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<PAGE>
EXHIBIT 10.34
***TEXT OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4)
AND 240.24b-2.
Execution Copy
DEVELOPMENT AND LICENSE AGREEMENT
BETWEEN
VALEANT RESEARCH & DEVELOPMENT
AND
SCHERING CORPORATION
Dated as of December 13, 2006
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS AND
INTERPRETATION................................... 1
ARTICLE II
LICENSE.........................................................
9
ARTICLE III CONDITIONS
PRECEDENT........................................... 12
ARTICLE IV
COMPENSATION....................................................
12
ARTICLE V [INTENTIONALLY
OMITTED].......................................... 17
ARTICLE VI DEVELOPMENT AND MARKETING
OBLIGATIONS........................... 17
ARTICLE VII Ongoing Phase II
Study......................................... 18
ARTICLE VIII INTELLECTUAL
PROPERTY......................................... 19
ARTICLE IX REPRESENTATIONS, WARRANTIES AND LIMITATION OF
LIABILITY......... 22
ARTICLE X INDEMNIFICATION AND LIMITATION OF
LIABILITY...................... 25
ARTICLE XI CONFIDENTIALITY AND
PUBLICATION................................. 27
ARTICLE XII TERM AND
TERMINATION........................................... 30
ARTICLE XIII ASSIGNMENT;
SUCCESSORS........................................ 32
ARTICLE XIV DISPUTE
RESOLUTION............................................. 33
ARTICLE XV GENERAL
PROVISIONS.............................................. 35
EXHIBIT A - Licensed Compound
EXHIBIT B - Sample Invoice
</TABLE>
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DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (this Agreement) is made
as of
December 12, 2006 and is effective as of the Effective Date by
and between
Valeant Research & Development, a Delaware corporation
(Valeant) and Schering
Corporation (LICENSEE), a New Jersey corporation (each a "Party"
and
collectively the "Parties").
RECITALS
A. Valeant possesses certain intellectual property related to
the compound
Pradefovir.
B. LICENSEE has expertise in researching, developing,
manufacturing and
marketing pharmaceutical products for the treatment of human
diseases and wishes
to develop, manufacture, and market Products based on the
Licensed Compound in
accordance with this Agreement.
C. Metabasis Therapeutics, Inc. (Metabasis) and Valeant, as the
successor
in interest to ICN Pharmaceuticals, Inc., previously entered
into a Development
and License Agreement as of October 1, 2001 relating to the
Licensed Compound
(the Original Agreement).
D. Metabasis, Valeant and LICENSEE have executed an Assignment
Agreement
effective concurrently with the Effective Date, pursuant to
which Metabasis and
Valeant have consented to the assignment by Valeant to LICENSEE
of Valeant's
rights and obligations under the Original Agreement.
E. Effective as of the Effective Date, LICENSEE and Metabasis
have amended
and restated the Original Agreement (the Metabasis License
Agreement) pursuant
to which Metabasis has, among other things, granted LICENSEE an
exclusive
license to Metabasis' rights in the Licensed Compound.
F. Valeant wishes to grant an exclusive license to LICENSEE and
LICENSEE
wishes to acquire an exclusive license to Valeant's intellectual
property with
respect to, and to develop, manufacture, and market Products
based on the
Licensed Compound, in accordance with this Agreement.
AGREEMENT
In consideration of the above and the mutual covenants set forth
in this
Agreement and other valuable consideration received by the
Parties, the Parties
agree as follows.
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, capitalized terms have the respective
meanings set forth
below.
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1.
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Act means the Federal Food, Drug and Cosmetic Act (21 U.S.C.
Section 301,
et seq.), including any amendments or supplements.
Accounting Period means a calendar quarter commencing on the
first day of
an Accounting Period (and for the first Accounting Period,
commencing on the
Effective Date), respectively January 1, April 1, July 1, and
October 1, each
being the first day, and finishing the last day of an Accounting
Period
respectively on March 31, June 30, September 30 and December 31,
each being the
last day.
Accounting Standards means with respect to both Valeant and
LICENSEE, GAAP
(United States Generally Accepted Accounting Principles) in each
case as
generally and consistently applied throughout the Party's
organization.
Affiliate of a Party means any corporation or other business
entity that
controls, is controlled by, or is under common control with a
Party, where
control means direct or indirect ownership of more than fifty
percent (50%) of
the voting interest in a corporation or entity, or such other
relationship as,
in fact, constitutes actual control of management or the ability
to cause the
direction of the management or policies of a corporation or
other entity. In the
case of entities organized under the laws of certain countries,
the maximum
percentage ownership permitted by law for a foreign investor may
be less than
fifty percent (50%), and in such case such lower percentage
shall be substituted
in the preceding sentence, provided that such foreign investor
has the power to
direct the management and policies of such entity.
