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EXHIBIT 10.7
EXECUTION COPY
EXCLUSIVE LICENSE AGREEMENT
THIS
EXCLUSIVE LICENSE AGREEMENT (this "Agreement") is made effective
the
7th day of November, 2001, by and between Deltanoid
Pharmaceuticals, Inc., a
Delaware corporation (hereinafter called "DPI"), and Quatrx
Pharmaceuticals
Company (hereinafter called "Licensee"), a corporation organized
and existing
under the laws of the State of Delaware. DPI and Licensee are each
individually
referred to herein as a "Party" and collectively as the
"Parties".
WHEREAS,
DPI owns certain inventions that are described in the "Licensed
Patents" defined below, and DPI 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.
"Compound" shall mean
either **************************
***************************************************
***************************, or
***********************************
*********************** as claimed in a Licensed Patent.
"Confidential Information" has the meaning set forth in Section
7.1.
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"Cosmetic
Product" shall mean any product approved, made, used, sold and
marketed for nonprescription cosmetic applications, which does not
contain a
Product Compound unless (a) such Product Compound is
***************************************, and (b) the concentration
of
*************************************** in the applicable product
is no greater
than *******************.
"Development Plan" has the meaning set forth in Section 3.2.
"Disclosing Party" has the meaning set forth in Section 7.1.
"DPI" has
the meaning set forth in the first paragraph.
"Effective
Date" shall mean the date first above written as the effective
date of this Agreement.
"Exploratory Clinical Trial" shall have the meaning set forth in
Section
3.1.
"FDA"
shall mean the United States Food and Drug Administration.
"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.
"Invention" has the meaning set forth in Section 8.1.
"Inventor"
has the meaning set forth in Section 8.1.
"License
Rights" has the meaning set forth in Section 2.2.
"Licensed
Patents" shall mean 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, all to the extent owned
or licensed
by DPI or which DPI has the right to license or sublicense to
Licensee.
"Licensee"
has the meaning set forth in the first paragraph.
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"Licensee
Notice" has the meaning set forth in Section 2.2.
"Net Sales"
shall mean 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 or
duties paid; (ii)
normal and customary trade, quantity and cash discounts and rebates
allowed;
(iii) sales commissions; (iv) allowances on account of rejection or
return by
customers; (v) 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; (vi) 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 end-user, 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 which contains a Compound as one of its
active ingredients, the use, sale, offer for sale, manufacture, or
importation
of which, if unlicensed, would infringe one or more Valid Claims of
a patent
within the Licensed Patents.
"Product
Compound" shall mean a Compound which is the active ingredient
in
a Product.
"Royalty
Term" shall mean, with respect to a particular Product in any
jurisdiction, 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
jurisdiction.
"Selected
Compound" shall have the meaning set forth in Section 3.1.
"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 DPI as of the Effective
Date, and which
is necessary
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or useful to Licensee in furtherance of the research, development,
manufacture
or marketing of such Product or potential Product.
"Valid
Claim" shall mean a claim contained 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.
"WARF"
shall mean Wisconsin Alumni Research Foundation, a nonstock,
nonprofit Wisconsin corporation.
"WARF
Agreement" shall have the meaning set forth in Section 3.1.
"WARF
Compound" shall have the meaning set forth in Section 3.1.
SECTION 2. GRANT.
2.1. License. DPI hereby grants to Licensee a worldwide, exclusive
(even as to
DPI) license, with the right to grant sublicenses, under the
Licensed Patents to
a compound (including any metabolites discovered by Deltanoid)
selected from
***, ***, or ***, to make, have made, use, sell, have sold, and
import for
topical treatments (topical treatments do not include patch
delivery systems or
mucous membrane delivery systems, such as a suppository, intended
for systemic
treatment) of skin diseases (including treatments of skin, hair and
nails). DPI
agrees not to sell, market, or license any of the compounds that it
currently
owns or has right to use to any other company for the topical
treatment of skin
disease, including psoriasis, while this license is in effect. DPI
specifically
excludes from the foregoing license and reserves for itself the
exclusive right
to, and the right to license others to, make, have made, use, sell,
have sold,
or import any Cosmetic Product which contains ***. If the selected
compound is
***, or ***, or ***, DPI specifically excludes from the foregoing
license and
reserves for itself the exclusive right to, and the right to
license others to,
make, have made, use, sell, have sold, or import any treatment of
cancer or
renal osteodystrophy. DPI will, if at all possible in view of a
prior agreement
with
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******************* dated *****************, avoid using the
selected compound
for development as a topical treatment for cancer.
