Exhibit 10.5
***Text Omitted and Filed
Separately
with the Securities and Exchange
Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections
200.80(b)(4)
and 240.24b-2.
LICENSE AGREEMENT
This License Agreement (the
AGREEMENT) is made and entered into as of June 15, 2004 (the
EFFECTIVE DATE) by and between the University of Iowa Research
Foundation (hereinafter UIRF) having offices at 214 Technology
Innovation Center, Iowa City, Iowa 52242-5000 and Neurogenetics,
Inc., (hereinafter LICENSEE), having offices at 11085 North Torrey
Pines Road, Suite 300, La Jolla, CA 92037.
WHEREAS, under the patent policy of
The University of Iowa (UI), all inventions and technology arising
during the normal course of research and teaching at UI are
assigned and entrusted to UIRF to obtain patent or other
appropriate intellectual property protection and license said
technology;
WHEREAS, UIRF is, therefore, owner
by assignment from Timothy J. Brennan of his entire right, title
and interest in United States Patent Application Serial No.
10/033,632 filed December 26, 2001, titled “Drugs for Spinal
Anesthesia”, (UIRF #02028) and in the inventions described
and claimed therein;
WHEREAS, LICENSEE wishes to obtain a
world-wide license in order to practice the above referenced
invention covered by patent rights in the United States and in
certain foreign countries, and to manufacture, use and sell in the
commercial market the products made in accordance therewith;
and
WHEREAS, UIRF wishes to grant such a
license to LICENSEE in accordance with the terms of this
AGREEMENT.
NOW THEREFORE, in consideration of
the foregoing premises, the parties agree as follows:
ARTICLE 1 -
DEFINITIONS
1.1
PATENT RIGHTS shall mean the patents
and patent applications listed on Appendix A attached hereto,
the inventions described and claimed therein, and any divisions,
substitutions, substitute applications and inventors’
certificates, continuations, and continuations-in-part to the
extent the claims are directed to subject matter specifically
described in the patents and patent applications listed on
Appendix A, patents issuing thereon, extensions, term
restorations, re-examinations or reissues or renewals thereof; and
any and all foreign patents and patent applications corresponding
thereto which will be automatically incorporated in and added to
this AGREEMENT and shall periodically be added to Appendix A
attached to this AGREEMENT and made part thereof.
1.2
LICENSED PRODUCTS shall mean
products and methods the use of which would, but for a license
granted under the PATENT RIGHTS, infringe the PATENT RIGHTS,
including, without limitation, the LICENSED METHODS.
1.3
LICENSED METHODS shall mean the
methods and uses claimed in the PATENT RIGHTS.
1.4
NET SALES shall mean the gross
amount invoiced by LICENSEE and its AFFILIATES and its SUBLICENSEES
on sales of LICENSED PRODUCTS to independent purchasers less:
(a) trade, quantity and cash discounts allowed and taken;
(b) refunds, rebates, chargebacks and retroactive price
adjustments actually paid; (c) actual LICENSED PRODUCT returns
and allowances; and (d) duties, sales taxes, excise taxes and
transportation charges to third parties actually paid by or
on behalf of LICENSEE and its AFFILIATES and its SUBLICENSEES
separately set forth in the invoiced amount.
1.5
AFFILIATES shall mean any person,
company, corporation, business or other entity directly or
indirectly controlling, controlled by, or under common control with
LICENSEE. For purposes of this definition,
“control” shall mean beneficial ownership of more than
50% (fifty percent) of the outstanding voting shares or securities
or the ability otherwise to elect a majority of the board of
directors or other managing authority.
1
1.6
APPLICABLE LAWS shall mean all
applicable laws, ordinances, rules and regulations of any kind
whatsoever of any governmental (including international, foreign,
federal, state and local) or regulatory authority, including,
without limitation, all laws, ordinances, rules and regulations
promulgated by any governmental REGULATORY AGENCY.
