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EXHIBIT 10.12
EXECUTION COPY
EXCLUSIVE LICENSE AGREEMENT
THIS
EXCLUSIVE LICENSE AGREEMENT (this "Agreement") is made effective
the
19th day of May, 2003 ("Effective Date"), by and between ILEX
Products, Inc., a
Delaware corporation having its principal place of business at 4545
Horizon Hill
Blvd., San Antonio, Texas 78229-2263 (hereinafter called "ILEX"),
and Quatrx
Pharmaceuticals Company, a corporation organized and existing under
the laws of
the State of Delaware having its principal place of business at
5430 Data Court,
Suite 300, Ann Arbor, Michigan 48108-8935 (hereinafter called
"Licensee"). ILEX
and Licensee are each individually referred to herein as a "Party"
and
collectively as the "Parties".
WHEREAS,
ILEX owns certain inventions that are described in the
"Licensed
Patents" defined below, and ILEX is willing to grant a license to
Licensee under
all of the Licensed Patents and Licensee desires a license under
all of them;
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements
set forth below, the parties covenant and agree as follows:
SECTION 1. DEFINITIONS.
"Affiliate" shall mean each and every business entity
controlling,
controlled by or under common control with a Party. For purposes of
this
definition, "control" shall mean ownership, directly or indirectly,
of more than
fifty percent (50%) of the voting or income interest of the
applicable business
entity.
"Agreement" has the meaning set forth in the first paragraph.
"Claim"
has the meaning set forth in Section 9.1.
"Confidential Information" has the meaning set forth in Section
7.1.
"Disclosing Party" has the meaning set forth in Section 7.1.
"Effective
Date" shall mean the date first above written as the effective
date of this Agreement.
"FDA"
shall mean the United States Food and Drug Administration.
"Field"
shall mean the treatment of lipid disorders, atherosclerosis
and
all other cardiovascular related diseases.
"First
Commercial Sale" shall mean the first sale of a Product to a
third
party (other than an Affiliate or sublicensee) in a jurisdiction
after
regulatory approval for such sale has been obtained from the
appropriate
regulatory authorities in such jurisdiction.
"ILEX
LDL/Lp(a) and HDL/Apo E Research Platforms" shall mean all
research
and development activities conducted by ILEX which relate to LDL,
Lp(a), HDL,
and/or Apo E which involve compositions
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claimed and/or described in the Licensed Patents. For the avoidance
of doubt,
compositions and uses claimed or for which claims are obtained in
other patents
and/or patent applications owned or licensed to ILEX and/or its
affiliates,
which are not part of the Licensed Patents (see Appendix A for list
of "Excluded
Patents and Patent Applications"), shall not be included in the
ILEX LDL/Lp(a)
and HDL/Apo E Research Platforms even if such compositions are
disclosed as
having lipid lowering or similar activities (hereinafter
"Excluded
Compound(s)").
"Invention" has the meaning set forth in Section 8.1.
"Inventor"
has the meaning set forth in Section 8.1.
"Lead
Compound" shall mean a Licensed Compound which Licensee
notifies
ILEX in writing, at any time during the first two (2) years after
the Effective
Date for a Product decreasing LDL and Lp(a) in the Field and the
first four (4)
years after the Effective Date for a Product to treat HDL and/or
Apo E in the
Field, is one of Licensee's lead development candidates.
"Licensed
Compound" shall mean a chemical compound, the composition of
matter or use thereof is claimed in a Licensed Patent.
"Licensed
Patents" shall mean only the patent applications and patents
listed in Exhibit A, which is attached hereto and is incorporated
herein by
reference, and any foreign counterparts thereof, and any
continuations,
continuations-in-part, divisions, re-issues, additions, renewals
and extensions
thereof, and any patents issuing therefrom, and all current and
future patents
necessary to practice the foregoing, e.g. patents to Product
metabolites, all to
the extent owned or licensed by ILEX or which ILEX has the right to
license or
sublicense to Licensee.
"Licensee"
has the meaning set forth in the first paragraph.
"Net
Sales" shall mean, with respect to Product, the gross receipts
from
sales in any country less deductions for: (i) transportation and
insurance
charges; (ii) sales and excise taxes, tax, tariff, duty or any
other
governmental charges (but excluding income, franchise and other
similar taxes)
or duties paid; (iii) normal and customary trade, and quantity
discounts and
rebates allowed; (iv) sales commissions actually paid to third
parties; (v)
allowances actually made on account of rejection or return by
customers; (vi)
credits, rebates, charge-back rebates, reimbursements or similar
payments
actually granted or given to wholesalers and other distributors,
buying groups,
health care insurance carriers, governmental agencies and other
institutions;
(vii) payments or rebates actually paid in connection with state or
federal
Medicare, Medicaid or similar programs. However, except where the
sublicensee or
Affiliate is the final consumer of the Product, any sale to a
sublicensee or
Affiliate shall be excluded from the computation of Net Sales, but
any
subsequent sale by the sublicensee or Affiliate to a third party
other than
another sublicensee or Affiliate shall be included in the
computation of Net
Sales.