*****************************
****************************************************************************
*****************************************************************************
***************************************. Further, if DPI finds a
new use for any
of its compounds in topical application (includes skin, hair and
nails), Quatrx
will have a 90-day option to license or reach an agreement to
license such use
for development as set forth in Section 2.2. In the case of these
options, a new
and separate license agreement must be negotiated. DPI specifically
excludes
from the foregoing license and reserves for itself the exclusive
right to, and
the right to license others to, make, have made, use, sell, have
sold, or import
Products approved, made, use, sold, and marketed for systemic
applications.
Within 30 days of the date hereof, DPI shall deliver to Licensee
copies of all
materials consisting of the Licensed Patents and Technical
Information and shall
provide to Licensee all Technical Information that is not in a
tangible medium.
2.2
Option. If, at any time prior to the first anniversary of the
Effective Date, DPI determines to grant a license under the
Licensed Patents to
make, have made, use, sell, have sold, export or import any
products for
systemic treatment of psoriasis, or other skin diseases (including
treatments of
skin, hair, and nails), DPI shall notify the Licensee in a writing
which
references this Section and which describes in detail the rights
which DPI
desires to license. If within ** days of receipt of such a written
notice from
DPI, Licensee notifies DPI in writing that it desires to obtain
such a license
(the "Licensee Notice"), the Parties shall negotiate the terms of
such a license
exclusively with each other and in good faith for a period of **
days from the
date of the Licensee Notice. If the Parties are unable to agree on
the terms of
a license to the License Rights, DPI shall be free to negotiate
with third
parties for a license to the License Rights provided, however, that
DPI for a
period of not longer than one year shall not grant to any such
third party a
license to such License Rights on terms which in aggregate are more
favorable
than the Licensee indicated it would accept in the foregoing ** day
period.
SECTION 3. DEVELOPMENT.
3.1.
Exploratory Development. Within 30 days of the receipt by Licensee
of
the results of all currently ongoing experiments involving
Compounds, which
experiments are being conducted by DPI or its employees, officers,
agents or
representatives (the "Ongoing DPI Experiments"), Licensee and DPI
shall select a
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Compound for treatment of psoriasis, (the "Selected Compound") to
be used in
clinical development which may include an exploratory clinical
trial which may
compare such Compound against a certain compound licensed by
Licensee from WARF
(the "WARF Compound") pursuant to that certain agreement between
WARF and
Licensee (the "WARF Agreement"), with the goal of selecting the
best compound
for full scale clinical development (the "Exploratory Clinical
Trial"). Licensee
and DPI shall agree on the protocol for such clinical trial,
provided that DPI
acknowledges that Licensee may not be permitted to disclose to DPI
certain
information obtained by Licensee from WARF relating to the WARF
Compound.
Licensee shall use its best commercial efforts to conduct such
exploratory
clinical trial. Licensee shall notify DPI if it is proceeding with
further
clinical development of the Selected Compound within the earlier of
(i) ****
following availability of the results of the Exploratory Clinical
Trial or (ii)
**** after the availability of clinical trial material containing
the Selected
Compound and the WARF Compound which is sufficient to dose the
number of
patients projected to participate in the Exploratory Clinical
Trial. If Licensee
fails to provide DPI with such notice within the foregoing time
frame, then all
rights under the Licensed Patents shall revert to DPI, this
Agreement shall be
deemed to be terminated, and Licensee shall transfer to DPI the
results of the
Exploratory Development Plan, subject to any obligations Licensee
has to WARF
under the WARF Agreement.
3.2.
Further Clinical Development; Diligence and Termination.
Licensee
shall be responsible for funding the clinical development of the
Selected
Compound. Licensee shall develop the Selected Compound using
efforts comparable
to those efforts Licensee makes with respect to other compounds in
its
development portfolio. If Licensee receives the results of the
Ongoing DPI
Experiments and Licensee has not conducted any clinical development
activity
(including, without limitation, filing of an IND or causing an
investigator to
file an IND, contracting with third parties to provide services to
Licensee for
such development, engaging in activities relating to preparation
for manufacture
of the applicable Compound or beginning preparation of clinical
study protocols
for any Compound) on any Compound prior to the six month
anniversary of the
later of (i) the Effective Date or (ii) the date Licensee receives
the results
of the Ongoing DPI Experiments, then this Agreement and Licensee's
rights
hereunder shall be terminated.
Licensee and DPI have agreed on certain development milestones for
the
development of the Selected Compound which are listed on the
attached Exhibit B.