Agreement has the meaning set forth in the preamble.
Approval Authority means a governmental authority or agency
whose approval
is required in a country for any Regulatory Approval, including
the FDA, EMEA
and any national or regional regulatory authorities.
Assignment Agreement means the assignment agreement entered into
among
Metabasis, LICENSEE and Valeant relating to the assignment by
Valeant to
LICENSEE of Valeant's rights and obligations under the Original
Agreement.
Bankruptcy Code means Title 11, U.S. Code.
Breaching Party has the meaning set forth in Section 12.3.
Business Day means a day when banks are open for business in Los
Angeles,
California, and New York, New York.
Claims has the meaning set forth in Section 10.1.
Combined Product means any pharmaceutical product with two or
more active
pharmaceutical ingredients (in any formulation and including a
combination of
separate dosage forms in a single package), one of which is a
Licensed Compound
and one or more of which is not, sold as a single item for one
price.
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Commercially Reasonable Efforts means with respect to the
development,
manufacture, Regulatory Approval, and commercialization of
Licensed Compound and
Product, application of efforts and resources at all times that
are consistent
with what LICENSEE applies for similar pharmaceutical products
of similar market
potential at similar stages of development.
Competitive Product means any pharmaceutical product in final
form which
[...***...] and such product is not a Product being
commercialized by LICENSEE
or a Sublicensee of LICENSEE pursuant to this Agreement.
Compassionate Sales means, with respect to a Product in any
country in the
Territory, any sale of the Product by LICENSEE or any of its
Affiliates or
Sublicensees that is required by a governmental authority to be
made to certain
persons or classes of persons in such country, before or after
the Product has
been approved for use in such country by the Approval Authority,
but before the
price of the Product (or reimbursement for the Product) has been
determined by
the applicable governmental authority in such country.
Conditions Precedent means:
(i) the full and complete execution of the Other Agreements by
the
parties thereto in accordance with Section 1.3; and
(ii) any required filing under the HSR Act and expiration or
early
termination of the subsequent waiting period as described in
Section 15.17.
Confidential Information means all know-how and other
proprietary
information and data of a financial, commercial or technical
nature which the
disclosing Party or any of its Affiliates has supplied or
otherwise made
available to the other Party, whether made available orally, in
writing or in
electronic form, including information comprising or relating to
concepts,
discoveries, inventions, data, designs or formulae in relation
to this
Agreement.
Control or Controlled means, with respect to any compound,
material,
information or intellectual property right, that the party owns
or has a license
and has the ability to grant to the other party a license or a
sublicense (as
applicable) as provided for herein without violating (i) the
terms of any
agreement with any Third Party or (ii) any law or governmental
regulation
applicable to such license or sublicense.
Cover, Covering or Covered means that, with respect to a Patent
Right, a
compound, product, practice or the like which would infringe a
Valid Claim of
such Patent Right in the absence of a license.
Dollars or $ means the lawful currency of the United States.
Effective Date means the later of (a) the date of signature of
the
Agreement by both Parties and (b) the date on which all the
Conditions Precedent
have been satisfied.
EMEA means the European Medicines Agency, or any successor
entity thereto.
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Encumbrance means any claim, charge, equitable interest,
hypothecation,
lien, mortgage, pledge, option, license, assignment, power of
sale, retention of
title, right of pre-emption, right of first refusal or security
interest of any
kind.
EU Major Market means any three or more of the following
countries:
[...***...]
EU Regulatory Approval means (a) marketing authorization
approval from the
EMEA and pricing approval and reimbursement in the EU Major
Market or (b)
marketing authorization approval and pricing approval and
reimbursement in the
EU Major Market.
European Union means the amalgamation of European member states
created by
the Treaty on European Union (commonly called the Maastricht
Treaty) effective
January 1, 1993 as expanded since such date.
FDA means the United States Food and Drug Administration, or any
successor
entity thereto.
Field means all human and animal pharmaceutical and diagnostic
applications
in all indications, including for prevention or treatment of all
diseases.
First Commercial Sale means, with respect to a Product in any
country in
the Territory, the first arms-length sale to a Third Party
purchaser in such
country of a Product by LICENSEE or any of its Affiliates or
Sublicensees, after
Regulatory Approval in such country, which transfers physical
possession and
title to the Product, provided, however, that any Compassionate
Sales or sales
for pre-marketing, testing, or sampling will not be a First
Commercial Sale.
Generic Affiliate means any Affiliate of a Party whose principal
business
activity is the development, manufacture, commercialization or
distribution of
generic pharmaceutical products.
