<PAGE>
EXHIBIT 10.53
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXECUTION COPY
LICENSING AGREEMENT
This LICENSING AGREEMENT ("Agreement"), effective as of March 31,
2000
(the "Effective Date"), by and among GILEAD SCIENCES, INC., a
Delaware
corporation with its principal office located at 333 Lakeside
Drive, Foster
City, CA 94404 ("Gilead Sciences"), and its wholly-owned
subsidiary, NEXSTAR
PHARMACEUTICALS, INC., a Delaware corporation (collectively with
Gilead
Sciences, "Gilead"), and EYETECH PHARMACEUTICALS, INC., a Delaware
corporation
with its principal offices located at 300 East 42nd Street, Third
Floor, New
York, New York 10017 ("EyeTech"). Unless otherwise defined in this
Agreement,
all capitalized terms shall have the meanings given to them in
Section 1.1 of
this Agreement.
RECITALS
1.
WHEREAS, Gilead owns certain patents and patent applications
and related know-how for NX1838, and has made certain filings for
regulatory
approvals with respect to NX1838; and
2.
WHEREAS, Gilead and EyeTech desire to enter into this
Agreement and certain other agreements, including an agreement
providing for the
fill-and-finish manufacture of quantities of Product sufficient for
the
completion of Phase Ib clinical trials; and
3.
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Gilead wishes to license to EyeTech and EyeTech wishes
to license
from Gilead all of Gilead's rights under patents, patent
applications and
know-how related to NX1838, and have access to all regulatory
approvals with
respect to NX1838; and
4.
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Gilead also wishes to sell to EyeTech and EyeTech wishes
to purchase
from Gilead its inventory of NX1838.
NOW, THEREFORE, the Parties hereto, intending to be legally
bound,
hereby agree as follows:
SECTION 1
DEFINITIONS
1.1
Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.
<PAGE>
"Affiliate" shall mean any Person that, directly or indirectly,
through
one or more intermediaries, Owns, is Owned by or is under common
Ownership with,
a Party, where "Own" or "Ownership" means (a) direct or indirect
possession of
at least fifty percent (50%) of the outstanding voting securities
of a
corporation or a comparable ownership in any other type of Person,
provided,
however, that if the law of the jurisdiction in which such entity
operates does
not allow fifty percent (50%) or greater ownership by a Party, such
ownership
interest shall be at least forty percent (40%) or (b) that a Person
or group of
Persons otherwise has the unilateral ability to control and direct
the
management of the entity, whether by contract or otherwise.
"Business Day" shall mean any day other than a Saturday, Sunday
or
banking holiday in New York City or San Francisco, California.
"Calendar Quarter" shall mean a calendar quarter (i.e., period of
three
(3) consecutive months) ending on March 31, June 30, September 30
or December
31.
"Calendar Year" shall mean any period of twelve (12) consecutive
months
ending on December 31.
"Competitive Product" shall mean a product competitive with a
Product.
"Compulsory License" means a compulsory license under the
Licensed
Patents obtained by a Third Party through the order, decree, or
grant of a
governmental authority of competent jurisdiction, authorizing such
Third Party
to manufacture, use, sell, offer for sale or import a Competitive
Product in one
or more countries within the Territory.
"Control",
"Controls", and "Controlled" shall mean, with respect to a
particular item of information or intellectual property right, that
the
applicable Party owns or has a license to such item or right and
has the ability
to grant to the other Party access to and a license or sublicense
(as
applicable) under such item or rights as provided for in this
Agreement without
violating the terms of any agreement or other arrangement with any
Third Party.
"Damages" shall mean any and all costs, losses, claims,
liabilities,
fines, penalties, damages and expenses, court costs, and reasonable
fees and
disbursements of counsel, consultants and expert witnesses incurred
by a Party
hereto (including any interest payments which may be imposed in
connection
therewith).
"Delivery Date" shall mean the date that is ten (10) days after
the
Effective Date.
"Effective Date" shall have the meaning given such term in the
first
sentence of this Agreement.
"EU" shall mean Austria, Belgium, Denmark, Finland, France,
Germany,
Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal,
Spain, Sweden and
the United Kingdom, and future members of the European Union (or
its successor),
upon their admission for full membership (with commercial rights
and privileges
substantially comparable to those of the foregoing countries).
2.
<PAGE>
"EyeTech Rights" shall mean any invention or inventions, patentable
or
not, know-how, information and/or data relating to the Product,
including,
without limitation, pre-clinical studies and clinical trial
information,
manufacturing processes, formulations, modes of delivery and/or
data necessary
for the manufacture, use or sale of the Product, which are
Controlled by EyeTech
during the term of this Agreement, and all Patents covering any of
the foregoing
which are Controlled by EyeTech during the term of this
Agreement.
"FDA" shall mean the United States Food and Drug Administration, or
any
successor thereto.
"Field" shall mean the prevention and treatment of all human and
other
animal diseases and conditions, and expressly excluding in vivo and
in vitro
diagnostic applications.
"First Commercial Sale" shall mean, with respect to any
particular
country, the first sale of a Product in such country by EyeTech, or
any of its
Affiliates or sublicensees, after Regulatory Approvals in such
country have been
granted from the relevant Regulatory Authority in such country for
such Product.
