EXHIBIT 10.13
CERTAIN PORTIONS
OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR
CONFIDENTIAL
TREATMENT. THE NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE
SECURITIES AND
EXCHANGE COMMISSION.
DEVELOPMENT AND LICENSING AGREEMENT
-----------------------------------
THIS WORLD-WIDE EXCLUSIVE DEVELOPMENT AND LICENSING AGREEMENT
[the
"Agreement"], is made, entered into and
effective as of ___ September, 2003
["Effective Date"], by and between
Innovative Medical Services ["INNOVATIVE"], a
California corporation, having its
principal place of business at 1725 Gillespie
Way, El Cajon, Ca 92020, and Therapeutics,
Inc., a Delaware corporation, with
its principal place of business at 4180 La
Jolla Village Drive, Suite 255, La
Jolla, California 92037
["THERAPEUTICS"].
RECITALS
WHEREAS, pursuant to a Core Settlement Agreement dated 15
November
2001, INNOVATIVE became the sole owner
and/or assignee of certain patents and
certain technology, known as SDC Core
Technology, more fully described in
Exhibit A hereto, which includes silver
dihydrogen citrate and other related
silver compounds;
WHEREAS, INNOVATIVE has developed and commercialized various
and
multiple non-healthcare, non-personal care
applications utilizing the SDC Core
Technology;
WHEREAS, THERAPEUTICS is primarily engaged in medical product
development with an emphasis on
dermatological products, blending clinical and
regulatory strategies, manufacturing
know-how, drug development expertise, and a
thorough understanding of the competitive
technologies and the marketplace;
WHEREAS, INNOVATIVE and THERAPEUTICS are interested in exploring
and
investigating the feasibility of developing
healthcare and personal care
products utilizing the SDC Core Technology,
which may require approval from an
Agency, including the United States Food
and Drug Administration ("FDA");
WHEREAS, the Parties have determined that THERAPEUTICS has the
necessary knowledge, skill and expertise in
the identification and development
of proprietary drugs utilizing the SDC Core
Technology and that such process can
be more efficiently and effectively
accomplished through the beneficial
collaboration by the Parties; and
WHEREAS, INNOVATIVE and THERAPEUTICS desire to enter into a
collaborative development program for the
product development and
commercialization of personal care and
healthcare products utilizing the SDC
Core Technology and requiring FDA approval
or review.
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 1 OF 43
<PAGE>
AGREEMENT
---------
NOW, THEREFORE, for and in consideration of the premises and other
good
and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the Parties hereto expressly
agree as follows:
SECTION 1.0
DEFINITIONS
1.1 The term "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 Agreement, such ownership
interest shall be at least forty percent
(40%).
1.2 The term "Agency" means any
governmental regulatory authority, exclusive of
the United States Environmental Protect
Agency "EPA" (except as agreed to by the
Parties), responsible for granting health
or pricing approvals, registrations,
import permits, and other approvals
required before a SDC Product(s) may be
tested or marketed in any country. The term
Agency includes the United States
Food and Drug Administration ("FDA")
1.3 The term "Agency Approval" means final
authorization by an Agency to market
and sell the SDC Product(s) in a country in
the Territory.
1.4 The term "Best Efforts" means that the
obligated Party is required to make a
diligent and good faith effort to
accomplish the applicable objective through
the use of a sustained manner consistent
with the exercise of prudent scientific
and business judgment as applied to other
research, development and
commercialization efforts for products of
similar scientific and commercial
potential within the research programs and
relevant product lines of such Party.
1.5 The term "Budget" means the annual
budget approved by the EMC from time to
time pursuant to Section 3.4. As of the
Effective Date, the initial Budget
agreed-upon by the Parties shall be
included in the initial Development Plan and
Technology Development Plan, which are
attached as Exhibit B hereto.
1.6 The term "Development" means, as
applied to a Product, that the Party has
been granted the "product specific" license
and performed material work with
respect to such Product, such as (without
limitation): partnering activities,
formulation development, preclinical
testing or submission of an IND.
1.7 The term "Development Costs" or
"Development Expenses" means the costs
incurred by THERAPEUTICS or INNOVATIVE for
its account after the Effective Date
which are consistent with the Development
Plan and are specifically attributable
to the research and development of SDC
Product(s) pursuant to the Development
Plan and Technology Development Plan. Such
costs shall include the internal and
external
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 2 OF 43
<PAGE>
verifiable costs incurred either by
THERAPEUTICS or INNOVATIVE to further the
SDC Product(s) Development and Technology
Development programs. Internal costs
related to the Development Plan and
licensing or sale of SDC Products shall
include, but not be limited to, salaries,
employee benefits, use of facilities
and equipment, personnel, travel expenses
and costs, product/licensing related
legal fees, materials and supplies, which
shall be absorbed into the Development
Costs based on generally accepted
accounting principles and methods mutually
established and approved by the EMC, such
approval not to be unreasonably
withheld. For these Development Costs and
Development Expenses to be eligible
for reimbursement per the terms of this
Agreement they must be approved by the
EMC.