1.7
CONFIDENTIAL INFORMATION shall mean
information related to PATENT RIGHTS and LICENSED PRODUCTS and
information that a party to this Agreement (the RECEIVING PARTY)
receives (whether disclosed in writing, electronically, orally or
by observation) from the other party (the DISCLOSING PARTY) that
the DISCLOSING PARTY reasonably considers proprietary and marks
confidential (or if received orally or by observation, is confirmed
in writing as confidential by the DISCLOSING PARTY within 30
(thirty) days after such disclosure is made) unless in each case
such information, as shown by competent evidence:
(a)
was known to the RECEIVING PARTY or
to the public prior to the DISCLOSING PARTY’s disclosure;
or
(b)
became known to the public, after
the DISCLOSING PARTY’s disclosure hereunder, other than
through a breach of the confidentiality provisions of this
AGREEMENT by the RECEIVING PARTY or any person to whom such
RECEIVING PARTY disclosed such information; or
(c)
was subsequently disclosed to the
RECEIVING PARTY by a third party having a legal right to disclose
such information to the extent not subject to an obligation of
confidentiality to such third party; or
(d)
was developed by the RECEIVING PARTY
independent of the DISCLOSING PARTY’s CONFIDENTIAL
INFORMATION.
For purposes of the treatment of
CONFIDENTIAL INFORMATION, the UI and UIRF shall be treated together
as one party.
1.8
FDA means the U.S. Food and Drug
Administration or any successor agency.
1.9
FIRST COMMERCIAL SALE shall mean the
first sale for end use or consumption of the LICENSED PRODUCT after
the FDA has granted REGULATORY APPROVAL of such LICENSED
PRODUCT.
1.10
REGULATORY AGENCY shall mean the
FDA.
1.11
REGULATORY APPROVAL shall mean any
approvals (including, but not limited to, labeling approvals),
product and/or establishment licenses, registrations or
authorizations of any federal, state or local REGULATORY AGENCY,
department, bureau or other governmental entity, necessary and
sufficient for the commercial manufacture, use, storage,
importation, export, transport or sale of a LICENSED PRODUCT in a
particular regulatory jurisdiction.
1.12
ROYALTY TERM shall have the meaning
provided in Section 3.1.
1.13
SUBLICENSEE shall mean any third
party that is not an AFFILIATE of LICENSEE to whom LICENSEE, or an
AFFILIATE of LICENSEE, grants a sublicense or an option to
sublicense, or any other grant of rights under the PATENT RIGHTS to
practice, make and have made, to use and have used, to import and
have imported, to offer for sale and have offered for sale, and/or
to sell and have sold the LICENSED PRODUCTS granted under
Section 2.1 hereof.
1.14
SUBLICENSE REVENUES shall mean all
revenues received by LICENSEE or an AFFILIATE from a SUBLICENSEE
pursuant to a sublicense under the PATENT RIGHTS, an option for a
sublicense under the PATENT RIGHTS, or a similar agreement
providing for a grant of rights under the PATENT RIGHTS, in each
case granted pursuant to Section 2.1 hereof. SUBLICENSE
REVENUES shall include (a) license issue fees, (b) license
maintenance fees, (c) sales and marketing fees, and (d) non
FDA/clinical trial milestones. SUBLICENSE FEES shall not
include (a) FDA/clinical trial milestone fees, (b) equity
investments in Licensee at fair market value, (c) any funds
received at fair
2
market value by Licensee for the
conduct of research and development, (d) payments received for
manufacturing, (e) royalties, (f) payment to LICENSEE or its
AFFILIATES in connection with the grant of rights to any other
non-UI and non-UIRF intellectual property (f) and any bona fide
loan made to LICENSEE or any of its AFFILIATES.
ARTICLE 2 - GRANT
2.1
UIRF hereby grants to LICENSEE and
LICENSEE accepts, subject to the terms and conditions hereof, an
exclusive (subject only to Section 2.3), worldwide license to
use the LICENSED PRODUCTS under the PATENT RIGHTS. Such
license shall include the right to grant sublicenses (with the
right to grant further sublicenses) subject to UIRF’s
approval which approval shall not be unreasonably withheld.
