LICENSE AGREEMENT

EXHIBIT 10.2

[*** Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text. Application has been made to the Securities and Exchange Commission seeking confidential treatment of such confidential portions under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. This exhibit has been filed separately with the Securities and Exchange Commission without redactions in connection with MediciNova’s confidential treatment request.]

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (hereinafter referred to as “Agreement”) dated as of October 31, 2006 (hereinafter referred to as “Effective Date”), is entered into between MediciNova, Inc. , a Delaware corporation having a place of business located at 4350 La Jolla Village Drive, Ste 950, San Diego, California 92122, U.S.A. (hereinafter referred to as “MN”), and Meiji Seika Kaisha, Ltd., a Japanese corporation having its principal business place at 4-16, Kyobashi 2-chome, Chuo-ku, Tokyo 104-8002, Japan (hereinafter referred to as “MS”).

WITNESSETH:

WHEREAS, MS is the owner of the MS Intellectual Property (as hereinafter defined) relating to a new chemical class of compounds of plasma carboxypeptidase B inhibitor, [***];

WHEREAS, MN desires to obtain an exclusive license, with a right to grant sublicenses, under the MS Intellectual Property, and MS desires to grant such license to MN, upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (as hereinafter defined) hereby agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, unless specifically set forth to the contrary herein, the terms defined in this ARTICLE 1 shall have the respective meanings set forth below, it being understood that words in the singular include the plural and vice versa:

1.1 “ Act ” shall mean the United States Food Drug and Cosmetic Act of 1938, as amended, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time.

1.2 “ Affiliate ” shall mean, (i) any corporation or business entity of which at least fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a Party or by any entity mentioned in (ii) hereinafter; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds at least fifty percent (50%) (or the maximum ownership interest permitted by law) of the securities or other ownership interests

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representing the equity, voting stock or general partnership interest of a Party. Further, if a joint venture is established pursuant to an agreement between a Third Party (as hereinafter defined) and MN, MS or their respective Affiliate (including, without limitation, an entity that manufactures, uses, purchases, sells, imports, exports, or acquires Compound and/or Product [as hereinafter respectively defined] for, to or from MN, MS or their respective Affiliate), where MN, MS or their respective such Affiliate has significant input regarding the management and operation of such joint venture (e.g., through board representation or specified veto rights) or a significant stake in the profits of such joint venture, such joint venture shall also be deemed as an Affiliate hereunder.

1.3 “ ANDA ” shall mean an abbreviated NDA (as hereinafter defined) in the United States according to applicable US laws and regulations.

1.4 “ API ” shall mean Compound in bulk form used as the active pharmaceutical ingredient in the manufacture of Product.

1.5 “ Business Day(s) ” shall mean any day that is not a Saturday, a Sunday, a national holiday in Japan and/or United States, or a day on which the New York Stock Exchange and/or the Tokyo Stock Exchange is closed.

1.6 “ Calendar Quarter ” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.

1.7 “ Calendar Year ” shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31.

1.8 “ Centralized Procedure ” shall mean the European Union Centralized Procedure for marketing authorization in accordance with Council Regulation n° 2309/93 of July 22, 1993 or any successor regulations.

1.9 “ CFR ” shall mean the United States Code of Federal Regulations.

1.10 “ cGMP ” shall mean then current good manufacturing practices as defined in regulations promulgated by the FDA (as hereinafter defined) under the Act and, if applicable, equivalent laws and regulations of other countries or jurisdictions in the MN Territory (as hereinafter defined) relating to the formulation, manufacture, testing prior to delivery, storage and delivery of Compound, API and Product.

1.11 “Commercially Reasonable Efforts” shall mean efforts and resources normally used by a licensee in the pharmaceutical industry that is similar in size to MN for a product owned by it or to which it has exclusive rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety and efficacy, the regulatory and reimbursement structure involved, the profitability of the applicable products, and other relevant factors.

1.12 “Compound” shall mean the chemical compound, [***], as diagrammed on Schedule 1.12 , (ii) any other compounds claimed or covered by any of the MS Patent Assets (as hereinafter defined) listed on Schedule 1.44 , (iii) [***].

 

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1.13 “ Control ” shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement with any Third Party.

1.14 “ Cost of Goods ” shall mean the actual and bona fide and verifiable manufacturing and supply costs calculated in accordance with GAAP (as hereinafter defined), including labor, material and factory costs, and including amounts payable to Third Party manufacturers, specifically associated with the manufacture and supply by MN or an MN Affiliate (as hereinafter defined) of API or Product supplied to an MN Sublicensee (as hereinafter defined).

1.15 “ Customer ” shall mean any purchaser of Products, provided, however, that any MN Affiliate or MN Sublicensee shall be deemed a Customer, with respect to a Sale (as hereinafter defined) thereto of a particular Product, only in the case where such party receives such Product for its own end-use or other internal commercialization and not for re-sale.

1.16 “ Development Milestone ” shall mean the milestone events set forth in Section 4.2.

1.17 “ Dominating Patent ” shall mean an unexpired patent which is owned or Controlled by a Third Party and as to which both Parties mutually agree in good faith and in writing would be infringed by activities associated with the commercialization of Product.

