<PAGE>
Exhibit 10.17
LICENSE AGREEMENT
by and between
BioTie Therapies Corp.
and
Somaxon Pharmaceuticals, Inc.
12 November 2004
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S>
<C>
1.
DEFINITIONS............................................................................
2
2.
LICENSE................................................................................
6
2.1
License
Grant...................................................................
6
2.2
After-Acquired Patents and
Know-How.............................................
6
2.3
University
of Minnesota; Ivax
Corporation.......................................
7
2.4
Reservation of
Rights...........................................................
7
2.5
Sublicense......................................................................
7
3. TRADE
MARKS............................................................................
8
4.
PAYMENTS...............................................................................
8
4.1
Milestone
Payments..............................................................
8
4.2
Royalties.......................................................................
8
4.2.1
Royalty
for Products within the Scope of the Patents.................
8
4.2.2 Royalty in
Case of Combination Products and Required Licenses........
9
4.2.3 Other
Indications....................................................
10
4.2.4 Escrow in
Case of Challenge..........................................
10
4.2.5 Potential
Offset for Clinical Trial Expenses.........................
10
4.3
Sublicensing
Fees...............................................................
10
4.4
Calculations, Payment and Tax
Withholding.......................................
12
5. SUPPLY OF
MATERIAL.....................................................................
13
6.
WARRANTIES.............................................................................
13
6.1
General.........................................................................
13
6.2
Corporate
Existence and
Power...................................................
13
6.3
Authority.......................................................................
14
6.4
Grant of
Rights.................................................................
14
6.5
Intellectual
Property...........................................................
14
7. DEVELOPMENT OF
THE PRODUCTS AND REGULATORY
MATTERS.....................................
15
7.1
Development
Plan................................................................
15
7.2 Steering
Committee..............................................................
15
7.3
Diligence.......................................................................
16
7.4
Clinical
Trials and Regulatory
Matters..........................................
15
7.5
Pharmacovigilance...............................................................
16
8. SALES AND
MARKETING EXPENDITURE PLAN; MINIMUM
ROYALTIES................................
17
8.1
Sales and
Marketing Expenditure
Plan............................................
17
8.2
Minimum
Royalties...............................................................
17
9. PATENT
MAINTENANCE.....................................................................
18
9.1
IPR
Defence.....................................................................
19
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S>
<C>
9.2
Patent
Infringements............................................................
19
10. IMPROVEMENTS AND JOINT
INVENTIONS......................................................
20
10.1
Improvements....................................................................
20
10.2
Joint
Inventions................................................................
21
11.
TERMINATION............................................................................
21
12.
COMPETITION............................................................................
23
13. RECORD KEEPING AND
AUDITING............................................................
23
14. LIABILITy AND
INDEMNIFICATION..........................................................
24
15.
CONFIDENTIALITY........................................................................
26
16. FORCE
MAJEURE..........................................................................
27
17.
NOTICES................................................................................
28
18.
ASSIGNMENT.............................................................................
29
19. RELATIONSHIP OF
PARTIES................................................................
29
20. NO
WAIVER..............................................................................
29
21. COMPLIANCE WITH
LAWS...................................................................
29
22. SEVERABILITY OF
CLAUSES................................................................
29
23.
AMENDMENTS.............................................................................
30
24. ENTIRE
AGREEMENT.......................................................................
30
25. GOVERNING
LAW..........................................................................
30
26. DISPUTE
RESOLUTION.....................................................................
30
27. SPECIFIC
PERFORMANCE...................................................................
30
28.
EXPENSES...............................................................................
31
29. APPENDICES AND
HEADINGS................................................................
31
30. COUNTERPARTS OF THIS
LICENSE AGREEMENT.................................................
31
</TABLE>
<PAGE>
LIST OF APPENDICES
APPENDIX 1.27 List of Patents
APPENDIX 2-A Minnesota
Agreement
APPENDIX 2-B Ivax
Agreement
APPENDIX 2-C Minnesota Tri-Party Agreement
APPENDIX 2-D Ivax Tri-Party
Agreement
APPENDIX 4.2.3
Restrictions on Use of Know-How
APPENDIX 7.1 Responsibilities
of the Parties
APPENDIX 7.5 Joint Operating
Procedure on ADR reporting for Nalmefene
APPENDIX 15 Initial
Press Release
<PAGE>
LICENSE AGREEMENT
THIS LICENSE AGREEMENT
is entered into on this the 12th day of
November 2004, by and between
1.
