LICENSE AGREEMENT

Exhibit 10.3

 

 

License Agreement

 

 

Caritas St. Elizabeth’s Medical Center of Boston,

Inc.,

A Massachusetts Not For Profit Corporation

 

and

 

Corautus Genetics Inc.,

A Delaware Corporation

 

August 10, 2005

 

TABLE OF CONTENTS

 

LICENSE AGREEMENT

 

LICENSE AGREEMENT

 

This Agreement, made and effective as of August 10, 2005 (the “Effective Date”), is entered into by and between Corautus Genetics, Inc., a corporation organized and existing under the laws of Delaware, with its principal offices at 75 Fifth Street, NW, Suite 313, Atlanta, Georgia 30308 (“CORAUTUS”) and Caritas St. Elizabeth’s Medical Center of Boston, Inc., a Massachusetts non-profit corporation having its principal place of business at 736 Cambridge Street, Boston, Massachusetts (“CSEMC”).

 

RECITALS

 

WHEREAS, CSEMC has developed and owns certain patent applications and patents relating to angiogenic growth factors for treatment of peripheral neuropathy and is conducting a research study on such treatment;

 

WHEREAS, CORAUTUS has intellectual property rights to the vascular endothelial growth factor-2 gene, referred to as “VEGF-2”, and has produced proprietary naked plasmid DNA encoding for VEGF-2, including plasmid DNA sometimes referred to as “phVEGF-2” or “pVGI.1(VEGF2)”;

 

WHEREAS, CORAUTUS has substantial knowledge and expertise in research, development, manufacture and marketing of medical products; and

 

WHEREAS, CSEMC and CORAUTUS wish to collaborate to develop and commercialize the technology embodied in the CSEMC Patents;

 

NOW THEREFORE, in consideration of the mutual covenants and premises contained herein, the parties hereby agree as follows:

 

I. DEFINITIONS

 

Whenever used in this Agreement, the following capitalized terms shall have the following meanings:

 

“ Act ” means the United States Food, Drug and Cosmetic Act, as may be amended from time to time, to the extent applicable.

 

“ Additional Clinical Trials ” shall mean Phase II, Phase III or any other human clinical trial testing the safety and efficacy of the Biological Materials for the treatment of a peripheral neuropathy.

 

“ Affiliate ” shall mean a Person that, directly or indirectly, through one or more intermediates, controls, is controlled by, or is under common control with the Person specified. For the purposes of this definition, control shall mean the direct or indirect ownership of (i) in the case of corporate entities, securities authorized to cast more than fifty percent (50%) of the votes in any election for directors, or (ii) in the case of non-corporate entities, more than fifty percent (50%) ownership interest with the power to direct the management and policies of such

non-corporate entity. Notwithstanding the foregoing, the term “Affiliate” shall not include subsidiaries in which a Party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the board of directors, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.

 

“ Approval ” shall mean approval by the FDA or the corresponding European authority permitting marketing by CORAUTUS of a Licensed Product.

 

“ Approval Date ” shall mean the date of approval by the FDA or the corresponding European authority permitting marketing by CORAUTUS of the Initial Product.

 

“ Biological Materials ” shall mean the vascular endothelial growth factor-2 gene referred to as “VEGF-2” and proprietary naked plasmid DNA encoding for VEGF-2, including the plasmid DNA sometimes referred to as “phVEGF-2” or “pVGI.1(VEGF2)”, together with any Progeny, Derivatives and Modifications therefrom.

 

“ Combination Product ” shall mean a Licensed Product that includes one or more compounds in addition to Biological Materials or a licensed process that uses one or more additional methods that may or may not be the subject of an CSEMC Patent.

 

“ Commercially Reasonable Efforts ” shall mean efforts and resources commonly used by CORAUTUS for a product owned by it or to which it has rights at a similar stage in its development or product life and of similar market potential taking into account efficacy, safety, the anticipated regulatory authority approved labeling, the competitiveness of alternative products in the marketplace, the patent and other proprietary position of the product, the likelihood of regulatory approval, the profitability of the product including the royalties payable to licensors of patent rights, alternative products (of either a Third Party or CORAUTUS) and other relevant factors. Commercially Reasonable Efforts shall be determined on a market-by-market basis for a particular product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Licensed Product and the market involved.

