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Exhibit 10.4
NDD-094
LICENSE AGREEMENT
between
Novartis Pharma AG,
Novartis AG
and
Vanda Pharmaceuticals, Inc.
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE
OMITTED PORTIONS.
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NDD-094 LICENSE AGREEMENT
This
LICENSE AGREEMENT (the "Agreement") dated the 4th day of June,
2004
(the "Effective Date") by and between Novartis Pharma AG, a
corporation
organized and existing under the laws of Switzerland and having its
principal
office at Lichtstrasse 35, 4056 Basel, Switzerland ("Novartis"),
Novartis AG, a
corporation organized and existing under the laws of Switzerland
and having its
principal office at Lichtstrasse 35, 4056 Basel, Switzerland
("Novartis AG") and
Vanda Pharmaceuticals, Inc., a corporation organized and existing
under the laws
of the State of Delaware and having its principal office at 47
Hulfish Street,
Suite 310, Princeton, NJ 08542, The United States ("Vanda").
Novartis, Novartis
AG and Vanda may be referred to herein individually as a "Party"
and
collectively as the "Parties".
INTRODUCTION
WHEREAS, Novartis AG owns or has rights to certain Novartis Patents
(as
defined below) and Novartis AG and Novartis each have rights to
Novartis
Know-How (as defined below) related to the Product (as defined
below) and the
Compound (as defined below), and each has the right to grant
certain rights and
licenses thereunder as set forth herein, and
WHEREAS, Vanda has certain expertise in the development and
commercialization of pharmaceutical products, and Vanda wishes to
obtain certain
licenses to the Compound for the purpose of developing and
commercializing the
Product, and
WHEREAS, Novartis AG and Novartis each wish to grant a license to
Vanda in
respect of such development and commercialisation.
NOW,
THEREFORE, in consideration of the mutual promises, covenants
and
agreements hereinafter set forth, the sufficiency of which is
hereby
acknowledged, the Parties to this Agreement mutually agree as
follows:
ARTICLE 1
DEFINITIONS
For
purposes of this Agreement, the following initially capitalized
terms
in this Agreement, whether used in the singular or plural, shall
have the
following meanings:
1.1 "Affiliate" shall mean any corporation, company,
partnership,
joint venture and/or firm which controls, is controlled by, or is
under
common control with a specified person or entity. For purposes of
this
Section 1.1, "control" shall be presumed to exist if one of the
following
conditions is met: (a) in the case of corporate entities, control
of at
least fifty per cent (50%) of the voting rights at a meeting of the
board
of
directors or direct or indirect ownership of at least fifty
percent
(50%) of the stock or shares having the right to vote for the
election of
directors, and (b) in the case of non-corporate entities, direct
or
indirect ownership of at least fifty percent (50%) of the equity
interest
with
the power to direct the management and policies of such
non-corporate
entities. The Parties acknowledge that in the case of certain
entities
organized under the laws of certain countries outside of the United
States,
the
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maximum percentage ownership permitted by law for a foreign
investor may be
less
than fifty percent (50%), and that in such cases such lower
percentage
shall be substituted in the preceding sentence, provided that such
foreign
investor has the power to direct the management and policies of
such
entity. Notwithstanding the foregoing venture capital investors in
Vanda
shall not be considered Affiliates of Vanda.
1.2 "Annex" or "Schedule" shall mean the annexes attached to the
back
of
this Agreement. In the event of conflict between the drafting of
the
operative terms of the Agreement and the Annex, the operative terms
of the
Agreement shall prevail.
1.3 "Back-up Compound" shall mean a compound currently available
to
Novartis and Novartis AG to be selected by Novartis in its sole
discretion
and
offered by it to Vanda in the event that in the agreed opinion
of
Novartis and Vanda the Compound fails in a Phase II trial.
1.4 "Business Day" shall mean any day on which banking institutions
in
New
York, New York and Basel are open for business.
1.5 "Commercialization" or "Commercialize" shall mean
activities
conducted by a Party either by itself or through a Third Party and
directed
to
marketing, promoting, distributing, importing, exporting, offering
for
sale
and selling a Product. When used as a verb, "Commercialize" means
to
engage in Commercialization.
1.6 "Commercializing Party" shall mean Vanda, except that
"Commercializing Party" shall mean Novartis as soon as Novartis
has
exercised either the Scenario II Option or the Scenario III Option
and
thereby has elected to Commercialize the Product.