"Party" or
"Parties" has the meaning set forth in the first paragraph.
"Product"
shall mean any product discovered or developed for use in the
Field from the ILEX LDL/Lp(a) and HDL/Apo E research platforms
conducted by ILEX
at any time prior to or during the term of this Agreement and
disclosed in, or
covered by at least one Valid Claim of any patent listed in Exhibit
A.
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"Royalty
Term" shall mean, with respect to a particular Product in any
country in the Territory, the period of time commencing on the
First Commercial
Sale of such Product in such jurisdiction and ending upon the
expiration of the
last to expire Licensed Patent containing a Valid Claim which would
be infringed
by the manufacture, use, importation, offer for sale, or sale of
such Product in
such country, provided that if the only such Valid Claim is a claim
in a pending
patent application, then the Royalty Term shall end **** from the
Effective
Date, unless after such **** period, Licensee has obtained, or
otherwise enjoys
marketing exclusivity for the Product in question in the applicable
jurisdiction
through non-patent related statutory means (hereinafter "Non-Patent
Statutory
Exclusivity") such as orphan drug or new chemical entity status, in
which case,
the Royalty term shall extend for the term of the Non-Patent
Statutory
Exclusivity.
"Technical
Information" shall mean any and all know-how, trade secret and
other information of a technical nature relating to any Product or
potential
Product, which is in the possession of ILEX as of the Effective
Date, and which
is necessary or useful to Licensee in furtherance of the research,
development,
manufacture or marketing of such Product or potential Product.
"Territory" shall mean the world.
"Valid
Claim" shall mean a claim contained in a pending patent
application
or in an issued patent, which claim has not expired and has not
been held
unenforceable, unpatentable or invalid by an unappealable decision
of a court or
other governmental agency of competent jurisdiction.
SECTION 2. GRANT.
2.1.
License. ILEX hereby grants to Licensee an exclusive (even as
to
ILEX) license under the Licensed Patents and the Technical
Information in the
Territory, with the right to grant sublicenses to make, have made,
use, sell,
have sold, and export and import Products to the full extent
necessary for the
research, development, commercialization and marketing of such
Products in the
Field, and the right to use all existing and future data relating
thereto owned
or controlled by ILEX. ILEX shall not develop or research any
compound derived
from the ILEX LDL/Lp(a) and HDL/Apo E Research Platforms conducted
by ILEX at
any time prior to or during the term of the Agreement for any
indications,
except that ILEX may conduct research and development on a Licensed
Compound
only for uses outside the Field if:
2.1.1. Licensee has designated such Licensed Compound as a Lead
Compound and thereafter has ceased development of such Licensed
Compound; or
2.1.2. the research and development of such Licensed Compound is
for
a method of administration that is not oral or transdermal and such
Licensed
Compound is not a Lead Compound; or
2.1.3. the research and development of such Licensed Compound is
for
a method of administration of such Licensed Compound that is oral
or transdermal
and such Licensed Compound is not a Lead Compound or a Reserved
Compound. For
purposes of this Section 2.1.3, "Reserved Compounds" shall mean (a)
up to four
Licensed Compounds which are not Lead Compounds, which have
activity for
indications relating to LDL or Lp(a) and which are selected by
Licensee at any
time prior to the second anniversary of the Effective Date and (b)
up to four
Licensed Compounds which are not Lead Compounds
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and are not included in Section 2.1.3 (a) above, which have
activity for
indications relating to HDL or Apo E and which are selected by
Licensee at any
time prior to the second anniversary after Licensee declares a Lead
Compound for
HDL or Apo E.
In the event ILEX commences research or development outside the
Field on a
Licensed Compound, and Licensee thereafter declares such Licensed
Compound as a
Lead Compound or a Reserved Compound, then ILEX shall cease all
research and
development work on such Licensed Compound. In the event ILEX
commences research
and development of any Licensed Compounds as permitted herein, the
parties shall
thereafter equally share the worldwide costs of filing, prosecution
and
maintenance of all Licensed Patents containing Valid Claims
covering such
Licensed Compound subject to Section 2.3.
