Confidential Treatment
Requested. Confidential portions of this document have been
redacted and have been separately filed with the
Commission.
***** Confidential material
redacted and filed separately with the
Commission.
LICENSE AND DEVELOPMENT
AGREEMENT
THIS LICENSE AND DEVELOPMENT
AGREEMENT is entered
into as of the 26 th day of February, 2003 (the “
Effective Date ”) by and between XTL
BIOPHARMACEUTICALS LTD. ( “XTL” ), and
B&C BIOPHARM CO., LTD. ( “B&C”
)
RECITALS
WHEREAS, B&C has certain intellectual property rights
and know-how relating to the B&C Compounds (as defined herein);
and
WHEREAS, XTL desires to obtain an exclusive license to
such intellectual property rights and know-how, and B&C desires
to grant such a license on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and promises contained herein, the parties agree as
follows:
ARTICLE
1.
DEFINITIONS
As used herein, the following terms shall have
the following meanings:
1.1.
“Affiliate”
shall mean any company or entity
controlled by, controlling, or under common control with a party
hereto and shall include without limitation any company 50% or more
of whose voting stock or participating profit interest is owned or
controlled, directly or indirectly, by a party, and any company
which owns or controls, directly or indirectly, 50% or more of the
voting stock of a party.
1.2.
“Asia” shall mean those countries set forth on
Schedule A .
1.3.
“B&C
Compounds” shall mean the compounds referred to by B&C
as *****.
1.4.
“FDA” shall mean the United States Food and Drug
Administration or any other governmental agency of a country within
the Licensed Territory having responsibilities comparable to those
of the United States Food and Drug Administration.
1.5.
“Field” shall mean all therapeutic uses against
HCV.
1.6.
“HCV” shall mean the Hepatitis C virus.
1.7.
“Licensed
Know-How” shall mean (a) tangible or intangible
know-how; (b) trade secrets, inventions (whether or not
patentable); (c) data; (d) preclinical and clinical
results; (e) other information; and (f) any physical,
chemical or biological material and any replication or any part of
such material; limited, however, to that which is necessary or
useful for the development, manufacture, use or sale of Licensed
Product, and which B&C owns, controls or has a license (with
the right to sublicense) on or after the Effective Date.
***** Confidential material
redacted and filed separately with the
Commission.
1.8.
“Licensed
Patents” shall
mean all patents, both foreign and domestic, including without
limitation all substitutions, extensions, reissues,
re-examinations, renewals and inventors certificates and all patent
applications (including provisionals, divisionals, continuations
and continuations-in-part), which B&C owns, controls or has a
license (with the right to sublicense) on or after the Effective
Date, that would be infringed by the development, manufacture, use,
import, offer for sale or sale of Licensed Product in the Field in
the Licensed Territory, including without limitation those patents
and any patents issuing on those patent applications listed on
Schedule C hereto.
1.9.
“Licensed
Product” shall
mean any product incorporating a B&C Compound.
1.10.
“Licensed
Technology” shall mean the Licensed Patents and the Licensed
Know-How.
1.11.
“Licensed
Territory” shall mean the Rest of the World and
Japan.
1.12.
“Net Royalty
Payments” shall mean the royalty payments actually
received by XTL from its sublicensees for sales of Licensed
Product, net of any amounts XTL shall be required to pay to third
parties with respect to such sales.
1.13.
“Net
Sales” shall
mean all revenues actually received by XTL, its Affiliates or its
sublicensees from the sale of Licensed Product, after deduction for
transportation charges, commissions, discounts, credits allowed for
defective or returned or recalled goods and other allowances
(actually paid or allowed, including but not limited to, prompt
payment and volume discounts, charge backs from wholesalers),
insurance and sales and other taxes based on sales prices when
included in gross sales, but not including taxes assessed on income
derived from such sales.
1.14.
