Confidential treatment has been requested for
portions of this exhibit. The copy filed herewith omits the
information subject to the confidential treatment request.
Omissions are designated as * * *. A complete version of this
exhibit has been filed separately with the Securities and Exchange
Commission.
Confidential
Exhibit 10.49
LICENSE AGREEMENT
BETWEEN
DURECT CORPORATION
AND
EPICEPT CORPORATION
LICENSE AGREEMENT
This LICENSE AGREEMENT (the
“Agreement”), entered into on the “Effective
Date” (as defined below), is made by and between the EPICEPT
CORPORATION, a Delaware corporation having a principal place of
business at 777 Old Saw Mill River Road, Tarrytown, NY 10591
(“EpiCept”), and DURECT CORPORATION, a Delaware
corporation having a principal place of business at 2 Results Way,
Cupertino, California 95014 (“Durect”), each a
“Party” and collectively the “Parties” to
this Agreement.
WITNESSETH
:
W
HEREAS
, EpiCept owns certain patent rights relating to
methods and compositions for use in the topical treatment of back
pain, muscle tensions and myo-fascial pain, where such methods and
compositions feature a topical carrier system containing a local
anesthetic agent and are intended for use on intact mammalian skin
and/or outer synovial membranes, and certain additional patent
rights relating to methods and compositions that include the use of
certain intradermal pharmaceutical penetration enhancing
excipients;
W
HEREAS
, Durect is engaged in the development, approval,
commercialization and marketing of certain proprietary
pharmaceutical products for the treatment of pain, including
transdermal products containing analgesic and/or anesthetic
pharmaceutical agents;
W
HEREAS
, Durect desires to obtain from EpiCept, and
EpiCept desires to grant to Durect, certain exclusive rights under
the EpiCept Licensed Patents and other EpiCept Technology suitable
for the manufacture, development, registration and
commercialization of Licensed Products in the Territory (each as
defined herein below); and
W
HEREAS
, EpiCept has previously granted certain exclusive
rights and licenses under the EpiCept Licensed Patents and EpiCept
Technology by way of a license agreement with Endo Pharmaceuticals
Inc., dated 18 December 2003, and a license agreement with
Adolor Corporation, dated 23 July 2003.
N
OW
T
HEREFORE
, in consideration of the foregoing
premises and the covenants, conditions, undertakings and agreements
hereinafter set forth in this Agreement, the Parties intending to
be legally bound, hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the
following terms shall have the meanings set forth in this
Section 1:
1.1 “ AAA ” has
the meaning set forth in Section 12.13 of this
Agreement.
1.2 “ Affiliate ”
means a Person or entity that directly or indirectly through one or
more intermediates, controls, is controlled by, or is under common
control with the person or entity specified. For the purpose of
this definition, “control” shall mean with respect to
an entity, the direct or indirect ownership of (a) more than
fifty percent (50%) of the capital stock or share capital
entitled to vote for the election of directors of the entity or
(b) more than fifty percent (50%) of equity or voting
interest of the entity. An entity will be an Affiliate for purposes
of this Agreement only so long as it satisfies the definition set
forth herein.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.3 “ ANDA ” means an
abbreviated new drug application that is submitted to the FDA for
approval to manufacture and/or sell a pharmaceutical product in the
United States pursuant to the FDC Act.
1.4 “ Annual Net Sales
Period ” has the meaning set forth in Section 4.3 of
this Agreement.
1.5 “ Applicable Law
” shall mean all laws (including common law), treaties,
statutes, ordinances, rules, regulations, standards and guidelines
as may be in effect from time to time and that relate to the
development, marketing, manufacturing, packaging or sale of the
Licensed Product in the Territory or the performance of either
Party’s obligations under this Agreement including all laws,
treaties, regulations and guidelines governing the import, export,
development, marketing, distributions and sale of the Licensed
Product in the Territory, to the extent applicable and relevant,
and including all marketing authorization applications in each
jurisdiction of the Territory, all good clinical manufacturing or
practices standards or guidelines promulgated by the FDA or other
Regulatory Authorities and including trade association guidelines,
where applicable, as well as the United States’ export
control laws and the U.S. Foreign Corrupt Practices Act.
1.6 “ Back Pain ”
means any kind of back pain, including acute and chronic pain and
having any etiology and/or cause including, but not limited to,
pain deriving in whole or in part from myofascial, muscle tension,
and/or any combinations thereof.
14.22 1.7 “ Clinical
” means, when used with respect to studies or data, studies
that are carried out in humans and data obtained
therefrom.