Within 30 days of the Effective Date, the parties shall agree on a
development
plan
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for the development of the Selected Compound, which shall include
the milestones
set forth on Exhibit B (such plan is hereinafter referred to as the
"Development
Plan"). The Development Plan shall include projected dates by which
certain
development activities shall be completed as well as the underlying
assumptions
upon which such projections are based. Licensee shall provide DPI
with a
quarterly report of the status of development of the Selected
Compound and the
Parties shall, upon request, review the status of the development
of the
Selected Compound as compared to the proposed Development Plan. The
Parties
acknowledge and agree that the Development Plan shall be regularly
reviewed and
modified to reflect the actual experience of Licensee in conducting
development
of the Selected Compound. If, at any time after the end of the
initial 2
quarters from the date of final selection of the Selected Compound,
DPI provides
Licensee with written notice that Licensee has failed to adhere to
the
milestones contained in the Development Plan for reasons unrelated
to the safety
or efficacy of the Selected Compound, the availability of clinical
supplies or
patient recruitment, or other reasons beyond the reasonable control
of Licensee,
then Licensee shall have up to 1 quarter to provide a detailed
written response
to these concerns, highlighting additional steps to be taken, if
appropriate. In
the event that Licensee still has not met the milestones set forth
in the
Development Plan for reasons unrelated to the safety or efficacy of
the Selected
Compound, the availability of clinical supplies or patient
recruitment, or other
reasons beyond the reasonable control of Licensee, DPI may
terminate this
Agreement.
SECTION 4. CONSIDERATION.
4.1.
License Fee. Licensee agrees to pay to DPI a license fee of
$50,000,
due within 2 business days of the Effective Date.
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4.2.
Milestones. Licensee shall make the following milestone payments
to
DPI within 30 days after the first achievement of each of the
following
milestones:
<TABLE>
<CAPTION>
Milestone
Payment
---------
-------
<S>
<C>
********************************************
$ *******
********************************************
$ *******
********************************************
$ *******
</TABLE>
The milestone payments received by DPI under this Section 4 shall
be
non-refundable and non-creditable. Each milestone payment referred
to in this
Section 4 shall be made only once, regardless of whether additional
formulations
of Products are, or more than one Product is, developed or
commercialized.
4.3.
Royalty. Licensee agrees to pay to DPI a royalty payment on Net
Sales
of each Product sold by Licensee and its Affiliates and permitted
sublicensees
in each calendar year in jurisdictions where a Valid Claim would be
infringed by
the manufacture, use or sale of such Product in such jurisdiction
according to
the following rates, and during the Royalty Term applicable to the
particular
Product in such jurisdictions:
*% for such Net Sales up to $****** per year.
*% for such Net Sales in excess of $********** and less than
$***
******* in each calendar year.
*% for such Net Sales of $*********** or more in each calendar
year.
In the event that Licensee notifies DPI under Section 3.1 that
Licensee elects
to develop the WARF compound instead of the Selected Compound for
uses covered
under this DPI license, then Licensee agrees to pay to DPI a
percentage of
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Licensee's Net Sales of the WARF Compound for such uses equal to
**% of the
royalty which Licensee would have been required to pay to DPI if
the product
containing the WARF Compound was a Product under this Agreement,
provided that
such percentage shall only apply to such Net Sales in jurisdictions
where the
manufacture, use or sale of such product would infringe a patent
licensed by
Licensee from WARF under the WARF Agreement. The period of time
over which
Licensee shall make such payments to DPI shall commence on the
First Commercial
Sale of the product containing the WARF Compound and shall end on
the date that
such product can be made, used and sold without infringing the
patents licensed
by Licensee from WARF under the WARF Agreement in all jurisdictions
in which
Licensee is generating such Net Sales. This Section 4.3 shall
survive the
termination or expiration of this Agreement other than a
termination for breach
of this Agreement by DPI.
4.4.
Minimum Royalty. Licensee further agrees to pay to DPI a
minimum
royalty on the sale of Products, but not on the sale of products
containing WARF
Compounds, of (i) $*** for the first consecutive $*** period
following the First
Commercial Sale of the first Product in the United States, (ii)
$*** for the
second such *** period, (iii) $*** for the third such *** period,
(iv) $*** for
the fourth such *** period, and (v) $*** for the fifth such ***
period and all
subsequent *** periods during the Royalty Term applicable to such
Products.
Royalties paid to DPI pursuant to Section 4.3 for Net Sales in the
*** period
applicable to each minimum royalty amount shall be credited against
each such
minimum royalty. The minimum royalty amounts shall be due and owing
within 30
days of the end of the *** period applicable to each such minimum
royalty
amount.
4.5.
Accounting; Payments.
4.5.1. 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.