“Net Sublicense
Payments” shall mean license fees, milestones and similar
payments, other than royalty payments, actually received by XTL
from its sublicensees, but excluding (a) payments made to XTL if
said payments are designed to pay for research and development
costs to be incurred under, and then actually incurred after the
date of, the agreement under which said payments are made and (b)
equity investments in XTL. These payments shall be on amounts net
of any payments XTL shall be required to make to third parties with
respect to such license fees, milestones and other similar
payments. By way of illustration, if XTL receives $100 in license
fees from a sublicensee of the B&C Compounds, and XTL is
required to pay $10 to third parties, XTL shall pay $***** to
B&C (*****).
1.15.
“Phase I Clinical
Trials” shall
mean the initial human studies for a Licensed Product required by
FDA to ascertain safety of the Licensed Product.
1.16.
“Phase III Clinical
Trials” shall
mean the expanded human studies necessary for filing with, and (if
successful) approval of marketing by, FDA of a Biologics License
Application or New Drug Application (or corresponding application,
registration or certification outside of the United States) for a
Licensed Product.
1.17.
“Rest of the
World” shall
mean all the countries of the world excluding Asia.
2
***** Confidential
material redacted and filed separately with the
Commission.
1.18.
“Valid
Claim” shall
mean a patent claim contained in an issued and unexpired patent
which has not lapsed or been declared invalid or unenforceable by a
court in a decision which is unappealable or not
appealed.
ARTICLE
2.
LICENSES; DEVELOPMENT AND
COMMERCIALIZATION
2.1.
GRANT BY B&C
TO
XTL.
(a) Subject to the terms of this Agreement, B&C
hereby grants to XTL an exclusive license, with the right to
sublicense, under the Licensed Technology to make, have made, use,
sell, offer to sell and import Licensed Product in the Field within
the Licensed Territory.
(b) B&C hereby agrees to grant a license, with
the right to sublicense, under the Licensed Technology to XTL, a
third party or a separate entity formed by the parties, as may be
agreed by the parties pursuant to Section 2.2(b) with
respect to development and commercialization of Licensed Product in
the countries of Asia, excluding Japan and Korea.
2.2.
DEVELOPMENT AND
COMMERCIALIZATION OF LICENSED PRODUCT.
(a) As between the parties, B&C shall retain all
development and commercialization rights to the B&C Compounds
in Korea and shall be solely responsible for all costs associated
with any such efforts; provided that (i) all clinical studies
conducted by B&C or its Affiliates of products incorporating
B&C Compounds shall be designed by B&C in collaboration
with XTL, (ii) B&C shall keep XTL informed of the ongoing
progress of all such clinical studies on a current basis, (iii)
B&C shall promptly provide XTL with complete data from such
clinical studies and (iv) upon the written request of XTL, B&C
shall promptly provide XTL with all data from pre-clinical studies
of B&C Compounds which XTL has chosen for clinical development,
including, without limitation, toxicity, pharmacokinetics and
biological activity data. XTL shall have the right to use such data
solely for its submissions seeking regulatory or marketing approval
of B&C Compounds outside of Korea.
(b) Within the countries of Asia, but excluding
Japan and Korea, (i) XTL and B&C shall jointly develop and
commercialize Licensed Product in the Field, (ii) the parties shall
license the B&C Compounds to a third party for development and
commercialization in the Field, or (iii) XTL and B&C shall form
a separate entity to develop and commercialize B&C Compounds in
the Field, as mutually agreed and as may be required or advisable
due to legal and tax requirements. In each case, B&C and XTL
shall equally share all costs for development and commercialization
of products incorporating B&C Compounds in all such countries
as well as all revenues received therefrom.
(c) XTL shall be responsible for the development and
commercialization of Licensed Product in the Field in the Licensed
Territory, either on its own or by licensing to or collaborating
with one or more third parties; provided that (i) XTL shall keep
B&C informed on a current basis of the ongoing progress of all
clinical studies conducted by XTL or its Affiliates of products
incorporating B&C Compounds, (ii) XTL shall promptly provide
B&C with complete data from such clinical studies and (iii)
upon the written request of B&C, XTL shall promptly provide
B&C with all data from pre-clinical studies of B&C
Compounds which B&C has chosen for clinical development in
Korea, including, without limitation, toxicity, pharmacokinetics
and biological activity data. B&C shall have the right to use
such data solely for its submissions seeking regulatory or
marketing approval of B&C Compounds in Korea.
