LICENSE AGREEMENT

Exhibit 10.346

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “ Agreement ”) dated the 17 ^th day of December, 2008 (the “ Execution Date ”) is entered into by and between Ligand Pharmaceuticals Incorporated, a corporation organized and existing under the laws of the State of Delaware and having its principal office at 10275 Science Center Drive, San Diego, California 92121 (“ Ligand ”), and SmithKline Beecham Corporation, doing business as GlaxoSmithKline, a Pennsylvania corporation with its principal office at One Franklin Plaza, Philadelphia, Pennsylvania 19101 USA (“ GSK ”) (each, a “ Party ” and collectively, the “ Parties ”).

INTRODUCTION

WHEREAS , Ligand and GSK entered into that certain Research, Development and License Agreement dated as of December 29, 1994 under which GSK is developing and commercializing Promacta ^® / Revolade ^® (eltrombopag) (“ eltrombopag ”), (the “ Ligand/GSK Agreement ”);

WHEREAS , GSK and Ligand have been engaged in discussions relating to the development and ownership of the oral thrombopoietin mimetic which Ligand has designated as LGD-4665 (the “ Matter ”); and

WHEREAS , Ligand desires to exclusively license to GSK all of Ligand’s rights in and to LGD-4665, its back-ups, and all related compounds covered by patent rights of Ligand, as such Licensed Compounds are defined herein, in settlement of the Matter, and GSK is willing to take an exclusive license to all such Licensed Compounds, in each case pursuant to the terms and conditions as more particularly set forth in this Agreement.

NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article 1:

1.1 “ Affiliate ” means any corporation or other business entity controlled by, controlling or under common control with another entity, with “control” meaning direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of, or more than a fifty percent (50%) interest in the income of, such corporation or other business entity, or such lower percentage as permitted under the relevant laws of the jurisdiction in which it is organized.

1.2 “ Business Day ” means a day other than a Saturday or Sunday on which banking institutions in New York are open for business.

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1.3 “ Certificate of Analysis ” means certificates substantially in the form attached hereto in Exhibit A , evidencing the analytical tests conducted on a specific lot of Existing Licensed Compound and setting forth, inter alia , the items tested, specifications, and test results.

1.4 “ Combination Product ” means a Licensed Product that includes at least one other therapeutically effective active pharmaceutical ingredient (whether co-formulated or co-packaged with the Licensed Product, as the case may be, in such License Product) which is neither the Licensed Product nor part of the same molecule as that containing such Licensed Product. To be a Combination Product, the Combination Product and all its ingredients must be sold together as a single product and invoiced as one product. Drug delivery vehicles, adjuvants, and excipients shall not be deemed to be “therapeutically effective active pharmaceutical ingredients,” and their presence shall not be deemed to create a Combination Product.

1.5 “ Commercialization ” or “ Commercialize ” means any and all activities directed to and in support of the sale of a Licensed Product in the Field in the Territory, including, without limitation, marketing, promoting, market planning and product strategy, commercial-scale manufacturing, obtaining pricing and reimbursement approvals, negotiating with managed care and group purchasing organizations, professional and consumer promotion, advertising, distributing, offering for sale and selling, importing, conducting post-Regulatory Approval clinical studies, manufacturing for commercial sale (except for manufacturing scale-up activities, which shall be Development activities), medical affairs activities in support of a Licensed Product, including, without limitation, opinion leader development, medical inquiries, information and education and pharmacovigilance. When used as a verb, “Commercialize” means to engage in Commercialization.

1.6 “ Confidential Information ” means all all trade secrets, processes, formulae, data, information, improvements, inventions, chemical or biological materials, chemical structures, techniques, marketing plans, strategies, customer lists, or other information that has been created, discovered, or developed by a Party, or has otherwise become known to a Party, or to which rights have been assigned to a Party, as well as any other information and materials that are deemed confidential or proprietary to or by a Party (including, without limitation, all information and materials of a Party’s customers and any other Third Party and their consultants), in each case that are disclosed by such Party to the other Party, regardless whether any of the foregoing are marked “confidential” or “proprietary” or communicated to the other by the disclosing Party in oral, written, graphic, or electronic form. Any information or documents disclosed by a Party to the other Party that is subject to an ongoing confidentiality obligation at the Execution Date shall be deemed the disclosing Party’s Confidential Information under this Agreement and shall be subject to the provisions of Article 9.

1.7 “ Confidential Information of GSK ” has the meaning set forth in Section 9.1.1.

1.8 “ Control ” or “ Controlled ” means with respect to any (a) material, document, item of information, method, data or other know-how or (b) intellectual property right, the possession (whether by ownership or license, other than by a license granted pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access, ownership, a license and/or a sublicense as provided herein under such item or right without violating the terms of any agreement or other arrangement with any Third Party as of the time such Party would first be required hereunder to grant the other Party such access, ownership, license or sublicense.

