License Agreement

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BioMedical Research, Inc | MDRNA, Inc

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Title: License Agreement
Date: 5/15/2009
Industry: Biotechnology and Drugs Law Firm: Sills Cummis Sector: Healthcare

License Agreement, Parties: biomedical research inc , mdrna inc

Exhibit 10.3

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

License Agreement

By And Between

Novartis Institutes for BioMedical Research, Inc.

And

MD RNA, Inc.


1.	DEFINITIONS AND INTERPRETATION	1

2.	LICENSES	6

3.	DISCLOSURE AND TRANSFER OF MDRNA KNOW-HOW AND COOPERATION	7

4.	FINANCIAL PROVISIONS	7

5.	PAYMENT TERMS	7

6.	CONFIDENTIALITY	8

7.	EVENT OF DEFAULT	10

8.	TERM; RIGHTS IN BANKRUPTCY	10

9.	REPRESENTATIONS, WARRANTIES AND COVENANTS	11

10.	INDEMNIFICATION; LIABILITY	15

11.	PUBLICATIONS AND PUBLICITY	19

12.	GENERAL PROVISIONS	20

EXHIBIT A – MD RNA PATENTS

EXHIBIT B – MICHIGAN PATENTS

EXHIBIT C – SAMPLE INVOICE

EXHIBIT D – MICHIGAN LICENSE

EXHIBIT E – GECC AGREEMENT

EXHIBIT F – PAYMENT INSTRUCTIONS

LICENSE AGREEMENT

This LICENSE AGREEMENT (“ Agreement ”) is made as of this 20th day of March, 2009 (“ Effective Date ”), by and between Novartis Institutes for BioMedical Research, Inc., a Delaware corporation (“ Novartis ”) and MD RNA, Inc., a Delaware corporation (“ MD RNA ”). Novartis and MD RNA are each referred to individually as a “ Party ” and together as the “ Parties .”

RECITALS

WHEREAS, MD RNA has developed a proprietary platform for creating novel liposomes from dialkyl-amino acids for delivery of siRNA and owns or Controls (as defined below) certain intellectual property relating thereto;

WHEREAS, Novartis wishes to obtain, and MD RNA wishes to grant, a license to such intellectual property on the terms and conditions set forth herein;

WHEREAS, MD RNA Controls certain intellectual property pursuant to the Michigan License (as defined below); and

WHEREAS, Novartis wishes to obtain, and MD RNA wishes to grant, a sublicense under the Michigan License on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Parties agree as follows.

1.	DEFINITIONS AND INTERPRETATION

1.1

Definitions. Unless the context otherwise requires, the terms in this Agreement with initial letters capitalized, shall have the meanings set forth below, or the meaning as designated in the indicated places throughout this Agreement.

“Affiliate” means, with respect to a Party, any Person that controls, is controlled by, or is under common control with that Party. For the purpose of this definition, “control” shall mean, direct or indirect, ownership of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interest in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby the entity or person controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity, or the ability to cause the direction of the management or policies of a corporation or other entity. In the case of entities organized under the laws of certain countries, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and in such case such lower percentage shall be substituted in the preceding sentence, provided , that such foreign

investor has the power to direct the management and policies of such entity. In the case of Novartis, “Affiliates” shall also be deemed to include [***] (also known as [***]), [***], and their respective Affiliates.

“Agreement” shall have the meaning set forth in the preamble.

“Business Day” means any day that is not a Saturday, a Sunday, or other day (i) which is a public holiday in Cambridge, Massachusetts, or (ii) which is a recognized Federal holiday in the United States of America.

“Claims” means all Third Party demands, claims, actions, proceedings and liabilities (whether criminal or civil, in contract, tort or otherwise) for losses, damages, reasonable legal costs and other reasonable expenses of any nature whatsoever.

“Code” shall have the meaning set forth in Section 8.2(a).

“Confidential Information” means all Know-How and other proprietary information and data of a financial, commercial or technical nature which the disclosing Party or any of its Affiliates has supplied or otherwise made available to the other Party or its Affiliates, whether made available orally, in writing or in electronic form, including information comprising or relating to concepts, discoveries, inventions, data, designs or formulae in relation to this Agreement. For purposes hereof, this Agreement and the terms hereof shall not be Confidential Information of either Party.