"GAAP" shall mean
United States generally accepted accounting
principles, consistently applied.
"Indemnified Party" shall have the meaning given in Section 7.2
hereof.
"Indemnifying Party" shall have the meaning given in Section
7.2
hereof.
"Know-How" shall mean all ideas, materials, inventions (whether
patentable or not), trade secrets, data, instructions, processes,
formulas,
expert opinion and information, including, without limitation, the
Manufacturing
Information and biological, chemical, pharmacological,
toxicological, physical
and analytical, safety, manufacturing and quality control data and
information,
in each case within the Field, that, as of the Effective Date are
(i) existing,
and (ii) Controlled by Gilead as of the Effective Date, in each
case which is
necessary or useful for the development, manufacture, use, sale
or
commercialization of the Product in the Field. Excluded from
Know-How are any
Patents, the Licensed Patents and the Transferred Assets.
"License" shall mean the license granted by Gilead to EyeTech
pursuant
to Section 2.1.
"Licensed Patents" shall mean any Patents listed in Exhibit D
(as
updated from time to time pursuant to Section 5.6) which claim the
manufacture,
use, import, offer for sale or sale of Products in accordance with
this
Agreement and which now or at any time during the term of this
Agreement are
Controlled by Gilead or any Affiliate of Gilead.
"Major Countries" shall mean Canada, France, Germany, Italy,
Japan,
Spain, United Kingdom and the United States.
"Manufacturing Information" shall mean copies of all existing
information in written and electronic form in Gilead's possession
or control as
of the Effective Date, with respect to any Product existing as of
the Effective
Date, that relates to, in the Field: (1) processes for the
production of NX1838,
and intermediates in the preparation of a Product; (2) the
in-process
3.
<PAGE>
analytical controls for production of each of: (a) NX1838; and (b)
a Product;
(3) the process, formulation and development reports generated for
the
preparation of a Product; (4) the analytical methods and validation
for the
quality control release of each of: (a) NX1838; and (b) a Product;
and (5) the
stability protocols, stability indicating methods and stability
data for each
of: (a) NX1838; and (b) a Product.
"NDA" shall mean a New Drug Application filed with the FDA
requesting
market approval for a new drug product.
"Net Sales" shall mean, with respect to the Product, the gross
amount
billed or invoiced by EyeTech, its Affiliates or sublicensees, to
unrelated
Third Parties for the Products in finished product form, less the
following
deductions:
(a)
trade,
quantity and cash discounts allowed, but
expressly excluding discounts or allowances offered as part of a
package of
products that includes a Product sold by EyeTech, its Affiliates
or
sublicensees;
(b) refunds,
chargebacks and any other allowances which
effectively reduce the net selling price;
(c) actual
product returns, credits and allowances;
(d) rebates
actually paid or credited to any governmental
agency (or branch thereof) or to any Third Party payor,
administrator or
contractee;
(e) discounts
mandated by, or granted to meet the
requirements of, applicable state, provincial or federal law,
wholesaler,
including required chargebacks and retroactive price
reductions;
(f)
transportation, freight, postage charges and other
charges such as insurance, relating thereto, in each case included
as a specific
line item on an invoice to such Third Parties; and
(g)
taxes,
excises or other governmental charges upon or
measured by the production, sale, transportation, delivery or use
of goods, in
each case included as a specific line item on an invoice to such
Third Parties.
Notwithstanding the foregoing, amounts received by EyeTech, or its
Affiliates or
sublicensees, for the sale of Products among EyeTech and its
Affiliates or
sublicensees for resale shall not be included in the computation of
Net Sales
hereunder. Net Sales shall be determined from books and records
maintained in
accordance with GAAP. In the event the Product is sold as part of a
combination
product, or as part of bundled products or as part of a delivery
system, the Net
Sales from the combination product, bundled product or delivery
system, for the
purposes of determining royalty payments, shall be determined by
multiplying the
Net Sales (as defined without regard to this paragraph) of the
combination
product by the fraction, A/(A+B) where A is the average sale price
of the
Product when sold separately in finished form and B is the average
sale price of
the other product(s) or system sold separately in finished form,
or, only if the
value of B cannot be determined, where A+B is the average sales
price of the
product(s) and
4.
<PAGE>
the delivery system together. If the value of B can be determined,
in no event
will the sales price of any combination product, bundled product or
delivery
system product be less than the sum of A and B. In the event that
such average
sale price cannot be determined for both the Product and such other
product(s)
or system in combination, the following calculation shall be
substituted for the
calculation recited in (ii) of the preceding sentence: the Net
Sales (as defined
without regard to this paragraph) of the combination products shall
be
multiplied by the fraction C/(C+D) where C is EyeTech's cost of
goods of the
Product and D is EyeTech's cost of goods for the other product(s)
or system,
determined in accordance with the method of accounting normally
employed by
EyeTech in computing cost of goods, provided, however, that the
minimum value of
such fraction as used in the calculation of Net Sales shall be
0.9.
"NX1838" shall mean Gilead's proprietary compound known as NX1838,
as
described in Exhibit A.
"Party" shall mean either Gilead or EyeTech, and "Parties" shall
mean
both of Gilead and EyeTech.
"Patents" shall mean patents and patent applications, both foreign
and
domestic, including without limitation, all extensions, reissues,
renewals,
reexaminations, patents of addition, supplementary protection
certificates and
inventors' certificates thereof, substitutions, provisionals,
divisionals,
continuations and continuations-in-part.