1.18 “ EMEA ” shall mean the European Agency for the Evaluation of Medicinal Products based in London (UK), as established by Council Regulation n° 2309/93 of July 22, 1993, as subsequently amended by Commission Regulation 649/98 of March 23, 1998, and any successor thereto having substantially the same functions.

1.19 “ EMEA Authority ” shall mean EMEA or the applicable Regulatory Authority (as hereinafter defined) in an EMEA Member State (as hereinafter defined).

1.20 “ EMEA Member State ” shall mean any country or jurisdiction where an MAA (as hereinafter defined) can be submitted under Centralized Procedure or Mutual Recognition Procedure (as hereinafter defined), including then current European Union member countries or jurisdictions and Norway, Iceland and Liechtenstein.

1.21 “ FDA ” shall mean the United States Food and Drug Administration and any successor thereto having substantially the same functions.

1.22 “ Field ” shall mean any use of Compound or Product in humans.

1.23 “ First Commercial Sale ” shall mean, on a country by country or jurisdiction by jurisdiction basis, the first commercial Sale of any Product to a Customer in each country or jurisdiction in the MN Territory by MN, MN Affiliates and/or MN Sublicensees after Regulatory Approval (as hereinafter defined) has been granted by the Regulatory Authority of such country or jurisdiction .

1.24 “ GAAP ” shall mean generally accepted accounting principles in the United States.

1.25 “ Generic Competition ” shall mean, on a country by country or jurisdiction by jurisdiction and Product by Product basis, (i) with respect to a country or jurisdiction in the MN Territory

 

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where IMS Statistical Data (or substantially equivalent data) are available, [***] or, (ii) in any particular country or jurisdiction in the MN Territory where IMS Statistical Data (or substantially equivalent data) are not available, [***].

1.26 “ Generic Drug(s) ” shall mean any pharmaceutical composition containing the same Compound as contained in Product Sold by MN, an MN Affiliate and/or an MN Sublicensee, in each case other than Product introduced in such country or jurisdiction by MN, an MN Affiliate and/or an MN Sublicensee.

1.27 “ Improvement ” shall mean any improvement or enhancement relating to Compound or Product including, without limitation, any change or modification to any method, process, composition, or any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage, administration, use, indication or packaging as well as the addition of other active ingredients.

1.28 “ IND ” shall mean an investigational new drug application, as defined in 21 CFR Section 312.3, and any amendments thereto, filed with the FDA or an equivalent application filed with an equivalent Regulatory Authority outside the United States, the filing of which is necessary to commence clinical testing of Product in such regulatory jurisdiction.

1.29 “ Know-How ” shall mean any and all unpatented information and materials, including but not limited to, discoveries, Improvements, processes, formulae, data, inventions, invention disclosures, know-how and trade secrets, including without limitation, all chemical, pharmaceutical, toxicological, biochemical, and biological, technical and nontechnical data, and information relating to the results of tests, assays, methods, and processes, and specifications and/or other documents containing information and related data, and any non-clinical, clinical, assay control, regulatory, and any other test results or information, that are necessary or useful for the development, manufacturing, Regulatory Approval and/or marketing of Compound or Product.

1.30 “ Major European Countries ” shall mean United Kingdom, France, Germany, Italy and Spain.

1.31 “ Market Exclusivity ” shall mean, with respect to any particular country or jurisdiction in the MN Territory, the situation or condition under which (i) the development, manufacture, use, offering for sale, sale, marketing, distribution, export and/or import of Compound and/or Product, but for the license granted in this Agreement, would infringe, or contribute to, or induce the infringement of, a Valid Patent Claim (as hereinafter defined) issued at the time of the infringing activity in such country(ies) or jurisdiction(s) and/or (ii) the exclusive right to market and sell Product is lawfully granted by the Regulatory Authority in such country(ies) or jurisdiction(s).

1.32 “ Marketing Authorization Application ” or “ MAA ” shall mean any new registration application or marketing authorization application, including any supplements or amendments thereto, such as a foreign counterpart or comparable to the NDA, which MN, MS, an MN Affiliate, an MN Sublicensee and/or an MS Licensee (as hereinafter defined) may file with the requisite Regulatory Authority in any country or jurisdiction other than the United States in the MN Territory or MS Territory (as hereinafter defined), as applicable, that is required to obtain

 

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Regulatory Approval of Product for a particular indication in such country or jurisdiction. For the avoidance of doubt, an application to EMEA Authority under the Centralized Procedure or Mutual Recognition Procedure shall be deemed as an MAA hereunder.

1.33 “ MN Affiliate ” shall mean any Affiliate of MN to which MN grants a sublicense in the MN Territory of the rights and licenses, whether in whole or in part, granted to MN by MS pursuant to Section 3.2 of this Agreement.

1.34 “ MN Development Costs ” shall mean the actual and bona fide and verifiable development costs, including but not limited to the costs for materials, full-time and part-time employees, overhead, payments made to Third Parties for manufacturing, formulation, non-clinical and clinical studies, specifically relating to Product which have been incurred by MN and/or an MN Affiliate prior to the effective date of the sublicense agreement between MN (or such MN Affiliate) and an MN Sublicensee, to the extent such development costs are reasonable and not excessive compared with the development costs of similarly situated development companies in the pharmaceutical industry under similar circumstances.