 

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1.9 “ Covering ,” “ Cover ” or “ Covered ” means, with respect to a Patent Right, that, but for rights granted to a Party under such Patent Right, the practice by such Party of an invention claimed in such Patent Right would infringe a Valid Claim included in such Patent Right, or in the case of a Patent Right that is a patent application, would infringe a Valid Claim in such patent application if it were to issue as a patent.

1.10 “ Development ” or “ Develop ” means preclinical and clinical drug development activities, including, among other things: test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control procedure development and performance with respect to clinical materials, statistical analysis and report writing, clinical studies, regulatory affairs, product approval and product registration (including pricing approvals).

1.11 “ Effective Date ” means the Execution Date.

1.12 “ Eltrombopag ” has the meaning set forth in the introduction to this Agreement.

1.13 “ Existing Licensed Compound ” means Ligand’s existing supply of LGD-4665 in bulk or finished form.

1.14 “ FDA ” means the United States Food and Drug Administration, or any successor agency.

1.15 “ FDCA ” means the federal Food, Drug, and Cosmetic Act, as amended, which is contained in Title 21 of the U.S. Code, section 301 et seq ., as amended and the regulations promulgated thereunder from time to time.

1.16 “ First Commercial Sale ” means, with respect to a particular country, the first bona fide invoiced sale of a Licensed Product to a Third Party by GSK or its Affiliates or sublicensees in such country after Regulatory Approval has been achieved for such Licensed Product in such country. Sales of Licensed Product for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale.

1.17 “ Generic Product ” means any pharmaceutical product sold by a Third Party, not authorized by GSK or its Affiliate or sublicense, and approved in reliance on the prior approval of a Licensed Product as determined by the applicable regulatory authority, on the basis of it being comparable to and substitutable for such Licensed Product, as stated in a Regulatory Filing with such regulatory authority.

1.18 “ Know-How ” means inventions, discoveries, trade secrets, information, experience, data, formulas, procedures and results, including physical, chemical, biological, toxicological, pharmacological, clinical, and veterinary data, dosage regimens, control assays and product specifications, but excluding any Patent Rights.

 

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1.19 “ Laws ” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

1.20 “ Licensed Assets ” means the Licensed Compounds, Licensed Products, Licensed Patents and Licensed Know-How.

1.21 “ Licensed Compound ” means any and all thrombopoietin mimetics Controlled by Ligand or its Affiliate during the Term of the Agreement including: (a) that certain compound known as LGD-4665 with the molecular structure shown on Exhibit B attached hereto, and all formulations including intravenous formulations), salts, prodrugs, hydrates, solvates, polymorphs, enantiomers and isomers thereof; (b) any back-up compounds to LGD-4665 being developed by Ligand as of the Execution Date, as shown on, or incorporated by reference in, Exhibit B ; and (c) any other thrombopoietin mimetic compounds that are Covered by the Licensed Patents. Notwithstanding the foregoing, for the purpose of this Section 1.22, an “Affiliate” shall not include any Third Party which acquires control over Ligand or over which Ligand acquires control after the Execution Date so long as such Third Party does not otherwise become involved in the conduct of Development or Commercialization of the Licensed Compounds.

1.22 “ Licensed Product ” means any pharmaceutical preparation in any formulation or form containing one or more Licensed Compounds as its active ingredients for use in any field. Licensed Products shall include Combination Products.

1.23 “ Licensed Know-How ” means all Know-How that (a) is possessed as of the Execution Date by Ligand or its Affiliates, (b) is owned or Controlled by Ligand or its Affiliates as of the Execution Date, and (c) is necessary or useful in the use, development, design, registration, or sale of Licensed Compounds or Licensed Products. “ Licensed Know-How ” shall also include all Know-How discovered or developed by Ligand in connection with undertaking and completing the Ongoing Animal Studies and the Phase II Study referred to in Section 2.3. For the purpose of this Section, “Affiliate” shall exclude any Third Party that acquires control of Ligand or over which Ligand acquires control after the Execution Date so long as such Third Party does not otherwise become involved in the conduct of Development or Commercialization of the Licensed Products.

1.24 “ Ligand Liabilities ” has the meaning set forth in Section 2.5.

1.25 “ Licensed Patents ” means: (a) the Patent Rights identified on Exhibit C attached hereto, and (b) any and all Patent Rights that issue there upon in any jurisdiction in the world.

1.26 “ Major Market ” means any one of the following: Japan, United Kingdom, France, Germany, Italy, Spain or the United States.

1.27 “ Matter ” has the meaning set forth in the introduction to this Agreement.

1.28 “ NDA ” means (a) (i) a New Drug Application or Supplemental New Drug Application, as defined in Title 21 of the U.S. Code of Federal Regulations, Section 314.50, et.seq., which is submitted to the FDA, or any successor application or procedure, and (ii) any foreign counterpart of a U.S. New Drug Application, and (b) all supplements and amendments, including supplemental New Drug Applications (and any foreign counterparts), that may be filed with respect to the foregoing.