ILEX shall use commercially reasonable efforts to restrict any
third party
sublicensee of any compounds owned or controlled by ILEX from
commercializing
such compounds in the Field. For the avoidance of doubt, the term
"controlled
by" in the previous sentence shall mean the possession by ILEX with
the right to
sublicense.
Within 90 days of the date hereof, ILEX shall deliver to Licensee,
at ILEX's
cost, copies of all materials consisting of the Licensed Patents
and Technical
Information and any other information, data or materials, whether
or not in a
tangible medium, relating to or necessary for the research and/or
development of
Products.
2.2. Right
of First Opportunity. In the event ILEX proceeds with research
and development permitted under this Section 2 and determines to
grant rights to
any third party with regard to such Licensed Compounds, ILEX shall
first provide
Licensee with written notice of such determination, along with a
copy of all
data, information and reports relating to such Licensed Compound
for use outside
the Field. If within **** days of receipt of such written notice,
Licensee
notifies ILEX in writing of Licensee's interest in the licensing
rights to such
Licensed Compound outside the Field, the Parties shall negotiate
for **** days
exclusively and in good faith the terms of such license to such
Licensed
Compound. In the event the parties fail to reach agreement on the
license terms
in the aforesaid **** day period, ILEX shall be free to offer the
same
opportunity to a third party without further obligation to
Licensee, provided,
however, that ILEX, for a period of not longer than one year shall
not grant to
any such third party a license to such Licensed Compound on terms
which in
aggregate are more favorable than the Licensee indicated it would
accept in the
foregoing **** day period.
2.3.
Maintenance of Licensed Patents. Subject to Section 2.1 and the
terms
of this Section 2.3, ILEX shall prosecute and maintain in the
Territory, using
outside patent counsel mutually agreed to, **** cost and expense,
all patents
and patent applications set forth on Exhibit A, using professional
and diligent
efforts. For purposes of the preceding sentence, the Parties agree
that the law
firm of Fulbright and Jaworski is mutually agreeable as of the
Effective Date,
provided that each Party retains the right to object to the use of
such firm in
the event circumstances change. For patent costs and expenses
incurred for
calendar year 2003 for Licensed Patents, the parties shall ****,
provided,
however, that if Licensee returns to ILEX or otherwise loses its
rights to a
Licensed Patent in one or more jurisdictions, then the parties
shall **** only
for the period of time prior to such return or loss of rights. If
Licensee
notifies ILEX in writing that it is no longer pursuing research or
development
of one or more Licensed Compounds claimed in a Licensed Patent, but
is pursuing
research or development of other Licensed Compounds claimed
therein, and ILEX
desires to pursue research and development of such Licensed
Compounds then the
parties shall thereafter **** the cost of filing, prosecution
and
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maintenance of such
Licensed Patent in all jurisdictions. Licensee shall
have the right to direct such prosecution and maintenance. In the
event Licensee
determines not to prosecute a patent in any jurisdiction in the
Territory,
Licensee shall notify ILEX in writing. Licensee's obligation to pay
for the cost
and expense of prosecuting or maintaining any such patent shall
cease effective
the date of such written notice. At Licensee's option, Licensee
shall have the
right to assume responsibility for the prosecution and maintenance
of all
patents and patent applications listed on Exhibit A, including all
corresponding
foreign patents and patent applications as Licensee shall deem
necessary to
file, prosecute and maintain.
SECTION 3. DEVELOPMENT; DATA SHARING.
3.1.
Development. Licensee shall be responsible for, and shall have
sole
control over the research and development of the Products,
including, without
limitation, the funding of such research and development. ILEX
shall not incur
any research or development costs or otherwise conduct research and
development
relating to Products, without the prior written consent of
Licensee.
3.2.
Diligence. Licensee shall use reasonable commercial efforts to
develop for the earliest market introduction (subject to all
required regulatory
approval) at least ****** indications and ****** indications,
provided that
under no circumstances shall Licensee be obligated to use more than
the level of
effort it used to develop any of its other products of equal market
potential.
In particular, Licensee shall:
a) for a
Product for ******:
i) file an
IND within **** of the Effective
Date;
ii) complete
Phase I clinical trials within ****
of acceptance of IND by FDA.
b)
for a
Product for ******, select a Lead Compound through a
reasonable experimental screening effort for full development
within **** of the Effective Date.
The time periods in subsections 3.2(a) and 3.2(b) shall be
suspended to the
extent that Licensee's development efforts are delayed due to
dosage
methodology, formulation, safety, efficacy, or regulatory issues or
availability
of clinical supplies or recruitment of clinical sites or clinical
patients.
3.3.