1.8 “ Clinical Trial
” means an investigation in human subjects and/or patients
intended to discover or verify the clinical, pharmacological and/or
other pharmacodynamic effects of an investigational product, and/or
to identify any adverse reactions to an investigational product,
and/or to study absorption, distribution, metabolism, and excretion
of an investigational product with the objective of ascertaining
its safety and/or efficacy.
1.9 [* * *]
1.10 “ Commercially
Reasonable Efforts ” with respect to any activity shall
mean the efforts and resources that an established pharmaceutical
company would devote to such activity with respect to its own
comparable product, taking into account the reasonable sales and
profitability potential of the product while promoting the
therapeutic profile and benefits of the product in the most
commercially reasonable beneficial and responsible manner, duly
respecting external factors outside the Party’s
control.
1.11 [* * *]
1.12 “ Control ”
or “ Controlled ” means possession by a Party or
its Affiliate of the right to grant to the other Party a license,
sublicense or other right to use, of the scope provided for in this
Agreement, to intangible or intellectual property rights (including
Patents, Know-How, trade secrets, data and rights to access or
cross-reference regulatory filings) without violating the terms of
any Applicable Law, agreement or other arrangement with any third
party existing at the time such Party or such Affiliate would be
first required hereunder to grant the other Party such license,
sublicense or other right.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.13 “ Dispute ” has the
meaning set forth in Section 12.13 of this
Agreement.
1.14 “ Durect Know-How
” means Know-How related to controlled release systems and
transdermal pharmaceutical patch products in general, and to
Licensed Product in particular, that is (a) Controlled by
Durect or any of its Affiliates during the Term of this Agreement
and (b) useful or any way related to developing, making,
having made, using, commercializing and/or registering Licensed
Product.
1.15 “ Durect
Improvements ” means any and all Patents or Durect
Know-How Controlled by Durect during the Term of this Agreement but
arising or otherwise obtained after the Effective Date and relating
to any improvement, enhancement, modification and/or extension of a
Licensed Product.
1.16 “ Durect Indemnified
Parties ” has the meaning set forth in Section 9.2
of this Agreement.
1.17 “ EDGAR ”
means the U.S. Government’s stated Education Department
General Administrative Regulations and, when used in connection
with a particular document, refers to the copy of that document as
available from the U.S. Government Securities and Exchange website
(www.sec.gov/) in the form existing as of the Effective Date of
this Agreement.
1.18 “ EDGAR Licenses
” have the meaning set forth in Section 7.2(j) of this
Agreement.
1.19 “ Effective Date
” means the date upon which this Agreement is fully executed
by the Parties and the Hercules Consent is fully executed by Durect
and Hercules Technology Growth Capital, Inc.
1.20 “ EpiCept
Improvements ” means any and all Patents or EpiCept
Know-How Controlled by EpiCept during the Term of this Agreement
but arising or otherwise obtained after the Effective Date and
relating to any improvement, enhancement, modification and/or
extension of a Licensed Product, wherein the practice of such
EpiCept Improvements, in the absence of a license, would infringe a
Valid Claim within the EpiCept Licensed Patents.
1.21 “ EpiCept Indemnified
Parties ” has the meaning set forth in Section 9.1
of this Agreement.
1.22 “ EpiCept Know-How
” means any and all Know-How that is Controlled by EpiCept or
any of its Affiliates during the Term of this Agreement and is
necessary or useful for Durect, or its Affiliates and/or licensees
to make, have made, develop, use, register, sell, have sold,
import, export, market and/or commercialize Licensed Product in the
Territory.
1.23 “ EpiCept Licensed
Patents ” means the Patents Controlled by EpiCept as of
the Effective Date and necessary to make, have made, develop, use,
register, sell, have sold, import, export, market and/or
commercialize Licensed Product in the Territory. For clarity, the
EpiCept Licensed Patents include the patent rights detailed in
Schedule 1.22 to this Agreement
1.24 “ EpiCept
Technology ” means the EpiCept Licensed Patents, the
EpiCept Know-How, and the EpiCept Improvements.
1.25 “ FDA ”
shall mean the United States Food and Drug Administration or any
successor thereto.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.26 “ FDC Act ” means the
Federal Food, Drug and Cosmetic Act set forth in 21 U.S.C.
§§321 et seq ., as amended, and the regulations
promulgated thereunder from time to time.
1.27 “ Field ”
shall mean all pharmaceutical applications for the palliative,
prophylactic and/or therapeutic treatment of Back Pain in
humans.