1.7 "Compound" shall mean the compound currently identified by
Novartis and Novartis AG as NDD-094 or isomers or epimers thereof
and any
metabolites and salts thereof and more particularly described on
Schedule
1.7.
1.8 "Confidential Information" has the meaning set forth in
Section
8.1.
1.9 "Controlled" or "Controls", when used in reference to
intellectual
property, shall mean the legal authority or right of a Party hereto
(or any
of
its Affiliates) to grant a license or sublicense of
intellectual
property rights to another party, or to otherwise disclose
proprietary or
trade secret information to such other Party, without breaching the
terms
of
any agreement with a Third Party infringing upon the
intellectual
property rights of a Third Party, or misappropriating the
proprietary or
trade secret information of a Third Party.
1.10 "Co-Promotion Agreement" has the meaning set forth in
Section
2.1(b).
1.11 "Development Costs" shall mean all reasonable costs incurred
by
Vanda after the Effective Date in developing the Product in
accordance with
this
Agreement, as set out in the Development Plan, which costs shall
be
proportionate and in line with the costs incurred by Vanda in
commercializing other compounds at the same stage of development
with
equivalent sales and profit potential and including:
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(a) all reasonable Out-of-Pocket Costs and expenses incurred;
(b) the reasonable direct and indirect costs of internal
scientific,
medical or technical personnel (including personnel expenses,
travel expenses
and infrastructure costs but for the avoidance of doubt, not
including the costs
of managerial, financial, legal or business development personnel)
engaged in
such efforts, which costs shall be determined based on the FTE
Rate, unless
another basis is otherwise agreed by the Parties in writing
(c) the reasonable costs and expenses of clinical supplies for
such
efforts, including without limitation (i) supply cost of clinical
supplies of
the Product; (ii) costs and expenses incurred to purchase and/or
package
comparator or combination drugs or devices; and (iii) costs and
expenses of
disposal of clinical samples;
(d) the reasonable costs and expenses incurred in connection
with
manufacturing process development and validation, manufacturing
scale-up and
improvements, stability testing and quality assurance/quality
control
development; qualification and validation of Third Party contract
manufacturers;
(e) the reasonable direct and indirect costs of senior management
of
Vanda to the extent reasonably related to the Product and
(f) all regulatory filing fees.
1.12
"Development Plan" shall mean the detailed plan drafted by Vanda
and
showing its intentions and estimated costs with respect to the
development of
the Compound.
1.13
"Effective Date" shall mean the date specified in the first
paragraph
of this Agreement.
1.14
"EMEA" shall mean the European Agency for the Evaluation of
Medicinal
Products.
1.15
"FDA" shall mean the U.S. Food and Drug Administration or its
successor agency.
1.16
"Field of Use" shall mean application to all conditions, disorders
and
diseases in humans.
1.17
"First Commercial Sale" shall mean the first sale of a Product to
a
Third Party by a Party or an Affiliate or sublicensee of such Party
in a country
in the Territory following the obtaining of the applicable
Regulatory Approval
of such Product in such country.
1.18
"FTE Rate" shall mean a rate of $ 200,000 per annum for the time of
an
employee for a full-time equivalent person year (consisting of a
total of 2,000
hours per annum) of work, to be pro-rated on a daily basis (per
annum amount to
be divided by 250 to produce the rate per whole day consisting of
eight hours)
if necessary, such rate to include all travel expenses.
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1.19
"Good Clinical Practice" shall mean the current Good Clinical
Practice
regulations promulgated by the FDA, published at 21 C.F.R. Part 50
and 56 as
such regulations may be amended, and such comparable regulations or
standards as
may be applicable with respect to the design, conduct, performance,
monitoring,
auditing, recording, analyses and reporting of clinical trials
outside the
United States.
1.20
"GMP" shall mean the current Good Manufacturing Practice
regulations
promulgated by the FDA, published at 21 C.F.R. Part 210 et seq., as
such
regulations may be amended, and such comparable regulations or
standards as may
be applicable with respect to Compound or Product(s) manufactured
or sold
outside the United States.
1.21
"Investigational New Drug Application" or "IND" has the meaning
set
forth in Section 2.2(a).
1.22
"Indemnified Party" has the meaning set forth in Section 10.3.
1.23
"Indemnifying Party" has the meaning set forth in Section 10.3.
1.24
"Infringement Claim" has the meaning set forth in Section
6.2(a).
1.25
"Joint Development Committee" or "JDC" shall mean the joint
global
development committee to be set up by Vanda and Novartis to
coordinate the
development and registration efforts described in this
Agreement.