Generic Equivalent means, as to any specific Product at issue
which has
received Regulatory Approval in the country at issue, a
pharmaceutical product
with the same active ingredient and administrative route as the
Product and
which has (i) in the United States, received Regulatory Approval
from the FDA
(x) under an abbreviated NDA in accordance with 21 C.F.R.
314.94(a) which refers
to the specific Product at issue as the Reference Listed Drug
(as defined in 21
C.F.R. 314.3(b)), (y) under an NDA described in Section
505(b)(2) of the Act as
to which information necessary for approval is contained in the
NDA filed for
the specific Product at issue but as to which the applicant in
the NDA for such
potential Generic Equivalent does not have a right of reference
or (z) by any
means by which the potential Generic Equivalent can obtain
Regulatory Approval
based, in part, on information contained in the NDA filed for
the specific
Product at issue but as to which the applicant in the
application for Regulatory
Approval for such potential Generic Equivalent does not have a
right of
reference; and (ii) in any other country in the Territory, from
the Regulatory
Authority having jurisdiction in such country (x) under an
application similar
to an abbreviated NDA which references the specific Product at
issue in a manner
similar to a Reference Listed Drug, (y) under an application
similar to an NDA
described in Section 505(b)(2) of the Act as to which
information necessary for
approval is contained in the NDA filed for the specific Product
at issue (or the
comparable application filed in the country at issue) but as to
which the
applicant in the application for such potential Generic
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Equivalent does not have a right of reference or (z) by any
means by which the
potential Generic Equivalent can obtain Regulatory Approval
based, in part, on
information contained in the NDA filed for the specific Product
at issue (or the
comparable application filed in the country at issue) but as to
which the
applicant in the application for Regulatory Approval for such
potential Generic
Equivalent does not have a right of reference.
Handle has the meaning set forth in Section 8.1.
IND means an Investigational New Drug application in the US
filed with the
FDA or the corresponding application for the investigation of
the Product in any
other country or group of countries, as defined in the
applicable laws and
regulations and filed with the Approval Authority of a given
country or group of
countries.
Indemnified Party has the meaning set forth in Section 10.3.
Indemnifying Party has the meaning set forth in Section
10.3.
Know-How means any and all inventions, developments, results,
and other
information, including clinical, technical, scientific and
medical information,
know-how, methods, practices and trade secrets, quality control
information and
procedures, pharmacological, toxicological and clinical test
data and results
and regulatory information.
Licensed Compound means all forms of MB6866 as identified at
Exhibit A (at
times known as remofovir and now known as pradefovir) including
any complexes,
chelates, clathrates, acids, bases, esters, salts, isomers,
stereoisomers,
enantiomers, pro-drug form, metabolite, hydrate, solvate,
polymorph, and
crystalline forms thereof, or any Substitute Compound
substituted in accordance
with Article III of the Original Agreement, and its various
forms including
salts and prodrugs.
Licensed Know-How means any Know-How Controlled by Valeant as of
the
Effective Date or thereafter during the Term relating to the
Licensed Compound
that is reasonably necessary or useful to research, develop,
prepare, make, have
made, market, export, have exported, import, use, offer for
sale, sell, have
sold, distribute, promote, detail or otherwise commercialize a
Licensed Compound
or Product in the Field in the Territory.
Licensed Patents means any and all Patent Rights licensed to
LICENSEE
pursuant to the terms of the Metabasis License Agreement.
Licensed Technology means the Licensed Know-How.
LICENSEE has the meaning set forth in the preamble.
MAA means an application for authorization to market the Product
in any
country or group of countries outside the United States, as
defined in the
applicable laws and regulations and filed with the Approval
Authority of a given
country or group of countries.
Major Health Care Company shall mean a Third Party
pharmaceutical or
biotechnology company (including a "group" within the meaning of
Section
13(d)(3) of the Securities
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5.
<PAGE>
Exchange Act of 1934) [...***...]
Major Market Country means each of the following countries and
its
territories and possessions: [...***...]
Metabasis has the meaning set forth in the preamble.
Metabasis License Agreement has the meaning set forth in the
preamble.
Milestone means any event relating to the development and
commercialization
of Products set forth in Section 4.2.
Milestone Payment means any of the payments required under
Section 4.2.
NDA means a New Drug Application filed with the FDA for
marketing approval
for a drug pursuant to the Act and the Regulations.