BIOTIE
THERAPIES CORP., a corporation incorporated and existing
under the laws of Finland, having its registered domicile in
Turku,
Finland and with business identity code 1475830-6 ("BTT")
and
2.
SOMAXON
PHARMACEUTICALS, INC., a corporation incorporated and
existing under the laws of the state of Delaware in the United
States of America and having its principal place of business in
San
Diego, California ("Somaxon").
Each also referred to
as "PARTY" or together as "PARTIES".
RECITALS
A.
BTT is,
amongst others, active in the research and development of
nalmefene for dependence disorders, such as alcohol dependence
and
impulse control disorders (including pathological gambling,
kleptomania, pyromania, intermittent explosive disorders) for
which
BTT has obtained certain patents.
B.
BTT has
obtained the patents referred to above through its own
development and in-licensing. In addition, BTT has licensed
certain
rights from Ivax Corporation ("IVAX") to use certain
preclinical
documentation and data relating to nalmefene for certain
dependence
disorders. BTT has further developed and, by its own studies,
complemented the preclinical data as well as conducted clinical
studies with nalmefene. Through studies conducted or arranged
by
BTT, BTT has obtained additional preclinical and clinical data
and
know-how relating to nalmefene.
C.
Somaxon
has experience and know-how in the clinical development of
drug substances affecting the central nervous system.
D.
Somaxon
has expressed its interest in developing clinically,
obtaining a regulatory marketing approval for and
commercialising
the IPR in the Territory.
E.
The
Parties have entered into a Co-operation and Option Agreement
in
order to assess the feasibility of a license arrangement for
the
purpose of commercialising the IPR in the Territory and with the
aim
to fulfill the Goal within the Term and, upon fulfillment, to
enter
into the License Agreement.
F.
The Goal
set forth in the Co-operation and Option Agreement has been
fulfilled and the Parties hereby enter into the License Agreement
on
the terms and conditions as stipulated hereinbelow. A.
<PAGE>
NOW THEREFORE, the Parties hereby agree as follows:
1. DEFINITIONS
As used in this License Agreement, unless expressly otherwise
stated or evident in the context, the following terms shall
have the meanings defined below. The singular (where
appropriate) shall include the plural and vice versa and
references to Appendices and Sections shall mean appendices
and sections of this License Agreement.
1.1 "AFFILIATE"
shall mean any company or other entity which
directly or indirectly controls or is controlled by
or is under common control with a Party hereto by
means of ownership of at least fifty (50) percent of
the voting stock or similar interest in said company
or other entity.
1.2 "BTT INDEMNITEE"
shall have the meaning as set forth in Section 14.
1.3 "BTT"
shall mean BioTie Therapies Corp.
1.4 "BUDGET"
shall have the meaning as set forth in Section 8.1
1.5 "DAMAGES"
shall mean any liabilities, damages, losses, costs,
claims or expenditures as set forth in Section 14.
1.6 "EFFECTIVE DATE"
shall mean the date of the License Agreement.
1.7 "FDA"
shall mean the United States Food and Drug
Administration of the United States Department of
Health and Human Services.
1.8 "FIELD"
shall mean the treatment of impulse control
disorders, (including pathological gambling,
kleptomania, pyromania and intermittent explosive
disorders), alcohol dependence, obsessive compulsive
disorders, eating disorders and nicotine dependence.
1.9 "COMPETITIVE PRODUCT" shall mean any product that (i)
contains nalmefene
as an active ingredient and/or (ii) is labeled for
the treatment of an indication within the Field.
1.10 "CONFIDENTIAL
shall mean all information, Know-How, data,
INFORMATION"
memoranda, reports, interpretations, forecasts and
records (whether written or in any other form)
containing or otherwise reflecting information
relating to BTT's as well as BTT's licensors'
business activity and Somaxon's business or any
other matter or thing which is not available to the
general public and which has been disclosed by or on
behalf of BTT and/or Somaxon, whether before or
after the date of this License Agreement.
<PAGE>
1.11 "[***] YEAR DATE" shall mean
the [***].
1.12 "FORCE MAJEURE EVENT" shall have the meaning as set
forth in Section 16.
1.13 "GENERIC APPROVAL shall mean
the date of first regulatory or marketing
DATE"
approval in the Territory of a product containing
nalmefene and which is frequently and customarily
prescribed or used for treatment of one or more of
the approved indications set forth in the Initial
NDA or subsequent regulatory approvals in the U.S.