"Person" shall mean a natural person, a corporation, a partnership,
a
trust, a joint venture, a limited liability company, any
governmental authority
or any other entity or organization.
"Pivotal Clinical Trial" shall mean either (a) a trial on
sufficient
numbers of patients that is designed to establish that a
pharmaceutical product
is safe and efficacious for its intended use, and to define
warnings,
precautions and adverse reactions that are associated with the
pharmaceutical
product in the dosage range to be prescribed, and to support
Regulatory Approval
of such pharmaceutical product or label expansion of such
pharmaceutical
product, or (b) a clinical trial that began as a trial on
sufficient numbers of
patients that is designed to establish the safety and biological
activity of a
pharmaceutical product for its intended use, and to define
warnings, precautions
and adverse reactions that are associated with the pharmaceutical
product in the
dosage range to be prescribed, after such date as the U.S. Food and
Drug
Administration or its successor (or equivalent regulatory
authority) has
indicated that the applicable Party may reasonably continue such
trials with the
intention to establish that a pharmaceutical product is safe and
efficacious for
its intended use, and to define warnings, precautions and adverse
reactions that
are associated with the pharmaceutical product in the dosage range
to be
prescribed, and to support Regulatory Approval of such
pharmaceutical product or
label expansion of such pharmaceutical product.
"Product" shall mean any pharmaceutical composition containing
NX1838
in any formulation, dosage concentration or volume, together with
all label
expansions, line extensions and improvements thereon, which may be
included in
any supplement, modification or addition to the filings for
Regulatory Approval
of the foregoing compound.
5.
<PAGE>
"Product Data Package" shall include the following information and
data
related to the Product in the possession or control of Gilead as of
the
Effective Date: (a) the Regulatory Documents; (b) pre-clinical and
clinical
development protocols, data, and reports; (c) manufacturing
development
technical reports; (d) toxicology reports; and (e) such other
information and
data specifically identified in Exhibit B attached hereto.
"Product Inventory" shall mean the NX1838 and Product inventory,
in
bulk or finished form, which Gilead Controls as of the Effective
Date, as
identified in Exhibit C attached hereto.
"Reasonable Diligence" shall mean commercially reasonable efforts
to
develop, obtain Regulatory Approval, and/or commercialize, as
applicable, a
Product in a country in the Territory, consistent with accepted
business
practices and legal requirements, and comparable to efforts in
the
pharmaceutical industry applicable to development, obtaining of
Regulatory
Approval for, or commercialization of human pharmaceutical products
at an
equivalent stage of development and similar market potential,
profit potential
and strategic value in view of conditions then prevailing.
"Regulatory Approval" shall mean (a) in the United States, approval
by
the FDA of an NDA, or equivalent application, for marketing
approval and
satisfaction of any related applicable FDA registration and
notification
requirements (if any) and (b) in any country other than the United
States, all
approvals (including any required marketing, pricing and
reimbursement
approvals) by the Regulatory Authority in such country of a single
application
or set of applications comparable to an NDA, enabling legal sale of
a product in
such country.
"Regulatory Authority" shall mean the FDA in the United States or
the
equivalent governmental agency having jurisdiction in any other
country in the
Territory.
"Regulatory Documents" shall mean the (a) United States
investigational
new drug application (the "IND") #56503 (dated July 12, 1998), and
all
amendments and annual reports to same; (b) any pediatric data
package or other
exclusivity extensions relating to Products; and (c) any other
regulatory
filings with Regulatory Authorities relating to the Product.
"Royalty Term" shall mean, with respect to each country in
which
Product is sold, the period of time equal to the longer of (i) ten
(10) years
from the date of First Commercial Sale of the Product in such
country, or (ii)
the expiration of the last-to-expire Licensed Patent in such
country that claims
the manufacture, use, and or sale of such Product as such
activities are carried
out pursuant to this Agreement.
"Territory" shall mean the world, unless the License terminates
with
respect to a country pursuant to Section 6.7, in which case the
Territory shall
exclude any country in which the License has so terminated.
"Third Party" shall mean a Person other than EyeTech, Gilead or
their
Affiliates.
"Transferred Assets" shall mean the Product Inventory and the
Product
Data Package.
6.
<PAGE>
SECTION 2
GRANT OF LICENSES AND TRANSFER AND DELIVERY OF TRANSFERRED
ASSETS AND MANUFACTURING INFORMATION
2.1 Grant of
License. Subject to the terms and conditions of this
Agreement, during the term of this Agreement, Gilead hereby grants
to EyeTech an
exclusive license under the Licensed Patents and Know How to make,
have made,
use, sell, offer to sell, import and export the Product within the
Field
throughout the Territory, with a right to sublicense to its
Affiliates or
(subject to Section 2.4) to any other Person.