 

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1.29 “ Net Sales ” means the gross amount invoiced by GSK, its Affiliates or its sublicensees to independent Third Parties, whether end-users or distributors or agents (but who are not sublicensees), for the sale or transfer for value of a Licensed Product, less the following deductions to the extent actually incurred or allowed based upon the sale of such Licensed Product:

(a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such Third Party for spoiled, damaged, out-dated and returned Licensed Product;

(b) freight and insurance costs for transporting such Licensed Product, to the extent invoiced to the Third Party;

(c) sales, value-added and other direct taxes on the sale of the Licensed Product;

(d) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Licensed Product;

(e) trade, cash, and quantity discounts off the invoiced price and similar promotional discounts or rebates (such as management fees required by hospital buying groups or granted to managed care organizations) off the invoiced price;

(f) amounts reflecting retroactive price adjustments on sale of products, to the extent not previously deducted from net sales; and

(g) allowances or reserves for bad debt (including cost of collection); all of the foregoing to the extent consistent with United States generally accepted accounting principles applied on a consistent basis and in accordance with the normal practice in the industry.

For the avoidance of doubt, no Net Sales shall be calculated on Licensed Product delivered solely for research purposes, for clinical trials or distributed as free samples or promotions.

If GSK sells a Licensed Product with other products not covered by this Agreement, and GSK provides a discount, allowance or rebate to the purchaser of such products based on the invoiced prices for all products sold, such discount must be allocated pro rata based on average wholesale prices (“AWP”) across all such products and may not be applied disproportionately to the Licensed Product.

If GSK or its Affiliates or sublicensees receive non-cash consideration for Licensed Product sold or otherwise transferred to an independent Third Party, Net Sales will be determined based on the average of the gross invoice prices charged to other independent Third Parties in respect of cash sales during the applicable reporting period.

 

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1.30 “ Ongoing Animal Study(ies) ” means the [***] study and the [***] study on LGD-4665 conducted by Ligand.

1.31 “ Party ” means GSK or Ligand; “ Parties ” mean GSK and Ligand.

1.32 “ Patent Rights ” means all existing patents and patent applications and all patent applications hereafter filed and patents hereafter issued, including without limitation any continuations, continuations-in-part, divisions, provisionals or any substitute applications, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

1.33 “ Phase II Study ” means, as to a specific pharmaceutical product, a well conducted and lawful study, conducted anywhere in the world in diseased humans, of the feasibility, safety, dose ranging and efficacy of such product, that is prospectively designed to generate sufficient data (if successful) to commence a Phase III Trial (or foreign equivalent) of such product, as further defined in 21 C.F.R. 312.21(b), as amended from time to time, or the corresponding regulation in jurisdictions other than the United States. For the avoidance of doubt, a Phase II Trial requires enrollment of patients with the applicable disease or condition and is aimed to provide a measure of efficacy in addition to short-term tolerability. A Phase II Trial shall be deemed commenced upon the first dosing of the first patient.

1.34 “ Phase III Study ” means, as to a specific pharmaceutical product, a well conducted and lawful study in humans performed to gain evidence of the efficacy of such product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product and provide an adequate basis for physician labeling, as described in 21 C.F.R. 312.21(c), as amended from time to time, or the corresponding regulation in jurisdictions other than the United States. A Phase III Trial shall be deemed commenced upon the first dosing of the first patient.

1.35 “ Regulatory Approval ” means any and all approvals (excluding any applicable governmental price and reimbursement approvals), licenses, registrations or authorizations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity that are necessary for the manufacture, use, storage, import, transport, promotion, marketing and sale of a product in a country or group of countries.

1.36 “ Regulatory Filings ” means, collectively, INDs, NDAs, drug master files and applications for designation of a product as an “Orphan Product(s)” under the Orphan Drug Act, or any other similar filings (including any foreign equivalents) for the clinical testing, manufacture or sale of a product.

1.37 “ Royalty Term ” has the meaning set forth in Section 7.3.1(b).

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1.38 “ Specifications ” means the handling, composition, testing, production, packaging, storage and shipping procedures and specifications for the Existing Licensed Compound.

1.39 “ Territory ” means all the countries of the world.

1.40 “ Third Party ” means any person or entity other than a Party or any of its Affiliates.

1.41 “ Valid Claim ” means a claim (a) of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise or (b) of any patent application that shall not have been cancelled, withdrawn, abandoned or been pending for more than five (5) years from its earliest priority date claimed.

1.42 Construction . Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa, and (d) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “but not limited to”, “without limitation”, “inter alia” or words of similar import.

