effective Date, pay to Gilead the amount of five million dollars ($5,000,000) as reimbursement for research and preclinical development expenses incurred by Gilead with respect to Products prior to the Effective Date. Such payment shall be nonaccountable, nonrefundable, and noncreditable.

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(d) Budget. It is agreed between the parties that as of the Effective Date, the amount of [ * ] is the estimated budget for reimbursement to Gilead for its internal research and development efforts under the Development Plan during a period of [ * ] following the Effective Date. In addition, Gilead’s external expenses for such research and development will be reimbursed pursuant to the Budget and in accordance with Section 3.3(e). Within forty-five (45) days following the Effective Date, the Steering Committee shall adopt a Budget for all research and development activities anticipated for the period from the Effective Date through December 31, 1997. The Budget approved by the Steering Committee will replace the estimated budget for Gilead’s internal expenses referred to above. On or before October 1, 1997, and not later than October 1 of each subsequent calendar year during the term of this Agreement, the Steering Committee shall approve annual budgets for all research and development activities scheduled for the following calendar year; such annual budgets shall be consistent with the Development Plan, as modified from time to time by the Steering Committee. Upon approval, annual budgets shall be the Budget then in effect.

(e) Payments to Gilead; Reconciliation. Roche shall pay to Gilead the amount budgeted for Gilead’s Development Costs for each calendar quarter on or before the first day of such calendar quarter within [ * ] after receipt of an invoice from Gilead. Within [ * ] following the end of each such calendar quarter, Gilead shall provide an accounting to Roche of the Development Costs actually incurred by it during such quarter (the "Actual Costs"), but for the first three quarters of each calendar year such reports shall be for informational purposes only and Roche’s payment of Development Costs shall continue to be made in accordance with the Budget for such year then in effect. At the end of each calendar year, the parties shall reconcile any difference between the amounts paid to Gilead for Development Costs and Gilead’s Actual Costs for such year. If the amounts paid to Gilead for Development Costs exceed its Actual Costs during such year, the amount of the excess shall be refunded or credited to Roche. If Gilead’s Actual Costs during the year exceeded the amounts paid by Roche for Development Costs during such year, the excess shall be paid by Roche as a supplemental payment if Roche approves such excess amount, which approval shall not be unreasonably withheld.

3.4 Adverse Reactions. Roche shall be responsible for reporting to the appropriate regulatory authorities all adverse events related to the use of Product worldwide, except that prior to the time Gilead transfers ownership of the IND to Roche as provided in Section 3.2(b), Gilead shall be responsible for the reporting of such adverse events in the U.S. Adverse events related to the use of Product worldwide shall be recorded in a single database, and the parties will coordinate their efforts to assure that all adverse events are reported properly.

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A RTICLE 4

D UE D ILIGENCE

4.1 Due Diligence. Roche shall devote its Best Efforts to commercialize Product in substantially all markets in the world. As used herein, "Best Efforts" shall mean that Roche is performing its obligations in a sustained manner consistent with the efforts major pharmaceutical companies devote to significant general practice products of similar market potential derived from internal research programs. Upon gaining the necessary regulatory, pricing and reimbursement approvals, Roche and/or its sublicensees shall use its Best Efforts to promote and market the Product in all significant markets. Any sublicense of marketing rights by Roche shall include a covenant for such sublicensee to use Best Efforts to maintain and increase sales of the Product in each country covered by the sublicense.

4.2 Global Commercial Roll-Out. Roche shall endeavor to obtain prompt approval for the sale of Product in substantially all countries of the world, once such approval has been obtained in the United States and Europe. In particular, subject to the exception set forth below, Gilead shall have the right to terminate Roche’s license to any particular Product in any country of the world [ * ] where such approval has not been obtained within [ * ] following the date on which such Product was first approved in all of the following countries: [ * ] (For such purpose, "approval" shall mean approval as to safety and efficacy but not pricing approval if separately required.) Gilead shall not have the right to terminate Roche’s license in any particular country where Roche can show that either (a) it used Best Efforts to achieve such registration within the specified time period, or (b) it is not reasonable to commercialize the Product in the country in question (for example, because of pricing). If Roche believes that either of the conditions set forth in the previous sentence apply, it shall so notify the Steering Committee at least one year prior to the expiration of the [ * ] time period referred to above, and shall explain its reasons. If Roche loses Product rights in any country pursuant to this Section 4.2, Gilead shall obtain rights thereto as provided in Section 9.5. [ * ] Roche shall not be subject to the time limit set forth in this Section 4.2, but shall still be obligated to use its Best Efforts to obtain approval as promptly as is reasonably practicable.

4.3 Commercial Due Diligence. If, regardless of whether Roche exercises Best Efforts, annual Net Sales of Products worldwide are less than [ * ] by the conclusion of the [ * ] following the date of First Commercial Sale of a Product in the U.S. or any country of the EU, then the parties agree to meet and confer in good faith regarding the most appropriate corrective actions to take in significant markets. The following factors shall be considered by the parties in determining the most appropriate course of action: (i) Roche’s competitive position, including promotional spending levels, sizes of field

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sales forces and market development expenditures, relative to competitive products; (ii) cost of goods sold; (iii) policy of health authorities on prophylaxis of influenza and (iv) Gilead’s interest in, and ability to increase revenues by, assuming all rights to the Product. In the event the parties agree that the rights to the Product shall revert to Gilead, the parties shall thereupon agree on appropriate commercial terms for the reversion of such rights.

4.4 Reports. Roche shall provide annual reports to Gilead as follows: (i) by February 1 of each year concerning its marketing activities relating to Products for the previous year, and (ii) by November 30 of each year concerning its contemplated marketing activities relating to Products for the subsequent year. In particular, such reports shall include specific budgets and timetables for activities in the [ * ] , the positioning of the Product, competitive issues, and Roche’s primary sales and marketing objectives with respect to Products in such countries.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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A RTICLE 5

C OMPENSATION

5.1 License Fee. Roche shall pay to Gilead a license fee of five million dollars ($5,000,000) within ten (10) days following the Effective Date. Such license fee shall be nonrefundable and noncreditable.

5.2 Milestone Payments. Roche shall pay to Gilead the following nonrefundable, noncreditable amounts within thirty (30) days of achievement of the milestone events set forth below for any Product ¹ :