 

“ Corautus Confidential Information ” shall mean all Corautus Product Data and any other data or information that is of value to CORAUTUS and is not generally known to competitors of CORAUTUS. To the extent consistent with the foregoing, Confidential Information includes information or data that (i) concerns the operations, facilities, manufacturing, clinical trials, pre-clinical studies, regulatory affairs and compliance, protocols, bench work, assay development, methodology, pricing, plans, affairs and businesses of CORAUTUS and the financial affairs of CORAUTUS, (ii) constitutes trade secrets, or (iii) is marked confidential, restricted, proprietary or with a similar designation. Confidential Information also includes any information of the type described in this paragraph that CORAUTUS obtains from another Person that CORAUTUS or such other Person treats as proprietary or designates as confidential information, whether or not owned or developed by CORAUTUS or such other Person. Notwithstanding the foregoing, such term shall not include any materials or information of the types specified above to the extent that such materials or information: (i) are or become generally utilized by other Persons engaged in the same business or activities in which CORAUTUS utilized, developed or otherwise acquired such information or publicly known; (ii) are known to CSEMC prior to receipt thereof and without any restrictions on disclosure in favor of CORAUTUS; or (iii) are furnished to other Persons by CORAUTUS with no restriction on disclosure.

 

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“ Corautus Invention ” shall mean Inventions relating solely to the Biological Materials, including but not limited to manufacturing, use or techniques thereof, conceived and/or reduced to practice solely by Corautus or jointly by CSEMC and Corautus under any under the Additional Clinical Trials in which CSEMC participates.

 

“ Corautus Phase II Clinical Trial ” shall mean an Additional Clinical Trial sponsored by Corautus that is recognized by the FDA or the corresponding European authority as a Phase II trial in the Field of Use.

 

“ Corautus Pivotal Clinical Trial ” shall mean a clinical trial sponsored by Corautus, that is recognized by the FDA or the corresponding European authority as a Phase III or equivalent clinical trial, designed and powered to provide substantive evidence of safety and efficacy to support an application for Approval of the Initial Product.

 

“ Corautus Product Data ” shall mean the data generated under any Additional Clinical Trials sponsored by CORAUTUS, the documentation filed by CORAUTUS with the relevant health or regulatory authorities and any government-issued approvals, including New Drug Applications obtained by CORAUTUS.

 

“ CSEMC Confidential Information ” shall mean all CSEMC Documentation and any other data or information that is of value to CSEMC and is not generally known to competitors of CSEMC. To the extent consistent with the foregoing, Confidential Information includes information or data that (i) concerns the operations, facilities, manufacturing, clinical trials, pre-clinical studies, regulatory affairs and compliance, protocols, bench work, assay development, methodology, pricing, plans, affairs and businesses of CSEMC and the financial affairs of CSEMC, (ii) constitutes trade secrets, or (iii) is marked confidential, restricted, proprietary or with a similar designation. Confidential Information also includes any information of the type described in this paragraph that CSEMC obtains from another Person that CSEMC or such other Person treats as proprietary or designates as confidential information, whether or not owned or developed by CSEMC or such other Person. Notwithstanding the foregoing, such term shall not include any materials or information of the types specified above to the extent that such materials or information: (i) are or become generally utilized by other Persons engaged in the same business or activities in which CSEMC utilized, developed or otherwise acquired such information or publicly known; (ii) are known to CORAUTUS prior to receipt thereof and without any restrictions on disclosure in favor of CSEMC; or (iii) are furnished to other Persons by CSEMC with no restriction on disclosure.

 

“ CSEMC Documentation ” shall mean the documents and information transferred by CSEMC to CORAUTUS for purposes of the Additional Clinical Trials.

 

“ CSEMC Invention ” shall mean Inventions relating solely to the use of vascular endothelial growth factors for the treatment of a peripheral neuropathy conceived and/or reduced to practice solely by CSEMC or jointly by CSEMC and CORAUTUS under any Additional Clinical Trial in which CSEMC participates.