1.28 “ Final Regulatory
Approval ” means a Regulatory Approval that allows for
the immediate marketing and sale of Licensed Product in a
jurisdiction within the Territory. With regard to the United
States, Final Regulatory Approval shall mean the written final
approval of an NDA by the FDA permitting the immediate marketing
and sale of Licensed Product in the United States.
1.29 “ First Commercial
Sale ” means with respect to any jurisdiction within the
Territory, after a Regulatory Authority in the Territory has
granted Final Regulatory Approval of Licensed Product, the first
sale (as evidenced by an invoice or receivable) for use,
consumption or resale of such Licensed Product by Durect to a third
party in a bona fide arms-length transaction in such jurisdiction.
A sale to an Affiliate shall not constitute a First Commercial Sale
unless the Affiliate is the end-user of such Licensed Product. For
avoidance of doubt, the provision of a reasonable number of free
samples of Licensed Product shall not be construed to constitute a
sale, use, consumption or resale of Licensed Product for purposes
of this definition.
1.30 “ Force Majeure
” means causes beyond a reasonable control of the Party,
including acts of God; changes in regulations or laws of any
government; war; terrorism; civil commotion; destruction of
production facilities or materials by fire, flood, earthquake,
explosion or storm; labor disturbances; epidemic; and failure of
public utilities or common carriers.
1.31 “ GAAP ”
means accounting procedures that are in accordance with United
States generally accepted accounting principles.
1.32 “ Generic Product
” means: (i) a generic transdermal patch pharmaceutical
product containing bupivacaine as the only active ingredient that
is bioequivalent to and substitutable (i.e., “AA” or
“AB” therapeutic equivalence code or other therapeutic
equivalence code hereafter created with similar meaning) for
Licensed Product and is sold under an ANDA pursuant to the FDC Act
or, if sold outside the United States, pursuant to the Applicable
Law of the relevant jurisdiction following expiry of any and all
Marketing Exclusivity Rights for Licensed Product in such
jurisdiction; (ii) a generic transdermal patch pharmaceutical
product containing bupivacaine as the only active ingredient that
is bioequivalent to and substitutable for Licensed Product and sold
under Article 10 of the EU Directive 2001/83/EC or other Applicable
Laws of the relevant jurisdiction following expiry of any and all
Marketing Exclusivity Rights for Licensed Product in such
jurisdiction; or (iii) a generic bupivacaine product that is
bioequivalent to and substitutable for Licensed Product under the
Applicable Laws relating to generic pharmaceutical products of the
relevant jurisdiction in the Territory other than in the United
States or the EU. For clarity, a Generic Product shall not include
any product sold by Durect, its Affiliates or licensees.
1.33 “ Hercules Consent
” means the fully executed Consent to License Agreement and
Use of Collateral agreement between Durect and Hercules Technology
Growth Capital, Inc., a copy of which is included as Schedule 1.33
to this Agreement.
|
1.34
|
“
Hercules Loan ” has the meaning set forth in
Section 7.2(i) of this Agreement.
|
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.35 “ IND ” means an
investigational new drug application (together with all subsequent
submissions, supplements and amendments thereto, and any materials,
documents or information referred to or relied upon thereby), as
defined in the U.S. Federal Food, Drug and Cosmetic Act (“FDC
Act”) as amended, and the regulations promulgated thereunder,
or the equivalent thereto as specified in any succeeding
legislation, and all supplements and amendments that may be filed
and enacted with respect to the foregoing.
1.36 “ Indemnified
Party ” has the meaning set forth in Section 9.3 of
this Agreement.
1.37 “ Indemnifying
Party ” has the meaning set forth in Section 9.3 of
this Agreement.
1.38 “ Know-How ”
means all technical information and other technical subject matter,
including any and all compounds, materials, methods, equipment,
specifications, ideas, concepts, formulations, discoveries,
inventions, devices, technology, trade secrets, compositions,
designs, formulae, know-how, show-how, specifications, drawings,
techniques, data, results, processes, procedures, designs,
documentation and other technology, whether or not patented or
patentable, and whether or not protected or protectable as a trade
secret.
1.39 “ Knowledge
” means the actual knowledge of a Party’s executive
officers.
1.40 “ Losses ”
has the meaning set forth in Section 9.1 of this
Agreement.
1.41 “ Launch ”
when used as a noun, means, on a jurisdiction-by-jurisdiction
basis, the First Commercial Sale of Licensed Product to a major
retail chain or a major distributor (as those terms are commonly
understood in the industry) after Final Regulatory Approval in such
jurisdiction, and when used as a verb, means to consummate such
First Commercial Sale.