1.26
"Loss" has the meaning set forth in Section 10.1
1.27
"Major Market Country" means each and any of the USA, Japan,
UK,
France, Germany, Italy and Spain.
1.28
"NDA" or "New Drug Application" shall mean a new drug application
and
all amendments and supplements thereto filed with the FDA pursuant
to 21 C.F.R.
Section 314, the EMEA or an equivalent Regulatory Authority in a
Major Market
Country, requiring such filing, and including all documents, data
and other
information concerning a pharmaceutical product which are necessary
for the
gaining of Regulatory Approval seeking permission to market and
sell the Product
in a Major Market Country.
1.29
"NDA Acceptance" means the written notification by the FDA or
its
equivalent outside the United States, that the NDA has met all the
criteria for
filing acceptance pursuant to 21 C.F.R. Section 314.101 or such
equivalent.
1.30
"NDA Filing" means the first submission of the NDA to the FDA, EMEA
or
its equivalent in a Major Market Country.
1.31
"Net Sales" shall mean the amount invoiced by or on behalf of a
Party
and its Affiliates and sublicensees for sales of the Product to
Third Parties in
the Territory in a bona fide arm's length transaction, less the
following
deductions in respect of the Product (each as determined in
accordance with
International Accounting Standards("IAS")) if not previously
deducted or
reimbursed or paid by a Third Party in the amount invoiced or
received: (a)
cash,
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and/or quantity discounts actually allowed or taken; (b) excise,
sales and other
consumption taxes and customs duties to the extent included in the
invoice price
(and excluding taxes based on Vanda's income); (c) all reasonable
freight,
postage and shipping, insurance and other transportation charges to
the extent
included in the invoice price to the customer; (d) all amounts
repaid or
credited by reason of rejections, return of goods or price
adjustments, in each
case specifically identifiable as relating to Product; (e) amounts
incurred
resulting from governmental (or an agency thereof) mandated rebate
programs;(f)
any Third Party rebates, administrative fees and chargebacks
clearly and
directly related to the sale of Product to the extent actually
allowed as agreed
by the parties in writing, any other specifically identifiable
amounts included
in Product's gross sales that were or ultimately will be credited
and that are
substantially similar to the items listed above. Sales from
Novartis or Vanda to
their Affiliates, Sublicensees or to each other shall be
disregarded for
purposes of calculating Net Sales.
In the event that the Product is sold as part of a combination
product, the Net Sales of the Product, for the purposes of
determining royalty
payments, shall be determined by multiplying the Net Sales (as
defined above in
this Section) of the combination product by the fraction A/(A+B),
where A is the
weighted (by sales volume) average sale price of Product when sold
separately in
finished form and B is the weighted average sale price of the other
product(s)
sold separately in finished form. In the event that such average
sale price
cannot be determined for both Product and the other product(s) in
combination,
Net Sales for purposes of determining royalty payments shall be
mutually agreed
by the Parties within a reasonable period of time prior to the
first Regulatory
Approval of such combination product based on all relevant factors
including
relative cost and the relative value contributed by each component,
and such
agreement shall not be unreasonably withheld.
1.32
"Novartis Know-How" shall mean any proprietary or
nonproprietary
information specific to the Compound or Product within the Field of
Use and of a
confidential nature necessary or useful for the manufacture,
preparation or
development of the Compound or Product Controlled by Novartis
and/or Novartis AG
during the term of this Agreement and shall include, without
limitation, data,
knowledge and information., including chemical, stability,
pharmacological,
toxicological, pre-clinical, clinical and manufacturing data,
samples,
documentation, analytical standards, and gene expression data,
provided that
Novartis Know-How shall not include [*].
1.33
"Novartis Monthly Average Exchange Rate" shall mean for a
currency,
the mathematical average of Reuters Daily Rates between 9:00 a.m.
and 10 a.m.
Basel time and the official European Central Bank daily rate fixed
at 2p.m. for
each Business Day of a month, where applicable.
1.34
"Novartis Patents" shall mean those Patents Controlled by Novartis
AG
claiming Compound, Product, or their metabolites or any formulation
of Compound,
processes, uses and intermediates of the foregoing, including those
listed on
Annex 3 attached hereto. For the avoidance of doubt, such Novartis
Patents shall
not include patents for [*].
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CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE
OMITTED PORTIONS.
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1.35
"Out of Pocket Costs" shall mean, in accordance with
International
Accounting Standards, expenses incurred by a Party and for the
avoidance of
doubt, not including pre-paid amounts and capital expenditure.