 

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“ CSEMC Patent(s) ” shall mean those United States or foreign patents and/or applications listed on Appendix A hereto as amended and modified from time to time by CSEMC which such Appendix A is hereby incorporated herein by reference, the inventions disclosed therein, and any divisions, reissues, continuations, continuations-in-part or extensions relating or corresponding thereto, and disclosed in foreign patent application corresponding thereto.

 

“ CSEMC Research Study Data ” shall mean the data generated under the CSEMC Research Study.

 

“ CSEMC Research Study ” shall mean the Phase I clinical trial under IND 11572 entitled “pVGI.1 (VEGF-2) Gene Transfer for Diabetic Neuropathy.” The Research Study is being conducted at the facility of CSEMC and through a subinvestigator at the New England Medical Center, Boston, Massachusetts.

 

“ Derivative ” means a substance which constitutes an unmodified functional sub-unit or product expressed by the Biological Materials, including, but not limited to, genes and regulatory sequences and proteins expressed by DNA or RNA.

 

“ Field of Use ” shall mean the use of Biological Materials for treating a peripheral neuropathy, including, without limitation, diabetic neuropathy.

 

“ First Licensed Product ” shall mean the first Licensed Product which is sold commercially after Approval.

 

“ Initial Product ” shall mean a product for the treatment of peripheral diabetic neuropathy that incorporates Biological Materials.

 

“ Intellectual Property ” shall mean all intellectual property rights, including (i) United States and other national patents and patent applications, divisions, continuations, continuations-in-part, reissues, renewals, reexaminations, requests for continued examination, supplemental registrations or extensions thereof, (ii) trademarks, whether registered or unregistered and applications for registration thereof, (iii) copyrights, whether registered or unregistered and applications for registration thereof, and (iv) trade secrets, know-how, technology, proprietary information and data, including formulae, procedures, plans, methods, processes, specifications, models, protocols, techniques and experimentation, and design, testing and manufacturing data, and products, compositions, and procedures.

 

“ Inventions ” shall mean findings, discoveries, inventions, additions, modifications, formulations, variations, enhancements, refinements or derivative works.

 

“ Joint Invention ” shall mean any Invention, except a Corautus Invention or a CSEMC Invention, whether patentable or not, first conceived and/or reduced to practice under an Additional Clinical Trial which could be described in a patent application, if one were to be filed, naming one or more employees and/or agents of CSEMC and one or more employees and/or agents of CORAUTUS as joint inventors as determined by U.S. patent laws.

 

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“ Licensed Product ” shall mean any product or method in the Field of Use covered by one or more Valid Claims.

 

“ Material Transfer Agreement ” shall mean the agreement between CORAUTUS and CSEMC effective as of August 1, 2004, and executed on even date herewith, a copy of which is attached as Appendix B hereto.

 

“ Modification ” shall mean any material substantially based on, containing or incorporating a substantial element of the Biological Material, or any materials which are not new or not obviously distinct from the Biological Material.

 

“ Net Sales ” shall mean ***

 

“ Party ” or “ Parties ” shall mean individually and collectively, respectively, CORAUTUS and CSEMC.

 

“ Person ” shall mean any individual, firm, corporation, partnership, limited liability company, trust, unincorporated organization or other entity or a government agency or political subdivision thereto, and shall include any successor (by merger or otherwise) of such Person.

 

“ Progeny ” shall mean any unmodified descendant from the Biological Material, including cell from cell, or organism from organism.

 

“ Third Party(ies) ” shall mean any Person other than CSEMC, CORAUTUS and their respective Affiliates.

 

“ Valid Claim ” shall mean any claim of an issued and unexpired patent within CSEMC Patent(s) which covers a Licensed Product and which shall not have been withdrawn, lapsed, cancelled, challenged or disclaimed, nor held invalid by a court of competent jurisdiction in an unappealed or unappealable decision.