2.2
Transferred Assets. As of the Effective Date, Gilead hereby
assigns, transfers and conveys to EyeTech all of Gilead's right,
title and
interest in and to the Transferred Assets (subject to Section
4.5(c)), and
EyeTech hereby accepts such assignment, transfer and conveyance. On
or before
the Delivery Date, Gilead shall have delivered to EyeTech all of
the Transferred
Assets and the Manufacturing Information. EyeTech shall have up to
ten (10) days
after such delivery to inventory the delivered Transferred Assets
and
Manufacturing Information and to give notice to Gilead of any
Transferred Assets
and Manufacturing Information that were not so delivered. If Gilead
receives
notice or otherwise learns after the Delivery Date that it has
failed to deliver
any Transferred Assets or Manufacturing Information to EyeTech,
Gilead shall
provide to EyeTech any such Transferred Assets or Manufacturing
Information no
later than five (5) Business Days after receipt of such notice or
knowledge (or
within such longer time as is mutually agreed by EyeTech and
Gilead). The
clinical data portion of the Product Data Package shall be provided
to EyeTech
in computer-readable format, where available, and otherwise in
printed format.
Gilead shall be under no obligation to convert to electronic format
any portion
of the Product Data Package that currently is available only in
printed format.
In the event that EyeTech is unwilling or unable to assume physical
possession
of the Transferred Assets and Manufacturing Information by the
Effective Date,
Gilead shall be entitled to charge EyeTech a reasonable fee for
storage of the
Transferred Assets and Manufacturing Information beyond the
Effective Date.
Gilead shall ship the Transferred Assets to EyeTech F.O.B. to
EyeTech's
designated facilities. For a period of 90 days following the
receipt by EyeTech
of the Transferred Assets and Manufacturing Information, Gilead
personnel shall
be reasonably available during Gilead's normal business hours to
respond to
technical inquiries of EyeTech regarding Products as is reasonably
requested by
EyeTech. EyeTech acknowledges that Gilead makes no representations
or warranties
with respect to the Transferred Assets or Manufacturing Information
(other than
as expressly set forth in Section 5 below) and that it accepts such
Transferred
Assets and Manufacturing Information "as is."
2.3 Negative
Covenant of EyeTech. EyeTech shall not use or
practice Licensed Patents or Know-How outside the Field or outside
the Territory
or for any other purpose except activities that it conducts in
compliance with
this Agreement.
2.4
Sublicenses. EyeTech shall have the right to sublicense the
licenses granted to it by Gilead under this Agreement without the
consent of
Gilead; provided that (i) prompt notice and a copy of such
sublicense shall be
given by EyeTech to Gilead pursuant to Section 8.2 of this
Agreement; (ii)
EyeTech shall remain obligated at all times under this Agreement
without regard
to whether it has sublicensed its rights or whether EyeTech's
sublicensee has
performed; (iii)
7.
<PAGE>
such sublicense shall name Gilead as a third party beneficiary of
such
sublicense; and (iv) any such sublicenses granted by EyeTech shall
contain
provisions providing for its termination or assignment to Gilead,
at the option
of Gilead, of EyeTech's interest therein upon termination of this
Agreement, and
shall further contain provisions which obligate such sublicensee to
comply with
such terms, conditions, agreements and obligations that are
consistent with the
terms, conditions, agreements and obligations to which EyeTech is
subject under
this Agreement.
2.5 Gilead
Right of First Negotiation. Except as otherwise
provided in this Section 2.5, Gilead shall have a right of first
negotiation
with respect obtaining all rights with respect to any Product which
is, or which
can reasonably be expected to be, [**] (a "Reversion Product") as
follows:
Eyetech shall notify Gilead in writing if Eyetech intends to seek,
negotiate, or
solicit offers to license a Third Party to commercialize the
Reversion Product
for the treatment or prevention [**] (the "Reversion Field") and a
specific
territory (the "Reversion Territory"), prior to contacting any such
potential
Third Party licensees. Such written notice shall include sufficient
detailed
technical information concerning the Reversion Product as Gilead
may reasonably
require to evaluate its interest in such Reversion Product. Within
thirty (30)
days after receiving Eyetech's notice as to the Reversion Product,
Gilead shall
notify Eyetech whether it is interested in negotiating with Eyetech
the terms
under which Gilead shall obtain a license from Eyetech to research,
develop and
commercialize Reversion Products as described herein. If Gilead
provides such
notice, the Parties shall negotiate exclusively and in good faith
for a period
of up to ninety (90) days after Eyetech receives Gilead's notice of
interest
(the "Negotiation Period") the terms of an agreement pursuant to
which Eyetech
will grant to Gilead and its Affiliates an exclusive,
royalty-bearing,
sublicensable license, under all Eyetech Know-How and Eyetech
Patents relating
to such Reversion Product, to research, develop, make, have made,
use, import,
offer for sale, sell and otherwise commercialize such Reversion
Product within
the Reversion Field within the Reversion Territory, and which
agreement shall
include commercially reasonable provisions for transfer of or
access to relevant
regulatory filings and technology to Gilead. Neither Gilead nor
Eyetech shall
have any obligation to actually enter into a license agreement with
respect to
such Reversion Product. If either Gilead does not respond to
Eyetech's notice of
intent to license the Reversion Product within thirty (30) days
after Gilead's
receipt thereof, or Gilead and Eyetech fail to agree upon the terms
of a license
under rights to the Reversion Product during the Negotiation
Period, Eyetech
shall be free to commercialize such Reversion Product by itself or
through its
Affiliates or Third Parties without further obligation to
Gilead.