LICENSEE agrees during the period of exclusivity of
this license in the United States that any LICENSED PRODUCT
produced for sale in the United States will be manufactured
substantially in the United States.
2.2
The term of this AGREEMENT and the
exclusive license set forth in Section 2.1 shall be from the
EFFECTIVE DATE until the expiration of the last to expire ROYALTY
TERM.
2.3
The granting and acceptance of this
license is subject to the following conditions:
(a)
The terms of the UI Patent Policy
approved in 1983, Public Law 96-517, and Public Law 98-620 and
UIRF’s obligations under agreements with other sponsors of
research. Any right granted in this AGREEMENT greater than
that permitted under Public Law 96-517 or Public Law 98-620 shall
be subject to modification as may be required to conform to the
provision of that statute.
(b)
UIRF shall have the right to make
and to use and to grant non-exclusive licenses to make and to use,
for research purposes only and not for any commercial purpose, the
subject matter described and claimed in PATENT RIGHTS.
(c)
Eli Lilly and Company (LILLY) may
have non-exclusive rights to the LICENSED PRODUCTS as part of a
Statement of Investigation executed July 6, 1998.
(d)
LICENSEE shall pay all future costs
connected with the commercial development of the LICENSED
PRODUCTS, including but not limited to the costs of complying with
applicable governmental testing, approvals and
regulations.
(e)
LICENSEE shall use reasonable
efforts to effect introduction of the LICENSED PRODUCTS into the
commercial market as soon as practicable, consistent with sound and
reasonable business practices and judgment; thereafter, until the
termination or expiration of this AGREEMENT, LICENSEE shall
endeavor to keep LICENSED PRODUCTS reasonably available to the
public.
(f)
UIRF shall have the right to
terminate the license granted pursuant to Section 2.1 or render
such license non-exclusive at any time after [***] ([***]) years
from the EFFECTIVE DATE if, in UIRF’s reasonable judgment,
LICENSEE:
(i)
fails to comply with
Section 2.3(e), or
(ii)
is not demonstrably engaged in a
research, development, manufacturing, marketing, or licensing
program, as appropriate, directed toward the commercial use of the
LICENSED PRODUCT.
In making this determination UIRF
shall take into account the normal course of programs for research,
development and commercialization conducted under sound and
reasonable business practices and judgment and shall take into
account the reports provided hereunder by LICENSEE.
*** Confidential Treatment
Requested
3
(g)
All sublicenses granted by LICENSEE
hereunder shall include a requirement that the SUBLICENSEE comply
with LICENSEE’s obligations to UIRF under this AGREEMENT,
including, without limitation, Section 2.3(e). A copy of
this AGREEMENT shall be attached to each such sublicense
agreement. Royalties charged for sublicenses by LICENSEE
shall not be in excess of normal trade practice with respect to
comparable licenses or sublicenses. A copy of each such
sublicense agreement shall be provided to UIRF within 45
(forty-five) days after the effective date of such sublicense
agreement.
2.4
UIRF hereby grants to LICENSEE the
right to extend the licenses granted in Section 2.1 to an AFFILIATE
subject to the terms and conditions hereof.
2.5
All rights reserved to the United
States Government and others under Public Law 96-517 and 98-620
shall remain and shall in no way be affected by this
AGREEMENT.
ARTICLE 3 - ROYALTIES,
PAYMENTS
3.1
LICENSEE shall pay to UIRF within
[***] ([***]) days after the end of each calendar quarter, the
applicable royalty set forth below on NET SALES of LICENSED
PRODUCTS sold by LICENSEE and its AFFILIATES and
SUBLICENSEES:
(a)
[***]% ([***] percent) of NET SALES
of LICENSED PRODUCTS sold by LICENSEE, its AFFILIATES or
SUBLICENSEES if [***]; or
(b)
[***]% ([***]percent) of NET SALES
of LICENSED PRODUCTS sold by LICENSEE, its AFFILIATES or
SUBLICENSEES if [***].