 

***	Confidential Treatment Requested

 

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II. GRANT OF LICENSE

 

2.1 License Grant : CSEMC hereby grants to CORAUTUS the exclusive worldwide right and license, with the right to sublicense on the terms and conditions set forth in Section 2.2, in the Field of Use under the CSEMC Patent(s) to make, have made, market, have marketed, use, import, offer for sale, sell and have sold Licensed Product (the “License”). The License granted hereunder shall be subject to any rights of the U.S. Government, its agencies or authorities under Public Law 96-517 and Public Law 98-620 which may be applicable. Notwithstanding the License granted herein, CSEMC shall have the right, subject to CORAUTUS’ consent, not to be unreasonably withheld, to make and have made Licensed Product(s) for itself and distribution to non-profit organizations for research purposes only, but not for any commercial or other purpose. Nothing in the foregoing sentence shall constitute a grant by Corautus or confer upon CSEMC any rights to make or use the Biological Materials.

 

2.1.1 CORAUTUS and CSEMC agree that if the “exclusive” nature of the License granted under this Section 2.1 is deemed to be unreasonable by a court of competent jurisdiction or the European Commission (each referred to herein as “Court”), CORAUTUS and CSEMC agree to a change in the nature of the license granted in the applicable country or countries within the jurisdiction of such Court to “co-exclusive,” “non-exclusive” or such other characterization as such Court shall deem reasonable under the circumstances; provided, however, that such change shall have no impact on the exclusive nature of the License elsewhere in the world or on the other terms and provisions of this Agreement. Notwithstanding the foregoing, if a Court were to deem the “exclusive” nature of the License as unreasonable, with respect to the country or countries within the jurisdiction of such Court, CORAUTUS, with respect to such countries only, shall not be obligated to any development or commercialization obligations hereunder, and the royalty rate to be paid by CORAUTUS with respect to Net Sales of Licensed Products in such countries shall be reduced by *** (***).

 

2.2 Sublicense Rights : CORAUTUS shall be entitled to grant sublicenses in the Field of Use under the License on terms and conditions in compliance and consistent with the terms and conditions of this Agreement (except that the royalty therein may be higher than that stated in Section 4.1 hereof). CORAUTUS shall provide CSEMC thirty (30) days prior written notice of any intent to sublicense any portion of the license granted under this Agreement, such notice to identify the sublicensee and the scope of the sublicense. CSEMC may refuse to grant CORAUTUS permission to sublicense any portion of the license granted under this Agreement to any entity which it deems in its sole discretion creates a likelihood of public embarrassment or scandal for the Roman Catholic Church by informing CORAUTUS of such refusal in writing within said thirty (30) day period. Each sublicense granted by CORAUTUS hereunder shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions similar to those in this Agreement including, but not limited to, the following provisions:

 

(a)

The sublicense shall expire automatically on the termination of the License;

 

(b)

The sublicense shall not be assignable, in whole or in part;

 

***	Confidential Treatment Requested

 

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(c)

The sublicensee shall not grant further sublicenses without the prior written consent of CSEMC and CORAUTUS;

 

(d)

During the term of the sublicense the sublicensee shall be bound in writing by a confidentiality obligation similar to that imposed on CORAUTUS in Article X, and the sublicensee shall bind its employees with a similar undertaking of confidentiality;

 

(e)

Any sublicense granted by CORAUTUS pursuant to this Agreement shall be subject to any rights of the U.S. Government, its agencies or authorities under Public Law 96-517 and Public Law 98-620 which may be applicable;

 

(f)

Each and every sublicense granted by CORAUTUS must contain a Catholic Identity provision substantially the same as set forth in Section 14.1 requiring any sublicensee to conform its use of the sublicense to the teachings of the Roman Catholic Church as provided for herein;

 

(g)

CORAUTUS shall provide CSEMC with a complete copy of each fully executed sublicense agreement promptly after its execution;

 

(h)

Failure of CORAUTUS to adhere to the requirements set forth herein that is not cured within 30 days after written notice from CSEMC to CORAUTUS of such failure, shall enable CSEMC to revoke and declare the License to be null and void and terminate this License Agreement; and

 

(i)

Failure of any sublicensee to adhere to the requirements set forth herein shall require CORAUTUS to revoke and declare said sublicense to be null and void.