SECTION 3
PAYMENTS AND DELIVERIES
In consideration of the exclusive license granted herein and
the
transfer of ownership of the Transferred Assets, EyeTech shall pay
the following
amounts to Gilead:
3.1 Initial
Payments and Deliveries.
(a) On Monday,
April 3, 2000, EyeTech shall pay to Gilead
the sum of seven million United States Dollars (US$7,000,000) by
Federal Reserve
electronic wire transfer in immediately available funds to an
account designated
by Gilead. Such amount shall be non-refundable and non-creditable,
and shall not
be subject to any counterclaim or set-off.
8.
<PAGE>
(b) On or
before the Effective Date, EyeTech and Gilead
Sciences shall enter into a Warrant Agreement (the "Warrant
Agreement") mutually
satisfactory to both Parties pursuant to which EyeTech shall issue
to Gilead
Sciences a warrant to purchase EyeTech Series B Preferred
Stock.
(c) On or before the
Delivery Date, Gilead shall deliver
to EyeTech (i) all of the Transferred Assets pursuant to Section
2.2 of this
Agreement; (ii) all of the Manufacturing Information pursuant to
Section 2.2 of
this Agreement; and (iii) a schedule ("Schedule of Transferred
Assets and
Manufacturing Information") setting forth each of the Transferred
Assets and
Manufacturing Information being delivered to EyeTech at such
time.
(d) Within ten
(10) days of delivery of the Transferred
Assets and the Manufacturing Information and of the Schedule of
Transferred
Assets and Manufacturing Information pursuant to Section 3.1(c)
above, EyeTech
shall inventory the delivered Transferred Assets and Manufacturing
Information
pursuant to Section 2.2 and shall either (i) deliver to Gilead a
receipt
acknowledging the receipt of each of the Transferred Assets and
the
Manufacturing Information set forth on the Schedule of Transferred
Assets and
Manufacturing Information or (ii) notify Gilead of any Transferred
Assets or
Manufacturing Information that Gilead did not deliver. If Gilead
receives notice
or otherwise learns after the Delivery Date that it has failed to
deliver any
Transferred Assets or Manufacturing Information to EyeTech, Gilead
shall provide
to EyeTech any such Transferred Assets or Manufacturing Information
no later
than five (5) Business Days after receipt of such notice or
knowledge (or within
such longer time as is mutually agreed by EyeTech and Gilead).
Within ten (10)
days of Gilead delivering such missing items to EyeTech following
notice given
by EyeTech pursuant to clause (ii) of this Section 3.1(d), EyeTech
shall deliver
the receipt described in clause (i) of this Section 3.1(d).
3.2 Milestone
Payments. Within five (5) Business Days of EyeTech
and/or its Affiliates or sublicensees achieving the first
occurrence of each of
the milestone events listed below with respect to any Product,
EyeTech shall
notify Gilead of such achievement and the date thereof, and within
thirty (30)
days of the date of such achievement, pay the one-time
non-refundable fees
specified below to Gilead by Federal Reserve electronic wire
transfer in
immediately available funds to an account designated by Gilead;
provided,
however, that in no event shall the following fees be payable more
than once
with respect to Products for any particular geographical area or
Milestone:
<TABLE>
<CAPTION>
Milestone
Fee
------------------------------------
-----
<S>
<C>
First [**] with respect to a Product
$[**]
First [**] with respect to a Product
$[**]
First [**] with respect to a Product
$[**]
First [**] with respect to a Product
$[**]
First [**] with respect to a Product
$[**]
First [**] with respect to a Product
$[**]
</TABLE>
9.
<PAGE>
3.3
Royalties.
(a) Royalty on
Products. EyeTech shall pay Gilead a
royalty payment on Net Sales of Products that are made or sold
during the
Royalty Term and that are sold by EyeTech, its Affiliates or
sublicensees (the
"Royalty") according to the following rates, as adjusted in
accordance with
Sections 3.3(b) below:
(i) [**]
percent ([**]%) of Net Sales in the
United States for the first [**] million dollars ($[**]) in Net
Sales in the
United States in a given Calendar Year;
(ii)
[**] percent ([**]%) of Net Sales in the
United States for the next [**] dollars ($[**]), up to and
including, [**]
dollars ($[**]) in Net Sales during the same Calendar Year;
(iii) [**]
percent ([**]%) of Net Sales in the
United States in excess of [**] dollars ($[**]) during the same
Calendar Year;
and
(iv)
[**] percent [**]%) of Net Sales outside the
United States in the same Calendar Year.
By way of example, if, in the year 2005, EyeTech Net Sales in
the
United States were equal to [**] dollars ($[**]), and [**] dollars
($[**])
outside the United States, then the Royalty payable to Gilead
hereunder would
equal [**] dollars ($[**]), calculated in the following manner:
<TABLE>
<CAPTION>
AMOUNT OF NET SALES
ROYALTY RATE
ROYALTY
----------------------------
------------
-------
<S>
<C>
<C>
First $[**] (United States)
[**]%
$ [**]
Next $[**] (United States)
[**]%
$ [**]
Next $[**] (United States)
[**]%
$ [**]
$[**] (outside United States)
[**]%
$ [**]
----------------------------
------
Total Royalty
$ [**]
</TABLE>
By way of further example, if, through the second Calendar Quarter
in
the year 2005, EyeTech Net Sales in the United States were equal to
[**] dollars
($[**]), and [**] dollars ($[**]) outside the United States, then
the Royalty
payable to Gilead hereunder after such Calendar Quarter would equal
[**] dollars
($[**]), calculated in the following manner:
<TABLE>
<CAPTION>
AMOUNT OF NET SALES
ROYALTY RATE
ROYALTY
------------
-------
<S>
<C>
<C>
First $[**] (United States)
[**]%
$ [**]
Next $[**] (United States)
[**]%
$ [**]
$[**] (outside United States)
[**]%
$ [**]
----------------------------
------
Total Royalty
$ [**]
</TABLE>
10.