3
*****
Confidential material redacted and filed separately with the
Commission.
(d) In Japan, B&C shall receive annual payments
equal to 50% of all revenues derived by XTL from the development
and commercialization of products incorporating a B&C Compound
for so long as the composition of matter of the B&C Compound is
covered by a Valid Claim of a Licensed Patent in Japan; provided
that no such payments shall be made until XTL has offset 50% of all
costs incurred in the development and commercialization of such
products.
(e) In the Rest of the World, the costs of
development and commercialization shall be fully borne by
XTL.
(f) Solely for purposes of clarification, the
parties’ respective rights under this Section 2.2 are
summarized on Schedule D attached hereto.
2.3.
DUE
DILIGENCE. Subsequent to XTL’s filing of an
Investigational New Drug Application with the FDA, or comparable
foreign filing, for a Licensed Product, XTL and its Affiliates and
any sublicensees for the Licensed Product shall use commercially
reasonable efforts to develop and commercialize the Licensed
Product. The parties hereby agree that XTL’s due diligence
obligations in this Section 2.3 shall be deemed to be fully
satisfied upon XTL’s and its Affiliates and sublicensees
spending, in the aggregate, at least U.S. $500,000 per year on the
development and commercialization of the Licensed
Product.
2.4.
ADDITIONAL B&C COMPOUNDS
SUPPLY AND SUPPORT.
(a)
Additional B&C
Compounds. From the
Effective Date until May 21, 2004, B&C shall keep XTL informed
of any meaningful developments related to any compound in the *****
set forth on Schedule B which shows potential activity
against HCV, and shall promptly provide XTL with a report for each
such compound, which will include all relevant data regarding its
activity against HCV. If XTL determines in good faith that one or
more such compound(s) show(s) adequate therapeutic index and
display pharmacokinetic properties, XTL shall promptly notify
B&C of its determination, and, upon such notification,
(i) B&C shall promptly supply to XTL at least 5 grams of
each such compound and, to the extent not already provided to XTL,
related HPLC, mass spectrometry and chemical structure information
and (ii) Schedule B shall be deemed to be automatically
amended to reflect the addition of such compound as a B&C
Compound. From the Effective Date until May 21, 2004, B&C shall
maintain an active program to develop analogs of *****.
(b)
Supply of B&C Compounds
for Additional Studies. Upon any request by XTL for additional
quantities of any B&C Compound or other compound owned or
licensed by B&C to be used by XTL as a negative control, for
toxicological, pharmacological or other non-clinical studies,
B&C shall use best efforts to (i) satisfy any such request
within one month of the request, and (ii) promptly supply XTL with
sufficient chemical synthesis information to enable XTL to
manufacture or have manufactured the requested compound.
XTL’s request shall state the intended use for such
additional quantities of B&C Compounds or other compounds, and
XTL warrants that the B&C Compounds or other compounds will be
used solely for the stated uses. XTL shall reimburse B&C for
its direct reasonable costs incurred in supplying such additional
quantities to XTL, such costs not to exceed a price of US $4,000
per 50 grams.
4
***** Confidential material
redacted and filed separately with the
Commission.
(c)
Development
Support. B&C
shall support XTL’s development of the B&C Compounds as
set forth on Schedule E .
2.5.
NONCOMPETITION. During the term of this Agreement, B&C
shall not, directly or indirectly, e.g., as a consultant, agent,
principal, partner, joint venturer, or stockholder, develop or
commercialize any products incorporating B&C Compounds in the
Field or grant any licenses to third parties for the development or
commercialization of any products incorporating B&C Compounds
in the Field, except as permitted under Section 2.2(a) for
the development and commercialization of B&C Compounds in Korea
or Section 2.2(b) as agreed to by the parties with respect
to the development and commercialization of B&C Compounds in
Asia (excluding Japan and Korea).
2.6.