1.8 The "Development Plan" is defined as
the overall two-stage (2) program for
the development of SDC Product(s) approved
by the EMC, from time to time,
pursuant to Section 3.2. Within thirty (30)
days from the Effective Date of this
Agreement, the Parties will adopt an
initial Development Plan, which will
reflect the mutual objectives of the
Parties with respect to the sequence of
events leading up to the filing of
regulatory submissions and will contain such
description having sufficient detail to
enable INNOVATIVE and THERAPEUTICS to
fully understand the overall project goals
and objectives. Said Development Plan
will consist of the following two
stages:
(a) Stage One of the Development Plan will refer to all
activities
conducted by either Party during Months one
(1) through twelve (12) from the
Effective Date for the technology
evaluation resulting in the identification and
categorization of potential new SDC
Products, which shall then be reviewed,
approved and selected by the EMC, on a
"product-by-product" basis, for Stage Two
development. The Development Plan adopted
by the Parties will outline Stage One
activities and will include the Product
Development Flow Chart attached hereto
as Exhibit "B", a time and events schedule
("T/E") in critical path form
prepared by THERAPEUTICS, utilizing
"Microsoft Project(R)" software or
equivalent and initial Budgets developed by
the Parties for said initial phase.
(b) Stage Two of the Development Plan will consist of all
activities
conducted by the Parties after a SDC
Product(s) has been identified and approved
for Stage Two development and a SDC
Product(s) specific plan has been reviewed
and adopted by the EMC for its continued
development and commercialization. The
SDC Product(s) specific plan will include a
Product specific T/E schedule in
critical path form prepared by
THERAPEUTICS, utilizing "Microsoft Project(R)"
software and will include a Budget, updated
annually, which will project all
anticipated costs pertaining to the T/E
schedule. Concurrently, as necessary, a
Product specific T/E schedule in critical
path form for intellectual property
development will be prepared by INNOVATIVE
utilizing "Microsoft Project(R)"
software, which will include a Budget,
updated annually, projecting the
anticipated costs pertaining to the
intellectual property resulting from
THERAPEUTICS's T/E schedule.
1.9 The term "Executive Management Committee" or "EMC" as used
herein
means that committee comprised initially of
four (4) senior staff members, two
(2) from each company, which shall be
established pursuant to and have the
responsibilities set
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 3 OF 43
<PAGE>
forth in Section 3.2 hereof and elsewhere
in this Agreement. Within sixty (60)
days of the Effective Date of this
Agreement, the Parties shall adopt rules and
regulations for the EMC's governance, which
shall supplement Section 3.2 hereof.
1.10 The term " cGMP" means current good manufacturing
practices.
1.11 The term "IND" or "Investigational New Drug Application" means
an
application as defined in the United States
Food, Drug and Cosmetic Act and
applicable regulations promulgated
thereunder to 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. For purposes of this Agreement it
shall also include IDE's
(Investigational Device Exemptions).
1.12 The term "Improvements" means and includes any and all
patentable
or non-patentable additions, alterations,
modifications, design changes, and
other improvements to the SDC Core
Technology and any derivative products, which
are SDC Healthcare Product(s) and
individually or jointly developed by
INNOVATIVE, THERAPEUTICS, or any Third
Party at any time during the term of this
Agreement, regardless of whether or not
INNOVATIVE owns or holds any proprietary
rights therein or thereto.
1.13 The term "INNOVATIVE Patent Rights" means and includes all
rights
under United States Patent No. 6,197,814,
issued 6 March 2001, United States
Patent No. 6,583,176, issued 24 June 2003,
as transferred to INNOVATIVE pursuant
to that certain Core Settlement Agreement
dated 15 November 2001, and all other
patent rights, issued or pending, related
in any way to Axenohl(R) or Axen(R) or
any Improvements thereto that were acquired
and/or developed prior to the
Effective Date of this Agreement by
INNOVATIVE, or any Affiliate of INNOVATIVE.
The term "INNOVATIVE Patent Rights" further
means and includes (a) all patent
applications filed heretofore or hereafter
during the term of this Agreement in
any country by INNOVATIVE or any Affiliate
of INNOVATIVE, together with any and
all United States and foreign patents that
have issued or in the future will
issue therefrom, and (b) all divisionals,
continuations, continuations-in-part,
reexaminations, reissues, renewals,
substitutions, confirmations, registrations,
revalidations, extensions or additions to
any such patents and patent
applications and patents issuing thereon;
all to the extent and only to the
extent that INNOVATIVE or any Affiliate of
INNOVATIVE now has or hereafter will
have the right to grant licenses or other
rights thereunder. INNOVATIVE Patent
Rights as of the Effective Date are set
forth as Exhibit A to this Agreement and
such Exhibit shall be updated on an annual
basis.
1.14 The term "INNOVATIVE Know-How" means all proprietary
inventions,
technology, trade secrets, clinical and
pre-clinical results, data, materials,
compounds, know-how, methods, documents,
tests, confidential information and
physical, chemical or biological material,
or other information, excluding
INNOVATIVE Patent Rights, owned or acquired
with right to sublicense during the
term of this Agreement by INNOVATIVE or any
Affiliate of INNOVATIVE that are
necessary or useful to the Parties
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 4 OF 43
<PAGE>
in the development, formulation,
manufacture, use or sale of SDC Product(s)
contemplated herein.
1.15 The term "THERAPEUTICS Know-How" means all proprietary
inventions,
technology, trade secrets, clinical and
pre-clinical results, materials,
compounds, knowhow, methods, documents,
tests, confidential information and
physical, chemical or biological material
and formulations thereof, procedures,
techniques or other information developed,
owned or acquired with right to
sublicense during the term of this
Agreement by THERAPEUTICS or any Affiliate of
THERAPEUTICS that are necessary or useful
to the Parties in the development,
formulation, manufacture, use or sale of
SDC Product(s) contemplated herein.