<PAGE>
(b) Offset.
Notwithstanding the forgoing, on a country by
country and Product by Product basis, EyeTech may credit against
Net Sales [**]
percent ([**]%) of any royalties it must pay to any Third Party on
any Product:
(1) pursuant to any licenses necessary to practice the License; or
(2) resulting
from any litigation (including settlement thereof) under Section
6.16; provided,
however, for purposes of this Section 3.3(b) that the applicable
royalty rates
used for calculation of Royalties payable to Gilead shall not be
reduced to less
than [**] percent ([**]%) of the royalty rates(s) otherwise
applicable pursuant
to Section 3.3(a).
3.4 Payment;
Report. All Royalties payable to Gilead under this
Agreement shall be paid in U.S. dollars within sixty (60) days of
the end of
each Calendar Quarter or as otherwise specifically provided herein
by Federal
Reserve electronic wire transfer in immediately available funds to
an account
designated by Gilead. At the time of payment of Royalties, EyeTech
shall send to
Gilead a statement with respect to the applicable Calendar Quarter,
country by
country and Product by Product, for EyeTech, its Affiliates and
sublicensees, of
the amount of aggregate worldwide gross sales and Net Sales, the
amount of gross
sales during such Calendar Quarter, an itemized calculation of Net
Sales showing
deductions provided for in the definition of Net Sales and in
Section 3.3(b),
and, on a cumulative basis for the current Calendar Year, the
amount of
Royalties or other payments due on such sales.
3.5 Exchange
Rate; Manner and Place of Payment.
(a) All
payments due hereunder from time to time shall be
paid in U.S. Dollars. For purposes of computing such payments, the
Net Sales of
Product in countries other than the United States shall be
converted into U.S.
Dollars as computed using the average monthly rate of exchange at
the time for
such currencies as the rate applicable to the transfer of funds
arising from
payments as published in the Wall Street Journal (New York
edition). The
currency conversion system used by EyeTech shall be subject to
audit by Gilead
as described in Section 3.6 and, if not determined to be a system
reflecting the
fair market value of the currencies in question, shall be modified
as necessary
to effect currency conversion at fair market value.
(b)
Notwithstanding the provisions of Section 3.5(a), if
by reason of any restrictive exchange laws or regulations, EyeTech
shall be
unable to convert to U.S. Dollars the amount, determined as above,
equivalent to
the amount due by EyeTech hereunder, then EyeTech shall so notify
Gilead
promptly and provide an explanation of the circumstances. In such
event, EyeTech
shall make all such payments or the balance thereof due hereunder
and which is
not paid in foreign currency as provided below, in U.S. Dollars as
soon as
reasonably possible after and to the extent that such restrictive
exchange laws
or regulations are lifted so as to permit EyeTech to pay amounts
due under this
Section 3.5 in U.S. Dollars. EyeTech shall promptly notify Gilead
if such
restrictions are so lifted. At its option Gilead shall meanwhile
have the right
to request the payment (to it or to its nominee), and, upon
request, EyeTech
shall pay or cause to be paid amounts due (or such portions thereof
as are
specified by Gilead) in the currency of any other country
designated by Gilead
and legally available to EyeTech under the then-existing laws of
regulations.
Any payments shall be payable to Gilead by wire transfer at such
bank in the
United States as Gilead Sciences shall specify from time to time.
Not less than
one (1) Business Day prior to such wire transfer, the remitting
party shall
telefax the receiving party advising it of the amount and of the
payment to be
made.
11.
<PAGE>
3.6 Audits.
EyeTech and its Affiliates and sublicensees shall keep
full and accurate books and records relating to the financial
performance of the
Product. During the term of this Agreement plus four (4) years
after termination
or expiration of this Agreement, Gilead shall have the right,
during regular
business hours and upon reasonable advance notice, to have such
books and
records audited by an independent certified accountant so as to
verify the
accuracy of the information previously reported to Gilead. Such
information
shall be deemed to be Proprietary Information of EyeTech and, as
such, subject
to confidentiality obligations pursuant to Section 6.3. The
independent
certified account shall keep confidential any Proprietary
Information obtained
during such audit and shall report to Gilead only the amounts of
Royalties due
and payable. The cost of such audit shall be borne by Gilead;
however, in the
event such audit reveals that the Royalties to Gilead constitute an
underpayment
of five percent (5%) or more from that revealed by the audit to be
actually
owed, the cost of the audit shall be borne by EyeTech. EyeTech
shall include in
all sublicenses granted as permitted under Section 2.4 an audit
provision
substantially similar to the foregoing requiring the sublicensee to
keep full
and accurate books and records relating to the Product and granting
Gilead the
right to audit the accuracy of the information reported by the
sublicensee in
connection therewith on the same terms as apply to an audit of
EyeTech's records
hereunder. The terms of this Section 3.6 shall survive any
termination or
expiration or termination of this Agreement for a period of four
(4) years.