ARTICLE 2

DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES

2.1 Overview . GSK shall have sole right, exercisable in GSK’s sole discretion and without accounting to Ligand, to control, direct and undertake all aspects of Developing and Commercializing Licensed Compounds and Licensed Products worldwide, including with regard to seeking, obtaining and maintaining Regulatory Approvals for the Licensed Compounds and Licensed Products in any jurisdiction in any field as well as manufacturing and having manufactured the Licensed Compounds and Licensed Products, including in each case making all strategic and tactical decisions with respect thereto. GSK covenants that it shall not knowingly violate any laws, rules and regulations that apply to the Development and Commercialization of the Licensed Compounds and Licensed Products. Ligand acknowledges and agrees that this Agreement is being entered into, in part, in order to settle the Matter and is not intended by the Parties to place on GSK the burden and expense of GSK having to Develop or Commercialize the Licensed Compounds or Licensed Products, unless, in its discretion, it chooses to do so. Further to the foregoing, for the avoidance of doubt, notwithstanding anything else in this Agreement, Ligand acknowledges and agrees that GSK shall be under no obligation, duty or diligence requirement to Develop or Commercialize the Licensed Compounds or Licensed Products, and that all decisions as to whether, if, when and how to undertake such Development or Commercialization activities shall be made by GSK in its sole discretion without taking into account any interest of Ligand and without having to consult with, advise or obtain any consent from Ligand.

 

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2.2 Ongoing Animal Studies . Prior to the Effective Date, Ligand had been undertaking the Ongoing Animal Studies involving LGD-4665. As soon as practical following the Effective Date, Ligand shall, at sole Ligand’s cost and expense, either complete or terminate the Ongoing Animal Studies. Ligand shall provide to GSK all data and study results, information and materials relating to or resulting from such activities of Ligand under or in connection with the Ongoing Animal Studies promptly after such data, results, information and materials come into the possession of Ligand and in substantially the same form as which they are received by Ligand.

2.3 Ligand’s Phase II Study for LGD-4665 . Prior to the Effective Date, Ligand had been undertaking one (1) active Phase II Study involving LGD-4665, Protocol No. LGD-4665-03. After the Execution Date of the Agreement, Ligand will use its commercially reasonable judgment to complete such study at Ligand’s sole cost in accordance with the study protocol as it exists as of the Execution Date. After the Execution Date, without the prior written consent of GSK (such consent not to be unreasonably withheld), Ligand will not alter the study protocol, will complete no more than the initial, planned enrollment of patients, and will not extend the Phase II Study. Ligand will keep GSK informed of the progress of the Phase II Study and will provide GSK with all data from such Phase II Study, including the final study report and SAS datasets, in substantially the same form as which it is received and maintained by Ligand. In addition, upon completion of the study, Ligand will promptly transfer the IND to GSK.

2.4 GSK Reports . GSK shall provide Ligand with brief, semi-annual reports summarizing its Development of Licensed Compounds. No reports shall be required after GSK makes and reports the First Commercial Sale of a Licensed Product in a Major Market. GSK shall promptly notify Ligand as soon as practicable after the occurrence of each milestone event set forth in Section 7.2. For the avoidance of doubt, GSK shall not wait until the next semi-annual report is due to inform Ligand of such milestone events, but instead shall do so promptly after the occurrence of the milestone event.

2.5 Ligand Liabilities In General . GSK shall not be the successor to Ligand, and GSK expressly does not assume and, without limitation to Section 13.1, shall not become liable to pay, perform or discharge, any liability, obligation or commitment whatsoever of Ligand. All liabilities, obligations or commitments of Ligand are referred to herein as the “ Ligand Liabilities ”. Ligand shall pay, perform and discharge when due, all of the Ligand Liabilities. Without limitation of the foregoing, the term “ Ligand Liabilities ” includes the following liabilities and obligations, whether accrued or fixed, absolute or contingent, known or unknown, determined or determinable, or otherwise (and whether due or to become due) and, unless otherwise expressly provided herein, whenever arising, and solely in the case of each of clause (i), (ii), (iii) and (iv) below, excluding any and all Liabilities GSK is obligated to indemnify, defend and hold harmless a Ligand Indemnified Party pursuant to Section 13.1:

(i) any liabilities, obligations or commitments of Ligand relating to or arising out of the assets other than the Licensed Assets;

(ii) any liabilities, obligations or commitments of any nature whatsoever of Ligand which arose or were incurred prior to the Execution Date, or which arise from or are based on events occurring or conditions existing before the Execution Date, including such liabilities, obligations or commitments of Ligand arising from or attributable to the ownership or use before the Execution Date of the Licensed Assets including, without limitation, any liability owing to Rockefeller University;

 

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(iii) and liabilities, obligations or commitments of any nature whatsoever of Ligand arising from Ligand’s Phase II Study for LGD-4665 referred to in Section 2.3; and

(iv) any liabilities, obligations or commitments under any contract with any Third Party.

