LICENSE AGREEMENT

Exhibit 10.18

 

*** Text omitted and filed separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b - 2

 

LICENSE AGREEMENT

 

This License Agreement (“ Agreement ”) is made as of this 29th day of March, 2002 (the “ Effective Date ”) by and between ABBOTT LABORATORIES , an Illinois corporation, with its principal office at 100 Abbott Park Road, Abbott Park, IL 60064 (“ Abbott ”) and EMPIRE PHARMACEUTICALS, INC. , a Delaware corporation, with its principal office at 4916 Route 81, Greenville, NY 12083 (“ Empire ”).

 

WITNESSETH

 

WHEREAS, Abbott, through its Affiliate (as defined below), Knoll GmbH & Co. KG (“Knoll”), is the holder of certain patent applications and patents (“ Patents ,” as more fully defined below) relating to Compound (as defined below);

 

WHEREAS, Abbott also possesses proprietary Know-How (as defined below) relating to Compound; and

 

WHEREAS, Empire wishes to obtain, and Abbott wishes to grant to Empire, an exclusive license in the Territory (as defined below) under Abbott’s Technology (as defined below) for the development, manufacture and commercialization of Product for Pharmaceutical Uses (as defined below).

 

NOW THEREFORE, in consideration of the mutual obligations and promises as set forth herein, the parties do hereby agree as follows:

 

1. Definitions . As used in this Agreement, the following terms shall have the following respective meanings:

 

1.1 “ Abbott’s Technology ” means the Patents and Know-How, including all Improvements developed by Abbott.

 

1.2 “ Affiliate ” means any corporation, company, partnership, joint venture and/or other entity which controls, is controlled by, or is under common control of either party hereto. For purposes of this definition, control shall mean direct or indirect ownership of more than fifty percent (50%) of the stock or participating shares entitled to vote for the election of directors (but only as long as such ownership exists).

 

1.3 “ Compound ” means the compound known as ANCROD, its enantiomers, racemates, isomers and any pharmaceutically acceptable salt or complex thereof, in its current and any other formulation, and including any Prodrugs and active metabolites, whether made before or after the Effective Date.

 

1.4 “ Confidential Information ” means any and all information or data relating to the Compound and/or Product which a party discloses to the other party, its employees or representatives, or is conceived or reduced to practice during the Term by either party or by a third party conducting feasibility and evaluation studies for Empire, whether in writing, orally or by

observation, including, without limitation, all scientific, clinical, technical, commercial, financial and business information and Know-How, and other information or data considered confidential in nature. Subject to Section 7.1 hereof, Abbott shall hold in confidence and shall not directly or indirectly disclose or provide to any third party information pertaining to the Compound or Abbott Technology without Empire’s prior written consent. Confidential Information shall not include information or any portion thereof which:

 

(a) is known to the receiving party at the time of disclosure and documented by written records made prior to the date of this Agreement;

 

(b) is subsequently disclosed to the receiving party without any obligations of confidence by an unaffiliated third person who has not obtained it directly or indirectly from the other party and who has the right to make such disclosure;

 

(c) becomes patented, published or otherwise part of the public domain;

 

(d) is independently developed by or for the receiving party by person(s) having no knowledge of or access to such information and without breach of any confidentiality obligation as evidenced by its written records; or

 

(e) is required to be disclosed by legal, regulatory, statutory or governmental process or authorities, provided in each case the party disclosing information promptly informs the other and uses its best efforts to limit the disclosure and to maintain confidentiality to the maximum extent possible and permits the other party to attempt by appropriate legal means to limit such disclosure.

 

The contents of and the Exhibits to this Agreement shall constitute Confidential Information.

 

1.5 “ Effective Date ” shall have the meaning ascribed to such term in the opening paragraph of this Agreement.

 

1.6 “ First Commercial Sale ” means the first sale of Product in the Territory, after Regulatory Approval, by Empire or its Affiliates (or their sublicensee(s)) to any unaffiliated third party as evidenced by the selling party’s invoice or other relevant document provided to such third party. A sale to an unaffiliated third party shall not include quantities delivered solely for research purposes, for clinical trials or quantities distributed as free samples or promotions.

 

1.7 “ Improvements ” means all additions, developments, modifications, enhancements and adaptations (i) which directly relate to or are used in connection with the Compound and/or Product, or any formulations thereof or additions, developments, modifications, enhancements, improvements and adaptations thereto, and (ii) which are conceived or reduced to practice during the Term. Ownership of Improvements shall be as set forth in Article 13 hereof.