3.7
Withholding Taxes. Any and all taxes levied on account of
royalty payments paid or owed from a country in which provision is
made in the
law or by regulation for withholding will be deducted from royalty
payments paid
Gilead hereunder. EyeTech shall cooperate with Gilead to claim
exemption from
such deductions or withholdings under any double taxation or
similar agreement
in force from time to time.
3.8
Sublicensee Obligations. In the event EyeTech sublicenses its
right to sell a Product, such sublicense shall include an
obligation for the
sublicensee to account for and report its Net Sales of Products and
provide that
Gilead shall have audit rights therefor pursuant to this Section 3
on the same
basis as if such sales were Net Sales of Products by EyeTech, and
EyeTech shall
pay royalty payments to Gilead as if the Net Sales of the
sublicensee were Net
Sales of EyeTech.
3.9 Late
Payments. Any amounts not paid by EyeTech when due under
this Agreement shall be subject to interest from and including the
date payment
is due through and including the date upon which Gilead has
collected
immediately available funds in an account designated by Gilead at a
rate equal
to the sum of two percent (2%) plus the prime rate of interest
quoted in the
Money Rates section of The Wall Street Journal, calculated daily on
the basis of
a 360-day year, or similar reputable data source. No special notice
by Gilead to
EyeTech of such interest due shall be required.
3.10
Compulsory License. If either Party learns that a Third Party
has obtained a Compulsory License in any country in the Territory,
such Party
shall promptly notify the other Party of such occurrence. If the
royalty rate
payable by the grantee of the Compulsory License is less than the
royalty rates
applicable in such country set forth in Section 3.3 of this
Agreement, then the
applicable royalty rates set forth in Section 3.3 of this Agreement
shall be
reduced to the lower royalty rates applicable in such country
pursuant to such
Compulsory License for so long
12.
<PAGE>
as sales of a Competitive Product are made by any Third Party
pursuant to the
Compulsory License.
SECTION 4
TERM OF AGREEMENT; TERMINATION
4.1 Term. The
term of this Agreement shall commence upon the
Effective Date and, unless sooner terminated as provided in this
Section 4,
expire on the expiration of all Royalty Terms for all Products.
4.2 Licenses
upon Expiration. In the event that the Agreement
expires as set forth in Section 4.1 above without early
termination, the License
shall automatically become, at EyeTech's election made at least 90
days prior to
such expiration, either (i) an exclusive, irrevocable,
royalty-bearing license,
subject to the surviving provisions of the Agreement, to use and/or
sublicense
the use of Know How to make, have made, use, import, have imported,
offer for
sale, sell, and have sold Product(s) in the Field in the Territory
as it exists
at the time of such expiration, subject to payment by EyeTech to
Gilead of a
royalty equal to [**] percent ([**]%) of Net Sales of Products made
pursuant to
the license under this Section 4.2(i) after the expiration of this
Agreement, or
(ii) a non-exclusive, irrevocable, royalty-free, paid-up license,
subject to the
surviving provisions of this Agreement, to use and/or sublicense
the use of Know
How to make, have made, use, import, have imported, offer for sale,
sell, and
have sold Product(s) in the Field in the Territory as it exists at
the time of
such expiration.
4.3
Termination for Breach. Each Party shall have the right to
terminate this Agreement and its obligations hereunder for material
breach by
the other Party, which breach remains uncured for sixty (60) days
after written
notice is provided to the breaching Party, or in the case of an
obligation to
pay royalty payments or other amounts owing under this Agreement,
which breach
remains uncured for thirty (30) days after written notice to the
breaching
Party; provided, however, that non-payment of any royalty amounts
or other
payments owing under this Agreement, for which the non-paying Party
reasonably
disputes the obligation or amounts not paid, shall not be deemed a
breach of an
obligation to pay royalty payments or other amounts owing under
this Agreement,
provided that the non-paying Party has paid all such amounts not in
reasonable
dispute.
4.4
Termination in Event of Patent Challenge. Gilead shall have
the right to terminate this Agreement if EyeTech challenges the
validity of the
Licensed Patents within any country in the Territory, effective
thirty (30) days
after EyeTech's receipt of written notice of such termination by
Gilead.
4.5 Reversion
of Product Rights.
(a)
Termination of Agreement. In the event that this
Agreement is terminated pursuant to Sections 4.3 or 4.4 above,
other than for
Gilead's material breach of this Agreement, the License shall
terminate
immediately upon such termination.
(b) Loss of
License Rights in Country. In the event that
EyeTech permanently loses its right to use and sell Products in any
country
other than by reason of any
13.
<PAGE>
action or failure to act on the part of Gilead or any party acting
on behalf of
Gilead, the License shall terminate with respect to such
country.