1.16 The term "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
FDA or the equivalent application to
the equivalent agency in any other country
or group of countries, the filing of
which is necessary to achieve approval upon
which one may commence sales and
distribution. For purposes of this
Agreement, NDA shall include ANDA's
(Abbreviated New Drug Applications), NADA's
(New Animal Drug Applications),
PMA's (Pre-Market Approvals), 510K's,
supplements or other regulatory
submissions or regulatory compliance to be
marketed.
1.17 The term "Party" means INNOVATIVE or THERAPEUTICS and, when
used
in the plural, shall mean INNOVATIVE and
THERAPEUTICS.
1.18 The term "Partnered Transaction(s)" means any agreement or
transaction entered into with any Third
Party either by (a) licensing an SDC
Product(s) for its continued development,
production, commercialization and/or
marketing; or by (b) the sale of an SDC
Product(s) developed pursuant to this
Agreement.
1.19 The term "Partnered Transaction(s) Proceeds" means any cash
or
noncash proceeds derived from or obtained
through any Partnered Transaction.
1.20 The term "Partnering Costs" means any EMC-approved cost or
expense
incurred by either Party in the negotiation
and documentation of a Partnered
Transaction.
1.21 The term "Phase I Clinical Trial" means the initial
introduction,
through clinical studies, of an
investigational new drug into humans, designed
to determine the metabolic and
pharmacologic actions of the drug in humans, the
side effects associated with increasing
doses, and, if possible, to gain early
evidence on effectiveness, which if
successful will permit the design of a
well-controlled, scientifically valid Phase
II Clinical Trial.
1.21 The term "Phase II Clinical Trial" means early
well-controlled,
closely monitored clinical studies
conducted to obtain some preliminary data on
the effectiveness of the drug for a
particular indication or indications in
patients with the disease or condition,
including common short-term side effects
and risks associated
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 5 OF 43
<PAGE>
with the use of the drug, which if
successful will permit the design of a
well-controlled, scientifically valid Phase
III Clinical Trial.
1.22 The term "Phase III Clinical Trial" means any clinical studies
or
trials 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 III Study" in the
United States or the equivalent
elsewhere.
1.23 The term "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 pre-clinical data, trade
secrets, business strategy, patent
applications, licenses, suppliers,
manufacturers, product and marketing
strategy, customers, market data, personnel
and consultants.
1.24 The term "Research and Development Program" or "research
and
development program" as used herein means
any and all research and development
activities deemed necessary and appropriate
by the EMC from time to time for the
development of SDC Product(s), and as more
fully set forth in the Development
Plan and Technology Development Plan,
attached hereto as Exhibit B.
1.25 The term "SDC Core Technology" means all Axenohl(R) and
Axen(R)
product rights, the supporting ionic silver
technology, which includes silver
dihydrogen citrate ("SDC"), SDC + ETOH,
other related silver compounds, and the
entire related intellectual property
portfolio, including INNOVATIVE Patent
Rights and INNOVATIVE Know-How, and any and
all Improvements made during the
Term of this Agreement.
1.26 The term "SDC Healthcare Product(s)" means any product
requiring a
prescription or authorization by a licensed
healthcare practitioner (including
but not limited to a physician, dentist, or
veterinarian), including but not
limited to drugs, devices, sterilants
(e.g., surgical scrub, instrument cleaning
products exclusive of hard surface
disinfectants) or diagnostics, utilizing the
SDC Core Technology or Improvements, or
future enhancements or additions to the
technology, having application in the
medical, pharmaceutical, or dental
categories of human health and/or animal
health and that is supported by an IND
("Investigational New Drug Application"),
an NDA ("New Drug Application"), an
ANDA ("Abbreviated New Drug Application"),
a NADA ("New Animal Drug
Application"), a PMA ("Pre-Market
Approval"), an IDE ("Investigational Device
Exemption"), a 510K, a supplement or other
regulatory submission, or that
requires regulatory compliance in order to
be marketed.
1.27 The term "SDC Personal Care Product(s)" means any
non-prescription
consumer product utilized for health,
beauty, dental, veterinary or other
similar needs and utilizes the SDC Core
Technology or Improvements, future
enhancements or additions to the technology
and that may require little or no
product clinical testing to establish a
claim. Also, included in this category
are products for which no specific
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL
SERVICES AND THERAPEUTICS, INC.
Page 6 OF 43
<PAGE>
cosmetic or clinical claim may be pursued,
which utilize low concentrations of
SDC Core Technology for preservative or
other "non-claim" usage, even though the
SDC Core Technology may confer a beneficial
effect.
1.28 The term "SDC Product(s)" or "Product(s)" means any SDC
Healthcare
Product(s) or any SDC Personal Care
Product(s) developed through the
collaborative efforts of the Parties
pursuant to this Agreement. For the
purposes of this Agreement, the definition
of an individual Product shall also
mean each indication for which a
formulation is being Developed.
1.29 The term "SDC Product Categorization," "Product
Categorization" or
"Categorization" means the step-by-step
process by which the EMC will evaluate
each potential SDC Product identified and
evaluated by THERAPEUTICS in order to
determine its proper categorical
designation, e.g., Category I, II or III, as
defined in Section 3.1. The SDC Product
Categorization process is set forth in a
Product Category Decision Chart, which is
attached hereto as Exhibit C.