1.36
"Patents" shall mean all rights under any patents or patent
applications and any continuations, continuations-in-part,
divisions,
provisionals, substitutions, patents of addition, reissues,
reexamination,
renewals or extensions thereof (including any supplemental patent
certificates)
and any confirmation patent or registration patent and all foreign
counterparts
of any of the foregoing.
1.37
"Payee" has the meaning set forth in Section 5.6.
1.38
"Payor" has the meaning set forth in Section.5.6
1.39
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated
organization or
government or political subdivision thereof.
1.40
"Phase I Clinical Trial" shall mean the first phase of human
clinical
trials of a drug required by the FDA to gain evidence of safety for
Product(s),
as described in 21 C.F.R. 312(a), as may be amended and deemed to
commence on
the date that the first patient is first dosed by or on behalf of
Vanda.
1.41
"Phase II Clinical Trials" shall mean that portion of the FDA
submission and approval process which provides for the initial
trials of a
Product on a limited number of patients for the purposes of
determining dose
and, evaluating safety and efficacy in the proposed therapeutic
indication, as
more fully defined in 21 C.F.R. 312.21(b) as may be amended and
deemed to
commence on the date that the first patient is first dosed by or on
behalf of
Vanda.
1.42
"Phase III Clinical Trials" shall mean that portion of the FDA
submission and approval process which provides for the continued
trials of a
Product on sufficient numbers of patients to generate safety,
efficacy and
pharmacoeconomic data to support regulatory approval in the
proposed therapeutic
indication, as more fully defined in 21 C.F.R. 312.21(c) as may be
amended and
deemed to commence on the date that the first patient is first
dosed by or on
behalf of Vanda (and Novartis, if applicable).
1.43
"Primary Market Research Development" shall mean all market
research
activity undertaken by the Commercialising Party prior to the First
Commercial
Sale.
1.44
"Product" shall mean a formulated pharmaceutical product
containing
the Compound or Back-up Compound as an active ingredient and
packaged for the
use by the ultimate consumer.
1.45
"Reasonable Commercial Efforts" shall mean the efforts and
resources
normally used in the pharmaceutical industry by companies employing
best
practice and the highest commercial standards for a product with
equivalent
sales and profit potential.
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1.46
"Regulatory Approval" shall mean, with respect to a country or
group
of countries in the Territory, all authorizations by the
appropriate Regulatory
Authority, governmental entity or entities necessary for commercial
sale of a
Product in that country or group of countries including, without
limitation and
where applicable, approval of labeling, price, reimbursement and
manufacturing.
1.47
"Regulatory Authority" shall mean the FDA, EMEA or any other
counterpart or additional governmental or regulatory agencies
responsible for
applicable Regulatory Approvals.
1.48
"Scenario I Option" has the meaning set forth in Section
2.2(c).
1.49
"Scenario II Option" has the meaning set forth in Section
2.2(a).
1.50
"Scenario III Option" has the meaning set forth in Section
2.2(b).
1.51
"Sublicensee" shall mean a Person, other than a Vanda Affiliate,
to
whom Vanda grants any right or license to use Novartis Patents or
Novartis
Know-How or to make, use or sell any Product under all or part of
Novartis'
Patents or Novartis' Know-How in the Territory.
1.52
"Supply Agreement" has the meaning set forth in Section 3.2.
1.53
"Support" or "Supporting" shall mean the preparation, filing,
prosecution, maintenance, renewal and defense of a Patent.
1.54
"Term" has the meaning set forth in Section 9.1(a).
1.55
"Territory" shall mean all the countries and territories of the
world.
1.56
"Third Party" shall mean any Person or other entity other than
Vanda,
Novartis, Novartis AG or their respective Affiliates of rights
conveyed under
this Agreement.
1.57
"Valid Claim" shall mean (i) an unexpired or issued claim of a
Novartis Patent which claim has not been held invalid or
unenforceable by final
decision of a court or other governmental agency of competent
jurisdiction,
unappealable or unappealed within the time allowed for appeal, and
which is not
admitted to be invalid or unenforceable through reissue, disclaimer
or otherwise
or (ii) pending patent application that is a Novartis Patent Right,
which claim
was filed in good faith and has not been abandoned or finally
disallowed without
the possibility of appeal or refiling of said application.