(or any equivalent regulatory approval or
marketing authorization filed with any equivalent
agency or governmental authority in any other
country in the Territory), including, but not
limited to, (i) a product covered by an Abbreviated
New Drug Application (ANDA) in the U.S. by the FDA
(or equivalent regulatory approval or marketing
authorisation filed with any equivalent agency or
governmental authority in any other country in the
Territory) which references the Initial NDA or (ii)
a product with frequent and customary "off label"
use for one or more of such approved indications.
1.14 "IMPROVEMENTS"
shall mean any uses, inventions, discoveries,
modifications, reformulations or results, whether
patentable or not, developed by either or both of
the Parties relating to nalmefene or a chemical
entity within the scope of a valid claim under the
Patents, including, but not limited to:
- any new
use of nalmefene;
- any new
combination product that contains
nalmefene; and
- any
derivative, prodrug, hydrate, salt,
ester, isomer, polymorph or analogue of
nalmefene.
For the avoidance of doubt, the term "Improvements"
shall exclude any product that does not contain
nalmefene or a chemical entity within the scope of a
valid claim under the Patents.
1.15 "INITIAL NDA"
shall mean the New Drug Application and all
amendments and supplements thereto filed with the
FDA relating to the Patents or for which the
Know-How is being used.
1.16 "IPR"
shall mean the Patents and Know-How.
1.17 "IVAX"
shall mean Ivax Corporation.
1.18 "IVAX AGREEMENT"
shall mean the Exclusive License Agreement attached
hereto as Appendix 2-B.
*** Certain information on this page has
been omitted and filed separately with
the Commission. Confidential treatment has
been requested with respect to the
omitted portions.
<PAGE>
1.19 "KNOW-HOW"
shall mean information and know-how needed for
obtaining a regulatory approval for any medicinal or
pharmaceutical product in the Field generated by BTT
or licensed in by BTT before or during the term of
this License Agreement from third parties of
whatever nature, whether or not patentable,
including ideas, discoveries, documentation,
invention, data, formulae, techniques, methods,
procedures for experiments and tests, protocols,
technical information, specifications, formulas,
results of experiments and tests (including, but not
limited to preclinical and clinical data), designs,
sketches, records, drugs and analyses. Any
information and know-how licensed in by BTT after
the date of this License Agreement shall be included
into this definition subject to that BTT has the
right, based on the agreement with the third party,
to license out such information and know how in the
Territory.
1.20 "LICENSE AGREEMENT" shall mean this
License Agreement and the Appendices
hereto.
1.21 "MARKET EXCLUSIVITY shall mean the
termination of regulatory market
TERMINATION DATE" exclusivity
period provided by the FDA and its
applicable data protection rules and regulations
for the Product in the Territory.
1.22 "MINIMUM ROYALTY" shall have
the meaning as defined in Section 8.2.
1.23 "MINIMUM ROYALTY
shall have the meaning as defined in Section 8.2.
DEADLINE"
1.24 "MINNESOTA AGREEMENT" shall mean License Agreement
attached hereto as
Appendix 2-A.
1.25 "NDA"
shall mean a New Drug Application and all amendments
and supplements thereto filed with the FDA (as more
fully defined in 21 C.F.R. 314.5 et seq.).
1.26 "NET SALES"
shall mean the total gross amount invoiced by
Somaxon or its Affiliates from the sale of any
Product to third parties less the sum of (a) [***],
(b) [***], (c) [***], (d) [***], and (e) [***].
1.27 "NEW PRODUCT"
shall have the meaning as set forth in Section 10.1.
1.28 "PARTY"
shall mean BTT or Somaxon and "Parties" both BTT and
Somaxon.
*** Certain information on this page has
been omitted and filed separately with
the Commission. Confidential treatment has
been requested with respect to the
omitted portions.
<PAGE>
1.29 "PATENTS"
shall mean impulse control disorder related patent
granted in the United States and identified with No.
5,780,479 and alcoholism related patents No.
4,882,335,
No. 5,086,058, No. 5,096,715 as well as
any patent application or patent relating to the
Field to which BTT has or acquires any right, title
or interest during the term of the License
Agreement, and all possible divisions, renewals,
continuations, continuations-in-part, reissues,
extensions and substitutions thereof and all foreign
counterparts in countries within the Territory. The
Patents as of the Effective Date of this License
Agreement, including the current applications are
identified in Appendix 1.27 to this License
Agreement.