1.30 The term "Technology Development Plan" means the plan by
which
INNOVATIVE will maintain and expand the SDC
Core Technology and INNOVATIVE
Patent Rights including all Improvements,
as necessary and needed to perform the
Parties' obligations under this Agreement
and to support the Development of the
EMC approved Products. The initial
Technology Development Plan including the
initial Budget reflecting the mutual
objectives of the Parties with respect to
the research to be carried out by
INNOVATIVE to expand the SDC Core Technology
shall contain sufficient detail to enable
THERAPEUTICS to understand the overall
goals and objectives and shall include time
and event schedules for expansion of
the SDC Core Technology, including
evaluation of all appropriate organic acids,
a patent filing plan, a plan to formally
assess and evaluate the current SDC
Core Technology Patent portfolio and the
plans to expand the portfolio.
1.31 The term "Territory" as used herein shall mean the entire
world.
1.32 The term "Third Party" as used herein shall mean any person
or
entity other than INNOVATIVE, THERAPEUTICS,
an Affiliate of either Party, or any
officer or director of either Party.
SECTION 2.0
GRANT OF LICENSE
RIGHTS
2.1 Grant of License. Subject to the terms of this Agreement
and
subject to payment of the "Initial
Licensing Fee" in Section 5.1 herein,
INNOVATIVE hereby grants to THERAPEUTICS an
exclusive, worldwide license,
without the right to sublicense, of
INNOVATIVE Patent Rights and INNOVATIVE
Know-How, limited solely for research and
development purposes for the
collaborative investigation and development
of SDC Product(s), as contemplated
herein. THERAPEUTICS agrees and warrants
that, subject to Section 2.3 of this
Agreement, INNOVATIVE Patent Rights and
INNOVATIVE Know-How will not be used by
THERAPEUTICS for any other purpose.
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 7 OF 43
<PAGE>
2.2 Disclosure of INNOVATIVE Know-How. Within thirty (30) days of
the
Effective Date and subject to payment of
the "Initial Licensing Fee" in Section
5.1 herein, and throug h the term of this
Agreement, INNOVATIVE shall make
available to THERAPEUTICS, subject to the
terms of this Agreement, all
INNOVATIVE Know-How.
2.3 Grant of Future Licenses and Sublicensing Rights. Upon (a)
identification of a potential SDC
Product(s), (b) SDC Product Categorization
pursuant to Section 1.29, and (c) adoption
of a Development Plan for such SDC
Product(s), reviewed and approved by the
EMC, on a product-by-product basis,
INNOVATIVE shall grant, to THERAPEUTICS
such "product specific" world-wide
license, or licenses, necessary and
required for the continued development,
production, out-licensing,
commercialization and marketing, or sale of any such
SDC Product(s) developed pursuant to this
Agreement, and the Parties shall enter
into a "product specific" license agreement
for such SDC Product(s) in the form
attached hereto as Exhibit E. The "product
specific" transfer of technology and
license to THERAPEUTICS refers to a
specific Product and includes rights to all
(1) dosage forms, (2) concentrations, (3)
related indications or uses and (4)
all types of SDC Core Technology and
Improvements predating or conceived during
the Term of the Agreement. Pursuant to such
"product specific" licensing,
THERAPEUTICS shall have the right to
sublicense the rights granted under the
"product specific" license to Third
Parties. If THERAPEUTICS grants a sublicense
to a Third Party, all of the terms and
conditions of the "product specific"
license agreement of Exhibit E shall apply
to the sublicensee to the same extent
as they apply to THERAPEUTICS.
2.4 Termination And Reversion Of Non-Utilized Patent Rights. In
the
event THERAPEUTICS fails to meet the
minimum performance standards set forth in
Section 3.7 within two (2) years from the
date of the payment of the Initial
Licensing Fee as required under Section 5.1
of this Agreement, all licensing
rights under Section 2.1 to INNOVATIVE
Patent Rights and INNOVATIVE Know-How not
utilized in the development of an SDC
Product shall revert to INNOVATIVE and be
automatically terminated. Termination and
reversion, as set forth in this
Section 2.4, shall not apply to any and all
INNOVATIVE Patent Rights and
INNOVATIVE Know-How being actively utilized
in any SDC Product(s) under
Development under this Agreement and
approved by the EMC regarding its
out-licensing or sale as a Product.
SECTION 3.0
PRODUCTS, PRODUCT DEVELOPMENT AND REGULATORY AFFAIRS
3.1 Products, Product Categories And Product Categorization.
Pursuant
to the Development Plan, the Parties shall
collaborate in the evaluation,
identification, development and
commercialization either through the sale and/or
licensing of SDC Product(s) in the medical,
dental and/or veterinary fields for
human or animal health, exclusive of food,
water or any product(s) requiring
principally Environmental Protection Agency
("EPA") review and approval. Upon
evaluation of a potential SDC Product(s),
SDC Product Categorization, as
described in Section 1.29, shall be carried
out by the EMC. The SDC Product(s)
Developed pursuant to the terms of this
Agreement shall consist solely of the
following categories of products:
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 8 OF 43
<PAGE>
(a) Category I Products. All SDC Healthcare Products,
primarily topical in nature, requiring (i)
an Agency approval or compliance, and
(ii) a medical, dental or veterinary
healthcare provider's prescription,
authorization , approval or action prior to
their dispensation or utilization;
that will be actively developed by
THERAPEUTICS pursuant to the terms of this
Agreement.
b) Category II Products. All SDC Healthcare Products,
requiring (i) an Agency approval or
compliance, and (ii) a medical, dental or
veterinary healthcare provider's
prescription, authorization, approval or action
prior to their dispensation or utilization;
that will be "licensed or
sublicensed" under the terms of this
Agreement or sold directly to a Third Party
for continued development and
commercialization, with little or no prior
research and development conducted by the
Parties.
