License Agreement

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Exhibit 10.68

License Agreement

         This License Agreement (the "Agreement") is entered into and made effective as of March 29, 2002 (the "Effective Date"), between InterMune, Inc ., ("InterMune"); Marnac, Inc. , ("Marnac"); KDL, Inc. and KDL GmBH (collectively, "KDL"); Dr. Solomon Margolin ("Margolin"); and DR. Shitotomo Yamauchi ("Yamauchi"). Each party to this agreement may be referred to herein each as a "Party" and all parties may be referred to jointly as the "Parties."

Recitals

         Whereas, InterMune is involved in the research, development and commercialization of products potentially useful in the prevention, mitigation and treatment of fibrotic and other diseases;

         Whereas, Marnac and KDL hold all ownership rights in that certain U.S. Patent No. [*]; and corresponding foreign patents, including any and all divisions, re-issues, continuations and substitutes in whole or in part of such patents in the Territory (as defined below) with respect to [*] and directly related Information; and

         Whereas , InterMune desires to obtain from Marnac and KDL, and Marnac and KDL desire to grant to InterMune, the exclusive, [*] in the Territory for [*] of Licensed Product.

         Now, therefore, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

1.     Definitions

         1.1    "Acceptance"     as used in this Agreement, shall mean acceptance by the appropriate governing authority as being filed in correct form, rather than as signifying regulatory approval.

         1.2    "Affiliate"     means any company or entity controlled by, controlling or under common control with a Party. As used in this Section 1.1, "control" means (a) that an entity or company owns, directly or indirectly, more than fifty percent (50%) of the voting stock of another entity, or (b) that an entity, person or group has the actual ability to control and direct the management of the entity, whether by contract or otherwise.

         1.3    "Best Efforts"     means every necessary and prudent effort of a Party applied in a prompt, commercially reasonable manner.

         1.4    "Commercially Reasonable Business Practice"     means making efforts and devoting resources that a similarly situated biopharmaceutical company would typically devote to a product of similar market potential, profit potential or strategic value, based on conditions then prevailing.

         1.5    "Information"     means information, results and data of any type whatsoever, in any tangible or intangible form, including without limitation inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, trade secrets, test data (including pharmacological, biological, chemical, biochemical, toxicological and clinical test data), analytical and quality control data, stability data, studies and procedures, all filings made to Regulatory Agencies, and patent and other legal information or descriptions, and all intellectual property rights therein, all limited to the anti-fibrotic application of Pirfenidone.

         1.6    "First Sale"     means the first commercial sale of Licensed Product .

         1.7    "IND"     shall have the meaning given in Section 6.2.

         1.8    "Licensed Patents"     means [*] the Territory, including any and all divisions, re-issues, re-examinations, renewals, continuations and substitutes in whole or in part of such patents and patent applications in the Territory with respect to [*] and all Patents (as defined in 1.13). The Licensed Patents shall specifically [*]

[*]CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         1.9    "Licensed Product"     means a product that [*] for the therapeutic treatment of [*] which product has [*] for the therapeutic treatment of [*] by the [*] through the [*]

         1.10    "Net Sales"     means, with respect to any Licensed Product, [*]

         (a)    [*]

         (b)    [*]

         (c)    [*]

         (d)    [*]

         (e)    [*]

         (f)     [*]

        A sale of a Licensed Product shall be deemed to occur upon [*]

         1.11    "Ongoing Clinical Trials"     shall have the meaning given in Section 6.2.

         1.12    "Orphan Drug Status"     is an exclusive approval to market a therapeutic for the treatment of a human fibrotic disease based upon orphan drug status under the Orphan Drug Act of 1983 in the United States (Pub.L. 97-414, Jan.4, 1983, 96 Stat. 2049) or any corresponding or similar non-U.S. statutes, granted by the U.S. Food and Drug Administration ("FDA"), the Committee on Proprietary Medicinal Products ("CPMP") or other Regulatory Agencies in the Territory to InterMune for the anti-fibrotic uses of Pirfenidone for such disease.

         1.13    "Patents"     means all of Marnac's, KDL's, Margolin's and Yamauchi's (a) [*] patent applications heretofore or hereafter filed or having legal force in any country including without limitation divisionals, continuations, continuation-in-part and provisional applications; (b) issued, unexpired [*] patents in any country, including utility, model and design patents and certificates of invention; and (c) substitutions, extensions, reissues, renewals, and supplementary protection certificates with respect to any such issued patents. For clarity, such patent applications and patents shall include those owned, as well as those controlled with the right to grant licenses, by any of Marnac, KDL, Margolin and Yamauchi. The Patents shall [*]

         1.14    "Permitted Seller"     means InterMune and its Affiliates and any permitted assignee, licensee or sublicensee having the right to sell Product hereunder.

         1.15    "Pirfenidone"     shall mean [*]

         1.16    "Regulatory Agencies"     means the FDA, the CPMP, and other governmental agencies having similar jurisdiction over the development, manufacturing, and marketing of pharmaceuticals.

         1.17    "Territory"     means worldwide (excluding Japan, Taiwan and Korea).

         1.18    "Third Party"     means any party other than InterMune and Marnac and their respective Affiliates, and other than KDL, Margolin and Yamauchi.