Net Sales means gross amounts invoiced by or on behalf of
LICENSEE and any
of its Affiliates or Sublicensees for the Product sold to Third
Parties who are
not Affiliates or Sublicensees of LICENSEE, unless such
Affiliate or Sublicensee
is the end user of such Product, in which case the amount billed
therefor shall
be deemed to be the amount that would be billed to a Third Party
end user in
bona fide, arms-length transactions, less the following
deductions, as
determined in accordance with LICENSEE's usual and customary
accounting methods,
which are in accordance with its Accounting Standards as
consistently applied at
LICENSEE, to the extent included in the gross invoiced sales
price of any
Product or otherwise directly paid or incurred by LICENSEE, its
Affiliates or
Sublicensees with respect to the sale of such Product: normal
and customary
trade and quantity discounts actually allowed and properly taken
directly with
respect to sales of the Product; amounts repaid or credited by
reasons of
defects, rejection, recalls, returns, field destroys, rebates
and allowances of
goods specifically identifiable to the Product; chargebacks and
other amounts
paid on sale or dispensing of such Product; amounts payable
resulting from
governmental, regulatory or agency mandated rebate programs;
tariffs, duties,
excise, sales, value-added and other taxes (other than taxes
based on income);
retroactive price reductions that are actually allowed or
granted; cash
discounts actually granted for timely payment; discounts
actually granted
pursuant to indigent patient programs and patient discount
programs, including,
without limitation, coupon discounts; a deduction of [...***...]
for
distribution and warehouse expenses; amounts repaid or credited
for
uncollectible amounts on previously sold products; and any other
specifically
identifiable amounts included in gross amounts invoiced for
Products to the
extent such amounts are customary exclusions from net sales
calculations in the
pharmaceutical industry for reasons substantially equivalent to
those listed
above and are reasonable in amount relative to similar
deductions taken by
LICENSEE in calculating net sales of its other products. Each of
the deductions
set forth above shall be determined on an accrual basis in
accordance with GAAP.
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In the event the Product is sold as a Combined Product, the Net
Sales of
the Product, for the purposes of determining royalty payments,
shall be
determined by multiplying the Net Sales of the Combined Product
by the fraction,
A/(A+B) where A is the weighted (by sales volume) average sale
price in a
particular country of the Product when sold separately in
finished form and B is
the weighted (by sales volume) average sale price in that
country of the other
product(s) sold separately in finished form. In the event that
such average sale
price cannot be determined for both the Product and the other
product(s) in
combination, Net Sales for purposes of determining royalty
payments shall be
agreed by the Parties based on the relative value contributed by
each component,
such agreement not to be unreasonably withheld.
Original Agreement has the meaning set forth in the
Preamble.
Original Closing Date means October 1, 2001.
Other Agreements means the Assignment Agreement and the
Metabasis License
Agreement.
Patent Rights means all patents, including all divisionals,
continuations,
substitutions, continuations-in-part, re-examinations, reissues,
additions,
renewals, extensions, registrations, and supplemental protection
certificates
and the like of any of the foregoing as well as applications of
any of the
foregoing. Patent Rights shall include regulatory-based
extensions to patent
terms, including pediatric exclusivity periods in the United
States.
Phase I Clinical Trial means the initial introduction of an
investigational
new drug into humans primarily designed to determine the
metabolism and
pharmacologic actions of the drug in humans, the side effects
associated with
increasing doses, and, if possible, to gain early evidence on
effectiveness, and
also may include studies of drug metabolism, structure-activity
relationships,
and mechanism of action in humans, as well as studies in which
investigational
drugs are used as research tools to explore biological phenomena
or disease
processes.
Phase II Clinical Trial means a controlled clinical study
conducted
primarily to evaluate the effectiveness of a drug for a
particular indication or
indications in patients with the disease or condition under
study and to
determine the common short-term side effects and risks
associated with the drug.
Phase III Clinical Trial means a pivotal clinical study of a
Product in
patients the protocol of which is designed to establish efficacy
and safety of
such Product for the purpose of preparing and submitting a
filing for NDA
approval in the US or EU Regulatory Approval.
PMEA means 9-[2-(phosphonomethoxy)ethyl]adenine.
Prodrug of PMEA means any compound which, as a result of in vivo
metabolism
after administration, releases PMEA as the active
ingredient.
Product means any human pharmaceutical product in finished
pharmaceutical
form containing, in whole or as a component, the Licensed
Compound.
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Recipient has the meaning set forth in Section 11.2(a).
Regulations means the regulations made under the Act, as amended
or
supplemented.
Regulatory Approval means with respect to a particular country
all
government approvals required by any government or regulatory
authority to
permit the sale of Products in such country, including any
necessary pricing or
pricing reimbursement approvals.
Royalty Obligation Period has the meaning set forth in Section
4.4.
Royalty Payments means the royalty due by LICENSEE to MV on Net
Sales as
set out in Clause 4.3(a)(i).
Sales & Royalty Report means a written report or reports
showing each of:
(a) the Net Sales of each Product in each country in the world
during the
reporting period by LICENSEE and each Affiliate and Sublicensee;
and (b) the
Royalty Payments, in United States Dollars, which shall have
accrued in respect
of such sales and the basis of calculating the Royalty Payments,
including for
each country where applicable, any royalty reductions made under
Sections 4.3
(a)(ii), (c), (d) and (e).