(c) Category III Products. All SDC OTC (over the counter) and
SDC Personal Care Products.
3.2 Executive Management Committee.
(a) Executive Management Committee Membership and Governance.
The Parties shall establish an Executive
Management Committee ["EMC"] to provide
strategic, technical and commercial
guidance to their collaborative efforts and
to provide overall coordination of the
activities of the Parties with respect to
each SDC Product(s) and implement the
initial Development Plan and Technology
Development Plan, all subsequent amendments
and revisions thereto and the
initial Budgets and all subsequent
amendments and revisions thereto. As a
foundational principle, all EMC decisions
shall be oriented to maximizing the
success of the Parties' overall
collaborative efforts and their realization of
the highest achievable value of any SDC
Product(s) developed hereunder. As a
second foundational principle, all EMC
decisions shall be by unanimous consent
of the committee members and if the
committee is unable to reach unanimous
consent on any given issue, then as to that
issue the decision will be made on a
Category-by-Category basis in favor of the
Party set forth in Section 3.2(b)
below. The EMC, in turn, may establish such
working groups or other mechanisms
as it desires to achieve this result. The
EMC shall consist of an equal number
of employee representatives of each Party,
which shall be at least two (2). The
size of the EMC may be changed by the
mutual agreement of the Parties. Within
ten (10) days after the Effective Date,
each Party shall select its initial
members of the EMC. Each Party may select
additional employee representatives to
replace the initial EMC members selected by
such Party as necessary during the
term of the Agreement, and may have other
representatives attend meetings of the
EMC in addition to the members of the
committee. Any EMC members selected by one
Party shall be subject to the reasonable
approval of the other Party. The
Chairperson of the EMC shall be a
representative of THERAPEUTICS. The
Chairperson of the EMC 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 EMC within
twenty (20) days after the relevant
meeting. The EMC shall have the authority to
make changes to these governance procedures
from time to time
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 9 OF 43
<PAGE>
as it deems warranted provided that all
members of the EMC concur. The EMC shall
attempt to operate by unanimous approval.
With the exception of issues outlined
in Section 3.2(b) below, in the event that
the EMC is unable to resolve any
issues by unanimous consent, such issues
shall be submitted for resolution
pursuant to Section 11.0 below.
(b) EMC Meetings And Responsibilities. The EMC shall meet at
least once each quarter i.e. four (4) times
per year during the term of this
Agreement. Each Party may request
additional meetings as reasonably required.
The EMC shall be responsible for overseeing
and monitoring the implementation of
the Development Plan, the Technology
Development Plan, intellectual property
maintenance, intellectual property
expansion plans, Budgets and all development,
partnering, commercialization plans. The
EMC shall determine the Categorization
of all potential SDC Product(s), determine
a suitable development program for
each SDC Product and will review and
approve all Budgets pursuant to Section
3.4. The EMC shall also monitor the
allocation of research and development work
between the Parties and shall recommend
changes as necessary. The Parties shall
report to the EMC on all significant
clinical, regulatory and intellectual
property issues relating to SDC Product(s),
and the EMC shall make
recommendations and provide strategic
guidance with respect to such issues. In
the event that any disputes arise in any
way relating to the foregoing functions
of the EMC related to Category I, II or III
SDC Product(s), their performance
criteria, Third Party sale or Third Party
licensing terms and conditions or any
other Product related issue before the EMC
that can not be resolved by the EMC,
the issue will be resolved on a
Category-by-Category basis in favor of the Party
designated below:
Category I and II
THERAPEUTICS
Category III
INNOVATIVE
3.3 Staging,
Research/Clinical Development and Regulatory Filings.
(a) Staging of Development Efforts. Prior to the commencement of
any
research and development program of any SDC
Product(s), THERAPEUTICS, on a Best
Efforts basis, shall evaluate the SDC Core
Technology and explore various
alternative uses in order to determine what
it believes to be the potential
commercially reasonable development of
viable SDC Product(s). Upon
identification of what it believes to be a
potentially viable SDC Product(s) and
completion of its Categorization by the
EMC, the Party bearing the primary
responsibility for the conduct and
execution of the research and development
activities for said SDC Product(s) shall
commence the research and development
activities reviewed and approved by the
EMC.
(b) Clinical Development. Utilizing commercially reasonable
efforts,
the collaborative research and clinical
development program will follow the most
efficient path to achieve registration of
Categories I, II, IIIA and IIIB SDC
Product(s) with THERAPEUTICS bearing the
primary and significant role in the
conduct and execution of the research and
clinical development activities for
Categories I, II, IIIA and IIIB SDC
Product(s), while INNOVATIVE will bear
similar responsibilities for all Categories
IIIC and IIID SDC Product(s). The
Parties further agree to fully cooperate as
necessary to support the programs
undertaken under this Agreement and freely
acknowledge that the distribution of
responsibility may be adjusted and changed
from time to time by unanimous
decision of the EMC.