1.35 “ MN Intellectual Property ” shall mean any and all MN’s and MN Affiliates’ intellectual property and proprietary rights in any and all MN Patent Assets and MN Know-How (as hereinafter respectively defined).

1.36 “ MN Know-How ” shall mean any and all Know-How that becomes during the term of this Agreement owned or Controlled by MN or an MN Affiliate.

1.37 “ MN Patent Assets ” shall mean all Patent Assets (as hereinafter defined) that are necessary to develop, make, use, market, distribute, import, export, offer for sale and/or sell Compound or Product and that become during the term of this Agreement owned or Controlled by MN or an MN Affiliate.

1.38 “ MN Sublicensee ” shall mean any Third Party to which MN or an MN Affiliate grants a sublicense in the MN Territory of the rights and licenses, whether in whole or in part, granted to MN by MS pursuant to Section 3.2 of this Agreement.

1.39 “ MN Territory ” shall mean all countries or jurisdictions worldwide, except for those in the MS Territory.

1.40 “ MS Affiliate ” shall mean any Affiliate of MS to which MS grants the rights and licenses in the MS Territory to research, develop, make, have made, use, offer for sale, market, sell, import, export and/or distribute Compound and/or Product under the MS Intellectual Property.

1.41 “ MS Intellectual Property ” shall mean any and all MS’s and MS Affiliates’ intellectual property and proprietary rights in any and all MS Patent Assets and MS Know-How (as hereinafter defined).

1.42 “ MS Know-How ” shall mean any and all Know-How that is or becomes during the term of this Agreement owned or Controlled by MS or an MS Affiliate.

 

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1.43 “ MS Licensee ” shall mean any Third Party to which MS grants the rights and licenses in the MS Territory to research, develop, make, have made, use, offer for sale, market, sell, import, export and/or distribute Compound and/or Product under the MS Intellectual Property.

1.44 “ MS Patent Assets ” shall mean (i) those Patent Assets listed on Schedule 1.44 including any counterparts thereof which have been or may be filed in other countries or jurisdictions and (ii) all Patent Assets that become owned or Controlled by MS or MS Affiliates during the term of this Agreement which, absent the rights and license granted to MN hereunder, would be infringed by development, manufacture, use, importation, exportation, sale, offer for sale, market or distribution of Compound, API and/or Product.

1.45 “ MS Territory ” shall mean Japan, Bangladesh, Brunei, Cambodia, People’s Republic of China, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

1.46 “ Mutual Recognition Procedure ” shall mean the mutual recognition procedure for marketing authorization in accordance with Directive No. 2003/83/EC of November 6, 2001 or any successor regulations and/or directives.

1.47 “ NDA ” shall mean a new drug application as defined in the Act and applicable regulations promulgated thereunder that is submitted to the FDA to apply for Regulatory Approval of Product for a particular indication in the United States and any amendments and supplements thereto.

1.48 “ Net Sales ” shall mean the total gross amount invoiced by MN or MN Affiliates from Sales of Products, commencing upon the date of First Commercial Sale, whether invoiced under one or more separate agreements, after deducting any of the following to the extent actually paid or provided, not already deducted from the gross amount invoiced and allocated to Product, in accordance with GAAP, any (a) credits, allowances, samples, discounts and rebates to, and chargebacks from the account of, Customers; (b) freight and insurance costs; (c) trade discounts, cash discounts, quantity discounts, rebates; (d) retroactive price reductions; (e) recalls, credits and allowances on account of returned or rejected Product, including allowance for breakage or spoilage; (f) sales, value-added and other direct taxes incurred directly in connection with the Sale of Product; (g) rebates, chargebacks or similar payments or credits actually granted to managed health care organizations, wholesalers, distributors, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations, or other institutions or health care organizations or to any governmental or regulatory authority in respect of any state, provincial, local or federal Medicare, Medicaid or similar programs in any country or jurisdiction in the MN Territory; (h) write-offs for bad debts or allowances; and (i) customs duties, custom broker charges and other surcharges and governmental charges incurred in connection with the exportation or importation of Product.

Sales or other transfers between or among MN, MN Affiliates and MN Sublicensees shall be excluded from the computation of Net Sales and no payments will be payable on such sales or transfers except where MN, such MN Affiliates or MN Sublicensees are Customers, but the computation of Net Sales shall include the subsequent Sales to Customers by MN or such MN Affiliates.