RIGHT OF FIRST
NEGOTIATION. Until
the third anniversary of the Effective
Date, B&C shall notify XTL in writing of any new compounds
owned or licensed by B&C that have potential activity in the
Field ( “New Compounds” ) and shall
provide XTL with (1) all HPLC, mass spectrometry and chemical
structure information for each such compound and (ii) 5 grams of
each New Compounds for XTL’s initial evaluation. Upon notice
from XTL at any time within 120 days after XTL’s receipt of 5
grams of a New Compound and the required information with respect
to such compound, XTL and B&C shall enter into good faith
negotiations to enter into an exclusive license to XTL to make,
have made, use, sell, offer to sell and import products
incorporating the New Compound in the Field within the Licensed
Territory. The terms for such license shall be no less favorable to
XTL than those contained herein.
ARTICLE
3.
COMMERCIAL
TERMS
3.1.
LICENSE FEE.
XTL shall pay to B&C a license
fee of US $***** (the “License Fee”), payable within 30
days of the Effective Date after B&C has complied with,
provided that B&C has theretofore complied with its obligations
under items 1, 2 and 3 of Schedule E .
3.2.
MILESTONES.
As nonrefundable advances against
the royalties payable to B&C pursuant to Section 3.3 ,
XTL shall make payments to B&C in connection with the following
milestones:
|
Milestone
|
|
Payment
|
|
*****
|
|
U.S. $*****
|
|
|
|
|
|
*****
|
|
U.S. $*****
|
|
|
|
|
|
*****
|
|
U.S. $*****
|
|
|
|
|
|
*****
|
|
U.S. $*****
|
5
***** Confidential material
redacted and filed separately with the
Commission.
3.3.
ROYALTIES.
XTL shall pay to B&C within 90
days after the end of each calendar year, royalties on Net Sales in
each country within the Rest of the World where the composition of
matter of the B&C Compounds incorporated in the Licensed
Product is covered by a Valid Claim of a Licensed Patent, as
follows:
(a) If sales of Licensed Product are made by XTL or
an XTL Affiliate (either directly or indirectly through a
distributor), ***** of Net Sales by XTL or its
Affiliate;
(b) If sales of Licensed Product are made by a
sublicensee of XTL, the lesser of (i) ***** of Net Royalty Payments
or (ii) ***** of Net Sales by such sublicensee; and
(c) ***** of Net Sublicense Payments.
3.4.
REDUCTION FOR MILESTONE
PAYMENTS. XTL shall
have the right to reduce the royalty payments due to B&C under
Section 3.3 to offset the full amount of the payments
advanced by XTL to B&C pursuant to Section 3.2 ;
provided, however, that the annual royalties otherwise payable
pursuant to Section 3.3 shall not be reduced by more than
*****. To the extent that any such advance payments made by XTL are
not fully offset by a reduction in the royalty payments made by XTL
for any year, XTL shall be entitled to carry forward the amount not
so covered to subsequent years until the full amount of such
advances is offset.
3.5.
ROYALTY
TERM. The royalties
payable under Section 3.3 shall be paid to B&C
until the last to expire Licensed Patent, on a country-by-country
basis.
ARTICLE
4.
PAYMENTS; RECORDS;
AUDIT
4.1.
PAYMENTS;
REPORTS. All amounts
payable under this Agreement shall be paid in U.S. Dollars. Each
payment of royalties by XTL shall be accompanied by a statement of
the amount of Net Sales, Net Royalty Payments and Net Sublicensee
Payments received during such period, and all other information
necessary to determine the appropriate amount of such
payments.
4.2.
EXCHANGE
RATE. The rate of
exchange to be used in computing the amount of currency equivalent
in United States Dollars due hereunder shall be made at the average
rate of exchange quoted for the final 20 business days of the
royalty period by Citibank (or its successor) in New York
City.
4.3.
RECORDS AND
AUDIT. During the
term of this Agreement and for a period of two years thereafter,
XTL shall keep complete and accurate records in sufficient detail
to permit B&C to confirm the accuracy of all payments due
hereunder. B