1.58
"Vanda Technology" means all Patents and know-how that are (i)
generated, identified, discovered, created or made by Vanda, its
employees or a
Third Party on behalf of Vanda, (ii) controlled by Vanda, and (iii)
necessary to
manufacture, use, research, develop, sell or seek regulatory
approval,
including, without limitation, manufacturing processes,
formulations, modes of
delivery and methods of use for the Compound, Back-up Compound, or
Products
developed by Vanda pursuant to its development work with the
Compound or the
Back-up Compound.
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ARTICLE 2
LICENSE
2.1
Grant to Vanda.
(a) Subject to the terms and conditions of this Agreement, on
the
Effective Date, Novartis and Novartis AG hereby grant to Vanda an
exclusive
license, with the right to sublicense with the prior written
consent of Novartis
and Novartis AG, such consent not to be unreasonably withheld,
under the
Novartis Patents and Novartis Know-How, to develop, use, make and
have made
Compound and Product in the Field of Use and in the Territory.
(b) Subject to the Scenario II Option pursuant to Section 2.2 (a)
and
Scenario III Option pursuant to Section 2.2 (b) and the
Co-Promotion Option
pursuant to Section 2.3 (a) and (b), Vanda shall have an exclusive
license to
Commercialize the Compound and Product, with right to sublicense
without
consent.
(c) Novartis AG and Novartis retain all rights to Novartis Patents
and
Novartis Know-How except to the extent explicitly granted to Vanda
hereunder.
2.2
Option.
(a) Scenario II Option. Upon the execution of this Agreement,
Vanda
agrees and undertakes that it shall commence Phase II Clinical
Trials for the
Product on [*]. Vanda shall be responsible for the conduct and
financing of each
of the Phase I Clinical Trials and Phase II Clinical Trials which
it elects to
conduct. Within three (3) months of the completion of the Phase II
Clinical
Trials, Vanda shall provide Novartis with a full written report of
the results
of the Phase II Clinical Trials, including the conclusions thereof.
Upon request
by Novartis, Vanda shall make available to Novartis any source data
reasonably
necessary for Novartis to determine whether to exercise the
Scenario II Option.
Novartis shall have sixty (60) Business Days immediately following
the delivery
to Novartis of the final Phase II Clinical Trial report to provide
notice of
exercise to Vanda stating, that Novartis wishes to co-develop and
Commercialize
the Product (the "Scenario II Option").
Upon exercise of the Scenario II Option, Novartis shall take over
the
Investigational New Drug Application with the FDA or such other
application
filed with any other Regulatory Authority ("IND") and Novartis
shall be
responsible for the overall development and regulatory filings for
the Product
in the Territory. After the exercise of the Scenario II Option,
Vanda shall
remain responsible for continuing to conduct the development of the
Product(s)
in accordance with the Development Plan as approved by the JDC. As
per Section
4.2 below Novartis shall take over the Chairman of the JDC
immediately after the
exercise of the Scenario II Option. Subject only to the option to
co-promote in
Section 2.3 (c) below, under Scenario II Novartis and its
Affiliates shall have
the exclusive rights for the Commercialisation of the Compound or
Product and
Vanda shall grant Novartis an exclusive license under the Vanda
Technology.
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CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE
OMITTED PORTIONS.
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Upon the exercise of the Scenario II Option by Novartis the
Scenario I
Option, pursuant to Section 2.2(c) below and Scenario III Option
pursuant to
Section 2.2(b) below as well the Co-Promotion Option pursuant to
Section 2.3(a)
and (b) shall be deemed expired.
(b) Scenario III Option. In the event that Novartis does not
exercise
its Scenario II Option, Vanda will consider the results of the
Phase II Clinical
Trial and may elect to commence Phase III Clinical Trials for the
Product within
[*] of the delivery of the final Phase II Clinical Trial report to
Novartis.
Vanda shall provide written notice of such election to Novartis.
Upon such
election, Vanda shall be responsible for the conduct and financing
of the Phase
III Clinical Trials. If Novartis does not receive such election
notice within
the twelve (12) months period, Novartis may terminate this
Agreement according
to Section 9.3. Within three months of the completion of the Phase
III Clinical
Trials, Vanda shall provide Novartis with a full written report of
the results
of the Phase III Clinical Trials, including the conclusions
thereof. The Phase
III Clinical Trials shall be performed in accordance with a plan
reviewed with
the relevant Regulatory Authority in a post Phase IIB meeting and
be approved by
the JDC. Upon request by Novartis Vanda shall make available to
Novartis any
source data reasonably necessary for Novartis to determine whether
to exercise
the Scenario III Option. Novartis shall have sixty (60) Business
Days
immediately following the delivery to Novartis of the final Phase
III Clinical
Trials report to provide written notice to Vanda of exercise
stating, Novartis
wishes to Commercialize the Product (the "Scenario III
Option").