ARTICLE 3

EXISTING LICENSED COMPOUND

3.1 Purchase of Existing Licensed Compound . At GSK’s sole discretion, GSK may elect, within [***] ([***]) months after the Effective Date, to purchase from Ligand (a) such amount in grams of bulk Existing Licensed Compound at a purchase price of [***] Dollars per kilogram ($[***]/kg) of bulk Existing Licensed Compound, and (b) such number of capsules of finished Existing Licensed Compound at a purchase price of [***] for each [***] capsules ($[***] capsules) of finished Existing Licensed Compound, in each case, on such other terms and conditions to be mutually agreed upon by the Parties. Exhibit D attached hereto details the amount of all bulk and finished Existing Licensed Compound existing as of the Execution Date for such quantities of Existing Licensed Compound. If GSK does not elect to purchase any Existing Licensed Compound from Ligand within [***] ([***]) months after the Effective Date, Ligand shall have the right to dispose of the Existing Licensed Compound or offer it for sale to a Third Party; provided, however , that prior to selling any Existing Licensed Compound to a Third Party, Ligand shall contact GSK to determine if it is interested in purchasing the Existing Licensed Compound on the same terms offered to the Third Party.

ARTICLE 4

REGULATORY MATTERS

4.1 Ownership . GSK shall own all Regulatory Approvals for Licensed Compounds and Licensed Products worldwide. Exhibit E sets forth the list of all Regulatory Filings worldwide that relate to the Licensed Compounds and/or Licensed Products and which exist as of the Execution Date. The Parties shall take all appropriate actions and make all necessary filings (at Ligand’s cost and expense) to transfer to GSK all right, title and interest in and to such Regulatory Filings.

4.2 Regulatory Coordination, Filings, Meetings and Correspondence . GSK shall oversee, monitor and coordinate all regulatory actions, communications and filings with and submissions to regulatory authorities, including filings and submissions of supplements and amendments thereto, with respect to each Licensed Compound or Licensed Product. GSK shall have the sole responsibility for drafting all Regulatory Filings for Licensed Products and shall be solely responsible for interfacing, corresponding and meeting with regulatory authorities with respect to all Licensed Compounds and Licensed Products. GSK shall have the exclusive right to file for,

 

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request and maintain any regulatory exclusivity rights for Licensed Products (including regulatory exclusivity rights based upon an orphan drug designation of a Licensed Product) and to conduct and prosecute any proceedings or actions to enforce such regulatory exclusivity rights.

4.3 Assistance . Ligand shall cooperate with GSK to provide all reasonable assistance and take all actions reasonably requested by GSK that are necessary or useful to enable GSK to comply with its obligations, and exercise its rights, under this Agreement.

ARTICLE 5

TRANSFER OF INFORMATION, LICENSED KNOW-HOW

5.1 Existing Information and Licensed Know-How . Within [***] ([***]) days following the Effective Date, Ligand shall, without any consideration in addition to that which is expressly required pursuant to this Agreement and without any royalty obligation, transfer and cause to be transferred to GSK complete copies of the information from the electronic data room established by Ligand to which GSK had access prior to the Execution Date. This information shall include, without limitation, the following: (a) all preclinical and clinical data and study results, Regulatory Filings, Regulatory Approvals, material regulatory correspondence, studies, information, safety and efficacy information relating to any Licensed Compounds and/or any Licensed Products and/or the Development thereof by or behalf of Ligand prior to the Effective Date, and (b) all information known to Ligand regarding the handling, precautions, toxicity and hazards associated with the Existing Licensed Compound, all as more specifically set forth in Exhibit F , attached hereto and incorporated herein.

ARTICLE 6

LICENSES; COVENANTS; RELEASE

6.1 Grant . Subject to the terms and conditions of this Agreement, Ligand hereby grants to GSK an exclusive (even as to Ligand) royalty-bearing, worldwide, perpetual, irrevocable right and license under the Licensed Patents and Licensed Know-How in the Territory to Develop, Commercialize, make, have made, use, have used, import, sell, offer for sale and have sold Licensed Compounds and Licensed Products in any and all fields in the Territory. Such license shall further include the right to grant sublicenses to Affiliates of GSK and to Third Parties in accordance with the terms set forth in Section 6.2. For the avoidance of doubt, Ligand shall retain rights under the Licensed Patents and Licensed Know-How to use LGD-4665 and other Licensed Compounds for its internal or partnered research and development purposes, subject to Section 6.4 and Section 6.5. For example, Ligand shall have the right to conduct cross-reactivity testing using thrombopoietin related assays in the research and development of non- thrombopoietin related compounds (e.g., compounds that impact the EPO, interferon or GCSF related signaling pathways).

6.2 Sublicense Rights . The licenses granted pursuant to Section 6.1 shall be fully sublicensable. GSK shall give Ligand written notice of any such sublicense in a Major Market, including the identity of the sublicense. GSK shall be jointly and severally responsible with its sublicensees to Ligand for failure by its sublicensees to comply with, and GSK guarantees the compliance by each of its sublicensees with, all such applicable restrictions and limitations in accordance with the terms and conditions of this Agreement.