 

1.8 “ Know-How ” means any proprietary technology, information, methods of use, processes, techniques, ideas or inventions (other than the Patents) owned, possessed or used by Abbott as of the Effective Date which is directly related to or used in connection with the

 

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Compound and/or Product, including all trade secrets and any other technical information relating to development, use or sale of the Compound and/or Product, provided that Abbott has the right to license and/or sublicense to Empire. To the best of Abbott’s knowledge and belief, Abbott has the right to license and/or sublicense substantially all of the Know-How.

 

1.9 “ 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 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 all purposes of this Agreement.

 

1.10 “ Net Sales ” means gross sales of the Product by Empire, by any Affiliates of Empire, or by any sublicensees of Empire, to unrelated third parties, in arm’s length transactions, including, but not limited to, pharmaceutical wholesalers, managed healthcare organizations, pharmacies, hospitals or dispensing physicians, less any of the following charges or expenses that are incurred in connection with gross sales of the Product to such entities/persons during the Term:

 

(a) discounts, including cash discounts, customary trade allowances or rebates actually taken, governmental rebates, chargebacks, commissions, and group purchasing management fees for formulary access;

 

(b) credits or allowances given or made for rejection, recall or return of previously sold Product actually taken;

 

(c) any tax or government charge, duty or assessment (including any tax such as a value added or similar tax or government charge) levied on the sale, transportation or delivery of Product when included on the invoice or other written document between the parties as payable by the purchaser and collectable by Empire, its Affiliate or sub-licensee; and

 

(d) freight, postage, transportation, insurance and duties on shipment of Product when included on the invoice or other written document between the parties as payable by the purchaser and collectable by Empire, its Affiliates or sublicensees.

 

1.11 “ Patents ” means the patent applications and patents listed in Exhibit A hereto and any amendments thereto, including foreign equivalents, and any and all substitutions, extensions, additions, reissues, re-examinations, renewals, divisions, continuations, continuations-in-part or supplementary protection certificates derived from or relating thereto.

 

1.12 “ Pharmaceutical Uses ” means any therapeutic use of the Compound and/or Product in any formulation or dosage form for the management of a disease or condition of the human body, including, but not limited to, acute ischemic stroke, but excluding any non-therapeutic use or non-human use (which non-therapeutic or non-human use shall include, but not be limited to, imaging, diagnostics, veterinary medicine, etc.).

 

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1.13 “ Prodrug ” means different pharmaceutical compounds which, following administration, are converted into structurally similar active metabolites that are similar to or act in a similar manner as the Compound.

 

1.14 “ Product ” means any formulation containing the Compound or any Improvement as an active ingredient for Pharmaceutical Uses.

 

1.15 “ Regulatory Approval ” means all governmental approvals and authorizations necessary for the manufacture and commercial sale of the Product in a country of the Territory, including, but not limited to, marketing authorization, pricing approval and pricing reimbursement, as applicable.

 

1.16 “ Regulatory Authority ” means the United States Food and Drug Administration or any successor entity and its equivalent in other countries of the Territory, including, but not limited to, EMEA.

 

1.17 “ Royalty Period ” shall have the meaning ascribed to such term in Section 5.2(a) of this Agreement.

 

1.18 “ Term ” means the period commencing on the Effective Date and terminating as set forth in Article 8 below.

 

1.19 “ Territory ” means the entire world.

 

1.20 “ Trademark ” means VIPRINEX ^® , ARWIN ^® , ARVIN ^® and any other trademark registered and owned by Abbott in any country of the Territory.

 

1.21 “ Valid Claim ” means a claim of an unexpired Patent that has not been withdrawn, canceled or disclaimed nor held invalid or unenforceable by a court or government agency of competent jurisdiction in an unappealed or unappealable decision.

 

2. License Grant . Abbott hereby grants to Empire an exclusive right and license in the Territory, under Abbott’s Technology, for all Pharmaceutical Uses, with the right to grant sublicenses pursuant to Section 4.6 hereof, to (i) research, develop, modify, improve, make or have made, Compound and Product; (ii) apply for and obtain Regulatory Approvals, all as may be required to manufacture and commercialize Product; and (iii) register, use, import/export, market, offer to sell and sell, Product and Compound.