Royalties shall not apply to sales
among LICENSEE, its AFFILIATES and their respective SUBLICENSEES
for resale. On sales between LICENSEE and its AFFILIATES or
SUBLICENSEES for resale, the royalty shall be paid on the
resale.
The foregoing royalty shall be
payable on a LICENSED PRODUCT-by- LICENSED PRODUCT basis until the
expiration of the last to expire of the PATENT RIGHTS containing a
valid claim of an issued patent (the ROYALTY TERM).
3.2
LICENSEE shall pay to UIRF a
percentage of any SUBLICENSE REVENUES received within [***] ([***])
days after the end of each calendar quarter during the ROYALTY TERM
as set forth below.
(a)
LICENSEE will pay to UIRF [***]%
([***]percent) of SUBLICENSE REVENUES received under agreements
executed with a SUBLICENSEE within [***] ([***])[***]after the
EFFECTIVE DATE.
(b)
LICENSEE will pay to UIRF the
following percentage of SUBLICENSE REVENUES received under
agreements executed with a SUBLICENSEE [***]: (i) [***]%
([***]percent) if [***]; and (ii) otherwise [***]%
([***]percent).
3.3
LICENSEE shall pay to UIRF a
one-time payment of $[***] ([***] dollars) upon [***]. Such
payment shall accrue upon receipt of such REGULATORY APPROVAL for
the LICENSED PRODUCT and shall be payable within [***] ([***]) days
of accrual. If such milestone event has occurred and
associated payment has accrued prior to the EFFECTIVE DATE,
LICENSEE shall pay to UIRF $[***] ([***] dollars) within [***]days
of the EFFECTIVE DATE. Such milestone payment shall be
creditable against future royalties.
3.4
LICENSEE shall pay to UIRF $[***]
([***] dollars) [***].
*** Confidential
Treatment Requested
4
3.5
On [***], and upon each subsequent
[***] during the term of this AGREEMENT, LICENSEE shall pay to UIRF
an annual license maintenance fee of $[***] ([***] dollars).
Each such annual license maintenance fee shall be reduced by the
total amount of any [***], and [***]on [***]accrued and paid to
UIRF by LICENSEE under this AGREEMENT during the calendar year
prior to such payment date, but shall not be reduced by (a) any
[***]accruing in any other calendar year during the term of this
AGREEMENT or (b) any [***] payable to UI pursuant to the terms of
any sponsored research agreement between LICENSEE and
UI.
ARTICLE 4 - REPORTING
4.1
Prior to signing this AGREEMENT,
LICENSEE has provided to UIRF a written summary of its proposed
research and development plan for the LICENSED PRODUCT.
4.2
LICENSEE shall provide written
annual reports with respect to the LICENSED PRODUCT within 60
(sixty) days after June 30 of each calendar year during the term of
this AGREEMENT. Each such report shall include but not be
limited to: reports of progress on research and development,
REGULATORY APPROVALS, manufacturing, sublicensing, marketing and
sales of the LICENSED PRODUCT during the preceding 12 (twelve)
months as well as plans for the coming year. If progress
differs from that anticipated in the plan provided under
Section 4.1, LICENSEE shall explain the reasons for the
difference and provide a modified plan to UIRF. LICENSEE
shall also provide any reasonable additional data UIRF requires to
evaluate LICENSEE’s performance.
4.3
LICENSEE shall report to UIRF the
date of FIRST COMMERCIAL SALE of the LICENSED PRODUCT within 30
(thirty) days of occurrence.