Sublicensee means each person to whom LICENSEE has granted a
sublicense
under Section 2.2.
Term means the term of this Agreement, as set forth in Section
12.1.5.
Territory means all the countries of the world and their
territories and
possessions.
Third Party means any person other than: Valeant, LICENSEE, or
any of their
Affiliates.
United States means the United States of America and its
territories and
possessions.
Valeant Change of Control means any transaction or series of
related
transactions in which a Major Health Care Company acquires or
becomes the
beneficial owner of (i) more than fifty percent (50%) of the
outstanding voting
securities of Valeant or the surviving entity, whether by
merger, consolidation,
reorganization, tender offer or similar means, or (ii) all or
substantially all
of the assets of Valeant, howsoever caused, including by sale or
lease.
Valeant Insolvency Event means, in relation to Valeant, any one
of the
following: (a) that Valeant is the subject of voluntary or
involuntary
bankruptcy proceedings instituted on behalf of or against
Valeant (except for
involuntary bankruptcy proceedings which are dismissed within
sixty (60) days);
(b) an administrative receiver, receiver and manager, interim
receiver,
custodian or similar officer is appointed in respect of Valeant;
(c) a notice
shall have been issued to convene a meeting for the purpose of
passing a
resolution to wind up Valeant, or such a resolution shall have
been passed other
than a resolution for the solvent reconstruction or
reorganization of Valeant;
(d) a resolution shall have been passed by Valeant or Valeant's
directors to
make an application for an administration order or to appoint an
administrator;
or (e) that Valeant makes any general assignment, composition or
arrangement
with or for the benefit
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of all or some of Valeant's creditors or suspends making
payments to all or
substantially all of Valeant's creditors.
Valid means with respect to an NDA or an MAA or other filing for
Regulatory
Approval with the relevant Approval Authority that the relevant
Approval
Authority has determined that such NDA or MAA or other filing
for Regulatory
Approval has successfully completed its validation
procedure.
Valid Claim means any claim of an issued and unexpired Patent
Right which
has neither been revoked, held unenforceable, unpatentable nor
invalid by a
final decision of a court or a governmental agency of competent
jurisdiction
(including any competent patent office), and any patent
application within the
Licensed Patents which is being Handled by Metabasis which has
been pending for
less than (i) [...***...] for patent applications in the United
States, or (ii)
[...***...] for non-U.S. patent applications from the date of
filing, unless on
the date of expiration of the applicable foregoing (i) or (ii),
one or more
rejections of the pending claims of such patent application are
under appeal to
a board of appeals, court, or other authority with jurisdiction
over appeals of
such rejections.
1.2 INTERPRETATION
In this Agreement, unless the context requires otherwise:
(a) the singular includes the plural and vice versa;
(b) words denoting persons include corporations, partnerships
and other
legal persons;
(c) a reference to a specified section, or paragraph is a
reference to that
specified section or paragraph of this Agreement;
(d) the article and section headings and the Table of Contents
are for
convenience only and do not affect the interpretation of this
Agreement;
(e) "including" means including without limitation; and
(f) a reference to a Party includes its successors and permitted
assigns.
ARTICLE II
LICENSE
2.1 LICENSE
Subject to the terms and conditions of this Agreement, Valeant
grants to
LICENSEE, and LICENSEE accepts, the exclusive right and
exclusive license under
the Licensed Technology within the Field throughout the
Territory (with the
right to grant sublicenses in accordance with Section 2.2), to
research,
develop, manufacture, have manufactured, market, export, have
exported, import,
use, offer for sale, sell, have sold, distribute, promote,
detail, and otherwise
commercialize the Licensed Compound or Products. The license is
exclusive (even
as to Valeant)
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with respect to the Licensed Technology. This Section 2.1 does
not prevent
Valeant from granting licenses to Third Parties with respect to
compounds or
products that do not fall within the definition herein of
Licensed Compounds or
Products.
2.2 SUBLICENSE
(a) Subject to Sections 2.2(b) and 2.2(c), LICENSEE has the sole
and
exclusive right to sublicense the rights granted to it by
Valeant under the
Licensed Technology within the Field throughout the Territory,
to any Affiliate
or Third Party at any time at its sole discretion (as such, a
Sublicensee). In
addition, LICENSEE may subcontract to Third Parties the
performance of tasks and
obligations with respect to the development and
commercialization of the Product
as LICENSEE deems appropriate.