“Confidentiality Agreement” means that certain Confidentiality Agreement dated as of February 10, 2009 between mdRNA and Novartis, as amended by an Amendment to Confidentiality Agreement dated February 17, 2009.

“Control” or “Controlled” means, with respect to any Know How, Patents, other intellectual property rights, or any proprietary or trade secret information, the legal authority or right (whether by ownership, license or otherwise) of a Party to grant a license or a sublicense of or under such Know How, Patents, or intellectual property rights to another Person, or to otherwise disclose such proprietary or trade secret information to another Person, without breaching the terms of any agreement with a Third Party, or misappropriating the proprietary or trade secret information of a Third Party.

“DiLA ² Data” means all data and information Controlled by MD RNA relating to the structure, activity and/or other characteristics of the lipids within the DiLA ² Platform Technology.

“DiLA ² Platform Technology” means compounds containing an amino acid core, including one or more amino acids or a peptide of two to twenty amino acid residues, and one or more lipophilic tails linked at either the N-terminus or the C-terminus of an amino

acid, or at both termini for use in delivery and administration of drug agents and in drug delivery systems, as in existence as of the Effective Date.

“Effective Date” shall have the meaning set forth in the first paragraph of this Agreement.

“Encumbrance” means any claim, charge, equitable interest, hypothecation, lien, mortgage, pledge, option, license, assignment, power of sale, retention of title, right of pre-emption, right of first refusal or security interest of any kind.

“Event of Default” shall have the meaning set forth in Section 7.1.

“Field” shall mean all uses and purposes.

“Field of Use” shall have the meaning set forth in the Michigan License.

“Force Majeure Event” shall have the meaning set forth in Section 12.5.

“Indemnification Claim Notice” shall have the meaning set forth in Section 10.3(b).

“Indemnified Party” shall have the meaning set forth in Section 10.3(b).

“Indemnifying Party” shall have the meaning set forth in Section 10.3(b).

“Know-How” means all technical information, know-how and data, including inventions (whether patentable or not), discoveries, trade secrets, specifications, instructions, processes, formulae, materials, expertise and other technology applicable to compounds, biologics, formulations, compositions, products or to their manufacture, development, registration, use or commercialization or methods of assaying or testing them or processes for their manufacture, formulations containing them, compositions incorporating or comprising them and including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical and analytical, safety, quality control, manufacturing, preclinical and clinical data, instructions, processes, formulae, expertise and information, regulatory filings and copies thereof, relevant to the development, manufacture, use or commercialization of and/or which may be useful in studying, testing, development, production or formulation of products, or intermediates for the synthesis thereof.

“Licensed Products” shall have the meaning set forth in the Michigan License.

“Licensed Processes” shall have the meaning set forth in the Michigan License.

“MAA” means an application for the authorization to market a product in any country or group of countries outside the United States, as defined in the applicable laws and regulations and filed with the Regulatory Authority of a given country or group of countries.

“ MD RNA Know-How” means the Know-How owned or Controlled by MD RNA or its Affiliates as of the Effective Date relating to the DiLA ² Platform Technology and condensing peptide technology. The MD RNA Know-How shall also include the DiLA ² Data. For the avoidance of doubt, “ MD RNA Know-How” shall not include any Know-How owned or Controlled by the University of Michigan.

“ MD RNA Patents” means the Patents identified in Exhibit A and any other Patents owned or Controlled by MD RNA or its Affiliates as of the Effective Date that have claims covering the DiLA ² Platform Technology. For the avoidance of doubt,

“ MD RNA Patents” shall not include any Patents owned or Controlled by the University of Michigan.

“ MD RNA Technology” means MD RNA Patents and MD RNA Know-How.

“ MD RNA Indemnitees” shall have the meaning set forth in Section 10.2.

“Michigan” means the Regents of the University of Michigan.

“Michigan License” means the License Agreement, dated as of May 7, 2008, between the Regents of the University of Michigan and MD RNA (f/k/a Nastech Pharmaceutical Company Incorporated).

“Michigan Patents” shall have the meaning given to the term PATENT RIGHTS in the Michigan License.