4.4
(a)
LICENSEE agrees to submit to UIRF
within [***] ([***]) days after the calendar quarters ending March
31, June 30, September 30, and December 31, reports setting forth
for the preceding 3 (three) month period at least the following
information:
(i)
the number of LICENSED PRODUCTS sold
by LICENSEE, its AFFILIATES and SUBLICENSEES;
(ii)
total billings for such LICENSED
PRODUCTS;
(iii)
the amount of royalty that is due
and payable to UIRF under Section 3.1;
(iv)
total SUBLICENSE REVENUES received
and the amount of the payment that is due and payable to UIRF under
Section 3.2; and
(v)
the basis for calculating such
payments.
Such report shall be certified as
correct by an officer of LICENSEE and shall include a detailed
listing of all deductions from NET SALES and royalties as specified
herein. If no royalties or payments on SUBLICENSE REVENUES
are due to UIRF for any reporting period, the written report shall
so state.
(b)
All payments due hereunder shall be
payable in United States dollars. Whenever conversion of
foreign currency to U.S. dollars shall be required, such conversion
shall be made using LICENSEE’s then current standard exchange
rate methodology for the translation of foreign currency sales into
U.S. Dollars or, in the case of other sales by AFFILIATES and
SUBLICENSEES, such similar methodology, consistently applied.
Any withholding of taxes levied by tax authorities on payments
hereunder shall be borne by UIRF and deducted by LICENSEE from the
sums otherwise payable by it hereunder for payment to the proper
tax authorities on behalf of UIRF. LICENSEE agrees to
cooperate with UIRF in the event that UIRF claims
*** Confidential Treatment
Requested
5
exemption from such withholding or
seeks credits or deductions under any double taxation or similar
treaty or agreement from time to time in force, such cooperation to
consist of providing receipts of payment of such withheld tax or
other documents reasonably available to LICENSEE.
(c)
All such reports shall be maintained
in confidence by UIRF, except as required by law, including Public
Law 96-517 and 98-620.
(d)
Late payments shall be subject to an
interest charge of [***]% ([***] percent) per month.
ARTICLE 5 - RECORD
KEEPING
5.1
LICENSEE shall keep, and shall
require its AFFILIATES and SUBLICENSEES to keep, accurate and
correct records of LICENSED PRODUCTS made, used or sold under this
AGREEMENT, appropriate to determine the amount of royalties and
payments on SUBLICENSE REVENUES due hereunder to UIRF. Such
records shall be retained for at least [***] ([***]) years
following a given reporting period. UIRF will have the right,
during regular business hours and upon reasonable advance notice,
to have such books and records of LICENSEE described above audited
no more than [***] ([***]) time per calendar year so as to verify
the accuracy of the information previously reported to UIRF.
UIRF will, for purposes of such audit, utilize the services of
UIRF’s Internal Audit Department or a certified public
accountant selected by UIRF and approved by LICENSEE, such approval
not to be unreasonably withheld. Such audit may cover the
[***] ([***]) [***]years preceding the date of the request for such
audit and may not cover any other calendar years.
Notwithstanding the foregoing, no audit of LICENSEE pursuant to
this Section 5.1 will cover any period of time preceding the
EFFECTIVE DATE. Such audit right shall continue for [***]
([***]) [***]years following termination of this
AGREEMENT.
5.2
Such accountants and/or UIRF’s
Internal Audit Department and UIRF will keep confidential any
information obtained during such audit and will verify only reports
and payments due, hereunder. The cost of such audit will be
borne by UIRF; however , if such audit shows that the amount
of any royalties or any other payments owed to UIRF is greater than
or equal to [***]% ([***]percent) or more than the amount of
royalties or any other payments paid for the calendar year(s) that
are the subject of the audit, the cost of the audit will be borne
by LICENSEE. Within [***] ([***]) days after both parties have
received a copy of an audit report, LICENSEE or UIRF, as
appropriate, will compensate the other party for payment errors or
omissions revealed by the audit.
ARTICLE 6 - FILING, PROSECUTION AND MAINTENANCE OF
PATENTS
6.1
LICENSEE shall reimburse UIRF for
all reasona