(b) LICENSEE shall remain responsible for ensuring compliance
with the
terms of this Agreement by Sublicensees. LICENSEE shall also pay
to Valeant
royalties on Net Sales by Third Party Sublicensees pursuant to
Section 4.3 of
this Agreement and LICENSEE will pay such royalties irrespective
of whether
LICENSEE receives payments or other consideration due from such
Third Party
Sublicensees.
(c) LICENSEE may sublicense its rights and obligations under
this Agreement
only to the extent it has sublicensed the corresponding rights
and obligations
under the Metabasis License Agreement.
(d) Any sublicense granted by LICENSEE other than in conformity
with the
provisions of this Section 2.2 shall be null and void.
2.3 EXCLUSIVITY
During the Term, Valeant will not license or otherwise grant to
any Third
Party any rights under the Licensed Technology to research,
develop,
manufacture, have manufactured, market, export, have exported,
import, use,
offer to sell, or sell, have sold, distribute, promote, detail
or otherwise
commercialize Licensed Compounds or Products in the Territory
within the Field.
2.4 PROVISION OF INFORMATION
(a) Within [...***...] following the Effective Date, Valeant
will disclose
and provide all information in its possession or control
relating to the
Licensed Patents and the Licensed Technology to LICENSEE or its
designated
Affiliate to the extent necessary or useful to enable LICENSEE
to perform its
obligations under this Agreement to develop, manufacture,
register, use or
market the Licensed Compound or Product and practice the
licenses granted
hereunder efficiently, including, to the extent reasonably
available to Valeant,
any clinical data, study reports, any information relating to
manufacturing, any
agreements in respect of the Licensed Compound, and any related
correspondence
and filings with any Approval Authority (including notes or
minutes of any
meetings with any Approval Authority). As part of such
disclosure, as soon as
reasonably practicable, Valeant will disclose to LICENSEE all
Licensed
Technology, including pre-formulation reports, clinical
manufacturing batch
records, development reports, IND documentation, analytical
results, analytical
method validation report, raw material and excipient sourcing
information,
quality audit findings, stability reports and any
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other relevant technical information. Such information is
subject to the
confidentiality provisions of Article XI hereof.
(b) Valeant shall have a continuing obligation to disclose and
provide to
LICENSEE such additional Licensed Technology as is developed or
obtained by
Valeant or its Affiliates during the term of this Agreement
which Valeant has
the legal right to disclose to LICENSEE. In addition, Valeant
shall promptly
disclose and provide to LICENSEE all data arising out of the
ongoing Phase II
study related to the Licensed Compound that it completes
pursuant to Article 7
hereof. Further, Valeant will, [...***...] provide reasonable
assistance to
LICENSEE in connection with understanding and using the Licensed
Technology,
including by providing information to assist LICENSEE in
developing the Licensed
Compounds or Product and its related activities.
2.5 LIMITS ON THE USE OF LICENSED COMPOUND BY VALEANT
Except as provided for in Article VII hereof, from the Effective
Date,
Valeant and its Affiliates will not research, develop,
manufacture, have
manufactured, market, export, have exported, import, use, offer
for sale, or
sell, have sold, distribute, promote, detail or otherwise
commercialize the
Licensed Compound. The rights granted under this Agreement are
to the exclusion
of Valeant, except as otherwise set forth in this Agreement.
2.6 NON COMPETITION
(a) Valeant agrees that for a period beginning on the Effective
Date and
ending [...***...] in a country, Valeant and its Affiliates will
not, directly
or indirectly, promote the sale of, sell, or otherwise
commercialize any
Competitive Product, or license, assign, permit or otherwise
assist, Third
Parties to engage in any of such activities in such country,
provided, however,
that Valeant and its Affiliates shall be permitted to
commercialize a
Competitive Product in any country with respect to which
LICENSEE's rights have
terminated pursuant to a termination by Valeant under Section
12.3 or a
termination by LICENSEE under Section 12.5 of this
Agreement.
(b) LICENSEE and its Affiliates (other than any Generic
Affiliates) may
not, for a period beginning on the Effective Date and
[...***...], directly or
indirectly, promote the sale of, sell, or otherwise
commercialize a Competitive
Product in such country. For the avoidance of doubt, if LICENSEE
acquires or
becomes the beneficial owner of a Third Party and as a result of
such
acquisition acquires full commercialization rights to any
Competitive Product,
LICENSEE shall [...***...]
(c) Notwithstanding anything in the Agreement to the contrary,
in the event
that Valeant breaches the non competition provisions contained
herein, LICENSEE
shall have the
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right to offset the full amount of damages it has suffered as a
result of
Valeant's breach against any payments to Valeant pursuant to
Article 4 hereof.
ARTICLE III
CONDITIONS PRECEDENT
3.1 This Agreement will become effective only upon the
occurrence of all
the Conditions Precedent.