“Novartis Indemnitees” shall have the meaning set forth in Section 10.1.

“Party” shall have the meaning set forth in the preamble.

“Patents” means all patents and patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models and certificates of addition and all foreign counterparts of them and including all divisionals, continuations, substitutions, continuations-in-part, re-examinations, reissues, additions, renewals, extensions, registrations, and supplemental protection certificates and the like of any of the foregoing.

“Person” means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity.

“Regulatory Authority” means any governmental agency or authority responsible for granting regulatory approvals for products, including the United States Food and Drug Administration, the European Medicines Agency, or any successor entities thereto and any corresponding national or regional regulatory authorities.

“Regulatory Filings” means any submission to a Regulatory Authority of any appropriate regulatory application, and shall include, without limitation, any submission

to a regulatory advisory board, marketing authorization application, and any supplement or amendment thereto. For the avoidance of doubt, Regulatory Filings shall include any Investigational New Drug (IND), New Drug Application (NDA) or the corresponding application in any other country or group of countries.

“Sublicensee” shall have the meaning set forth in the Michigan License.

“Term” means the term of this Agreement as set forth in Section 8.1.

“Territory” means all countries of the world.

“Third Party” means any Person other than a Party or an Affiliate of a Party.

“United States” or “US” means the United States of America, its territories and possessions.

“USD” or “US$” means the lawful currency of the United States.

1.2

Interpretation. In this agreement unless otherwise specified:

(a)

“includes” and “including” shall mean respectively includes and including without limitation;

(b)

a Party includes its permitted assignees and/or their respective permitted successors in title to substantially the whole of its undertaking;

(c)

a statute or statutory instrument or any of their provisions is to be construed as a reference to that statute or statutory instrument or such provision as the same may have been or may from time to time hereafter be amended or re-enacted;

(d)

words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders;

(e)

the Exhibits and other attachments form part of the operative provision of this Agreement and references to this Agreement shall, unless the context otherwise requires, include references to the Exhibits and attachments;

(f)

the headings in this Agreement are for information only and shall not be considered in the interpretation of this Agreement;

(g)

general words shall not be given a restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things; and

(h)

the Parties agree that the terms and conditions of this Agreement are the result of negotiations between the Parties and that this Agreement shall not be construed in

favor of or against any Party by reason of the extent to which any Party participated in the preparation of this Agreement.

2.	LICENSES

2.1

License Grant. Subject to the terms and conditions of this Agreement, MD RNA hereby grants to Novartis and its Affiliates a non-exclusive, irrevocable, perpetual, royalty-free, fully paid-up license, with the right to grant sublicenses as permitted in Section 2.3 of this Agreement, under the MD RNA Technology to research, develop, make, have made, use, import, offer for sale, sell, have sold, commercialize and otherwise exploit any product and/or process in the Field in the Territory.

2.2

Michigan Sublicense Grant.

(a)

Subject to the terms and conditions of this Agreement, MD RNA hereby grants to Novartis and its Affiliates a non-exclusive license under the Michigan Patents, with the right to grant sublicenses, in each case subject to the terms and conditions of the Michigan License, in the Field of Use and the Territory, to make, have made, import, use, market, offer for sale, sell and have sold Licensed Products and to practice Licensed Processes.

(b)

In connection with the sublicense granted pursuant to this Section 2.2 Novartis agrees to comply, as and to the extent applicable to a Sublicensee, with the following Sections of the Michigan License: [***].

(c)

For the avoidance of doubt, other than as specified in Section 2.2(b) above, Novartis shall not be bound by any provision of the Michigan License, including Article 5 (Diligence).

(d)

Novartis acknowledges, pursuant to clause (1) of Section 6.4 of the Michigan License the disclaimer of warranties and limitations on Michigan’s liability, as provided in Article 9 of the Michigan License.

2.3

Sublicense Rights.

(a)

Novartis may sublicense to a Third Party the rights granted to it by MD RNA under Section 2.1 of this Agreement at any time at its sole discretion, but only in connection with [***]. A “ Novartis Product ” means any product with respect to which Novartis or any of its Affiliates has conducted research, manufacturing, development and /or commercialization activities that are material to such product.