 

3. Information ; Exclusivity .

 

3.1 Conveyance of Information/Inventory :

 

(a) On or before June 1, 2002, Abbott shall convey to Empire the information under Abbott’s and its Affiliates’ control involving the Compound, including but not limited to all information relating to Patents and Know-How, worldwide regulatory documentation, draft and final clinical reports and data, toxicity study reports, annual safety reports (if any) for the previous

 

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few years, manufacturing protocol and batch records, production methodologies, claims related to potential violations of any third party rights, registration information, any collaborative research agreements in the possession of Abbott, its Affiliates and agents, and all other pertinent and proprietary information and files related to the Compound, but excluding raw data sources which are not customarily required for regulatory submission (e.g., laboratory notebooks and other laboratory databases). In addition, Abbott shall use reasonable efforts to transfer to Empire Abbott’s interests in [***], such transfers being subject, in all respects, to applicable Regulatory Approvals. With regard to information from raw data sources, in the event that such information is requested from Empire by a Regulatory Authority, Abbott shall use reasonable efforts to provide Empire with such information. If such information is requested for other purposes, Abbott shall use reasonable efforts to provide Empire with such information at a cost of [***] Dollars ($***) per hour of Abbott employee time to compile such information. For purposes of this Section 3.1 , information shall not be deemed under Abbott’s and its Affiliates’ control if such information is protected by confidentiality agreements with third parties. With respect to such protected information, Abbott shall use reasonable efforts to obtain the consent of such third parties to release the protected information to Empire.

 

(b) Abbott shall convey to Empire all available inventory of the material (Compound, bulk, raw venom and processed clinical material) to conduct Phase II clinical evaluation studies, except for such quantities required by Abbott in connection with internal research purposes and non-Pharmaceutical Uses of the Compound. Abbott represents that such material was manufactured in accordance with then existing Knoll internal specifications. Abbott also warrants and represents that such material was stored in accordance with Knoll’s storage specifications. Except as provided in the two (2) preceding sentences, any inventory of material conveyed to Empire under this Section 3.1(b) shall be conveyed “AS IS” and “WITH ALL FAULTS,” WITHOUT WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE. Empire shall be responsible for all testing, quality control and certification of such material. Empire shall be responsible for testing the raw venom component of the material in accordance with the testing methodologies specified on Exhibit E attached hereto and made a part hereof (the “ Testing Specifications ”).

 

(c) Upon delivery of raw venom in accordance with the schedule specified on Exhibit D , Empire shall have thirty (30) days following receipt of the raw venom to determine its compliance with the Testing Specifications. Within such thirty (30) day testing period, Empire shall provide Abbott with written notice via facsimile of its determination whether or not the raw venom complies with the Testing Specifications. Failure to provide such notice shall be deemed an admission by Empire that the raw venom complies with the Testing Specifications. If the raw venom complies (or is deemed to comply) with the Testing Specifications, payment amounts for such raw venom specified on Exhibit D shall be due within ten (10) days of the earlier of (i) the expiration of the thirty (30) day testing period, or (ii) the date of determination that the raw venom complies with the Testing Specifications. If Empire provides Abbott with timely notice that the raw venom does not comply with the Testing Specifications, then Empire shall promptly return the raw venom to Abbott.

 

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(d) If a dispute arises as to whether the raw venom complies with the Testing Specifications and the parties are unable to resolve the dispute, the matter shall be referred to an independent third party testing laboratory located in the United States and agreed to by the parties. The testing laboratory shall perform testing of the raw venom in question in accordance with the Testing Specifications and shall provide results to Abbott and Empire. The decision of the testing laboratory shall be final and binding on the parties. The cost of the testing shall be paid by the party found to be in error. If the raw venom is finally determined not to comply with the Testing Specifications, Empire shall have the right to terminate this Agreement in accordance with Section 8.2 hereof.

 

3.2 Empire Exclusivity . During the Term, and except as described in Section 4.3 , neither Abbott nor its Affiliates, shall directly or through intermediaries, undertake any development or commercialization activities related to Pharmaceutical Uses, except that Abbott shall be entitled to utilize the Compound for its internal research purposes (including pharmaceutical research), provided in no event shall such utilization permit Abbott to develop and/or commercialize Pharmaceutical Uses. For the avoidance of doubt, Abbott shall have the express right to undertake development and commercialization activities relating to the Compound for non-Pharmaceutical Uses.