Upon exercise of the Scenario III Option, Novartis shall take over
the
Investigational New Drug application with the FDA or such other
application
filed with any other Regulatory Authority ("IND") and Novartis
shall be
responsible for the overall development and regulatory filings for
the Product
in the Territory. As per Section 4.2 below Novartis shall take over
the Chairman
of the JDC immediately after the exercise of the Scenario III
Option. Subject
only to the option to co-promote in Section 2.3(c) below, under
Scenario III
Novartis and its Affiliates shall have the exclusive rights for
the
Commercialisation of the Compound or Product and Vanda shall grant
Novartis and
exclusive license under the Vanda Technology.
Upon the exercise of the Scenario III Option by Novartis the
Scenario
I Option pursuant to Section 2.2(c) below and the Co-Promotion
Option pursuant
to Section 2.3(a) and (b) shall be deemed expired.
(c) Scenario I Option. In the event that Novartis does not
exercise
the Scenario II Option or the Scenario III Option, Novartis shall
be deemed to
have exercised the Scenario I Option. Under Scenario I Vanda shall
be fully
responsible for the entire development, manufacturing and
Commercialisation of
the Compound and the Product. Subject to the option to co-promote
in Section
2.3(a) and (b) below, under Scenario I Novartis shall have no right
or
obligation to the Commercialisation of the Compound or Product.
Within three
months of the last date for Novartis to exercise the Scenario III
Option, but
did not exercise such option, Vanda shall submit to Novartis a
detailed
commercialisation plan demonstrating the planned application of
Reasonable
Commercial Efforts.
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CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE
OMITTED PORTIONS.
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(d) Good Clinical Practices. All Phase I Clinical Trials, Phase
II
Clinical Trials or Phase III Clinical Trials conducted by Vanda
pursuant to this
Agreement shall be conducted in accordance to Good Clinical
Practice.
2.3
Co-Promotion Option.
(a) Novartis First Right of Refusal - If pursuant to section
2.2(c)
above Novartis is deemed to have exercised its Scenario I Option,
and Vanda
decides to co-promote the product with a Third Party, Vanda shall
notify
Novartis in writing of its intention to co-promote the Products
with such a
co-promotion partner. Novartis will have ninety (90) Business Days
from the date
Vanda notifies Novartis of its intention to co-promote the Product
with a Third
Party to provide written notice of its intent to exercise its
option to
co-promote the Product with Vanda and to negotiate in good faith a
Co-Promotion
Agreement on commercially reasonable terms and conditions.
(b) If after such ninety-Business Day period, the Parties have
not
entered into a Co-Promotion Agreement, Vanda would be free to enter
into an
arrangement with a Third Party leading pharmaceutical company;
provided, that
Vanda will provide Novartis a last opportunity to submit a Matching
counteroffer
on terms no less favorable to Vanda than those terms last offered
by the
potential Third Party leading pharmaceutical company. Vanda shall
provide to
Novartis all reasonably available information belonging to Vanda,
and not
subject to Third Party confidentiality restrictions, relating to
the arrangement
as Novartis shall reasonably require, including proposed terms;
provided,
however, that Vanda shall not be required to disclose the identity
of such Third
Party. Within sixty (60) Business Days of Novartis' receipt of the
written
notice, Novartis will respond to Vanda in writing regarding
Novartis' interest
in Matching the counter-offer. During the same sixty (60) Business
Day period
following receipt of such notice from Vanda, Novartis may submit to
Vanda the
counter-offer. Vanda shall consider such counteroffer from Novartis
in good
faith and agree to negotiate with Novartis in the event that the
terms of such
Novartis counteroffer are more favourable to Vanda than those of a
bona fide
definitive agreement negotiated by Vanda with a Third Party. As
used herein,
"Matching" shall mean [*] or (ii) [*].