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 10 OF 43
<PAGE>
(c) Regulatory Filings. With regard to Category I and Category II
SDC
Product(s) and after review and approval by
the EMC, THERAPEUTICS shall cause to
prepare and file in its own name as
"sponsor" any and all INDs and NDAs,
including ANDAs, NADAs, PMAs, IDEs
("Investigational Device Exemptions"), 510Ks,
and supplements or other regulatory
submissions (collectively the "Regulatory
Filings") for SDC Product(s) requiring
Agency or regulatory compliance in the
United States. The EMC has the right to
review and approve all regulatory
submissions, but is required to do so in a
timely manner with approval not being
unreasonably withheld. A single
representative of INNOVATIVE has the right to
attend any and all FDA meetings (as an
observer only), subject to THERAPEUTICS
approval and said approval will not be
unreasonably withheld.
(d) Diligence. In their respective capacities and in regard to
the
respective Category types, THERAPEUTICS and
INNOVATIVE, on a Best Efforts basis,
will each diligently carry out the research
and development of SDC Product(s) as
provided in this Section 3.3. 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 and the research and
development program.
(e) Adverse Reactions. THERAPEUTICS shall be responsible for
reporting
to the appropriate regulatory authorities
any and all adverse events related to
the use of any Category I and Category II
SDC Product(s), while INNOVATIVE shall
bear said responsibility for all Category
III SDC Product(s). Adverse events
related to the use of any SDC Product(s)
shall be recorded in a single database,
maintained by THERAPEUTICS and the Parties
will coordinate their efforts to
assure that all adverse events are properly
reported INNOVATIVE will report all
adverse events to THERAPEUTICS within 5
days of notification regardless of the
Category of the Product.
In the event of termination or breach, or for any other reason
THERAPEUTICS transfers its ownership of any
Regulatory Filings for any SDC
Product(s) to INNOVATIVE, INNOVATIVE shall
assume and become responsible for the
reporting of adverse events for any
Category I and Category II SDC Product(s).
3.4 Budgets. It is agreed between the Parties that, as of the
Effective
Date, both THERAPEUTICS and INNOVATIVE, as
part of the Development Plan and
Technology Development Plan will have
submitted its initial proposed Budgets for
its activities under this Agreement (a copy
of which is attached hereto as
Exhibit B). All future projected Budgets
for the budgetary periods determined by
the EMC relating to all future research and
development activities of each and
every SDC Product(s) developed under this
Agreement, and work proscribed by the
Technology Development Plan will be
submitted to the EMC for its review and
approval. Said Budgets shall
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 11 OF 43
<PAGE>
include projected costs for THERAPEUTICS'
internal and external research and
development efforts as well as INNOVATIVE's
proposed activities under the
Development Plan and Technology Development
Plan. In the event that either Party
determines that its efforts and activities
will result in a budget overrun in
excess of ten (10.0%), such Party will
immediately notify the EMC thereof.
Budgets in excess of 10% must receive EMC
approval to be eligible for
reimbursement per Section 3.6. Budget
overruns may include line items not
previously included in an approved Budget.
These new items must be approved by
the EMC to be eligible for reimbursement.
Approval cannot be withheld for new
items requested by the Agency, directly or
indirectly, for a Product.
3.5 Reports. To the degree applicable, THERAPEUTICS shall
provide
monthly reports to INNOVATIVE, as follows:
(i) concerning its past and
contemplated research and development
efforts and activities relating to all SDC
Product(s), including all technical,
scientific and clinical progress; and (ii)
concerning its past and contemplated
efforts and activities in locating,
identifying and pursuing potential Third
Party purchasers or licensees with the
requisite capital and funding capabilities
for an FDA-mandated clinical testing
phase and the maximization of the
commercial potential of the identified SDC
Product(s). In particular, such reports as
warranted shall include specific
budgets, timetables and time and events
schedules for activities in the research
and development of the SDC Product(s), the
potential marketing and positioning
of the SDC Product(s), competitive issues
and THERAPEUTICS' primary sales and
marketing objectives with respect to
"partnering" of the SDC Product(s) on a
worldwide basis with an emphasis on the
United States.
To the degree applicable, INNOVATIVE shall provide monthly reports
to
THERAPEUTICS, as follows: (i) concerning
its past and contemplated research and
development efforts and activities relating
to all improvements and its progress
with Category III Products, including all
technical, scientific and clinical
progress; and (ii) concerning its past and
contemplated efforts and activities
in locating, identifying and pursuing
potential Third Party purchasers or
licensees with the requisite capital and
funding capabilities for any required
testing and the maximization of the
commercial potential of the identified
Category III SDC Product(s) and (iv) a
patent update regarding efforts to
strengthen and broaden the SDC Core
Technology and Improvements (Technology
Development Plan) In particular, such
reports as warranted shall include patent
application updates and/or pending
applications, specific budgets, timetables
and time and events schedules for past and
contemplated activities in the
research and development of the SDC
Product(s), the potential marketing and
positioning of the SDC Product(s),
competitive issues and INNOVATIVES' primary
sales and marketing objectives with respect
to "partnering" of the SDC
Product(s) on a worldwide basis with an
emphasis on the United States.
3.6 Development Costs And Reimbursement.
(a) General. THERAPEUTICS shall pay, on a current basis, all
research and development expenses, both
internal and external, in carrying out
its responsibilities as set forth in the
Development Plan, for Category I, II
and those
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 12 OF 43
<PAGE>
Category III SDC Product(s) categorized by
the FDA as OTC drug products (Exhibit
B as 3A and 3B). INNOVATIVE shall pay, on a
current basis, any and all research
and development expenses for Category III
SDC Product(s) both internal and
external, exclusive of products categorized
by the FDA as OTC drug products, as
well as ongoing intellectual property
maintenance expenses in carrying out its
responsibilities as set forth in the
Technology Development Plan, as modified
from time to time by the EMC.