 

4. Feasibility/Evaluation/Development/Manufacturing/Marketing/Other .

 

4.1 Feasibility/Evaluation Studies : Empire shall use commercially reasonable efforts to evaluate the Compound for the indication of ischemic stroke. For purposes of Empire’s obligations under this Agreement, the term “commercially reasonable efforts” shall mean those efforts that would be commercially reasonable for a company substantially similar to Empire. Empire shall have sole responsibility for conducting and/or supervising the feasibility and evaluation studies on the Compound. Empire shall provide Abbott with an annual update and summary of such studies and all such information shall be treated as Empire’s Confidential Information. Recognizing that certain evaluation work may be done by one or more third parties and recognizing that such work (e.g., formulations) may involve the patented subject matter of such third party, Empire will use commercially reasonable efforts to (i) provide in its license with the third party that the patented subject matter of such third party may be sublicensed to Abbott in the event that the Compound and Product are returned to Abbott under Section 4.7 ; and (ii) negotiate a royalty-free license/sublicense with such third party for the benefit of Abbott in the event that the Compound and Product are returned to Abbott under Section 4.7 . In the event that Empire is unable to negotiate a royalty-free license/sublicense, Abbott agrees to assume the royalty obligations thereunder if it elects to practice under such license/sublicense following the return of the Compound and Product under Section 4.7 . Empire agrees to promptly provide Abbott with written notice of the terms of any licenses entered into with third parties which pertain to the Compound and/or Product.

 

4.2 Clinical Development : Empire shall use commercially reasonable efforts to develop the Compound for the ischemic stroke indication. For purposes of this Section 4.2(a) , development of an indication shall be deemed to have commenced upon enrollment of the first subject in the first clinical study for an indication using the formulation selected for clinical development. Empire shall have sole responsibility for designing, conducting and paying for the

 

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cost of the clinical development of Product and shall use commercially reasonable efforts to diligently conduct such clinical development as set forth below. Except as set forth in Section 3.2 above, Abbott hereby agrees that it shall not undertake any research or development related to Pharmaceutical Uses of the Compound during the Term, except as may be necessary following the license granted to Abbott under Section 4.7 in the event of a termination of this Agreement under Sections 8.2 , 8.3 , 8.4 , or 8.5 .

 

4.3 Commercialization : Empire shall use commercially reasonable efforts to develop and commercialize the Product in at least the following major countries: [***] (each a “Major Country” ), using at least that level of effort it would use with similar compounds in its portfolio; provided, however, that Empire shall not be obligated to commercialize Product in [***] if, in Empire’s reasonable opinion, [***] conditions would make the marketing and sale of the Product in [***] not commercially viable. In the event that Empire or its sublicensees elect not to market in a particular country(ies), either directly or through third parties, Abbott shall have the right, upon notice to Empire, to market, either directly or through third parties, the Product in each such country, by paying to Empire the [***]. Empire agrees to provide Product to Abbott for sale in each such country at the [***] and to assign to Abbott all applicable Regulatory Approvals necessary for Abbott to market Product in such country.

 

4.4 Marketing : Empire shall have sole responsibility for marketing Product, including entering into any co-marketing and/or co-promotion arrangements. Empire shall distribute all Product samples in the United States in accordance with the Prescription Drug Marketing Act.

 

4.5 Manufacturing : Empire and its Affiliates shall have sole responsibility for manufacturing Product.

 

4.6 Sublicensing : Empire may sublicense its rights under this Agreement with Abbott’s prior written consent, which consent shall not be unreasonably withheld. Each sublicense shall be in writing and shall include provisions acknowledging that such sublicense is subject to the license granted Empire under this Agreement, that each sublicensee shall make reports and keep and maintain records of sales to at least the same extent as required under this Agreement, allowing Abbott the same access and audit rights permitted under this Agreement, and that such sublicense shall be automatically terminated upon termination of this Agreement. Empire shall remain primarily liable for all of Empire’s obligations hereunder and for the performance of sublicensees, including the obligation to pay milestones and royalties required hereunder.

 

4.7 Improvements : All Improvements and all new patents which relate to the Compound or the Product which come into existence during the Term and which relate to or are derived from work done by or for Empire or its Affiliates or sublicensees relating to the Compound without any contribution by Abbott, its Affiliates, contractors, or agents, shall be deemed the property of Empire. Provided, however, in the event this Agreement is terminated by Abbott for any reason as set forth in Article 8 , all such Improvements and patents shall be exclusively licensed to Abbott solely for use with the Compound and Product on a worldwide, royalty-free, paid-up

 

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basis, and Empire retains all rights in and to any such Improvements and patents for any and all other uses.