1.42 “ Licensed Product
” means a transdermal pharmaceutical patch product for sale
only by prescription containing bupivacaine as the only active
ingredient, indicated and approved by a Regulatory Authority for
use in the Field, wherein such product and/or indication is covered
by a Valid Claim of the EpiCept Licensed Patents or a Valid Claim
of a Patent under the EpiCept Improvements.
1.43 “ Marketing
Exclusivity Right s” means: (i) a marketing or data
exclusivity right conferred as a result of designation as a drug
for rare diseases or conditions under Sections 525 et seq.
of the FDC Act, an exclusive right to sell under an NDA pursuant to
Section 505(j)(5) or 505(c)(3)(D)(ii) and (iii) of the
FDC Act or any relevant subsequent legislation, rules or
regulations, or the exclusive right granted by the FDA upon
completion of pediatric studies requested by the FDA under
Section 505A(a) of the FDC Act or any successor legislation;
(ii) a marketing or data exclusivity right conferred as a
result of Article 10 of EU Directive 2001/83/EC and/or Article 3(3)
of EU Regulation 726/2004/EC or EU Regulations 141/2000/EC and/or
847/2000/E, as applicable; or (iii) any equivalent or similar
rights in any jurisdiction in the Territory, successor legislations
of any of the foregoing or subsequent legislation that has the
effect of extending marketing or data exclusivity right to a
pharmaceutical product.
1.44 “ NDA ”
means an application (whether original, supplementary or
abbreviated) to the applicable Regulatory Authority in a country of
the Territory, for approval by such Regulatory Authority, necessary
for the commercial sale of Licensed Product in such country. An
NDA, together with all supplemental filings referencing the initial
NDA filing, shall be deemed one and the same NDA for the purposes
of this Agreement.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.45 “ Negotiation Period ”
has the meaning set forth in Section 6.1(a) of this
Agreement.
1.46 “ Net Sales
” means the gross amount invoiced by Durect or its Affiliates
or sublicensees for sale of Licensed Product in commercial
arms-length sales to a third party (including third party
distributors and wholesalers), commencing with the First Commercial
Sale, less deductions for: (i) normal and customary trade,
cash and quantity discounts actually given, credits, price
adjustments or allowances for damaged products, returns or
rejections of products; (ii) chargeback payments and rebates
(or the equivalent thereof) granted to group purchasing
organizations, managed health care organizations or to federal,
state/provincial, local and other governments, including their
agencies, or to trade customers; (iii) freight, shipping
insurance and other transportation expenses (if separately
identified in such invoice); (iv) sales, value-added, excise
taxes, tariffs and duties, and other taxes directly related to the
sale, to the extent that such items are included in the gross
invoice price (but not including taxes assessed against the income
derived from such sale). Sales between Durect and any of its
Affiliates or sublicensees for resale shall not be a commercial
sale by Durect for the purposes of this Section 1.46, and in
such case, Net Sales shall be based on the gross amount invoiced
for the Licensed Products by such Affiliate or sublicensee. In
addition, any use of Licensed Product for promotional, sampling or
compassionate use purposes shall not be considered in determining
Net Sales. Except as specifically provided above, Net Sales shall
be calculated in accordance with GAAP, consistently
applied.
1.47 [* * *]
1.48 “ Party ”
and “ Parties ” have the meaning set forth in
the Preamble of this Agreement.
1.49 “ Patent ”
and “ Patents ” mean issued patents and patent
applications, including any and all provisionals, continuations,
divisionals, continuation-in-part applications, foreign
counterparts, substitutions, reissues, renewals, re-examinations,
supplementary protection certificates, patent term extensions,
adjustments or restoration rights, registrations, confirmations,
successor protective rights or subsequently issued protective
rights of similar nature of any of the above.
1.50 “ Patent Term
Extension ” has the meaning set forth in
Section 11.3 of this Agreement.
1.51 “ Person ”
means an individual or a corporation, partnership, association,
trust, or any other entity or organization, including a government
or political subdivision or an agency or instrumentality
thereof.
1.52 “ Phase III Clinical
Trial ” means an expanded controlled or uncontrolled
clinical trial as required by 21 C.F.R. §312 performed after
preliminary evidence suggesting effectiveness of a Licensed Product
has been obtained, the primary purpose of which is to establish
effectiveness and safety of Licensed Product in patients with the
particular indication or indications being studied and to provide
an adequate basis for physician labeling.