1.30 "PATENT EXPIRATION shall mean the
earlier of (i) the expiration of the
DATE"
last to expire of the patents covering the Product
(including Patents, if applicable) or (ii) the date
that all remaining unexpired patent(s) covering the
Product (including Patents, if applicable) have been
invalidated in a decision by a court of competent
jurisdiction for which no appeal has been sought.
1.31 "PATHEON"
shall mean Patheon Inc.
1.32 "PRODUCT"
shall mean a pharmaceutical product which consists
of nalmefene hydrochloride and the manufacture, use,
sale or importation of which would infringe a valid
claim under the Patents but for the licenses
contemplated hereby or for which Know-How is
required.
1.33 "SALES AND MARKETING shall mean the sales and
marketing plan for the
PLAN"
Products in the Territory prepared and confirmed in
accordance with Section 8 of this License Agreement.
1.34 "SOMAXON"
shall mean Somaxon Pharmaceuticals, Inc.
1.35 "SOMAXON ANALOGUE/ shall mean any
product containing any analogue,
DERIVATIVE"
derivative prodrug, hydrate, salt, ester, isomer or
polymorph of nalmefene as an active ingredient, in
any formulation and through any mode of
administration, developed or in-licensed by Somaxon.
1.36 "SOMAXON INDEMNITEE" shall have the meaning as
set forth in Section 14.
1.37 "STEERING COMMITTEE" shall mean a committee
consisting of two (2)
representatives of each Party.
1.38 "SUBLICENSEE"
shall have the meaning as set forth in Section 4.3.
<PAGE>
1.39 "SUBLICENSING
shall have the meaning as set forth in Section 4.3.
REVENUES"
1.40 "TARGET SALES CALLS" shall have the meaning as
set forth in Section 8.1
1.41 "TERRITORY"
shall mean North America comprised of the United
States, Canada, Mexico and their territories and
possessions (including but not limited to, the
Commonwealth of Puerto Rico).
1.42 "TRADE MARKS"
shall mean BTT's trademarks "Soberal" and "Cessal"
registered in the United States and any other
countries within the Territory.
2. LICENSE
2.1 LICENSE GRANT
In partial consideration of the payments referred to in
Section 4 below and subject to the terms and conditions of
this License Agreement, BTT hereby grants to Somaxon an
exclusive (even as to BTT), royalty-bearing license, with
the right to sublicense, under the Patents and Know-How as
well as Improvements developed or acquired by BTT during
the term
of the License Agreement, which are necessary or
useful to develop, make, have made, use, sell, have sold,
offer for sale, import, or otherwise commercialise Products
in the Territory. Subject to earlier termination under
Section 11 below, the license set forth herein shall expire
as to the Patents upon the expiration of the last to expire
patent within the Patents. The royalties payable during the
validity of the Patents and after the expiration of the
Patents are set forth in Section 4 below. After the
termination of all relevant royalty periods set forth in
Section 4 below, Somaxon shall have a fully paid-up and
exclusive license under the Know-How for the Field in the
Territory.
2.2 AFTER-ACQUIRED PATENTS AND
KNOW-HOW
Any Patents and Know-How acquired by BTT during the term of
this License Agreement shall be automatically included in
the license set forth above, provided that BTT has the
right based on the applicable agreement ("Third Party
Agreement") with the third party(ies) from whom such rights
have been acquired, to grant a sublicense in the Territory
to such rights. If and to the extent BTT is required to pay
to such third party(ies) any payments, and Somaxon wants to
exploit such rights acquired by BTT after the signing of
this License Agreement, the remuneration payable by Somaxon
to BTT under Section 4 below shall be adjusted in good
faith negotiations by the Parties so that BTT is able to
make such payments to the third party(ies) and receive
reasonable compensation for such sublicensing. If and when
any Third Party Agreement is executed under which Somaxon
receives a sublicense from BTT, BTT agrees that it shall
not do anything to terminate nor make any amendment,
supplement or other modification to the applicable Third
Party Agreement which
<PAGE>
would adversely affect the rights of BTT and/or Somaxon,
except
with the prior written consent of Somaxon (not to be
unreasonably withheld).