(c) If Novartis exercises its Scenario II Option or Scenario
III
Option, and intends to co-promote the product in a Major Market
Country with a
Third Party, Novartis shall notify Vanda in writing of its
intention to
co-promote the Products with a co-promotion partner. Vanda will
have ninety (90)
Business Days from the date Novartis notifies Vanda of its
intention to
co-promote the Product to provide written notice of its intent to
exercise its
option to co-promote the Product with Novartis on commercially
reasonable terms
and conditions to be negotiated in good faith and set forth in the
Co-Promotion
Agreement. If after ninety (90) Business Days of such good faith
negotiations
there is no agreement on the
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terms of the Co-Promotion Agreement between the Parties, Novartis
shall be free
to co-promote the Product with a Third Party.
ARTICLE 3
MANUFACTURE AND SUPPLY
3.1
Provision of Compound. Within twenty (20) Business days of the
Effective Date, Novartis will provide to Vanda, at no cost to
Vanda, [*] EX
WORKS (as such term is defined in INCOTERMS 2000 of the
International Chamber of
Commerce in Paris: delivery to Vanda shall occur when the Compound
and Product
is placed at Vanda's disposal at Novartis' premises), as well as
adequate data
in connection with the development of the Compound and Product.
Further Novartis
shall sell to Vanda and Vanda shall buy (only if in useable
condition, on an as
needed basis) from Novartis the remaining Compound available at
Novartis in
addition to the 20 kg specified in this Section 3.1 at the terms
and conditions
specified in SCHEDULE 3.1. For the avoidance of doubt, Novartis
makes no
representation or warranty that any quantities of Compound provided
to Vanda
under this Agreement will meet the GMP standards.
3.2
Right to Manufacture Clinical Supply. Within thirty (30) Business
Days
of the Effective Date, the Parties shall determine whether Novartis
will
manufacture and supply to Vanda the clinical supplies of Compound
and/or
Product, and the parties shall negotiate the terms and conditions
of a clinical
supply agreement pursuant to which the Compound shall be supplied.
To the extent
that the Parties do not enter into an agreement for the supply of
Compound for
clinical purposes within such thirty (30) Business Day period, then
Novartis
shall co-operate in all reasonable respects to transfer such
Novartis Know-How
to Vanda and provide such other assistance reasonably necessary in
order to
enable Vanda or a Third Parry to supply clinical supplies of
Compound and/or
Product. Novartis shall have exclusive rights to manufacture the
Compound and
Product in the event that Novartis exercises either the Scenario II
Option or
the Scenario III Option.
3.3
Transfer of Novartis Know-How and Novartis Patent Files. In
furtherance
of the activities contemplated by this Agreement, Novartis and
Novartis AG each
shall, or shall cause its Affiliates to, transfer as promptly as
possible to
Vanda the Novartis Know-How and the files of the Novartis Patents,
including
copies of all relevant laboratory notebook information, screening
data and
synthesis schemes clinical trial information and clinical trial raw
and derived
datasets, which includes description in any forms, data and other
information
disclosed or transferred to Vanda before the Effective Date. Banked
DNA samples
and or animal tissues treated with the compound will only be made
available to
Vanda for further studies in accordance with the protocols and
informed consents
set forth at the time of sample acquisition provided however that
no human
tissue samples with identifiable patient data will be transferred
to Vanda. All
raw data and individual clinical and genetic data will be
transferred to Vanda
under a mutually agreed coding schema, in order to protect
patient
confidentiality. All original identifiable patient data will,
however be
provided to the FDA as part of the submission package. If Vanda
requires
additional genotyping on existing samples, Novartis will contract
this work out,
in accordance with the informed consents, on Vanda's
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behalf and at Vanda's cost. If further DNA samples from past study
patients are
desired, Vanda will revisit the sites and try to consent or
reconsent these
patients for additional DNA sampling. Novartis and Vanda shall each
be
responsible for the costs of their employees, representatives or
agents
incurred in the transfer from Novartis to Vanda of the Novartis
Know-How and the
files of the Novartis Patents. In addition, Novartis and Novartis
AG shall make
a Novartis representative familiar with the Novartis Know-How and
the files of
the Novartis Patents reasonably available within reasonable office
hours of the
relevant employee to assist Vanda with the transfer as well as to
answer any
questions Vanda may have concerning such transferred information.
In the event a
translator is necessary or any of the materials need to be
translated into
English, the Parties shall share equally in the cost of such
translation. Upon
Novartis' exercise of the Scenario II option Vanda shall transfer
back to
Novartis the files of the Novartis Patents.
3.4
Transfer of Pharmacovigilance obligations and IND. In furtherance
of
the activities contemplated by this Agreement, Novartis and
Novartis AG each
shall, or shall cause its Affiliates to, transfer to Vanda the IND,
including
copies of all relevant registration dossiers. Such transfer shall
however be
subject to the transfer of all Pharmacovigilance obligations, with
respect to
clinical trials of Products performed prior to the Effective Date
by Novartis to
Vanda or Vanda's Affiliates.