1.53 “ Proof of Concept
Trial ” means a Clinical Trial of Licensed Product in
patients that demonstrates efficacy on an efficacy endpoint and
therefore justifies proceeding with pivitol Phase III Clinical
Trials or other pivitol registration Clinical Trials required for
Final Regulatory Approval of Licensed Product.
1.54 “ Regulatory
Approval ” means the technical, medical and scientific
licenses, registrations, authorizations and approvals (including,
without limitation, approvals of NDAs, supplements and amendments,
pre- and post-approvals, pricing and reimbursement approvals, and
labeling approvals) of a Regulatory Authority, necessary for the
development (including the conduct of Clinical Trials),
manufacture, distribution, storage, transport, marketing,
promotion, offer for sale, use, import, reimbursement, export or
sale of Licensed Product in a regulatory jurisdiction within the
Territory.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.55 “ Regulatory Authority ”
means any national, supra-national, regional, state or local
regulatory agency, department, bureau, commission, council,
ministry or other governmental entity involved in the granting of
Regulatory Approval in any jurisdiction within the
Territory.
1.56 “ Reversion of
Rights ” has the meaning set forth in Section 3.4 of
this Agreement.
1.57 “ Reverted
Asian/Pacific Rights ” has the meaning set forth in
Section 3.4 of this Agreement.
1.58 “ Reverted European
Rights ” has the meaning set forth in Section 3.4 of
this Agreement.
1.59 “ Reverted Latin
American Rights ” has the meaning set forth in
Section 3.4 of this Agreement.
1.60 “ ROFR Notice
” has the meaning set forth in Section 6.1(a) of this
Agreement.
1.61 “ ROFR Reply
” has the meaning set forth in Section 6.1(a) of this
Agreement.
1.62 “ Royalties
” has the meaning set forth in Section 4.3 of this
Agreement.
1.63 “ Royalty Term
” has the meaning set forth in Section 4.3 of this
Agreement.
1.64 “ Rules ”
has the meaning set forth in Section 12.13(c) of this
Agreement.
1.65 “ Serious Adverse Drug
Experience ” means any adverse drug experience occurring
at any dose that results in any of the following outcomes: death; a
life-threatening adverse drug experience; inpatient hospitalization
or prolongation of existing hospitalization; a persistent or
significant disability/incapacity; or a congenital anomaly/birth
defect. Important medical events that may not result in death, be
life-threatening, or require hospitalization may be considered a
Serious Adverse Drug Experience when, based upon appropriate
medical judgment, they may jeopardize the patient or subject and
may require medical or surgical intervention to prevent one of the
outcomes listed in this definition.
1.66 “ Term ” has
the meaning set forth in Section 10.1 of this
Agreement.
1.67 “ Territory
” means worldwide.
1.68 “ Third Party
Offer ” has the meaning set forth in Section 6.1(a)
of this Agreement.
1.69 “ Valid Claim
” means a claim of any pending or issued unexpired EpiCept
Licensed Patent and/or a claim of any pending or issued unexpired
Patent within the EpiCept Improvements, including any patent term
extensions thereto, where such claim has not been revoked or held
invalid or unenforceable by decision of a court or other
governmental agency of competent jurisdiction from which no appeal
can be or has been taken and has not been held or admitted to be
disclaimed, invalid or unenforceable through re-examination or
disclaimer, opposition procedure, nullity or invalidity suit or
otherwise, which claim covers a Licensed Product; provided,
however, that if a claim of a pending patent application shall not
have issued within five (5) years after the filing date from
which such claims takes priority entitlement such claim shall not
constitute a Valid Claim for the purposes of this Agreement unless
and until such claim shall issue.
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
1.70 “ Withholding Taxes ”
has the meaning set forth in Section 5.3 of this
Agreement.