The Parties will be reimbursed for all EMC approved expenses from
funds
derived from Partnered Transactions
described below and further detailed in
Exhibit D.
(b) Reimbursement Of THERAPEUTICS Research/Development Costs
And Expenses And Partnering Costs. Upon the
sale or licensing to a Third Party
of any Category I, II or III SDC Product(s)
developed pursuant to this Agreement
and, to the degree funds are available from
the Partnered Transaction(s),
THERAPEUTICS shall be entitled to
reimbursement for all Development Costs and
its time, expenses and legal fees directly
related to partnering activities
involved in the sale or license of each
Product incurred pursuant to the
Development Plan and as more fully set
forth in the Reimbursement Schedule
contained in Exhibit D attached hereto.
Reimbursement for EMC approved expenses
will be made from the proceeds of Partnered
Transactions for the Product(s) for
which the expenses were incurred.
The Parties acknowledge that THERAPEUTICS will incur certain
non-Product specific pre-clinical expenses
that support multiple Products. The
Parties agree that THERAPEUTICS shall be
entitled to reimbursement of such
non-Product specific preclinical expenses
from the proceeds of the first three
(3) Category I, II and those Category III
SDC Product(s) categorized by the FDA
as OTC drug products (Exhibit B as 3A and
3B) Partnered Transactions, with the
total amount of such non-Product specific
pre-clinical expenses allocated
equally across the three Partnered
Transactions.
(c) Reimbursement Of INNOVATIVE's Acquisition Costs, Prior
Research/Development Costs And Expenses,
On-Going Maintenance Expenses And
Partnering Costs. The Parties acknowledge
that, prior to the Effective Date,
INNOVATIVE has incurred costs and expenses
in excess of $2,200,000.00. Upon the
sale or licensing to a Third Party of
Category I, II or III SDC Product(s)
developed pursuant to this Agreement and,
to the degree funds are available from
the Partnered Transaction(s), INNOVATIVE
shall be entitled to reimbursement in
the mutually agreed-upon amount of
$2,200,000.00 for costs and expenses incurred
prior to the Effective Date. One fourth
(i.e., $550,000) of the aforementioned
$2,200,000.00 reimbursement due INNOVATIVE
will be allocated to and recovered
from the proceeds of each of the first four
(4) SDC Product Partnering
Transactions regardless of the Category of
the SDC Product.
INNOVATIVE shall be reimbursed for Development Costs, 50% of the
costs
directly related to maintenance and
expansion of the SDC Core Technology and
100% of the ongoing intellectual property
costs for new medical, dental or
veterinary indications directly related to
the SDC Products and incurred after
the Effective Date
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 13 OF 43
<PAGE>
pursuant to the Development Plan and as
more fully set forth in the
Reimbursement Schedule contained in Exhibit
D attached hereto. Such
reimbursement for EMC approved expenses
will be made from the proceeds of
Partnered Transactions for the Product(s)
for which the expenses were incurred.
3.7 Minimum Development Performance Standard. If, regardless of
whether
THERAPEUTICS exercises its Best Efforts,
within two (2) years from the date of
payment of the Initial Licensing Fee as
required by Section 5.1 of this
Agreement at least five (5) SDC Products
reviewed and approved by the EMC, in
any combination of Category I or II
products, with not less than two in either
Category I or II, are not under Development
under the terms of this Agreement,
then the Parties agree that this Agreement
shall be automatically terminated and
the licensing rights granted by INNOVATIVE
to THERAPEUTICS under Section 2.1
shall terminate and revert to INNOVATIVE;
provided, however, that any SDC
Product(s) under Development and all
licenses and sublicenses related to the
continued development of those SDC
Product(s) shall remain unaffected by
termination under this Section 3.7 and the
terms of this Agreement shall remain
in full force and effect for the continued
Development of those SDC Product(s).
Upon termination under this Section 3.7,
INNOVATIVE shall be entitled to proceed
with the development of any Product(s) in
the medical, dental and/or veterinary
fields for human or animal health, in any
way it sees fit; provided however,
that INNOVATIVE shall not engage in the
development and/or production of any
Product(s) that is competitive with the
continued Development of an SDC
Product(s) under the terms of this
Agreement and those Products that are the
subject of active Third Party substantive
discussions regarding its licensing or
sale.
SECTION 4.0
DUTIES AND RESPONSIBILITIES
4.1 THERAPEUTICS' Duties and Responsibilities. With regard to
Category
I, II and III Products, on a Best Efforts
basis, THERAPEUTICS shall provide:
(a) Research and
Development Program. Based upon its expertise
and on a commercially reasonable basis
exercising its Best Efforts, THERAPEUTICS
will establish an integrated Development
Plan for the implementation of research
and development programs for each SDC
Product(s) evaluated and identified under
Section 3.3(a) that, in its exercise of
sound business judgment, it deems worth
pursuing. The Development Plan, with
mutually agreed upon performance standards
and criteria, including time and event
scheduling, will identify potential SDC
Healthcare Product candidates, under
Categories I and II, as set forth in
Section 3.0, for development by either
THERAPEUTICS or a Third Party(s).