 

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6.3 No Implied Licenses Or Rights . Except as expressly provided in this Agreement, neither Party shall have any license or other interest in any intellectual property rights Controlled by the other Party.

6.4 Non-Compete . As a condition of this Agreement, Ligand covenants to GSK, effective as of the Execution Date, during the Royalty Term and for [***] ([***]) [***] thereafter, that Ligand and its Affiliates shall not, directly or indirectly, Develop, Commercialize, make, have made, use, have used, import, sell, offer for sale or have sold any thrombopoietin mimetic products. For the avoidance of doubt, notwithstanding the previous sentence, Ligand shall be able to directly or indirectly, Develop, Commercialize, make, have made, use, have used, import, sell, offer for sale or have sold any products that do not demonstrate, as their predominant or primary property, agonist activity at the thrombopoietin receptor. Notwithstanding the foregoing, for the purpose of this Section 6.4, an “Affiliate” shall not include any Third Party which acquires control over Ligand after the Execution Date or any Third Party to which Ligand assigns this Agreement in accordance with Section 13.3. For the avoidance of doubt, nothing herein shall prevent Ligand from acquiring control over a Third Party, provided that Ligand complies with the first sentence of the Section 6.4.

6.5 Further Covenant of Ligand .

(a) Ligand covenants to GSK, effective as of the Effective Date, that during the Royalty Term, Ligand and its Affiliates (which, for the purpose of the entirety of the Section 6.5(a), excludes any Third Party which acquires control over Ligand after the Execution Date or any Third Party to which Ligand assigns this Agreement in accordance with Section 13.3) will not file in any jurisdiction any patent application that Covers any Licensed Compound, Licensed Product and/or eltrombopag, unless Ligand or its Affiliates are requested to do so by GSK. In the event that Ligand or any of its Affiliates, in violation of the foregoing covenant, inadvertently files or otherwise obtains Patent Rights that Covers Licensed Compound, Licensed Product and/or eltrombopag (any such Patent Rights to the extent it Covers Licensed Compound, Licensed Product and/or eltrombopag, a “ New Product Patent ”), Ligand hereby covenants to GSK and its Affiliates and sublicensees, effective as of the Execution Date, that none of Ligand or any of its Affiliates will: (i) sue GSK, its Affiliates or sublicensees for infringement of, or (ii) commence, aid, prosecute, or cause to be commenced, aided or prosecuted any action or other proceeding against GSK, its Affiliates or sublicensees with respect to infringement of, in each case ((i) and (ii)), any New Product Patent. For the avoidance of doubt, this section shall not restrict the right of any Third Party which acquires control over Ligand or a successor or assign of Ligand to (i) sue GSK, its Affiliates or sublicensees for infringement of, or (ii) commence, aid, prosecute, or cause to be commenced, aided or prosecuted any action or other proceeding against GSK, its Affiliates or sublicensees with respect to infringement of, in each case ((i) and (ii)), any patent other than the Licensed Patents listed on Exhibit C .

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(b) Ligand further covenants to GSK, effective as of the Effective Date, that during the Royalty Term, with respect to (i) any Third Party which acquires control over Ligand after the Execution Date, (ii) any Third Party to which Ligand assigns this Agreement in accordance with Section 13.3, or (iii) any Third Party which Ligand acquires after the Execution Date (together, the “Section 6.5(b) Affiliates”), none of such Section 6.5(b) Affiliates of Ligand or any of their respective sublicensees will: (x) sue GSK, its Affiliates or sublicensees for infringement of, or (y) commence, directly aid, prosecute, or cause to be commenced, directly aided or prosecuted any action or other proceeding against GSK, its Affiliates or sublicensees with respect to infringement of, in each case ((x) and (y)), any patent or patent application owned or Controlled by such Section 6.5 Affiliate or sublicensee that is necessary for GSK, its Affiliates or sublicensees to practice the inventions in the Licensed Patents, including, without limitation, the Licensed Compounds and any Licensed Product.

6.6 Section 365(n) of The Bankruptcy Code . All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement.

6.7 Settlement and Release . As of the Effective Date, (a) GSK, on behalf of itself and its Affiliates, hereby releases and discharges Ligand and its respective subsidiaries, divisions, parents, Affiliates, agents and each of their respective officers, directors, employees, representatives and agents, and (b) Ligand, on behalf of itself and its Affiliates, hereby releases and discharges GSK and its subsidiaries, divisions, parents, Affiliates, agents and each of their respective officers, directors, employees, representatives and agents, in each case ((a) and (b)), as follows:

(i) from any and all actions, claims, counterclaims, defenses and damages whatsoever, in law or equity, whether in tort or contract or otherwise, which the releasing Party ever had, now has or hereafter shall or may have, that can be, could be or could have been asserted by GSK or Ligand in the Matter, or any other judicial or non-judicial proceeding based on facts and circumstances as of the Effective Date known or unknown to the releasing Party which arise out of or relate to any allegations, facts or occurrences alleged in the Matter;

(ii) from any and all actions, claims, counterclaims, defenses and damages whatsoever, in law or equity, whether in tort or contract or otherwise, which the releasing Party has or may have had as of the Effective Date, that can be, could be or could have been asserted by GSK or Ligand relating to the Ligand/GSK Agreement, or any other judicial or non-judicial proceeding based on facts and circumstances as of the Effective Date known to the releasing Party which arise out of or relate to the Ligand/GSK Agreement; and

 

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(iii) from any and all actions, claims, counterclaims, defenses and damages whatsoever, in law or equity, whether in tort or contract or otherwise, which the releasing Party has or may have had as of the Effective Date, that can be, could be or could have been asserted by GSK or Ligand relating to Ligand’s EPO, G-CSF, and interferon research programs with respect to compounds in such programs identified by Ligand after 2002 or any other judicial or non-judicial proceeding based on facts and circumstances as of the Effective Date known or unknown to the releasing Party which arise out of or relate to Ligand’s EPO, G-CSF, and interferon research programs, but only with respect to compounds in such programs identified by Ligand after 2002;

provided, however , with respect to (i), (ii) and (iii) above, that nothing herein shall have any effect on any actions, claims, counterclaims, defenses or damages related to any alleged breach of this Agreement, including any alleged breach of any representations, warranties and covenants therein; and provided, further, however, that nothing in (ii) or (iii) above shall have any effect on any patent claims GSK may have, now or in the future, relating to Ligand’s EPO, G-CSF and interferon programs. For the avoidance of doubt, this settlement and release shall not apply to any future conduct that has not occurred as of the Effective Date and shall in no way prevent the Parties from bringing any actions, claims, counterclaims, defenses and damages whatsoever, in law or equity, whether in tort or contract or otherwise in the future based on conduct that first occurs after the Effective Date. Furthermore, and for the avoidance of doubt, nothing herein shall have any effect on any indemnification obligations of a Party for Third Party claims as set forth in Article 13.

6.8 No Admissions . Nothing contained in this Agreement, and none of the execution, delivery, or performance of any obligation of or under this Agreement, shall be construed as an admission by any Party of any wrongdoing, liability or potential claims, and the Parties recognize that each expressly denies any liability or potential liability.

6.9 No Effect on Ligand/GSK Agreement . Nothing in this Agreement shall have any impact on GSK’s payment obligations or GSK’s or Ligand’s other obligations under the Ligand/GSK Agreement as they relate to eltrombopag. For the avoidance of doubt, GSK expressly confirms that it has an obligation to pay Ligand royalties on sales of eltrombopag, as set forth in the Ligand/GSK Agreement.

ARTICLE 7

FINANCIAL PROVISIONS

7.1 License Fee . Within five (5) Business Days after the Execution Date and receipt of an invoice from Ligand, GSK shall pay a license fee of Five Million Dollars ($5,000,000) in cash to Ligand by wire transfer of immediately available funds into an account designated by Ligand. Such license fee shall be nonrefundable and noncreditable against any other payments due hereunder.

7.2 Milestone Payments .

 

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7.2.1 Licensed Compounds/Licensed Products . Subject to Section 7.6, GSK shall pay Ligand, in the manner set forth in Section 7.4, the following non-refundable and non-creditable amounts no later than [***] ([***]) days after the occurrence of the corresponding milestone events and receipt by GSK of an invoice from Ligand requesting payment of such milestone. Each payment under this Section 7.2.1 shall be made only once during the Term and only if and upon each particular milestone event being satisfied pursuant to its term set forth in the following table.

 

7.2.2 Sales Milestone . Subject to Section 7.6, GSK shall pay Ligand, in the manner set forth in Section 7.4, a [***] Dollars ($[***]) no later than[***] ([***]) days after the end of the first calendar quarter in which [***].

7.2.3 Notices; Further Clarification . GSK shall promptly notify Ligand of the occurrence of each milestone. If any milestone set forth above is achieved prior to or in the absence of the achievement of any preceding milestone for such Licensed Compound or Licensed Product then, effective upon achievement of any such milestone, all previously unpaid payments for any such preceding milestone shall also become due and payable.

7.3 Royalties .

7.3.1 Licensed Products .

(a) During the Royalty Term, GSK shall pay to Ligand royalties on annual aggregate Net Sales of each Licensed Product in the Territory, on a country-by-country basis, as follows:

(i) For the first twelve (12) months beginning with the First Commercial Sale in a country, at a royalty rate of eight percent (8%) of Net Sales; and

(ii) Thereafter, at a royalty rate of sixteen percent (16%) of Net Sales.