Reporting. Licensee shall provide to ILEX, on an annual basis
within
30 days of each anniversary of the Effective Date, a written report
summarizing
the current status and future plans for the development of
Products.
3.4.
Services Agreement. In the event that Licensee determines that
it
would be desirable to receive continued assistance from ILEX in the
conduct of
research and development of the Products after the 90 day period
set forth above
in Section 2.1, and provided that ILEX still owns or controls its
operations in
Geneva (Switzerland), then Licensee and ILEX shall negotiate in
good faith the
terms of a services agreement to cover such continued assistance.
In the event
ILEX has not fulfilled its obligation to deliver the items
described in Section
2.1 within the required 90 day period, then in addition to any
other remedies
available to Licensee, ILEX shall provide such services sufficient
to deliver
the items described in Section 2.1 at ILEX's expense.
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SECTION 4. CONSIDERATION.
4.1.
License Fee. Licensee agrees to pay to ILEX a non-refundable,
non-creditable license fee of $2,500,000, due within 5 business
days of the
Effective Date.
4.2.
Milestones. Licensee shall make the following milestone payments
to
ILEX within 30 days after the first achievement of each of the
following
milestones for each Product being developed by Licensee for
decreasing LDL and
Lp(a) within the Field:
<TABLE>
<CAPTION>
Milestone Event
Payment
<S>
<C>
Acceptance of an IND by the FDA.
$****
Dosing of the first patient in a
The greater of $**** or *******
Phase * clinical trial of the Product.
*******
*******
Dosing of the first patient in a
The greater of $**** or *******
Phase * clinical trial of the Product.
*******
*******
Acceptance of filing of first application
The greater of $**** or *******
for regulatory approval for the sale
*******
of the Product in *****.
*******
Acceptance of filing of first application
The greater of $**** or *******
for regulatory approval for the sale
*******
of the Product in ******.
*******
Acceptance of filing of first application
The greater of $**** or *******
for regulatory approval for the sale
*******
of the Product in either ******.
*******
First commercial sale of the Product
The greater of $**** or *******
in ****** after receipt of regulatory
*******
approval from ****.
*******
First commercial sale of the Product
The greater of $**** or *******
in ***** after receipt of regulatory
*******
approval.
*******
First commercial sale of the
The greater of $**** or *******
Product in **** after receipt
*******
of regulatory approval
*******
</TABLE>
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<TABLE>
<S>
<C>
********
********
********
********
********
</TABLE>
Licensee to pay ILEX the following amounts upon the achievement of
the following
milestones for each Product being developed by Licensee for
increasing HDL
within the Field:
<TABLE>
<CAPTION>
Milestone Event
Payment
<S>
<C>
Acceptance of an IND by the FDA
$****
Dosing of the first patient in a
The greater of $**** or ********
Phase * clinical trial of the Product.
********
********
Dosing of the first patient in a
The greater of $**** or ********
Phase * clinical trial of the Product.
********
********
Acceptance of filing of first
********
application for regulatory approval
********
for sale of the Product in each
********
of *****.
First commercial sales of the
********
Product in **** after receipt of
********
regulatory approval from *** and
********
in **** and ****.
********
********
********
********
********
</TABLE>
Each milestone payment referred to in this Section 4 shall be made
only once
with respect to each Product and Licensee shall not be required to
pay milestone
payments for additional formulations of such Products which are
developed or
commercialized. In the event Licensee ceases development of a
Product for which
milestones payments have been made due to safety, efficacy,
regulatory or
manufacturing reasons, and Licensee commences or continues
development of a
Product for the same or similar indications as the discontinued
Product, then
Licensee shall not be obligated to make any milestone payments to
ILEX with
respect to such additional Product until such additional Product
achieves
milestones which were not achieved by the discontinued Product.
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4.3.
Royalty. Licensee shall pay to ILEX a royalty payment on sales
of
each Product, as follows:
4.3.1. With respect to Products approved for the treatment of
LDL
and/or Lp(a),according to the following rates during the Royalty
Term applicable
to the particular Product:
****% for such Net Sales by Licensee or its Affiliates up to
and
including $**** per year.
****% for such Net Sales by Licensee or its Affiliates in excess
of
$**** and less than $**** in each calendar year.
****% for such Net Sales by Licensee or its Affiliates of $****
or more in each calendar year.
****% of all royalties on the sale of such Products received by
Licensee from any third party granted a sublicense pursuant to
Section 2.1.
4.3.2. With respect to Products approved for the treatment of
HDL
and/or Apo E, according to the following rates during the Royalty
Term
applicable to the particular Product:
****% for such Net Sales by Licensee or its Affiliates up to
and
including $**** per year.