ARTICLE 4
DEVELOPMENT AND COMMERCIALIZATION
4.1
Development. Subject to the exercise by Novartis of either the
Scenario
II Option or the Scenario III Option, Vanda shall be responsible
for overall
development and regulatory filings for the Product in the
Territory. Vanda shall
use its Reasonable Commercial Efforts to perform its obligations
under this
Agreement and cause or cause to be done, all things necessary to
perform the
obligations contemplated hereby. Vanda shall use Reasonable
Commercial Efforts
to make all registrations, filings and applications, to give all
notices to the
relevant Regulatory Authority and obtain any governmental
transfers, approvals,
orders, qualifications and waivers necessary or desirable for
the
commercialisation of the Product hereby.
4.2
The JDC shall be set up within four (4) weeks of the Scenario II
Option
and shall be comprised of at least one member from Vanda and
Novartis
respectively (or further equal numbers from both Parties on an ad
hoc basis as
is agreed), plus the chairman from the Commercialising Party with
the deciding
vote to assist in a consistent and harmonized development of the
Product under
this Agreement, it being understood that each member shall be
entitled and
expected to consult with their organization. The JDC shall discuss
development
and registration issues and shall co-ordinate the development and
registration
efforts described in this Agreement. Meetings of the JDC shall be
at such times
and places and in such form (e.g., in person, telephonic or video
conference) as
the members of the JDC shall determine but shall meet at least once
every six
(6) months. Representatives of both Novartis and Vanda shall be
present at any
meeting of the JDC. Decisions of the JDC shall be made by a
majority vote at a
telephone or video conference or by a written consent signed by
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all members thereof. The JDC shall keep minutes of its
deliberations (or appoint
a secretary to do so) setting forth, amongst other matters, all
proposed actions
and all votes thereon.
4.3
All records of the JDC shall at all times be available to the
Parties.
The JDC may delegate to one Party or to a specific representative
the authority
to make certain decisions. The costs incurred by each Party through
its
participation in the JDC shall be borne by each Party.
4.4
Quarterly Reports. While the Compound is under development and
until
the completion of Phase II and Phase III Clinical Trials, Novartis
will receive
reports every three months prepared by Vanda within forty-five (45)
Business
Days after the end of each quarterly period. Such reports shall set
forth in
summary form the results of development work performed and costs
incurred during
the preceding quarterly period and the planned development work,
time-lines,
launch plans, estimated costs to be incurred and commercialisation
to be
performed by Vanda in the next quarterly interval and explain to
Novartis in
detail the reasons for any disparity between product development
work performed
and costs incurred during the preceding quarterly period and the
description of
planned development work and costs estimate contained in the
preceding quarterly
report.
4.5
Discontinuance of or Delay in Development. If either (1) Vanda
should
decide to discontinue the development of the Compound into Product
or (2) if a
time period of more than one year, elapses between patient dosings
prior to the
NDA Filing or (3) more than one year elapses between the receipt of
guidance by
Vanda from a Regulatory Authority and the next dosing of a patient
it shall
promptly notify Novartis in person and in writing and all licenses
granted
hereunder will thereupon automatically terminate. Vanda will make
available to
Novartis all results of development work carried out up to the
point of
discontinuance and Novartis shall have a non-exclusive license to
use all such
results of the Vanda Technology solely for use in any future
development or
commercialisation work to be carried out in respect of the
Compound, Product or
Back-up Compound. Should the Compound ultimately become a
commercialized
Product, a [*]([*])% royalty on Net Sales will be payable to Vanda
by Novartis
where such Net Sales are in countries where the Product is
protected by Patents
in the name of Vanda. For countries where Net Sales are made and
where the
Product is not protected by Patents in the name of Vanda, Novartis
shall pay to
Vanda a royalty of [*] ([*]) per cent on Net Sales for a period of
five (5)
years after the First Commercial sale of a Product.
4.6
Regulatory and Marketing Efforts
(a) Market Launch. The Commercializing Party shall use
Reasonable
Commercial Efforts to seek marketing authorizations in Major Market
Countries
and effect the introduction of Product into Major Market Countries
within [*] of
such Product completing the Regulatory Approval process.
(b) Sole Discretion. Subject to the terms and conditions of the
Co-Promotion Agreement, if entered into