2.3 UNIVERSITY OF MINNESOTA; IVAX
CORPORATION
The license set forth above shall include the sublicense of
all of
BTT's rights with respect to the Territory under (i)
its License Agreement with the University of Minnesota
dated April 17, 2000, a correct and complete copy of which
is attached hereto as Appendix 2-A (the "MINNESOTA
AGREEMENT"), and (ii) its Exclusive License Agreement with
Ivax Corporation ("Ivax") dated April 28, 1998, as amended
by the First Amendment thereto dated February 1, 1999 and
the Second Amendment thereto dated ______, 2004, a correct
and complete copy of which is attached hereto as Appendix
2-B (as amended, the "IVAX AGREEMENT"). BTT agrees that it
shall not do anything to terminate nor make any amendment,
supplement or other modification to the Minnesota Agreement
or the Ivax Agreement which would adversely affect the
rights of
BTT and/or Somaxon under such agreements as of
the date hereof, except with the prior written consent of
Somaxon (not to be unreasonably withheld).
In connection with this License Agreement, the parties have
entered into Tri-Party Agreements related to the sublicense
of rights under the Minnesota Agreement and the Ivax
Agreement. A copy of the Tri-Party Agreement with the
University of Minnesota is attached hereto as Appendix 2-C,
and a copy of the Tri-Party Agreement with Ivax is attached
hereto as Appendix 2-D.
2.4 RESERVATION OF RIGHTS
Each
Party expressly acknowledges and agrees that other
than (i) the license granted by BTT to Somaxon in this
License Agreement, including the Improvements of BTT
contemplated above, (ii) the sale and transfer of the
Trademarks in the Territory set forth in Section 3 below
and (iii) the rights with respect to Improvements and
inventions set forth in Section 10 below, neither Party
will acquire or will have a right to claim any other rights
in, or to the use of other patents, know-how or
intellectual property rights owned, controlled, adopted or
used by the other Party. Subject to the non-competition
covenant set forth in Section 12, it is also agreed and
understood that nothing in this License Agreement shall
restrict BTT from developing the IPR or entering into
license negotiations or license agreement(s) with third
parties concerning IPR and/or Improvements in territories
other than the Territory.
2.5 SUBLICENSE
Somaxon may grant sublicenses hereunder to any third party,
which (i) is independent from and not an Affiliate of
Somaxon, and (ii) would in Somaxon's good faith judgment
serve to increase the commercial potential of the IPR
and/or Products. However, such sublicenses shall not
relieve Somaxon of its obligations to BTT under this
License Agreement. Until the expiration of the Minnesota
Agreement, Somaxon shall give BTT at least fifteen (15)
days advance notice of the major terms of any sublicense
agreement, with sufficient
<PAGE>
detail to support BTT's required notice to the University
of Minnesota under Section 4.4 of the Minnesota Agreement.
Although Somaxon shall retain sole discretion over the
terms of any such sublicense agreement, Somaxon shall
consider in good faith any reasonable comments made by BTT
(including comments from the University of Minnesota which
maybe relayed by BTT to Somaxon) prior to entering into the
sublicense agreement.
3. TRADE MARKS
In partial consideration of the payments referred to in
Section 4 below, BTT hereby transfers all rights, title,
and interest in the Trade Marks, and all goodwill
associated therewith, in the Territory to Somaxon. In
furtherance of such transfer, BTT shall execute and deliver
to Somaxon appropriate instruments of assignment of trade
marks to facilitate the recording of the transfer of the
Trade Marks in the Territory.
4. PAYMENTS
In consideration of entering into this License Agreement,
Somaxon agrees to pay BTT the milestone payments and
royalties based on the Net Sales of the Products, as set
out below.
4.1 MILESTONE PAYMENTS
Somaxon shall make the following non-refundable fixed
payments to BTT upon the occurrence of the indicated
milestones:
(a) U.S.
$3,000,000 (three million) as a signing fee for
this License Agreement;
(b) [***]
upon [***];
(c)
[***]upon [***]; and
(d) [***]
upon [***] and a [***] upon [***].
Such milestone payments shall, unless otherwise mutually
and explicitly agreed in writing, be paid within fifteen
(15) days after the occurrence of the milestones set forth
above. Notwithstanding the foregoing, the above milestone
payments are subject to reduction under the limited
circumstances described in Section 7.4 below.