****% for such Net Sales by Licensee or its Affiliates in excess
of
$**** and less than $**** in each calendar year.
****% for such Net Sales by Licensee or its Affiliates of $****
or more in each calendar year.
For sublicensee royalty, in the case of Product approved for the
treatment of
HDL and/or Apo E, the royalty payment during the Royalty Term
applicable to a
particular Product shall be:
****% of all royalties on the sale of such Products received by
Licensee from any third party granted a sublicense pursuant to
Section 2.1.
4.3.3. The royalties calculated under Sections 4.3.1 and 4.3.2
shall
be due and payable without reduction for royalties that might be
payable by
Licensee to third parties in respect of such sales, except that
Licensee may
deduct, from any royalties owed thereunder for a particular
Product:
(i) With regard to sales by Licensee, **** of royalties on
the sales of such Products payable by Licensee to third parties
under licenses
to a patent that would be infringed by the making, using or selling
of Products,
but for the grant of such license, provided however that Licensee
may not
reduce, based on the foregoing deduction, the amount of royalties
payable to
ILEX in respect of sales of such Product in a particular country by
more than
****% of Net Sales; and
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(ii) With regard to sales by sublicensees of Licensee, ****%
of all royalties on the sale of such Products received by Licensee
from any
third party granted a sublicense pursuant to Section 2.1 if such
sublicensee or
Licensee is obligated to pay a royalty to a third party under an
issued patent
that, but for the grant of such license, the making, using or
selling of
Products would infringe a patent owned or controlled by such third
party.
4.4. Accounting;
Payments.
4.4.1. Licensee shall keep and maintain complete books and
records
containing an accurate accounting in sufficient detail of all data
required to
enable verification of earned royalties and other payments due
hereunder.
4.4.2. Within 45 days after the end of each calendar quarter,
Licensee shall remit to ILEX a statement of Net Sales by Licensee
and by its
sublicensees on account for such quarter, which statement shall be
accompanied
by the payment due to ILEX pursuant to Section 4.3.
4.4.3. ILEX may request that the financial statements of
Licensee
and of its sublicensees relating to the sale of Products be audited
annually by
a nationally recognized independent certified public accountant
("CPA")
reasonably acceptable to Licensee for the purpose of verifying the
amount of
royalty payments due. Such examination of books and records of
Licensee and its
sublicensees shall take place during regular business hours during
the term of
this Agreement and for two (2) years after its termination,
provided however,
that such an examination shall not take place more than once a year
and shall
not cover records for more than the preceding three (3) years, and
provided that
such accountant shall agree to keep confidential all the
information obtained by
such accountant during such audit and shall report to ILEX only if
the royalty
statements and payments are accurate, or if not accurate, only the
amount of the
inaccuracy. If such accountant shall find an underpayment to ILEX,
presentation
of a written statement substantiating the underpayment shall be
provided to
Licensee. If Licensee is not in agreement with the findings of the
accountant
selected by ILEX, then Licensee shall so notify ILEX in writing
within 30 days
of receipt by Licensee of said findings, in which case the parties
shall jointly
appoint, within a further period of 30 days, an independent
certified public
accountant to validate, at Licensee's expense, ILEX's accountant's
findings, and
the decision of said independent accountant shall be final. If said
independent
accountant verifies that an underpayment has occurred, the amount
due and
interest (accruing at the prevailing prime rate of interest for
commercial loans
published in the Wall Street Journal, Eastern Edition, from the
date payment was
due through the date of actual payment to ILEX) shall be paid to
ILEX within
thirty (30) days and, if the amount of the underpayment is greater
than ****% of
the required payment, then Licensee shall reimburse ILEX the
out-of-pocket cost
for the CPA activities in the audit in question. If such
accountants disagree,
then the parties shall be free to pursue any remedies available to
them, subject
to the terms hereof, except that Licensee shall pay to ILEX the
lowest amount
due as determined by either accountant, immediately.
4.4.4. All payments due to ILEX under this Agreement shall be
made
in United States dollars and shall be sent by Licensee to ILEX to
the attention
of "CEO" at the address shown in Section 12.6. If Licensee receives
Net Sales in
currency other than United States dollars, royalty payments due to
ILEX on
account of Net Sales shall be converted into United States dollars
at the
conversion rate for the foreign currency as published in the
eastern edition of
The Wall Street Journal as of the last business day of the
applicable calendar
quarter.
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4.4.5. Any income or other tax that Licensee hereunder, its
Affiliates or sublicensees are required by applicable law to
withhold and pay on
behalf of ILEX hereunder with respect to the royalties payable
under this
Agreement shall be deducte