1.71
Interpretation
(a) Whenever any provision of this
Agreement uses the term “including” (or
“includes”), such term shall be deemed to mean
“including without limitation” and “including but
not limited to” (or “includes without
limitations” and “includes but is not limited
to”) regardless of whether the words “without
limitation” or “but not limited to” actually
follow the term “including” (or
“includes”);
(b) “Herein”,
“hereby”, “hereunder”, “hereof”
and other equivalent words shall refer to this Agreement in its
entirety and not solely to the particular portion of this Agreement
in which any such word is used;
(c) All definitions set forth herein
shall be deemed applicable whether the words defined are used
herein in the singular or the plural;
(d) Wherever used herein, any
pronoun or pronouns shall be deemed to include both the singular
and plural and to cover all genders;
(e) The recitals set forth at the
start of this Agreement, along with the Schedules to this
Agreement, and the terms and conditions incorporated in such
recital and Schedules shall be deemed integral parts of this
Agreement and all references in this Agreement to this Agreement
shall encompass such recitals and Schedules and the terms and
conditions incorporated in such recitals and Schedules,
provided , that in the event of any conflict between the
terms and conditions of this Agreement and any terms and conditions
set forth in the Schedules, the terms of this Agreement shall
control;
(f) In the event of any conflict
between the terms and conditions of this Agreement and any terms
and conditions that may be set forth on any order, invoice, verbal
agreement or otherwise, the terms and conditions of this Agreement
shall govern;
(g) The Agreement shall be construed
as if both Parties drafted it jointly, and shall not be construed
against either Party as principal drafter;
(h) Unless otherwise provided, all
references to Sections and Schedules in this Agreement are to
Sections and Schedules of and to this Agreement;
(i) All references to days, months,
quarters or years are references to calendar days, calendar months,
calendar quarters or calendar years unless otherwise expressly
provided;
(j) Any reference to any federal,
national, state, local or foreign statute or law shall be deemed to
also refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise;
(k) Any requirements of notice or
notification by one Party to another shall be construed to mean
written notice in accordance with Section 12.5; and
(l) Wherever used, the word
“shall” and the word “will” are each
understood to be imperative or mandatory in nature and are
interchangeable with one another.
2. GRANT OF LICENSES AND
EXCLUSIVITY
2.1 License Grant : Subject
to the terms and conditions hereof, EpiCept hereby grants to
Durect, and Durect hereby accepts, an exclusive (even as to EpiCept
and its Affiliates), royalty-bearing right and license, with the
right to grant sublicenses (pursuant to Sections 2.2 and 2.3 below)
under the EpiCept Licensed Patents and Patents within the EpiCept
Improvements to make, have made, develop, use, sell, offer for
sale, have sold, and import Licensed Products in and for the Field
throughout the Territory.
2.2 Subcontracting : Durect
shall have the right to subcontract its responsibilities under
this
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
Agreement (and grant any necessary sublicenses
in connection therewith) without obtaining the written consent of
EpiCept, provided however that Durect shall at all times remain
primarily responsible and liable for all such
responsibilities.
2.3 Sublicenses : [* *
*]
3. DEVELOPMENT AND
COMMERCIALIZATION OF LICENSED PRODUCT
3.1 Development of Licensed
Product : As between the Parties, Durect shall be solely
responsible, at its own cost, expense and discretion, for
designing, creating and finalizing a commercially reasonable plan
for the development of Licensed Product sufficient to obtain
Regulatory Approval of such product within the Territory, and then
implementing and carrying out all activities contemplated under
such development plan such as all research, development,
scientific, medical, regulatory and other activities including, but
limited to the design, production and/or implementation of all
clinical studies, non-clinical studies, manufacturing process
development, scale-up and validation, CMC activities, ICH
registration batches, pre-approval inspection preparation,
pharmaceutical development including quality control and stability,
manufacturing, qualification and regulatory tasks. Notwithstanding
the foregoing, Durect shall use Commercially Reasonable Efforts to
develop and commercialize Licensed Product throughout the
Territory.
3.2 Regulatory Matters : All
Regulatory Approvals for Licensed Product in the Territory shall be
filed, held, owned and maintained solely in Durect’s or
Durect’s designee’s name. In this regard, Durect shall
have the sole and exclusive control over, and all authority and
responsibility for any and all development activities contemplated
herein, as well as any and all regulatory strategies relating to
development and commercialization of Licensed Product in the
Territory including, without limitation, the preparation of any and
all documents submitted to a Regulatory Authority in the Territory
and the filing of all submissions relating to Regulatory Approval
for Licensed Product, and all regulatory actions, communications
and meetings with any Regulatory Authority with respect to Licensed
Product, in each and every case, at Durect’s sole cost and
expense.
3.3 Reports : Durect shall
provide to EpiCept semi-annual written progress reports summarizing
Durect’s activities toward achieving Regulatory Approval of
Licensed Product. Such reports shall be provided until the Launch
of the first Licensed Product by or for Durect.