4.2 ROYALTIES
4.2.1
ROYALTY FOR PRODUCTS
WITHIN THE SCOPE OF THE PATENTS
Subject to the remainder of this Section 4.2, Somaxon will
pay to BTT the following royalty amounts on Net Sales
within the Territory on the indicated
*** Certain information on this page has
been omitted and filed separately with
the Commission. Confidential treatment has
been requested with respect to the
omitted portions.
<PAGE>
Product type on a country-by-country basis for the
applicable period set forth below:
<TABLE>
<CAPTION>
ROYALTY
PRODUCT TYPE*
RATE
START DATE
END DATE
--------------------------------------
------
----------------------------
-------------------------------
<S>
<C>
<C>
<C>
Product covered by a Patent within the
[***]
Effective Date
Later of (i) Patent Expiration
IPR; and any Improvements to such
Date or (ii) Market
Exclusivity
Patent
Termination Date
[***] Later of (i)
Patent
Generic Approval Date or until
Expiration Date or (ii)
May 2011, whichever is later
Market Exclusivity
Termination Date
Product not covered by a Patent within
[***]
Effective Date
Patent Expiration Date
the IPR, but covered by another valid,
issued patent and dependent upon the
Know-How; and any Improvements thereto
[***] Patent
Expiration Date
Generic Approval Date or
until May 2011, whichever is later
Product not covered by a Patent within
[***]
Effective Date
Generic Approval Date or until
the IPR or any other valid, issued
May 2011, whichever is later
patent but dependent upon the
Know-How; and any Improvements thereto
</TABLE>
* The Parties agree that any
determination of the type of Product for
purposes of the foregoing table and the quantity or percentage of
Net
Sales of the Product related to one or more indications, including,
but
not
limited to off-label indications or uses, shall be determined by
one
of
the following methods, at Somaxon's election: (i) marketing and
sale
under a distinct brand or tradename or (ii) review of IMS Health
sales
data
(or similar third party prescription market research data).
4.2.2 ROYALTY IN CASE
OF COMBINATION PRODUCTS AND REQUIRED LICENSES
The foregoing royalty for Products for which the [***]
royalty is being applied may be reduced by any amounts
actually paid by Somaxon to a third party in the form of a
royalty or other additional cost of goods, up to a maximum
of [***] of the royalty otherwise due, if, and only if,
Somaxon is required to pay such amounts to the third party
due to (i) any license of intellectual property rights due
to the potential or alleged infringement by the Product or
any Improvements of such third-party intellectual property
rights, or (ii) the presence in the Product or any
Improvements of a proprietary dosage delivery system and/or
active ingredient which alone would be outside the scope of
a valid claim under the Patents. In connection with any
such reduced royalty, Somaxon shall raise at the next
regularly scheduled meeting of the Steering Committee any
potential or alleged infringement or alternate delivery
system or active ingredient giving rise to the reduced
royalty and the Parties shall cooperate with one another in
good faith in connection with the negotiation and
implementation of any related license(s) from one or more
third party(ies); provided, however, that the Parties
understand and agree that Somaxon shall have sole
discretion over the ultimate determination of whether any
license(s) and the amounts payable to a third party
thereunder are "required" for purposes of
*** Certain information on this page has
been omitted and filed separately with
the Commission. Confidential treatment has
been requested with respect to the
omitted portions.
<PAGE>
this Section 4.2.2; provided, further, however, that the
maximum
cumulative reduction of the royalties under (i) and
(ii) above shall not exceed [***].
4.2.3 OTHER
INDICATIONS
BTT acknowledges and agrees that Somaxon shall have the
right to negotiate directly with Ivax with respect to a
license to the clinical data for additional indications for
the Product. BTT shall provide reasonable cooperation to
Somaxon in any effort to license or otherwise acquire
rights to clinical data for additional indications for the
Product from Ivax.
BTT has set forth on Appendix 4.2.3 to this License
Agreement a complete and accurate description of any
restrictions as to the use of such Know-How for indications
outside the Field. Somaxon acknowledges that a portion of
the Know-How is licensed in by BTT and confirms that it
will comply with restrictions described on Appendix 4.2.3.