(b)

Novartis may sublicense the rights granted to it by MD RNA under Section 2.2 of this Agreement as and to the extent provided in the Michigan License.

3.	DISCLOSURE AND TRANSFER OF MDRNA KNOW-HOW AND COOPERATION

3.1

Disclosure and Transfer of MD RNA Know-How. As soon as reasonably possible after the Effective Date (and in any event within [***] days after the Effective Date), MD RNA, without additional consideration, shall disclose to Novartis or its designated Affiliate all MD RNA Know-How in existence as of the Effective Date and provide copies of any existing tangible embodiment thereof in written or electronic form as reasonably requested by Novartis, including delivery of an electronic copy of the DiLA ² Data in a commonly usable format. Such disclosures shall include all MD RNA Know-How and any other data, information and documents known to and Controlled by MD RNA as of the Effective Date which may be necessary or useful to Novartis to practice the licenses granted hereunder efficiently.

3.2

Cooperation. Upon request by Novartis within a reasonable period after disclosure by MD RNA of the MD RNA Know-How and other data, information and documents pursuant to Section 3.1 of this Agreement, MD RNA will provide reasonable assistance to Novartis or its designated Affiliate in connection with understanding and using the MD RNA Know-How for purposes consistent with licenses and rights granted to Novartis hereunder; provided , that Novartis shall promptly pay or reimburse MD RNA for any travel or other out-of-pocket expenses incurred by MD RNA in connection with providing such assistance requested by Novartis.

4.	FINANCIAL PROVISIONS

4.1

Upfront Payment. In consideration of the licenses and rights granted to Novartis hereunder, Novartis shall pay to MD RNA a one-time upfront payment of Seven Million Two Hundred and Fifty Thousand Dollars ($7,250,000). Such upfront payment shall be paid in accordance with the instructions set forth Exhibit F within [***] Business Days after receipt by Novartis of an invoice in the form of Exhibit C , which invoice shall be issued no earlier than the Effective Date.

4.2

Third Party Obligations. MD RNA shall remain responsible for the payment of all royalty, milestone and other payment obligations, if any, due to Third Parties under any Patents or Know-How which have been licensed to MD RNA and are sublicensed to Novartis under this Agreement. All such payments shall be made promptly by MD RNA in accordance with the terms of its license agreement.

5.	PAYMENT TERMS

5.1

Payment Terms. All payments from Novartis to MD RNA shall be made by wire transfer to the credit of such bank account as may be designated by MD RNA in this Agreement or in writing to Novartis. Any payment which falls due on a date which is not a Business

Day in Cambridge, Massachusetts may be made on the next succeeding Business Day in Cambridge, Massachusetts.

5.2

Currency. All payments under this Agreement shall be payable in US dollars.

5.3

Taxes. MD RNA will pay any and all taxes levied on account of any payments made to it under this Agreement. If any taxes are required to be withheld by Novartis, Novartis will: (a) deduct such taxes from the payment made to MD RNA; (b) timely pay the taxes to the proper taxing authority; (c) send proof of payment to MD RNA; and (d) reasonably assist MD RNA in its efforts to obtain a credit for such tax payment. Each Party agrees to reasonably assist the other Party in lawfully claiming exemptions from and/or minimizing such deductions or withholdings under double taxation laws or similar circumstances.

6.	CONFIDENTIALITY

6.1

Duty of Confidence. Subject to the other provisions of this Section 6, all Confidential Information disclosed by a Party or its Affiliates under this Agreement will be maintained in confidence and otherwise safeguarded by the recipient Party. The recipient Party may only use the Confidential Information for the purposes of this Agreement and pursuant to the rights granted to the recipient Party under this Agreement. Subject to the other provisions of this Section 6, each Party shall hold as confidential such Confidential Information of the other Party or its Affiliates in the same manner and with the same protection as such recipient Party maintains its own confidential information. Subject to the other provisions of this Section 6, a recipient Party may only disclose Confidential Information of the other Party to employees, agents, contractors, consultants and advisers of the Party and its Affiliates and sublicensees and to Third Parties to the extent reasonably necessary for the purposes of, and for those matters undertaken pursuant to, this Agreement; provided , that such Persons are bound to maintain the confidentiality of the Confidential Information in a manner consistent with the confidentiality provisions of this Agreement.