 

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1.49 “ Net Sublicense Consideration ” shall mean (a) the total gross amount invoiced, received or otherwise charged and the value of any other consideration in the form of cash payments received or obtained, directly or indirectly, by MN or an MN Affiliate from any MN Sublicensee as consideration for the grant of the sublicense under Section 3.2, including, but not limited to, as royalties of any kind including royalties based on net sales of Product by such MN Sublicensee, flat fees, up-front license fee and payments based on the achievement of milestones relating to Product, whether received under one or more separate agreements, less MN Development Costs; and (b) the amount of any profit of MN (or MN Affiliates) derived from the supply of API or Product to MN Sublicensees (i.e. the transfer price from MN or such MN Affiliates to such MN Sublicensees, less Cost of Goods). Notwithstanding the foregoing, Net Sublicense Consideration shall not include any amounts received by MN or an MN Affiliate directly from MN Sublicensees attributable to any bona fide (i) funding by such MN Sublicensee of the costs for MN’s (and/or such MN Affiliate’s) development activities specifically relating to Product, including non-clinical and clinical studies associated with obtaining Regulatory Approval, which such MN Sublicensee contracts out on arms length terms to MN and/or an MN Affiliate on and after the effective date of the sublicense agreement between MN (or an MN Affiliate) and such MN Sublicensee, to the extent such costs do not exceed an amount which is reasonably typical under the similar circumstances in the pharmaceutical industry ; and (ii) arms length cash investments by such MN Sublicensee in securities of MN and/or an MN Affiliate not as part of consideration for sublicense set forth in Section 3.2.

1.50 “ Party” shall mean MS or MN , and “Parties” shall mean MS and MN.

1.51 “ Patent Assets ” shall mean any patents and patent applications, including provisionals and priority filings, utility models and their applications (which shall be deemed to include certificates of invention and applications for certificates of invention and supplementary protection certificates) together in all cases with any continuations, continuations-in-part, divisions, patents of addition, reexaminations, reissues, renewals as well as extensions, supplementary protection certificates and any other patent term extensions of any of the foregoing.

1.52 “ Person ” shall mean an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

1.53 “ Phase 1 Clinical Trial ” shall mean that portion of the drug development process relating to Product which provides for the first introduction into humans of such Product including small scale clinical trial in healthy volunteers and/or patients to obtain information on such Product’s safety, tolerability, pharmacological activity, pharmacokinetics and/or pharmacodynamics, and supporting Regulatory Approval of such Product in the Field, as more fully defined in 21 C.F.R. 312.21 (a) or the equivalent statute or regulation in a country or jurisdiction other than the United States.

1.54 “ Phase 2 Clinical Trial ” shall mean that portion of the drug development process relating to Product which provides for a well-controlled clinical trial conducted in patients, a principal purpose of which is to make a preliminary determination that such Product is safe for its intended

 

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use and to obtain sufficient information about such Product’s efficacy, as well as to obtain an indication of the dosage regimen required, to permit the design of further clinical trials, and supporting Regulatory Approval of such Product in the Field, as more fully defined in 21 C.F.R. 312.21 (b) or the equivalent statute or regulation in a country or jurisdiction other than the United States.

1.55 “ Phase 3 Clinical Trial ” shall mean that portion of the drug development process relating to Product which provides for a large scale clinical trial conducted in a sufficient number of patients that is designed to establish that such Product is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with such Product in the dosage range to be prescribed, and supporting Regulatory Approval of such Product in the Field, as more fully defined in 21 C.F.R. 312.21 (c) or the equivalent statute or regulation in a country or jurisdiction other than the United States.

1.56 “ Product ” shall mean any pharmaceutical composition containing Compound as an active ingredient, in any formulation, delivery system or package configuration.

1.57 “ Proprietary Information ” shall mean any and all scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or by any other means, which is owned or Controlled and under the protection of one Party and is being provided by that Party to the other Party in connection with this Agreement.

1.58 “ Regulatory Approval ” shall mean, in any country or jurisdiction in the MN Territory or the MS Territory, as applicable, all approvals (including pricing and reimbursement approvals required for marketing authorization), product and/or establishment licenses, registrations or authorizations of all regional, federal, state or local regulatory agencies, departments, bureaus or other Regulatory Authority, necessary for the manufacture, use, storage, import, export, transport, offer for sale and sale of Compound, API and/or Product in such country or jurisdiction. For the avoidance of doubt, an approval by the EMEA Authority under the Centralized Procedure or Mutual Recognition Procedure shall be deemed as a Regulatory Approval hereunder.

1.59 “ Regulatory Authority ” shall mean any court, tribunal, arbitrator, agency, commission, official or other instrumentality of any federal, state, county, city or other political subdivision, domestic or foreign, that performs a function for such political subdivision similar to the function performed by the FDA for the United States and the EMEA Authority for EMEA Member States with regard to the approval, licensing, registration or authorization to develop, test, manufacture, promote, market, distribute, use, store, import, export, transport, offer for sale or sell a pharmaceutical product intended for human use in the defined territory or political subdivisions, or with respect to the approval of pricing or reimbursement for such product.

1.60 “ Royalty Term ” shall mean the royalty term set forth in Section 4.3.4.

1.61 “ Royalty Year ” shall mean, during the Royalty Term (i) for the year in which the First Commercial Sale occurs (the “First Royalty Year”), the period commencing with the first day of the Calendar Quarter in which the First Commercial Sale occurs and expiring on the last day of

 

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the Calendar Year in which the First Commercial Sale occurs; and (ii) for each subsequent year, each successive Calendar Year.

1.62 “ Sale ” shall mean the act of selling, leasing, exchanging, or otherwise transferring, providing, furnishing, or disposing of Compound, API or Product for any consideration to a Customer. Correspondingly, “Sell” means to make or cause to be made a Sale, and “Sold” means to have made or caused to be made a Sale.