 

2.3 Option . CSEMC hereby grants Corautus the right and option to acquire an exclusive, worldwide, royalty bearing license with right to sublicense under the CSEMC Inventions in the Field of Use for the life of any patent to be issued with respect to the CSEMC Inventions. ***. This option may be exercised as to a CSEMC Invention at any time during the one year period commencing on the date CSEMC gives written notice to CORAUTUS that CSEMC has filed a patent application covering such CSEMC Invention.

 

III. LICENSE FEE AND MILESTONE PAYMENTS

 

3.1 Milestone Payments . Each of the following amounts will be payable by CORAUTUS to CSEMC within thirty (30) business days following confirmation by CORAUTUS that the specified event has occurred:

 

3.1.1

***.

 

3.1.2

***.

 

3.1.3

***.

 

***	CONFIDENTIAL TREATMENT REQUESTED

 

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3.1.4

***.

 

3.1.5

***.

 

IV. ROYALTY PAYMENTS

 

4.1 Royalty Amount : In further consideration for the grant of the License, CORAUTUS shall pay to CSEMC a royalty, on a country-by-country basis, at the rate of *** (***) of Net Sales of Licensed Products.

 

4.2 Quarterly Payments : Royalties and sublicensing income under Sections 4.1 and 4.8 herein shall be payable on a quarterly basis, within ninety (90) days after the end of each calendar quarter. Royalties shall be based upon the Net Sales during each calendar quarter, commencing with the calendar quarter in which the first commercial sale of a Licensed Product is made. Royalties shall be calculated in accordance with generally accepted accounting principles and shall be paid without any reduction or deduction or set-off of any nature or kind whatsoever, except as may be prescribed by law.

 

4.3 Reports : CORAUTUS shall furnish to CSEMC at the same time as each payment is made pursuant to Section 4.2, a written report on a country-by-country basis, of the (i) sublicensing income and (ii) Net Sales, the number of units of each type of Licensed Product included in Net Sales, and the calculation of the royalty due and payable, for the calendar quarter upon which the royalty payment is based.

 

4.4 Records : CORAUTUS shall keep, or cause to be kept, full, complete and proper records and accounts of sales of Licensed Products in sufficient detail to enable the royalties payable hereunder to be determined. CSEMC shall jointly have the right at its own expense to appoint an independent certified public accounting firm, reasonably acceptable to CORAUTUS, to audit, during normal business hours and upon reasonable prior written notice, the records which are necessary to verify the royalties payable pursuant to this Agreement; provided, however, that if the audit discloses that CSEMC was underpaid royalties by at least *** (***) for any calendar quarter, then CORAUTUS shall reimburse to CSEMC any reasonable costs of such audit, together with an amount equal to the additional royalties to which CSEMC is entitled as disclosed by the audit. CSEMC may exercise its right of audit no more frequently than once in any calendar year. The accounting firm shall disclose to CSEMC only information relating solely to the accuracy of the royalty payments and reports. CORAUTUS shall preserve and maintain all such records required for audit for a period of three (3) years after the calendar quarter to which the record applies. CORAUTUS shall make such records and books available to the foregoing accounting firm at a suitable location within the United States.

 

4.5 Corautus Obligation to Pay : CORAUTUS, at its own expense, shall be responsible for reporting and paying to CSEMC all royalties due under Section 4.1 hereof on account of sales of Licensed Products by its Affiliates, sublicensees and distributors.

 

4.6 Term of Royalty : The royalty obligations to CSEMC as to each Licensed Product shall terminate on a country-by-country basis on the expiration date of the last to expire of issued CSEMC Patents in such country which have not been disclaimed or held invalid by a

 

***	CONFIDENTIAL TREATMENT REQUESTED

 

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court of competent jurisdiction from which no appeal can be taken or, after mutual consultation and agreement, an appeal is not taken, and which includes at least one Valid Claim covering the Licensed Product.

