Exhibit 10.5
LICENSE AGREEMENT
This License Agreement (the
“Agreement”) is made and entered into as of the 1st day
of July, 2002 (the “Effective Date”), by and between
the UNIVERSITY OF PITTSBURGH OF THE COMMONWEALTH SYSTEM OF HIGHER
EDUCATION, a non-profit corporation, organized and existing under
the laws of the Commonwealth of Pennsylvania, having its principal
office at 4200 Fifth Avenue, Pittsburgh, Pennsylvania 15260
(“UNIVERSITY”) and NOVACEA, INC., a Delaware
corporation having its primary place of business at 601 Gateway
Boulevard, Suite 450, South San Francisco, California 94080
(“LICENSEE”).
WHEREAS, UNIVERSITY is the owner of
certain PATENT RIGHTS and KNOW-HOW (as hereinafter defined) and has
the right to grant licenses under such PATENT RIGHTS and
KNOW-HOW,
WHEREAS, UNIVERSITY desires to have
the PATENT RIGHTS and KNOW-HOW utilized in the public
interest;
WHEREAS, LICENSEE has represented to
UNIVERSITY, to induce UNIVERSITY to enter into this Agreement, that
LICENSEE, shall commit itself to a thorough, vigorous and diligent
program of exploiting the PATENT RIGHTS and KNOW-HOW so that public
utilization results therefrom; and
WHEREAS, LICENSEE desires to obtain
a license under the PATENT RIGHTS and KNOW-HOW upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants contained herein, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE 1 -
DEFINITIONS
For purposes of this Agreement, the
following words and phrases shall have the following
meanings:
1.1 “ AFFILIATE ”
shall mean, with respect to UNIVERSITY, any clinical or research
entity that is operated or managed as a facility under the UPMC
Health System, whether or not owned by UNIVERSITY.
1.2 “ KNOW-HOW ”
shall mean any and all non-patented, proprietary technology and
information (including, without limitation, research data, designs,
formulas, process information, clinical data, and other information
pertaining or relating to any technology or invention claimed in
the Patent Rights) existing as of the Effective Date as a result of
activities conducted in the laboratories of Drs. Donald Trump
and/or Candace Johnson, which is necessary or useful for the
practice of the Patent Rights, or for the manufacture, use, offer
for sale or sale of a Licensed Product.
1.3 “ LICENSED PRODUCT
” shall mean VITAMIN D and one or more cytotoxic agents
administered or otherwise used or offered for use in a mariner
which would, but for the license granted herein, infringe one or
more of the PATENT RIGHTS.
1.4 “ LICENSEE ”
shall mean NOVACEA, INC. and all entities directly or indirectly
controlling, controlled by or under common control with NOVACEA,
INC.
1.5 “ NET SALES ”
shall mean LICENSEE’s and any sublicensee’s invoiced
price for LICENSED PRODUCTS, less the sum of the
following:
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(a)
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actual cost of
freight charges or freight absorption and insurance, separately
stated in such invoice;
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(b)
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actual trade,
quantity or cash discounts allowed, if any;
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(c)
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taxes such as
sales taxes, tariff duties and/or use taxes separately stated on
each invoice and borne by the seller; and
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(d)
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credit
allowances given or made for rejection or return of previously sold
goods.
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1.6 “ PATENT RIGHTS
” shall mean the interest of UNIVERSITY in:
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(a)
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the United
States and foreign patents and/or patent applications listed in
Exhibit “A” attached hereto;
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(b)
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United States
and foreign patents issued from the applications listed in Exhibit
“A” and from divisionals, continuations and
continuations-in-part of these applications;
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(c)
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claims of U.S.
and foreign continuation-in-part applications, and of the resulting
patents, which are directed to subject matter specifically
described in the U.S. and foreign applications listed in Exhibit
“A”; and
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(d)
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claims of all
foreign patent applications, and of the resulting patents, which
are directed to subject matter specifically described in the United
States patents and/or patent applications described in (a),
(b) or (c) above.
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1.7 “ SUB-LICENSE
REVENUES ” shall mean all consideration paid to LICENSEE
in return for the grant of a sub-license under the PATENT RIGHTS,
including license fees and milestone payments but excluding:
(i) the purchase of equity in LICENSEE, (ii) payments or
reimbursement for consulting, research, development, or other
services. (iii) reimbursement for patent expenses or other
actual disbursements of LICENSEE, and (iv) running royalties
payable as a function of the manufacture, sale or use of a LICENSED
PRODUCT.
1.8 “ VITAMIN D ”
shall mean cholecalciferol, as well as all derivatives and analogs
thereof or thereto.
ARTICLE 2 - GRANT
2.1 To the extent it may lawfully do
so, UNIVERSITY hereby grants to LICENSEE a worldwide sole and
exclusive license under the PATENT RIGHTS and KNOW-HOW to
make,
have made, use, offer for sale and sell the
LICENSED PRODUCTS. The license granted hereby is subject to the
rights of the United States government, if any, as set forth in 35
U.S.C. Section 200, et seq .
2.2 UNIVERSITY reserves a
royalty-free, non-exclusive right to practice under the PATENT
RIGHTS to use LICENSED PRODUCTS for its own noncommercial research
and educational purposes.