1.63 “ Third Party ” shall mean any Person other than MS, MN and their respective Affiliates.

1.64 “ Trademark ” shall mean any trademark, trade name or trade dress as MN or any MN Affiliate shall adopt for Product that is at any time during the term of this Agreement owned or Controlled by MN or such MN Affiliate.

1.65 “ Valid Patent Claim ” shall mean a claim of an issued and unexpired patent included within the MS Patent Assets, which (a) has not been held revoked, or held unenforceable or invalid by a court or other governmental agency of competent jurisdiction, in an unappealed or unappealable decision and (b) has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

ARTICLE 2

DEVELOPMENT; REGULATORY MATTERS; EXCHANGE OF INFORMATION

2.1 Development in the MN Territory .

2.1.1 MN shall select and develop Compound claimed or covered by any of the MS Patent Assets in the MN Territory. In the event that MN notifies MS in writing of its intention on reasonable grounds to select and develop Compound that is not claimed or covered by any of the MS Patent Assets in the MN Territory, MN may do so after having full consultation with and obtaining a written consent of MS.

2.1.2 Development Plan . MN shall prepare and submit to MS a projected plan for the development of Product (hereinafter referred to as “Development Plan”). The Development Plan shall be divided into the following phases of development: (a) pre-clinical development until the first IND filing, (b) until initiation of the first Phase 2 Clinical Trial, (c) until initiation of the first Phase 3 Clinical Trial, and (d) until the first submission of either an NDA to the FDA or an MAA to an EMEA Authority. The Development Plan for (a) pre-clinical development until the first IND filing shall be prepared and submitted to MS by MN within one hundred twenty (120) days after the Effective Date and the Development Plan for its subsequent phase shall be prepared and submitted to MS by MN within ninety (90) days after the completion of the development activities in the Development Plan for each previous phase.

 

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2.1.3 Diligence and Information Exchange . MN shall use Commercially Reasonable Efforts to develop and commercialize Product at its own costs and responsibilities. In addition, MN agrees to:

 

(a)

provide, at its own responsibilities, sufficient scientific, technical, clinical and regulatory personnel, equipment, time, funds and resources for the commercial development of Product to meet its obligations hereunder;

 

(b)

undertake the development in accordance with the Development Plan and in compliance with applicable laws and regulatory requirements;

 

(c)

maintain records with respect to the activities performed under the Development Plan in sufficient detail and good scientific manner appropriate for Regulatory Approval in the MN Territory;

 

(d)

provide MS, after API or Product for Phase 1 Clinical Trials in compliance with cGMP becomes available and upon MS’s request, with the final version of the study protocol of any non-clinical and clinical study relating to Compound and Product to be conducted by or on behalf of MN, an MN Affiliate or, when applicable and available to MN, an MN Sublicensee;

 

(e)

submit to MS copies of all final reports of any non-clinical and clinical study relating to Compound and Product conducted by or on behalf of MN, an MN Affiliate or, when applicable and available to MN, an MN Sublicensee promptly after the completion of such studies;

 

(f)

semi-annually provide MS with a written report summarizing in reasonable detail the status of development activities of MN, any MN Affiliate and/or any MN Sublicensee relating to Compound and Product, including but not limited to, results of non-clinical and/or clinical studies conducted by or on behalf of MN, MN Affiliates and/or MN Sublicensees, with the delivery to MS of the summary of the annual report to an IND submitted by MN, MN Affiliates and/or MN Sublicensees to the FDA and/or EMEA Authority in connection with the periodic reporting requirements of the IND to be in satisfaction of the foregoing requirement;

 

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provided, however, that the foregoing obligations of MN are expressly conditioned upon the absence of (i) any adverse conditions relating to the safety or efficacy of Compound or Product including the absence of any action by any Regulatory Authority limiting the development or commercialization of Compound or Product; (ii)  force majeure (as more specifically described in Section 12.1) or other factors or reason(s) beyond MN’s reasonable control, including, for example, the unavailability of drug supplies needed to conduct the clinical trial, including, without limitation, as a result of failure of stability or lack of a satisfactory formulation; an inability to conduct the clinical trial due to action on the part of any Regulatory Authority, including, without limitation, the placement of a clinical hold on such clinical trial; or if the conduct of such clinical trial would violate any

 

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applicable laws, rules or regulations; or (iii) a good faith determination on the part of MN, acting as a reasonable pharmaceutical company and after consultation with MS, that Product which is intended to be studied in the clinical trial is not safe or efficacious in its then current formulation or dosage form or dose level.

2.1.4 Remedy . Without prejudice to any other remedies as provided for hereunder or available under laws, in the event MN, an MN Affiliate and/or an MN Sublicensee ceases development activities of Compound and/or Product for [***], and MN, such MN Affiliate and/or such MN Sublicensee does not demonstrate to MS’s reasonable satisfaction that, despite Commercially Reasonable Efforts by MN, such MN Affiliate and/or such MN Sublicensee, such cessation was due to reason(s) beyond reasonable control by MN, such MN Affiliate and/or such MN Sublicensee, including, for example, situation(s) set forth in (i) to (iii) of the proviso of Section 2.1.3 above, MS shall have the right, at its sole discretion, to terminate this Agreement pursuant to Section 9.3.3.