For clarity, a partial initial month in which the First Commercial Sale occurs shall be considered a full month for purposes of subsection (i) above.

(b) Royalties shall be payable, on a country-by-country basis, on Net Sales of Licensed Products for the longer of: (i) the expiration of the last-to-expire of the Licensed Patents with a Valid Claim Covering the composition of matter or therapeutic use for a labeled indication of the Licensed Product in such country (including any additional data exclusivity, as may be available under applicable Law), or (ii) ten (10) years from the date of First Commercial Sale of the first Licensed Product in any country worldwide (“Royalty Term”). The Royalty Term shall begin on the Effective Date and continue until the date the last royalty payment obligation expires in the last country for any Licensed Product as set forth above in this Section 7.3.1(b).

 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchanged

Commission. Confidential treatment has been requested with respect to the omitted portions.

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(c) The royalties set forth in this Section 7.3.1 shall be reduced in the following situations:

(i) In the absence of a Valid Claim within the Ligand Patent Rights Covering the composition of matter or use of a Licensed Product at the time of sale and in the country of sale of the Licensed Product, but where Ligand owns or Controls a pending patent application within the Ligand Patents, GSK shall pay to Ligand royalty payments at [***] percent ([***]%) of the relevant royalty rate that would otherwise be payable under this Section 7.3.1 for a period of [***] ([***]) years from the date of First Commercial Sale of the Licensed Product at issue (subject to subsection (ii) below), and shall pay the remaining [***] ([***]%) of the relevant royalty rate in escrow as provided below, until the earlier of (A) such time as a Valid Claim within the Ligand Patent Rights Covering the composition of matter or use of a Licensed Product issues with respect to such pending patent application in such country, in which case Section 7.3.1(a) shall apply; or (B) the date which is [***] ([***]) years from the date of First Commercial Sale of the Licensed Product at issue. The payments accruing under the remaining [***] percent ([***]%) of the relevant royalty rate shall be deposited into an escrow account to be maintained by GSK on behalf of Ligand (with interest from such account being reinvested into such account). Upon the occurrence of subsection (A) herein prior to [***] ([***]) years from the date of First Commercial Sale of the Licensed Product at issue, the remaining [***] percent ([***]%) of such payments (and interest) shall be promptly paid to Ligand. In the event a Valid Claim within the Ligand Patent Rights does not issue within such time frame, GSK shall retain all such amounts paid into escrow.

(ii) In the event a Licensed Product is sold in a county and a Generic Product is sold in such country during the Royalty Term, then at the end of the first [***][***]([***]) day period (the “ Generic Entry Period ”) during which one or more Third Parties sell a number of units of a relevant Generic Product in such country that comprises [***] percent ([***]%) or more of the aggregate number of units of such Licensed Product sold in such country during such Generic Entry Period (based upon mutually acceptable Third Party objective data sources), the otherwise applicable royalty rate set forth in this Section 7.3.1 shall be reduced by [***] percent ([***]%) after the conclusion of the Generic Entry Period.

(d) GSK shall have sole discretion, authority and right with respect to determining whether to enter into an agreement for license or other rights and to incur an obligation for any Third Party intellectual property required to make, have made, use, sell, lease, offer to sell or lease, import, export (within the Territory) or otherwise exploit, or transfer physical possession of or title in, an Licensed Product for any use in a country in the Territory. If any royalties or other payments are due to Third Parties, with respect to the identification, discovery, development, manufacture, use or sale of Licensed Compounds or Licensed Products

 

*** Certain information on this page has been omitted and filed separately with the Securities and Exchanged

Commission. Confidential treatment has been requested with respect to the omitted portions.

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(such payments, “ GSK Third Party Payments ”), then GSK shall be solely responsible for payment of all such royalties or other payments; provided howeve r, that GSK shall have the right to deduct [***] percent ([***]%) of such GSK Third Party Payments from the otherwise applicable royalties payable to Ligand for such particular calendar quarter; provided further , however, that in no event shall the otherwise applicable royalty rate to Ligand be reduced by more than [***] percent ([***]%) in a given calendar quarter. GSK shall have the right to carry forward and apply any such unused offset or deduction to which GSK is entitled in future calendar quarters or years in the event that such [***] percent ([***]%) reduction threshold would be exceeded, until the full amount of offset or deduction to which GSK is entitled is satisfied.

7.3.2 Cumulative Royalties . The obligation to pay royalties on the Net Sales of a Licensed Product shall be imposed only once with respect to the same unit of said Licensed Product regardless of the number of Valid Claims Covering such Licensed Product.

7.3.3 Compulsory Licenses . Should a compulsory license be granted to a Third Party under the applicable Laws of any country in the Territory under the Ligand Patents licensed hereunder to GSK, the royalty rate payable for sales of Licensed Products in such country shall be adjusted to match any lower royalty rate granted to such Third Party for such country, with respect to the sales of such Licensed Products, and during such periods for w