THERAPEUTICS shall collaborate and assist
INNOVATIVE in identifying Category III
SDC Product candidates. Upon evaluation and
identification and SDC Product
Categorization and approval by the EMC,
THERAPEUTICS will conduct all product
development, as more fully set forth in
Section 3.0 hereof and bear full
responsibility for all technical,
scientific and clinical studies associated
with the research and development of all
Category I and II SDC Product(s) and
those Category III SDC Product(s)
categorized by the FDA as OTC drug products
(Exhibit B as 3A and 3B).
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 14 OF 43
<PAGE>
(b) Identification and Solicitation of Third Party Purchasers
for SDC Product(s). THERAPEUTICS shall use
Best Efforts to identify and solicit
potential Third Party purchasers for sale
of any Category I or Category II SDC
Product(s) and, will support, as
appropriate INNOVATIVE'S efforts to arrange
sale of a Category III SDC Product(s).
THERAPEUTICS will negotiate deal terms
for sale of Category I and II Product(s) to
the Third Party(s) and present such
term sheet(s) to EMC for review and
approval prior to execution. In most cases,
it is anticipated that such a transaction
will occur on or before the completion
of a Phase II Clinical Trial or the
equivalent for a given Product.
(c) Identification and Solicitation of Third Party Licensees
for SDC Product(s). On a Best Efforts
basis, THERAPEUTICS shall identify and
solicit potential Third Party licensees for
Partnered Transaction(s) for all
Category I and II SDC Products.
THERAPEUTICS will negotiate deal terms for
licensing Category I and II Product(s) to
Third Party(s) and present term
sheet(s) to EMC for review and approval
prior to execution. In most cases, it is
anticipated that such a transaction will
occur on or before the completion of a
Phase II Clinical Trial or the equivalent
for a given Product.
4.2 INNOVATIVE's Duties and Responsibilities. In addition to
licensing
its SDC Core Technology pursuant to the
terms of this Agreement, as set forth in
Section 2.1 hereof, and with regard to
Categories I, II and III Products,
INNOVATIVE shall provide the following:
(a) Maintenance and Expansion of SDC Core Technology. On a
Best Efforts basis, INNOVATIVE shall
maintain its SDC Core Technology, all
related patents and pending patents and
continue to expand the SDC Core
Technology and intellectual property
opportunities related to Improvements as is
deemed necessary, reasonable and
appropriate in light of the SDC Product
development activities outlined in this
Agreement and approved by the EMC and
described in the Technology Development
Plan.
(b) Research and Development Program. Utilizing its Best
Efforts and with the assistance of
THERAPEUTICS, INNOVATIVE will establish an
integrated Development Plan for the
implementation of research and development
programs for all Category III SDC
Product(s) evaluated and identified under
Section 3.3(a) that, in its exercise of
sound business judgment, it deems worth
pursuing. The Development Plan, with
mutually agreed-upon performance standards
and criteria, including time and event
scheduling, will identify potential SDC
Personal Care candidates under Category
III, as set forth in Section 3.0, for
development and THERAPEUTICS shall
collaborate and assist INNOVATIVE in
identifying Category III SDC Product
candidates. Upon evaluation, identification
and approval by the EMC of such Category
III SDC products, INNOVATIVE will
conduct or have conducted all product
development, as more fully set forth in
Section 3.0 hereof and bear full
responsibility for all studies associated with
the research and development of all
Category III SDC Product(s) exclusive of
products categorized by the FDA as OTC drug
products The product development of
the aforementioned OTC products is the
responsibility of THERAPEUTICS.
W02-W97-oc:LGA\41332973.5
FINAL DEVELOPMENT AND LICENSING AGREEMENT
CONFIDENTIAL
DATED SEPTEMBER 5, 2003 BY AND BETWEEN INNOVATIVE
MEDICAL SERVICES AND THERAPEUTICS, INC.
Page 15 OF 43
<PAGE>
(c) Identification and Solicitation of Third Party Purchasers
for SDC Product(s). On a Best Efforts
basis, INNOVATIVE shall identify and
solicit potential Third Party purchasers
for sale of Category III SDC
Product(s). INNOVATIVE will negotiate terms
for sale of Category III Products to
Third Party(s) and present such term sheet
to EMC for review and approval prior
to execution. In most cases, it is
anticipated that such a transaction will
occur on or before the completion of a
Phase II Clinical Trial or the equivalent
for a given Product.
(d) Identification and Solicitation of Third Party Licensees
for SDC Products. On a Best Efforts basis,
INNOVATIVE shall identify and solicit
potential Third Party licensees of any
Category III SDC Product(s) and, will
support, as appropriate THERAPEUTICS'
efforts to arrange sale of a Category I
and II SDC Product(s). INNOVATIVE will
negotiate terms for licensing Category
III Products to Third Party(s) and present
such term sheet to EMC for review and
approval prior to execution. In most cases,
it is anticipated that such a
transaction will occur on or before the
completion of a Phase II Clinical Trial
or the equivalent for a given Product.
(e) Pre-Commercial Manufacturing of Drug Substance. INNOVATIVE
shall by January 1, 2004 produce and
provide at no cost to THERAPEUTICS,
cGMP-quality, active pharmaceutical
ingredient (SDC drug substance) based upon
SDC Core Technology or Improvements for
incorporation into investigational SDC
Healthcare Products, use in all of the
formulation development activities,
pre-clinical and clinical studies and
trials for all Category I,II and III SDC
Product(s) conducted by or under the
direction of THERAPEUTICS or any Licensee
of the SDC Products. INNOVATIVE will
provide the SDC (Raw Materi