2.1.5 MN shall, from time to time during the term of this Agreement, disclose, and shall cause any MN Affiliate to disclose, to MS all MN Intellectual Property subject to the license granted to MS under Section 3.3 and, when applicable and available to MN, all MN Sublicensee Intellectual Property (as defined in Section 3.3).

2.1.6 Meeting . Upon reasonable request and notice by one Party to the other Party, the Parties shall have a meeting at mutually agreed times and locations, a videoconference, or a teleconference up to twice a year to discuss the development of Product in the MN Territory and, if MS, an MS Affiliate or an MS Licensee is developing Product in the MS Territory, in the MS Territory. Each Party shall bear its own travel and related costs to attend the meeting.

2.1.7 Regulatory Matters . MN shall own, control and retain primary legal responsibility for, and shall be responsible for funding, preparing, filing and prosecuting all filing and regulatory applications required to obtain Regulatory Approval of Product in the Field in the MN Territory. MS shall transfer free of charge to MN as soon as practicable after the Effective Date any IND or other regulatory filings or approvals in the MN Territory relating to Compound or Product owned or Controlled by MS and MS shall allow MN or its designees free of charge the right to cross reference any IND, MAA or other regulatory filing in the MS Territory relating to Compound or Product if owned or Controlled by MS or an MS Affiliate. It is understood between the Parties that MS shall not be required to conduct any additional studies which support Regulatory Approval of Product in the MN Territory.

2.2 Development in the MS Territory . In case that at any time during the term of this Agreement, MS decides to develop and commercialize Product in the MS Territory:

2.2.1 MS shall so advise MN in writing and, during any such development or commercialization by MS, an MS Affiliate and/or an MS Licensee, the Parties shall coordinate, review and assess the clinical development of Product necessary to receive

 

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Regulatory Approvals in the MS Territory, to harmonize worldwide objectives for Product and to facilitate the transfer of data and regulatory communications, including the handling and reporting of adverse events. In the event that MS, an MS Affiliate or an MS Licensee decides to develop Product in the MS Territory for an indication that is the same as or substantially similar to any indication for which MN, an MN Affiliate and/or an MN Sublicensee has developed or is developing in the MN Territory, MS shall so advise MN in writing and the Parties shall establish a joint committee for the purpose contemplated in this Section 2.2.1;

2.2.2 MS shall own, control and retain primary legal responsibility for, and shall be responsible for funding, preparing, filing and prosecuting all filings and regulatory applications required to obtain Regulatory Approval of Product in the Field in the MS Territory. MN shall provide MS as soon as practicable during the term of this Agreement with copies of any IND, NDA, MAA and other regulatory filings or approvals in the MN Territory relating to Compound and/or Product in the Field owned or Controlled by MN, an MN Affiliate or, when applicable and available to MN, an MN Sublicensee (hereinafter referred to as “MN Regulatory Filings”), and MN shall allow MS, an MS Affiliate and/or an MS Licensee free of charge the right to cross reference any MN Regulatory Filing, if owned or Controlled by MN, such MN Affiliate, or, if applicable and available to MN, such MN Sublicensee solely for use in obtaining Regulatory Approval of Product in the Field in the MS Territory; provided, however, that in case of a sublicense by MN or an MN Affiliate to an MN Sublicensee, Section 4.7 shall be applicable;

2.2.3 It is understood between the Parties that MS has no obligation to supply to MN Compound, API and Product for development and commercialization by MN, an MN Affiliate and/or an MN Sublicensee in the MN Territory. MN shall be responsible for conducting, at its own cost and expense, any and all research activities related to manufacturing Compound, API and Product and for supplying Compound, API and Product for development and commercialization in the MN Territory. MN may, at its sole discretion, entrust any Third Party, MN Affiliate and/or MN Sublicensee with such research and manufacturing activities relating to Compound, API and/or Product in whole or in part;

2.2.4 So long as MN or its designees (including an MN Affiliate and an MN Sublicensee) is then manufacturing Compound, API and/or Product for development and/or commercial use, upon reasonable written request by MS, MN shall supply MS with the Compound, API and/or Product that is then being manufactured by MN or its designee (including an MN Affiliate and an MN Sublicensee) solely for research, development and/or commercial use by MS, an MS Affiliate and/or an MS Licensee in the MS Territory. In such case, upon MS’s request, MS and MN shall negotiate in good faith to enter into a supply agreement relating to such supply of Compound, API and/or Product to MS, solely for use in the MS Territory, containing such commercially reasonable terms and conditions as are typical for similar types of supply agreements.