 

5. Financials .

 

5.1 Milestones : Empire shall make the following milestone payments to Abbott within ten (10) days of the following events:

 

 

5.2 Royalty Payments :

 

(a) Royalty Rate and Royalty Period : Beginning with the First Commercial Sale by Empire, any Affiliates or sublicensees of Empire, Empire shall pay to Abbott a royalty on annual aggregate worldwide Net Sales of all Product for all Pharmaceutical Uses as follows:

 

(i) Where Product or its manufacture is covered by a Valid Claim in a country, Empire shall pay a royalty equal to [***] percent [***%] of Net Sales ([***] percent [***%] on Patents, [***] percent [***%] on Know-How and [***] percent [***%] on Trademark) until such time as the last Patent included in Abbott’s Technology covering such Product has expired and/or is invalidated in such country, or [***] following the First Commercial Sale, whichever is longer.

 

(ii) Except as set forth in (i) immediately above, where Product or its manufacture is not covered by a Valid Claim in a country, Empire shall pay a royalty equal to [***] percent [***%] of Net Sales based upon Abbott Know-How ([***]) percent [***%] and Trademark ([***]) percent (***%) for a period of [***] following the First Commercial Sale.

 

(iii) Where Product is no longer covered by a Valid Claim in a country and the period in (ii) immediately above has expired, Empire shall pay a royalty equal to [***] percent [***%] of Net Sales for the use of a Trademark.

 

For example, where Product is sold under a Trademark in a country where there is Patent protection, the royalty rate would be [***] percent [***%]. Where the Product is sold under a Trademark in a country and there is no Patent protection, and such Product is sold within the first,

 

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[***] following the First Commercial Sale, then the royalty would be [***] percent ([***]%). Where the Product is sold in a country under a Trademark and there is no Patent protection and more than [***] have elapsed since the First Commercial Sale, then the royalty would be [***] percent [***%].

 

The periods of time covered by (i) and (ii) above shall be deemed the “Royalty Period.” The period of time covered under (iii) above shall de deemed the “Trademark Royalty Period.”

 

(b) End of Royalty Period : Upon the end of the Royalty Period in any country of the Territory on a country-by-country basis, Empire shall have an exclusive, perpetual license under Abbott’s Technology in such country of the Territory, with all of the rights granted under Article 2 hereof, except that, for so long as a Trademark is used in such country by Empire, an Affiliate or a sublicensee of either of them, Empire shall continue to pay to Abbott a royalty equal to [***] percent [***%] of Net Sales due during the Trademark Royalty Period. For purposes of this Section 5.2(b) only, the term “Net Sales” shall mean sale of the Product or any other product under a Trademark.

 

(c) Royalty Reports and Payments : Beginning with the First Commercial Sale anywhere in the Territory, within sixty (60) days after the end of each calendar quarter, Empire shall prepare and deliver to Abbott a report detailing the calculation of Net Sales in the Territory, on a country-by-country basis, for such just ended quarter along with the calculation of royalties due thereon pursuant to Sections 5.2(a) and (b) above. Each report shall be accompanied by full payment in U.S. dollars of the royalties shown thereon to be due. In the event that conversion from foreign currency is required in calculating a royalty payment hereunder, the exchange rate used shall be the ratio in effect at the end of the last business day of the applicable quarter for which royalties are calculated, as reported by The Wall Street Journal (Midwest Edition), or a substantially similar global publication if The Wall Street Journal (Midwest Edition) is no longer published.

 

(d) Books and Records/Audit Rights : Empire shall keep books and records accurately showing all Products manufactured, used or sold under the terms of this Agreement. The relevant portions of such books and records shall be open to inspection by representatives of Abbott, at Abbott’s cost, solely for the purposes of determining the correctness of the royalties payable under this Agreement. Such audit, conducted no more than one time per calendar year, shall be during normal business hours after reasonable advance notice and subject to suitable confidentiality provisions. In the event an audit shows a deficiency to be due, Empire shall immediately pay such deficiency along with the reasonable costs and expenses of the audit if the deficiency is more than [***] percent [***%] of the amount due during such audited period. If the audit shows that an excess was paid, Empire shall be entitled to deduct the amount of such excess from the payment due for the next calendar quarter. Such books and records shall be preserved for a period of at least three (3) years after the date of the royalty payment to which they pertain, and no audit may be conducted with respect to royalties due in any calendar year that is more than two (2) years preceding the calendar year in which the audit is being conducted. Books and records for a given calendar year may only be audited once.

 

(e) Withholding Taxes on Royalties : Where any sum due to be paid to Abbott hereunder is subject to any withholding or similar tax, the parties shall use all reasonable efforts to

 

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do all such acts and things and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or