2.3 LICENSEE shall have the right to
enter into sub-licensing arrangements for the rights, privileges
and licenses granted hereunder upon notice to and prior written
approval of UNIVERSITY, which approval shall not be unreasonably
withheld or delayed. Any such sub-licensing arrangement shall
terminate upon termination of this Agreement.
2.4 Any sub-license granted by
LICENSEE hereunder shall provide that the obligations to UNIVERSITY
of Sections 2, 7, 8, 9, 10 and 13 of this Agreement shall be
binding upon the sub-licensee as if it were party to this
Agreement.
2.5 LICENSEE shall forward to
UNIVERSITY a copy of any and all sub-license agreements promptly
upon execution thereof. Such copies and the non-public information
reflected therein shall be kept confidential by
UNIVERSITY.
2.6 The license granted hereunder
shall not be construed to confer any rights upon LICENSEE by
implication, estoppel or otherwise as to any intellectual property
other than PATENT RIGHTS and KNOW-HOW.
ARTICLE 3 - DUE
DILIGENCE
3.1 LICENSEE shall use best efforts
consistent with prudent business judgment to bring one or more
LICENSED PRODUCTS to market and to continue active marketing
efforts for such LICENSED PRODUCTS throughout the term of this
Agreement.
3.2 Without limiting
Section 3.1, above, LICENSEE shall adhere to each of the
following milestones:
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(a)
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begin a Phase
II trial of a LICENSED PRODUCT within 18 months after the Effective
Date;
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(b)
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begin a Phase
II trial of a LICENSED PRODUCT for a second clinical indication
within 24 months after the Effective Date; and
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(c)
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begin a pivotal
Phase 111 trial of a LICENSED PRODUCT within 48 months after the
Effective Date.
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3.3 LICENSEE’s failure to
perform in accordance with Section 3.1 or Section 3.2
shall constitute a material breach of this Agreement. Such breach
shall entitle UNIVERSITY to terminate as provided in
Section 10.1(a), below.
ARTICLE 4 - ROYALTIES AND OTHER
CONSIDERATION
4.1 In consideration of the rights,
privileges and license granted by UNIVERSITY hereunder, LICENSEE
shall pay royalties and other consideration as follows:
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(a)
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as an initial
license fee, within ten (10) days execution of the Agreement,
[*] Dollars ($[*]) and [*] fully-paid shares of Common Stock of
LICENSEE, upon the terms set forth in the Stock Issuance Agreement
attached hereto as Exhibit “B”, (plus the reimbursement
of reasonable patent expenses incurred as of the Effective
Date);
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(b)
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within ten
(10) days following the issuance of a United States patent
claiming priority from U.S. Patent [*] and which includes, inter
alia, claims substantially identical to those identified as pending
claims [*] in UNIVERSITY’s “Response to Office
Action” dated October 3, 2001, a milestone payment of
[*] Shares of fully-paid Common Stock of LICENSEE upon the terms
set forth in Exhibit “B”; and
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(c)
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royalties in an
amount equal to [*] percent ([*]%) of NET SALES determined in a
manner consistent with Section 4.7, below.
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4.2 Royalty payments pursuant to
Section 4.1(c), above, shall be paid to UNIVERSITY in United
States dollars and directed to the address set forth in
Section 12 hereof within sixty (60) days after
March 31, June 30, September 30 and
December 31 of each calendar year during the term of this
Agreement. LICENSEE shall have the right to reduce the royalty rate
payable under Section 4.1(c) in any calendar quarter by [*] of
the royalty rate paid to any third party, by judgment, contract or
otherwise, for the right to manufacture, use or sell any LICENSED
PRODUCT in such calendar quarter; provided, however, that the
royalty rate due UNIVERSITY hereunder shall in no event be reduced
to less than [*] percent ([*]%) of NET SALES.
4.3 Commencing on the first
anniversary of the Effective Date, LICENSEE shall pay to UNIVERSITY
a minimum annual royalty, which amount shall be creditable against
royalties actually due to the UNIVERSITY with respect to NET SALES
in such calendar year. The first such payment shall be [*] Dollars
($[*]). The amount of such annual payment shall increase each year
by [*] Dollars ($[*]), up to a maximum of [*] Dollars ($[*)] per
year.
4.4 UNIVERSITY shall also receive:
(i) [*] percent ([*]%) of all SUB-LICENSE REVENUES received by
LICENSEE within the first twelve (12) months after the
Effective Date; (ii) [*] percent ([*]%) of all SUB-LICENSE
REVENUES received more than twelve (12) months but fewer than
twenty-four (24) months after the EFFECTIVE DATE, and of such
payments; and (iii) [*] percent ([*]%) of all SUB-LICENSE
REVENUES received more than twenty-four (24) months after the
Effective Date.
[*] Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect
to the omitted portions.
4.5 Payments pursuant to this
Agreement which are overdue shall bear interest calculated from the
due date until payment is received at the rate of eight percent
(8%) per annum.
4.6 LICENSEE shall sell LICENSED
PRODUCTS to UNIVERSITY and its AFFILIATES upon request at such
price(s) and on such terms and conditions as such products are made
available to LICENSEE’s most favored commercial
customer.
4.7 NET SALES as to the VITAMIN D
component of each LICENSED PRODUCT sold by LICENSEE shall be
determined and reported by LICENSEE solely in the manner provided
in this Section 4.7.