2.2.5 In case that at any time during the term of this Agreement, MN or its designees (including an MN Affiliate and an MN Sublicensee) is then manufacturing Compound, API and/or Product for development and/or commercial use and MS decides to manufacture such Compound, API and/or Product that is then being manufactured by MN or

 

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its designee (including an MN Affiliate and an MN Sublicensee), solely for research, development and/or commercial use in the MS Territory, MS shall have the right to have transferred to MS solely for such use the manufacturing technology developed, owned and Controlled by MN, MN Affiliates and, when applicable and available to MN, MN Sublicensees (hereinafter referred to as “Manufacturing Technology”). Upon MS’s request to have such Manufacturing Technology transferred to MS, MN then shall work with MS and/or its designees (including an MS Affiliate and an MS Licensee) in good faith and within a reasonable time frame to complete such technology transfer at MS’s costs, enabling MS and/or its designees (including MS Affiliate and MS Licensee) to manufacture and/or have manufactured Compound, API and/or Product for research, development and/or commercial use by MS, an MS Affiliate and/or an MS Licensee in the MS Territory, provided, however that MN shall not be responsible for process and equipment validation required by applicable laws or regulations in the MS Territory or otherwise for MS’s compliance necessary to pass inspection by any Regulatory Authority in the MS Territory. MS shall be free to perform, at its own costs and responsibilities, internal process chemistry research on the Manufacturing Technology independently of or in collaboration with MN and/or its designees (including an MN Affiliate and an MN Sublicensee);

2.2.6 MS and MN and/or their respective designees shall cooperate with respect to the exchange of adverse event and safety information associated with Compound and Product, provided that details of the cooperation in the handling of adverse event and safety information related to Compound and Product shall be the subject of a separate agreement to be negotiated in good faith between the Parties. Furthermore, the Parties shall cause their respective Affiliates and an MN Sublicensee and MS Licensee, as applicable, to cooperate with regard to the Parties’ information exchange set forth in this Section 2.2.6.

2.3 Exchange of Information . MS shall disclose to MN in the language in which they are available (except that all information required to be submitted to any Regulatory Authority in connection with any Regulatory Approval shall be disclosed by MS to MN in English) and in writing, in electronic format, where available, and hard copies (or, upon MN’s reasonable request and MS’s consent, originals), (a) within thirty (30) Business Days after the Effective Date, all MS Patent Assets and MS’s in-house reports containing MS Know-How existing as of the Effective Date, not previously available or made available to MN, (b) upon MN’s written request, MS Know-How which is not contained in MS’s in-house reports set forth in (a) above but available in other form (such as laboratory notes) and (c) on an ongoing basis throughout the term of this Agreement, and in addition to the other communications required under this Agreement, all MS Intellectual Property that become owned or Controlled by MS, any MS Affiliate or, when applicable and available to MS, any MS Licensee during the term of this Agreement, and any and all additions or revisions thereto.

ARTICLE 3

LICENSES; SUBLICENSES

3.1 License Grant to MN . MS hereby grants to MN an exclusive (even as to MS) license, including the right to grant sublicenses, under the MS Intellectual Property to research, develop, make, have made, use, offer for sale, market, sell, import, export and distribute Compound and/or Product in and throughout the MN Territory in the Field.

 

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3.2 Sublicense Rights .

MN may grant sublicenses within the scope of the license granted to MN under this Agreement to any Affiliate of MN or any MN Sublicensee, provided, however, that (a) each MN Affiliate and MN Sublicensee is subject to a written sublicense agreement and is bound by all of the material terms, conditions, obligations, restrictions and other covenants of this Agreement that protect or benefit MS’s rights and interests except for the cases in Sections 3.3, 4.3.3 and 4.7.1 where MN shall use Commercially Reasonable Efforts to obtain covenants from MN Sublicensee as provided for therein; (b) prior to granting each such sublicense, MN shall disclose to MS the proposed material terms and conditions of such sublicense; (c) MN shall advise MS of such sublicense and provide MS with a copy of the sublicense agreement; and (d) in the event of any sublicense by MN or an MN Affiliate to an MN Sublicensee, the provisions of Section 4.7 shall be applicable and MN shall, within thirty (30) days of the effective date of the sublicense agreement between MN (or such MN Affiliate) and such MN Sublicensee, submit MS a written report detailing MN Development Costs with certificates, vouchers and/or other documents related thereto in sufficient detail to the extent necessary for the verification of the accuracy and legitimacy of such MN Development Costs. MN covenants that it shall obtain appropriate reporting from MN Sublicensees to establish all amounts owed to MS hereunder, and shall make such reports available to MS.

In no event shall MS assume any obligations or liabilities, or be under any obligation or requirement of performance, under any such sublicense extending beyond MS’ obligations and liabilities under this Agreement. Upon MN’s reasonable request, at any time during the term of this Agreement, MS agrees to meet and confer in good faith with MN and any MN Sublicensee or potential MN Sublicensee to discuss mutually acceptable arrangements regarding the possibility of an extension of such MN Sublicensee’s or potential MN Sublicensee’s rights beyond any expiration or termination of this Agreement.