3.4 Reversion of Rights :
Durect shall be solely responsible, at its own cost and expense, to
ensure its own diligence and conduct any and all commercialization
activities with the intent of bringing Licensed Product to market
in jurisdictions within the Territory and shall thus maintain sole
discretion and responsibility with regard to all such matters, with
the single proviso that the performance of such activities shall be
subject to the following reversion rights (“Reversion of
Rights”):
(a) If, within [* * *], then the
license rights granted under Section 2.1 of this Agreement
shall terminate only with respect to the European jurisdictions
covered by a Valid Claim in the EpiCept Licensed Patents (the
“Reverted European Rights”) and thus allow EpiCept
itself, or with the assistance of any third party, to pursue
development and commercialization of Licensed Products under such
Reverted European Rights;
(b) If, within [* * *], then the
license rights granted under Section 2.1 of this Agreement
shall terminate only with respect to the Asian/Pacific
jurisdictions covered by a Valid Claim in the EpiCept Licensed
Patents (the “Reverted Asian/Pacific Rights”) and thus
allow EpiCept itself, or with the assistance of any third party, to
pursue development and commercialization of Licensed Products under
such Reverted Asian/Pacific Rights; and
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
(c) If, within [* * *], then the
license rights granted under Section 2.1 of this Agreement
shall terminate only with respect to the Latin American
jurisdictions covered by a Valid Claim in the EpiCept Licensed
Patents (the “Reverted Latin American Rights”) and thus
allow EpiCept itself, or with the assistance of any third party, to
pursue development and commercialization of Licensed Products under
such Reverted Latin American Rights.
4. PAYMENT
OBLIGATIONS
4.1 Signing Fee : Within
three (3) business days of the Effective Date and upon receipt
of an invoice from EpiCept, Durect shall pay a one-time signing fee
of one million U.S. Dollars (US$1,000,000), by wire transfer to an
account designated in writing by EpiCept.
4.2 Milestone Payments :
Durect shall provide EpiCept written notification identifying the
relevant timing/condition and pay to EpiCept within three
(3) business days the following one-time milestone payments
upon satisfaction of the following specified timing and/or
condition precedent by Durect, its Affiliates and/or
sublicensees.
[* * * ]
4.3 Royalties : In respect of
the license rights granted under Section 2.1 of this
Agreement, Durect shall pay EpiCept a royalty on sales of Licensed
Product in the Territory as follows. The aggregate of all royalty
obligations that are due to EpiCept in any Annual Net Sales Period
(as defined below) shall be referred to herein as
“Royalties.” Royalties shall begin to accrue, on a
jurisdiction-by-jurisdiction basis, on Net Sales within the
Territory on the date of the First Commercial Sale of Licensed
Product in a jurisdiction and shall be payable in respect to such
jurisdiction until the expiration of the last-to expire of the
EpiCept Licensed Patents or Patents under the EpiCept Improvements
containing one or more Valid Claims that cover such Licensed
Product in such jurisdiction (a “Royalty Term”).
Subject to Section 4.4 below, if a Royalty Term is in effect,
Durect shall pay EpiCept Royalties equal to the following
percentages of the aggregate annual Net Sales in all jurisdictions
within the Territory:
[* * *]
(a) The Royalty rates set forth
above shall apply only to that portion of Net Sales within the
applicable tier of annual Net Sales.
(b) [* * *]
(c) The periods by
which annual Net Sales are measured for purposes of this
Section 4.3 shall be a calendar year (each, an “Annual
Net Sales Period”) except that the first Annual Net Sales
Period shall begin on the first day of the calendar quarter
preceding the First Commercial Sale of Licensed Product and
continue to the end of the calendar quarter ending on
December 31 st
of that
calendar year.
4.4 Generic Competition :
During a Royalty Term, in the event that a Generic Product is
Launched in a jurisdiction within the Territory, the Royalties
otherwise payable to EpiCept under Section 4.3 shall be
reduced by [* * *].
4.5 [* * *]
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
5. REPORTS AND PAYMENTS
5.1 Payments : Beginning
forty-five (45) days after the end of the calendar quarter in
which the first Launch of Licensed Product in the Territory is
made, and for each calendar quarter thereafter (no later than
forty-five (45) days after the end of such calendar quarter),
Durect shall submit a statement to EpiCept that shall set forth the
amount of Net Sales in the Territory during such quarter and the
calculation of Royalties due on such Net Sales for such quarter.
Each such statement shall be accompanied by the payment, if any,
due to EpiCept.