3.2 LICENSEE and Valeant acknowledge that the non-occurrence of
any of the
conditions that are part of the Conditions Precedent will render
this Agreement
null and void.
ARTICLE IV
COMPENSATION
4.1 LICENSE FEE
Within five (5) business days following the Effective Date,
LICENSEE will
make a one-time, non-refundable, non-creditable payment to
Valeant in the amount
of nineteen million two hundred thousand dollars ($19,200,000)
(the "Valeant
License Fee"), which, together with the Metabasis Upfront Fee
set forth in
Section 4.1 of the Metabasis License Agreement, comprise the
Total Upfront Fee
set forth in Section 4.1 of the Metabasis License Agreement.
4.2 MILESTONE PAYMENTS
(a) In consideration of the licenses and rights granted by
Valeant to
LICENSEE hereunder LICENSEE will pay to Valeant the following
non-refundable,
non-creditable Milestone Payments, provided that the amounts
below, together
with the milestone payments due Metabasis under Section 4.2 of
the Metabasis
License Agreement, constitute the full amount of the milestones
due Metabasis
and Valeant pursuant to the terms of both this Agreement and the
Metabasis
License Agreement:
(i) [Intentionally omitted]
(ii) [...***...]
(iii) [...***...]
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(iv) [...***...]
(v) [...***...]
(vi) [...***...] and
(vii) [...***...]
(b) Each Milestone Payment due under Section 4.2(a) will be due
only once
for the first Product in respect of which the indicated
Milestone occurs,
regardless of the substitution for the Licensed Compound of a
Substitute
Compound pursuant to Article III. LICENSEE will notify Valeant
in writing within
[...***...] of the occurrence of each Milestone and will make
all Milestone
Payments within [...***...] after receipt of an invoice from
Valeant for payment
of the Milestone substantially in the form of Exhibit B. For the
avoidance of
doubt the subsequent occurrence of any similar event in respect
of any Product,
including in respect of any additional indication(s), will not
give rise to any
additional obligation of LICENSEE to make a Milestone Payment
with respect to
such subsequent event.
4.3 ROYALTIES
(a) In addition to the amounts payable under Section 4.2,
LICENSEE will
collectively pay Metabasis and Valeant (collectively referred to
as "MV"), in
any calendar year during the Royalty Obligation Period,
royalties in the
aggregate amounts as follows on a Product-by-Product and
country-by-country
basis and provided that the amounts below constitute the full
amount of the
royalties due MV pursuant to the terms of both this Agreement
and the Metabasis
License Agreement:
(i) in any country in which there is a Valid Claim of a
Licensed
Patent, a royalty on Net Sales in such country as provided
below:
(A) on Net Sales of Products [...***...]
(B) on Net Sales of Products [...***...]
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(ii) on Net Sales of each Product in any country in which there
is no
Valid Claim of a Licensed Patent, [...***...]
(b) Royalties on Net Sales will be calculated every Accounting
Period.
Within [...***...] after the last day of each such Accounting
Period during the
term of this Agreement following the First Commercial Sale of a
Product,
LICENSEE will provide to MV the Sales & Royalty Report. If
MV has no comments on
such report, Metabasis and Valeant shall each submit an invoice
to LICENSEE
substantially in the form of Exhibit B with respect to the
Royalty Payment, each
of which shall be signed by both Metabasis and Valeant and shall
indicate the
proportion of the Royalty Payments that shall be made to each of
(i) Metabasis
and (ii) Valeant, provided, however, that the sum of the
payments to be made to
each of Metabasis and Valeant may not exceed 100% of the actual
Royalty Payments
due (the "Total Royalties Due"). In the event that there are
invoicing
discrepancies (such that, for example, the total of the Royalty
Payments based
on the invoices received from each of Metabasis and Valeant
exceeds the Total
Royalties Due), LICENSEE may, in it sole discretion, make
payment to each of
Metabasis and Valeant as it determines is appropriate and in
keeping with the
terms of this Agreement and shall have no liability to Metabasis
or Valeant with
regard to any disagreement with respect to such allocation so
long as the total
of such payments is equal to the Total Royalties Due. LICENSEE
shall pay the
Royalty Payment within [...***...] after receipt of the
invoices. All such
Royalty Payments constitute the full amount of the Royalty
Payments due MV
pursuant to the terms of both this Agreement and the Metabasis
License
Agreement.