 

4.7 Late Payments . Unless otherwise provided in the Agreement, CORAUTUS shall pay interest to CSEMC on the aggregate amount of any payments by CORAUTUS that are not paid on or before the date such payments are due under the Agreement at a rate per annum equal to the lesser of the prime rate of interest as reported by The Wall Street Journal , Eastern U.S. Edition, from time to time, plus two percent (2%), or the highest rate permitted by applicable law, calculated on the number of days such payment is delinquent.

 

4.8 Additional Sublicensing Payments. Excluding research funding received by CORAUTUS for the Licensed Products and further excluding income received by CORAUTUS that is computed or determined by reference to the sales or sales price of the Licensed Product (e.g., royalties paid by a sublicensee to CORAUTUS) CORAUTUS shall pay CSEMC *** of all other income (e.g., license fees) received by CORAUTUS from a sublicensee as a result of a sublicense agreement granting a sublicense to the Licensed Product. For avoidance of doubt, nothing in the foregoing sentence is intended to reduce the royalty to be paid to CSEMC under Section 4.1 and 4.5 hereof. If the CSEMC technology is sublicensed in a bundle with other technologies, the amount due to CSEMC shall be pro rated based on the percent contribution of the CSEMC technology to the bundle, as mutually agreed by the parties.

 

V. PATENT MATTERS

 

5.1 Patent Prosecution Filing Obligation and Maintenance :

 

5.1.1 During the term of this Agreement, CSEMC shall be responsible for prosecuting and maintaining the CSEMC Patent(s). CORAUTUS shall reimburse CSEMC *** of patent expenses incurred after the Effective Date of this license; provided, however; (a) CSEMC will consult with Corautus periodically about patent expenses and receive input from Corautus before committing to expenses that are not routine patent prosecution expenses. Such non-routine patent expenses shall include, e.g., expenses involving litigation or interference; (b) Corautus will be billed for any patent expenses attributable to any calendar quarter by the close of the following calendar quarter, and any reimbursement for any expenses not timely billed will be deemed waived by CSEMC. CSEMC shall not abandon any CSEMC Patents without giving CORAUTUS prior written notice thereof.

 

5.1.2 CORAUTUS and CSEMC agree to reasonably cooperate in the preparation, filing, prosecution and maintenance of any patent application and patent in CSEMC Patent(s). CORAUTUS shall bear its own costs in connection with its cooperation with CSEMC under this Section 5.1.2.

 

5.1.3 CORAUTUS recognizes that CSEMC may license other parties under CSEMC Patents outside the Field of Use.

 

***	CONFIDENTIAL TREATMENT REQUESTED

 

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5.2 Mutual Assistance : CSEMC and CORAUTUS shall assist, and shall use reasonable efforts to cause their respective employees, patent attorneys, and in CORAUTUS’ case, consultants, to assist each other, in assembling inventorship information and data for the filing and prosecution of CSEMC Patents. In the event of a dispute as to status as an inventor, inventorship shall be determined in accordance with the patent laws of the United States or the patent laws of the country of application for patent by mutual agreement of counsel for CSEMC and counsel for CORAUTUS.

 

5.3 Patent Prosecution : CSEMC shall keep CORAUTUS reasonably informed with regard to the status of the CSEMC Patents and provide to CORAUTUS upon request therefor copies of patent applications for CSEMC Patents and related prosecution. CORAUTUS patent attorneys shall have the right to consult with CSEMC patent attorneys at reasonable times on matters relating to the prosecution of CSEMC Patents, including the scope of claim coverage and international filings. CSEMC shall consider all reasonable requests made by the other with regard to the patent application and maintenance processes. If either of the parties to this Agreement becomes aware of any infringement or potential infringement of the CSEMC Patents, that party will give notice thereof to the other party and provide available information to the other party.

 

VI. CORAUTUS/CSEMC RIGHTS

 

6.1 Ownership and Inventions :

 

6.1.1 Pre-Existing Corautus Rights . Both Parties acknowledge and agree that CORAUTUS retains ownership of all right, title and interest in and to the Biological Materials, Corautus Inventions, Corautus Confidential Information, all Intellectual Property of Corautus and Corautus Product Data subject only to Section 6.2.2 below

 

6.1.2 Pre-Existing CSEMC Rights . Both Parties acknowledge a