5.2 Currency Exchange : With
respect to Net Sales invoiced in U.S. Dollars, the Net Sales and
the amount of Royalties due to EpiCept hereunder shall be expressed
in U.S. Dollars. With respect to Net Sales invoiced in a currency
other than U.S. Dollars, the Net Sales shall be expressed in the
local currency of the entity making the sale, together with the
U.S. Dollar equivalent, calculated using the rate of exchange
that is the commercial rate of exchange for the conversion of local
currency to U.S. Dollars as published by The Wall Street
Journal on the last business day immediately prior to the date
of payment (or if such journal shall cease to publish currency
exchange rates, then the commercial rate of exchange published by
another leading U.S. financial publication or bank as mutually
agreed to in writing by the Parties).
5.3 Taxes and Withholding :
Any payments made by Durect to EpiCept under this Agreement shall
be reduced by the amount required to be paid or withheld pursuant
to any Applicable Law including, but not limited to, United States
federal, state or local tax law (“Withholding Taxes”).
Any such Withholding Taxes required by law to be paid or withheld
shall be an expense of, and borne solely by, EpiCept. Upon written
request, Durect shall submit to EpiCept reasonable proof of payment
of Withholding Taxes, together with an accounting of the
calculations of such taxes after such Withholding Taxes have been
remitted to the proper tax authority. The Parties will cooperate
reasonably in completing and filing documents required under the
provisions of any applicable tax laws or any other Applicable Law
in connection with the making of any required tax payment or
withholding payment, or in connection with any claim to a refund of
or credit for any such payment.
5.4 Mode of Payment : Durect
shall make all payments required under this Agreement by wire
transfer to any account specified by EpiCept or as otherwise
directed by EpiCept from time to time in U.S. Dollars.
5.5 Records Retention :
Durect and its Affiliates and sublicensees, as applicable, shall
keep complete and accurate books and records pertaining to the sale
of Licensed Product and the calculation of Net Sales in the
Territory for a period of three (3) calendar years after the
year in which such sales occurred. Such records and books shall
contain sufficient detail to permit the accurate calculation
consistent with GAAP of the Royalties due to EpiCept and any
one-time milestone payments due to EpiCept pursuant to
Section 4.2 above, including any records required to calculate
any Royalty adjustments hereunder.
5.6 Audit Request : During
the term of this Agreement and not more than once per calendar
year, EpiCept shall have the right, at its sole expense, to engage
an independent accounting firm reasonably acceptable to Durect,
which shall have the right to examine in confidence the relevant
Durect records as may be reasonably necessary to determine and/or
verify the amount of Royalties and/or one-time milestone payments
due under this Agreement. Such audit examination shall be
conducted, and Durect shall make its records available, during
normal business hours, after at least fifteen (15) days from
receipt of prior written notice to Durect, and shall take place at
the Durect facility where such records are normally maintained.
Each such audit examination
* * * Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidentiality has been requested with respect to the
omitted portions.
shall be limited to pertinent books and records
for any year ending not more than twenty-four (24) months
prior to the date of the request; provided that, unless an error is
uncovered, EpiCept shall not be permitted to audit the same period
of time more than once. Prior to permitting EpiCept’s
independent accounting firm to have access to such books and
records, Durect may require such accounting firm and its personnel
involved in the audit examination to sign a reasonable
confidentiality agreement pertaining to any confidential
information that is to be provided to such accounting firm or to
which such accounting firm shall have access while conducting its
audit examination. EpiCept’s independent accounting firm
shall prepare and provide to each Party a written report stating
whether the Royalties and Net Sales reports submitted and the
amounts paid by Durect to EpiCept are correct or incorrect and the
details concerning any discrepancies. Such accounting firm shall
not reveal to EpiCept any information learned in the course of such
audit examination other than the amount of any such discrepancies.
EpiCept hereby agrees to hold in strict confidence all information
disclosed to it by the accounting firm, except to the extent
necessary for EpiCept to enforce its rights under this Agreement,
or if such disclosure is required by law.
5.7 Cost of Audit : Unless
expressly provided for herein below, EpiCept shall bear the full
cost of the performance of any audit examination requested pursuant
to Section 5.6 of this Agreement. If, as a result of any audit
examination of the books and records of Durect, it is shown that
payments made by Durect to EpiCept under this Agreement were less
than the amount that should have been paid, then, subject to
Section 5.8, below, Durect shall make all payments required to
be made to eliminate any discrepancy revealed by said inspection
within 30 days after EpiCept’s demand therefor. In addition,
if, as a result of any such audit examination, it is shown that
payments made by Durect to EpiCept under this Agreement were less
than the amount that should have been paid, and such deficiency is
greater than 5 percent (5%) of the total aggregate amount
Royalties due to EpiCept under this Agreement, then, subject to
Section 5.8 below, Durect shall further reimburse EpiCept for
reasonable costs actually incurred by E