6.2

Exceptions. The obligations under this Section 6 shall not apply to any information to the extent the recipient Party can demonstrate by competent evidence that such information:

(a)

is (at the time of disclosure) or becomes (after the time of disclosure) known to the public or part of the public domain through no breach of this Agreement by the recipient Party or its Affiliates;

(b)

was known to, or was otherwise in the possession of, the recipient Party or its Affiliates prior to the time of disclosure by the disclosing Party or any of its Affiliates;

(c)

is disclosed to the recipient Party or an Affiliate on a non-confidential basis by a Third Party who is entitled to disclose it without breaching any confidentiality obligation to the disclosing Party or any of its Affiliates; or

(d)

is independently developed by or on behalf of the recipient Party or its Affiliates, as evidenced by its written records, without reference to the Confidential Information disclosed by the disclosing Party or its Affiliates under this Agreement.

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the recipient Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the recipient Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the recipient Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the recipient Party unless the combination and its principles are in the public domain or in the possession of the recipient Party.

6.3

Authorized Disclosures.

(a)

In addition to disclosures allowed under Section 6.2, Novartis may disclose Confidential Information belonging to MD RNA or its Affiliates to the extent such disclosure is necessary in the following instances: (i) filing or prosecuting Patents as permitted by this Agreement; and (ii) in connection with Regulatory Filings for products. In addition, Novartis may disclose Confidential Information belonging to MD RNA or its Affiliates to the extent such disclosure is necessary in connection with prosecuting or defending litigation as permitted by this Agreement; provided , that Novartis (A) informs MD RNA as soon as reasonably practicable of the proposed disclosure; and (B) shall use commercially reasonable efforts (but in no event less than the efforts used by Novartis with respect to its own similar confidential information) to limit the disclosure for the required purpose and to obtain protections to maintain the confidentiality of such MDRNA Confidential Information.

(b)

In addition, Novartis and its Affiliates and sublicensees may disclose Confidential Information of MD RNA to Third Parties as may be necessary or useful in connection with the development, manufacture or commercialization of products and/or processes; provided , that such Third Parties are bound to maintain the confidentiality of such Confidential Information in a manner consistent with the confidentiality provisions of this Agreement.

(c)

In the event the recipient Party is required to disclose Confidential Information of the disclosing Party by law or in connection with bona fide legal process, such disclosure shall not be a breach of this Agreement; provided , that the recipient Party (i) informs the disclosing Party as soon as reasonably practicable of the required disclosure; (ii) limits the disclosure to the required purpose; and (iii) at the disclosing Party’s request and expense, assists in an attempt to object to or limit the required disclosure.

(d)

Notwithstanding anything to the contrary contained in this Article 6 or Article 11 of this Agreement, MD RNA shall be permitted to disclose a copy of this Agreement to (a) MD RNA’s current or prospective banks, financial institutions, investors or other Third Parties for the purpose of raising capital or borrowing money or maintaining compliance with agreements, arrangements and understandings relating thereto, and (b) to any Person who proposes to be an assignee or to purchase or otherwise succeed (by merger, operation of law or otherwise) to all of MD RNA’s right, title and interest in, to and under this Agreement, if (1) such Person agrees to maintain the confidentiality of this Agreement pursuant to a written agreement at least as protective as the terms set forth in this Article 6 (with the exception of the term of the obligation of confidentiality, which may be for a specified term of years) and (2) any such assignment, purchase or succession would be permitted under Section 12.1 hereof.

7.	EVENT OF DEFAULT

7.1

Event of Default. The rejection of this Agreement under section 365 of the Code by MD RNA shall constitute an event of default (an “Event of Default”) by MD RNA under this Agreement.

8.	TERM; RIGHTS IN BANKRUPTCY

8.1

Term. Subject to Section 8.2, the term of this Agreement (the “Term”) is perpetual and shall continue indefinitely following the Effective Date.

8.2

Termination for Event of Default. Novartis may terminate this Agreement immediately upon written notice to MD RNA upon the occurrence of an Event of Default.

8.3

Rights in Bankruptcy.

(a)

The Parties agree that this Agreement constitut

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