(c) Transfer
of Rights. With respect to any and all
countries in which EyeTech's license rights are terminated pursuant
to Sections
4.5(a), 4.5(b), or 6.7(b): (i) such country(ies) shall
automatically be removed
from the Territory; (ii) EyeTech hereby grants to Gilead an
exclusive, freely
sublicensable license under the EyeTech Rights, which license shall
be
royalty-free and paid-up, subject to Section 4.5(d), to make, have
made, use,
import, offer for sale, sell and otherwise research, develop and
commercialize
formulations of the NX1838 in such countries, and Gilead covenants
not to
practice such license until the actual termination of EyeTech's
license rights
as to such countries pursuant to Sections 4.5(a) or (b); (iii)
EyeTech shall
assign all of its right, title and interest in and to, and shall
cooperate in
the transfer of all of, the following related to Products to the
extent that
EyeTech Controlled such during the term of this Agreement: (A) INDs
and
Regulatory Approvals, (B) all pre-clinical and clinical development
protocols,
data, and reports and other information and data (with any clinical
data to be
in computer-readable format, where available, and otherwise in
printed format,
with no obligation of EyeTech to convert to electronic format any
portion of
such clinical data that currently is available only in printed
format), (C)
manufacturing development technical reports, (D) toxicology
reports, and (E)
such other information and data specifically identified in Exhibit
B or of such
type (the preceding (A), (B), (C), (D) and (E) constituting the
"Updated Product
Data Package"), (iv) EyeTech shall deliver to Gilead copies of all
information,
records and data that it Controls that are reasonably necessary for
the
research, development and commercialization of Products, including
without
limitation all clinical data relating to Products, forward to
Gilead samples of
all chemical and biological materials acquired, made, cloned,
synthesized, first
discovered or collected as a result of research development or
commercialization
of Products and reasonable necessary to continue the research,
development and
commercialization of Products, and take such other actions and
execute such
other instruments, assignments and documents as may be necessary to
effect the
transfer of rights and materials hereunder to Gilead; and (v)
EyeTech shall
provide assistance reasonably requested by Gilead for a period of
ninety (90)
days following the date of notice of termination to facilitate the
exercise of
the license granted to Gilead in Section 4.5(c)(ii).
(d) Royalties.
Any license granted to Gilead pursuant to
Section 4.5(c) shall be subject to payment of a royalty to EyeTech
on a
country-by-country basis at a rate equal to: (i) if such license is
granted
after initiation of Pivotal Clinical Trials for a Product
applicable to such
country, [**] percent ([**]%) of Gilead's net sales of Products in
such country,
or (ii) if such license is granted on or after the first Regulatory
Approval of
Product in such country, [**] percent ([**]%) of Gilead's net sales
of Products
in such country.
4.6 Accrued
Rights and Obligations; Survival. Termination or
expiration of this Agreement for any reason shall be without
prejudice to any
rights which shall have accrued to the benefit of either Party
prior to such
termination or expiration, including damages arising from any
breach hereunder.
The following provisions of this Agreement shall survive the
expiration or
termination of this Agreement: Sections 2.3, 4.2, 4.6, 5, 6.3, 6.4,
6.5, 6.9,
6.11(a), 6.12, 6.18, 7, 8. The following provisions of this
Agreement shall
survive the expiration of this Agreement to the extent that the
license granted
to EyeTech pursuant to Section 4.2 is in effect: Sections 3.4
through 3.9, 4.3,
4.5, 6.2, 6.7(d), 6.7(f), 6.8, 6.11(b), 6.11(c), 6.11(d), 6.13,
6.16 and
6.17(a).
14.
<PAGE>
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Corporate
Existence and Power. As of the Effective Date, each
Party represents and warrants to the other that it (a) is a
corporation duly
organized, validly existing and in good standing under the laws of
the state in
which it is incorporated, and (b) has full corporate power and
authority and the
legal right to own and operate its property and assets and to carry
on its
business as it is now being conducted and as contemplated in this
Agreement,
including, without limitation, the right to grant the licenses
granted
hereunder.
5.2 Authority
and Binding Agreement. As of the Effective Date,
each Party represents and warrants to the other that it (a) has the
corporate
power and authority and the legal right to enter into this
Agreement and perform
its obligations hereunder, (b) has taken all necessary corporate
action on its
part required to authorize the execution and delivery of the
Agreement and the
performance of its obligations hereunder, and (c) the Agreement has
been duly
executed and delivered on behalf of such Party, and constitutes a
legal, valid
and binding obligation of such Party and is enforceable against it
in accordance
with its terms.
5.3 Title. As
of the Effective Date, each Party represents and
warrants to the other that it has sufficient legal and/or
beneficial title under
its intellectual property rights necessary to perform activities
contemplated
under this Agreement and to grant the licenses contained in this
Agreement and
other ownership rights conveyed pursuant to this Agreement
5.4 No
Conflict. Each Party represents and warrants to the other
that it has not entered, and will not enter, into any agreement
with any Third
Party which is in conflict with the rights granted to the other
Party under this
Agreement, and has not taken and will not take any action that
would in any way
prevent it from granting the rights granted to the other Party
under this
Agreement, or that would otherwise materially conflict with or
adversely affect
the rights granted to the other Party under this Agreement.
5.5 No
Approvals or Consents Required. Each Party represents and
warrants to the other that all necessary consents, approvals and
authorizations
of all governmental authorities and other persons or entities
required to be
obtained by such Party in order to enter into this Agreement have
been obtained.
5.6 Patents.
Gilead represents and warrants to EyeTech that in
Exhibit D, Gilead has in good faith supplied a c