3.3 Grant of license by MN . MN hereby grants, subject to the terms and conditions of this Agreement to MS an exclusive (even as to MN) and royalty-free license, including the right to grant sublicenses to any Affiliate of MS or any MS Licensee under the MN Intellectual Property solely to research, develop, make, have made, use, offer for sale, market, sell, import, export and distribute Compound, API and Product in the Field, in and throughout the MS Territory. In the event MN or an MN Affiliate has sublicensed the rights granted by MS to MN under Section 3.1 to an MN Sublicensee, MN shall use Commercially Reasonable Efforts to cause such MN Sublicensee to grant to MN or MN’s designee the right to grant MS an exclusive (even as to such MN Sublicensee) and royalty-free license, including the right to grant sublicenses to any Affiliate of MS or MS Licensees, under the Know-How and Patent Assets that are necessary to research, develop, make, have made, use, market, offer for sale, sell, distribute, import and export Compound, API and/or Product that become owned or Controlled by such MN Sublicensee during the term of this Agreement (hereinafter referred to as “MN Sublicensee Know-How” and “MN Sublicensee Patent Assets,” respectively, and as “MN Sublicensee Intellectual Property”, collectively) solely to research, develop, use, make, have made, offer for sale, market, sell, import, export and distribute Compound, API and Product in the Field in and throughout the MS Territory, and Section 4.7.1 shall be applicable. In case of a grant of such license, MN Sublicensee Know-How and MN Sublcensee Patent Assets shall be deemed to be MN Know-How and MN Patent Assets, respectively, and treated accordingly hereunder. If MS

 

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advises MN in writing that MS desires to use or sublicense the Trademark for Product in the MS Territory, MN shall grant MS a royalty-free, exclusive license, with a right to grant sublicenses to any Affiliate of MS or any MS Licensee, to use the Trademark solely in connection with the use, marketing, promotion, distribution, sale and other commercialization of Product in the MS Territory.

3.4 Retained Rights and Restrictions . The licenses granted in Section 3.1 and 3.3, respectively, are limited to the rights expressly granted therein. The Parties agree and acknowledge that there are no implied licenses under this Agreement or with respect to all right, title and interest in and to either the MS Intellectual Property or the MN Intellectual Property, except as specifically set forth herein. MN shall have no right or license to the MS Intellectual Property under this Agreement outside the Field and MS shall retain the right to use the MS Intellectual Property outside the Field. MS shall have no right or license to the MN Intellectual Property under this Agreement outside the Field and MN shall retain the right to use the MN Intellectual Property outside the Field.

ARTICLE 4

PAYMENTS AND ROYALTIES

4.1 Up-Front License Fee . In consideration of the rights and licenses granted by MS to MN hereunder, and in addition to and not in lieu of any other amounts due hereunder, MN shall pay to MS the sum of [***] .

4.2 Milestone Payments . Subject to the terms and conditions contained in this Agreement, in further consideration of the rights and licenses granted by MS to MN hereunder, MN shall pay MS the following milestone payments upon occurrence of the specified Development Milestone, irrespective of (i) whether such Development Milestones are achieved by MN or an MN Affiliate, (ii) which indications are explored, and (iii) Product for which such Development Milestone may be achieved, with each milestone payment to be made no more than once with respect to the achievement of such Development Milestone and no amounts shall be due hereunder for any subsequent or repeated achievement of such Development Milestone, regardless of the number of Products for which such Development Milestone may be achieved (but payable on the first achievement of such Development Milestone):

 

(a)

[***];

 

(b)

[***];

 

(c)

[***];

 

(d)

[***];

 

(e)

[***] ; and

 

(f)

[***] .

MN shall notify MS in writing not later than thirty (30) Business Days after the achievement of each Development Milestone and each such notice shall be accompanied by the

 

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appropriate milestone payment. In no event shall the payments provided for in this Section 4.2 be refundable to MN or creditable or recoupable against future royalties or other payments payable to MS pursuant to Section 4.3 or any other provision of this Agreement.

4.3 Royalties Payable by MN .

4.3.1 Royalty Rates-United States. Subject to the terms and conditions of this Agreement, and in further consideration of the rights and licenses granted by MS to MN hereunder, MN shall pay to MS royalties equal to the applicable percentages set forth below of the sum of the annual Net Sales in the United States in each Royalty Year during the Royalty Term. For determination of applicable royalty rate, annual Net Sales in the United States shown below shall mean the sum of Net Sales in the United States in the applicable Royalty Year:

(a) in case that MN solely Sells Product in the United States;

 

(b) in case that MN Sells Product jointly with MN Sublicensee(s) in the United States;

 

Examples of the royalty calculation under this Section 4.3.1 are shown on Schedule 4.3.

4.3.2 Royalty Rates-Outside the United States . Subject to the terms and conditions of this Agreement, and in further consideration of the rights and licenses granted by MS to MN hereunder, MN shall pay to MS royalties equal to the applicable percentages set forth below of the aggregate annual Net Sales in all countries and jurisdictions in the MN Territory, other than the United States, in each Royalty Year during the Royalty Term. For determination of applicable royalty rate, aggregate annual Net Sales outside the United States shown below shall mean the sum of Net Sales in any country or jurisdiction in the MN Territory other than the United States in the applicable Royalty Year:

(a) in case that MN solely Sells Product outside the United States;

 

 

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(b) in case that MN Sells Product jointly with MN Sublicensee(s) outside the United States;

 

Examples of the royalty calculation under this Section 4.3.2 are shown on Schedule 4.3.

4.3.3 MN shall make Commercially Reasonable Efforts to have the definition of net sales of Product sold by an MN Sublicens