(c) LICENSEE may obtain a license under any issued patent from
one or more
Third Parties which patent, but for such license, would be
infringed by the
exercise of the rights granted to LICENSEE hereunder. For any
such Third-Party
licenses, LICENSEE may reduce the royalties otherwise due to MV
hereunder by an
amount [...***...] paid by LICENSEE to such Third Party or Third
Parties to the
extent attributable to such license, including any [...***...];
provided,
however, that the total such reduction for all such Sublicenses
shall not cause
the royalties due to MV in any calendar year to fall below
[...***...] of the
royalties which would otherwise be due (i.e. without reference
to the reduction
due to Sublicense royalties) to MV in such year. Any portion of
such reduction
which is unused in any year because of the foregoing proviso
[...***...]; and
further provided that no reduction in royalties will result from
a license to a
Third Party patent that claims [...***...] that are not
necessary in order to
develop, manufacture or commercialize the Licensed Compound,
[...***...] and
further provided that no reduction in royalties will result from
a license to a
Third Party patent where such license covers a Combined Product
and where no
actual or alleged infringement by the claims of such patent
would result from
activities relating to a Product whose only active
pharmaceutical ingredient is
a Licensed Compound, [...***...] Valeant shall remain
responsible for the
payment of royalty obligations, if any, due to Third Parties
under any Licensed
Technology which has been licensed to Valeant and is sublicensed
to LICENSEE
under this Agreement. All such payments shall be made promptly
by Valeant in
accordance with the terms of its license agreement.
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(d) If a Third Party sells a product which is a Generic
Equivalent to a
Product in any country in which LICENSEE, an Affiliate or
Sublicensee is selling
such Product, the royalty payable by LICENSEE to MV under this
Agreement with
respect to such Product in each such country will be [...***...]
for the time
period during which such Generic Equivalent is sold by or on
behalf of such
Third Party in such country.
(e) If any Approval Authority imposes a price limitation for
specific
indications or patients, and [...***...] determines that such
limitation
[...***...] for a Product in such country, LICENSEE will
promptly notify Valeant
of such limitation. Pursuant to the terms of the Metabasis
License Agreement (i)
if Metabasis agrees with LICENSEE's determination, [...***...]
and (ii) if
Metabasis and LICENSEE fail to promptly agree [...***...] the
matter will be
referred to arbitration pursuant to Article XIV of the Metabasis
License
Agreement and [...***...] LICENSEE will, to the extent permitted
by law, use
reasonable commercial efforts to resist the imposition or
continuation of any
such price limitation.
4.4 DURATION OF ROYALTY OBLIGATIONS
The period during which LICENSEE is required to pay the royalty
under
Section 4.3 with respect to each Product (the Royalty Obligation
Period) will
terminate in each country in the Territory upon the occurrence
of the later of:
(a) the expiration or invalidation in such country of the last
to expire or
be invalidated Licensed Patent which but for the Metabasis
License Agreement
would be infringed by the manufacture, use or sale of such
Product in such
country; and
(b) [...***...] after the First Commercial Sale in such country
of such
Product.
4.5 PAYMENT TERMS
(a) LICENSEE will make all payments required to be made to
Valeant under
this Agreement in Dollars to Valeant by wire transfer of
immediately available
funds to a bank account of Valeant designated by Valeant from
time to time in
accordance with this Agreement. LICENSEE shall have no
obligation to pay any
proportion of a Royalty Payment to Metabasis or Valeant, as the
case may be,
until and unless a valid invoice indicating the appropriate
proportion of the
Royalty Payment to make to such party has been submitted
pursuant to Section
4.3(b).
(b) In the event that any payment due to Valeant hereunder,
including any
upfront payment, royalty payment and milestone payment, is not
made when due,
the payment shall accrue interest from the date due at the
[...***...] provided,
however, that in no event shall such rate exceed the
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maximum legal annual interest rate. The payment of such interest
shall not limit
a party from exercising any other rights it may have as a
consequence of the
lateness of any payment.
4.6 TAXES
All amounts owed under this Agreement will be reduced and paid
after
deduction as required by law for all applicable taxes, fees, and
other charges
on such amounts except taxes imposed with respect to or based on
a Party's net
income. In particular, any tax required to be withheld by
LICENSEE under the
laws of any country for the account of Valeant (withholding
taxes) will be
promptly paid by LICENSEE for and on behalf of Valeant to the
appropriate
governmental authority, and LICENSEE will furnish Valeant with
reasonable proof
of payment of such tax. All such tax actually paid on Valeant's
behalf will be
deducted from royalty payments due Valeant or promptly
reimbursed to LICENSEE if
no further payments are due Valeant. LICENSEE will reasonably
assist Valeant in
minimizing the withholding taxes applicable to any payment made
by LICENSEE and
in claiming tax refund at Valeant's request. Each Party agrees
to reasonably
assist the other Party in claiming exemption from such
withholding of taxes of
any type under double taxation or similar agreement or treaty
from time to time
in force and in minimizing the amount required to be so withheld
or deducted.
4.7 ALLOCATION OF ROYALTY PAYMENT
Provided that LICENSEE shall make the Royalt
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