4.2.4 ESCROW IN CASE
OF CHALLENGE
BTT shall notify Somaxon in writing of any challenges to
the validity or enforceability of any Patent, whether in an
administrative or judicial forum, within five (5) business
days of BTT's first receipt of notice of such challenge. In
case the validity or enforceability of a Patent is
challenged by a third party, Somaxon shall deposit
royalties which may otherwise be due to BTT hereunder which
are in excess of [***] of Net Sales, or in case BTT is
liable to pay royalty amounts based on sales of products in
excess of this amount under the Minnesota Agreement or the
Ivax Agreement, such amount, of applicable Net Sales in an
interest bearing escrow account until the final
determination of the validity or enforceability of such
Patent. If the challenge to the validity or enforceability
of any Patent is successful, Somaxon shall cancel the
escrow and retain all funds, royalties and accrued interest
deposited in such escrow, and the royalty percentage shall
be adjusted to take into account the new categorization of
the Product type set forth in Section 4.2.1 above. If the
challenge to the validity or enforceability of such Patent
is unsuccessful, Somaxon shall release the escrowed funds,
including the interest accrued, to BTT, and thereafter,
continue paying the royalties directly to BTT as
contemplated in Section 4.2.1 above.
4.2.5 POTENTIAL OFFSET
FOR CLINICAL TRIAL EXPENSES
Notwithstanding the foregoing, the above royalty payments
are subject to reduction under the limited circumstances
described in Section 7.4 below.
4.3
SUBLICENSING FEES
If Somaxon sublicenses its rights hereunder to a third
party (a "SUBLICENSEE"), Somaxon shall pay to BTT within
thirty (30) days of receipt, the following portion of the
Sublicensing Revenues (defined below) actually received by
Somaxon from the Sublicensee:
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(a) With
respect to Sublicensing Revenues composed of up-front
or milestone fees not characterized as a royalty or
primarily derived from net sales: [***] of the Sublicensing
Revenues.
Notwithstanding the foregoing, in connection with Somaxon's
receipt of any Sublicensing Revenue composed of a milestone
payment from the Sublicensee that is triggered by an event
comparable to any event set forth in Section 4.1 above,
Somaxon shall pay to BTT only the greater of (i) the amount
due as a result of the applicable milestone under this
Section 4.3 [***] or (ii) the amount due as a result of the
applicable milestone under Section 4.3 [***], but not both.
(b) With
respect to Sublicensing Revenues composed of royalties
or similar payments derived from net sales:
(i) If
Somaxon receives [***] or less of the
Sublicensee's net sales revenues from the sales of
the Product, Somaxon shall pay to BTT an amount
equal to [***] of the Sublicensing Revenues.
(ii) If Somaxon
receives more than [***] of the
Sublicensee's net sales revenues from the sales of
the Product, Somaxon shall pay to BTT an amount
equal to (i) [***] of the first [***] of the
Sublicensing Revenues, and (ii) an additional [***]
of the portion in excess of [***] of the
Sublicensing Revenues.
For purposes of illustration only, if Somaxon
receives [***] of the Sublicensee's net revenues
from the sale of Products, BTT shall be entitled to
receive an amount equal to [***] of the Sublicensing
Revenues received by Somaxon.
It is, however, agreed and understood that the royalty payable
by
Somaxon to BTT based on Somaxon sublicensing any rights
hereunder
shall be at least an amount which BTT is liable to pay under
the
Minnesota Agreement and/or the Ivax Agreement for the licenses
BTT
has obtained and further licensed to Somaxon in this License
Agreement plus a [***] share of the sales of the Products by
the
Sublicensee net of the deductions set forth in clauses (a)
through
(e) of the definition of Net Sales in Section 1 above.
As used herein, "SUBLICENSING REVENUES" shall mean any
up-front,
milestone, royalty or other amounts received by Somaxon from a
Sublicensee with respect to the sublicense of this License
Agreement multiplied by a fraction where (i) the numerator is
the
applicable royalty rate set forth in Section 4.2.1 above based
on
the applicable Product type and (ii) the denominator is [***];
provided however that "Sublicensing Revenues" shall not include
any amounts
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provided by a Sublicensee to Somaxon (a) primarily for
research,
development, sales and/or marketing support or (b) in the form
of
debt financing or bona fide equity investments in Somaxon made
in
connection with a corporate partnership, collaboration,
co-promotion or similar arrangement; provided that (i) such
debt
financing or equity investments are on terms that are
consistent
with independent third party valuation of such debt or equity
securities, or (ii) the proceeds of such debt financing or
equity
investment are substantially used for the commercialization of
the
IPR.
For purposes of illustration only, if the applicable royalty
rate
under Section 4.2.1 for the Products sold by the Sublicensee is
[***], the S