         1.19    "Valid Claim"     means a claim of an issued and unexpired Licensed Patent in a country which claim: (i) but for this Agreement, would preclude the sale of [*] by InterMune or another seller, (ii) has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and (iii) has not been abandoned, disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

2.     Grant of License

         2.1    Grant to InterMune.     Subject to Section 2.2, Marnac and KDL hereby grant to InterMune an exclusive [*] license in the Territory under the Licensed Patents and Information for [*] Licensed Products.

[*]CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         2.2    Research and Clinical Development.     [*] may conduct [*] relating to the [*] but shall not, under any conditions, [*] relating to the [*] the prior written consent of [*]

3.     Consideration

         3.1    Initial Payment.     Within five (5) business days after the Effective Date, InterMune shall pay to Marnac Eighteen Million Seven Hundred and Fifty Thousand Dollars ($18,750,000) in cash.

         3.2    Milestone Payments.     InterMune shall make the following milestone payments to Marnac, within [*] days of achieving these milestones:

         (a)    [*]

         (b)    [*]

         (c)    [*]

         (d)    [*] and

         (e)    [*]

[*]

3.3   Royalties.

         (a)    InterMune shall pay to Marnac a royalty of [*] on Net Sales of all Licensed Products in the Territory calculated by U.S. generally accepted accounting principles ("GAAP").

         (b)    If InterMune [*] InterMune shall pay a royalty to Marnac at the rate of [*] of Net Sales on such sales for the [*] in such country.

         (c)    InterMune's obligations pursuant to this Section 3.3 to pay royalties shall expire with respect to Net Sales for Licensed Products approved for particular indications with the expiration of this Agreement with respect thereto as set forth in Section 10.1.

         3.4    Payments to Marnac and KDL.     With respect to any dollar amounts that InterMune is required to pay in dollars hereunder pursuant to Section 3.1, 3.2 or 3.3, InterMune shall make such payment [*] notifies InterMune no later than [*] business days before such payment is due in writing as to whom InterMune must pay. If [*] business days before any such payment is due hereunder, then InterMune shall [*]

         3.5    Payment of Royalties.     Following the First Sale of a Licensed Product and during the term of the Agreement, InterMune shall furnish to Marnac a quarterly written report for each calendar quarter showing the sales of all Licensed Products subject to royalty payments hereunder during the reporting period and the royalties payable under this Agreement. Reports shall be due within [*] days following the close of each calendar quarter. Royalties that have accrued in a particular calendar quarter shall be due and payable on the date such royalty report is due. InterMune shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined.

[*]CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         3.6    Records and Audit.     InterMune shall maintain the records used to calculate all royalties payable under Section 3.3(a) and 3.3(b), including, without limitation, all records which support the calculation of each component of the equation for Net Sales. Such records shall be maintained for at least [*] years following the end of the calendar year to which they pertain. Such records will be open for audit during such [*] period by an independent certified public accountant selected by Marnac and KDL and reasonably acceptable to InterMune for the purpose of verifying InterMune's royalty and Net Sales calculations. Such audits may be made no more than once each calendar year, at reasonable times mutually agreed by InterMune, Marnac and KDL. Marnac and KDL shall bear the costs and expenses of audits conducted under this Section 3.6 unless a variation or error producing an underpayment in royalties payable exceeding [*] of the amount payable for the time period inspected is established in the course of any such audit, whereupon all costs relating to the audit and any unpaid amounts that are discovered will be paid by InterMune, together with interest on such unpaid amounts equal to the lesser of [*] per year, or the maximum rate permitted by law. Should the inspection prove overpayment by InterMune, such overpayment shall be deducted from the next royalty or other payment due from InterMune hereunder, without any interest due by Marnac and KDL. If [*] then the Parties agree that [*]

        All information obtained during and resulting from such audits conducted according to this Section 3.6 are hereby deemed Confidential Information as such term is defined in Section 8.1 and shall be kept confidential pursuant to Section 8.1.

         3.6    Income Tax Withholding.     If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Section 3, InterMune shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Section 3. InterMune shall submit appropriate proof of payment of the withholding taxes to Marnac or KDL, as appropriate, within a reasonable period of time.

4.     Manufacturing and Supply.

         4.1    [*].     Marnac shall [*] including but not limited to the [*] associated with the [*] Marnac shall [*] InterMune. InterMune shall be responsible for [*] or such other [*]

         4.2    [*] Supply.     

         (a)    [*] of Licensed Product [*] in accordance with [*] that as of the [*] to which InterMune [*] adequate to permit [*] conducting such [*] for which [*] days of receipt of such [*] shall provide to [*] of Licensed Product, [*] of Licensed Product. [*] the Effective Date.

         (b)    [*] agrees to [*] to use to [*] and other [*] of such quantities [*] Licensed Product or [*] InterMune agrees to [*]

         (c)    [*] shall provide to [*]

5.     InterMune Development and Commercialization Obligations.

         5.1    [*].     InterMune shall [*]

         5.2    Development and Commercialization.     

         (a)    InterMune shall, [*] assuming that the [*] to support the [*] In the event that [*] is sufficiently [*] and InterMune [*] InterMune will [*] set forth in Sections [*]

         (b)    InterMune shall also, [*] In the event that [*] InterMune will [*] set forth in Sections [*]

         (c)    For purposes of Sections [*] in the context of those paragraphs.

[*]CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

6.     Marnac and Margolin Obligations

         6.1    Information.     Marnac and Margolin shall deliver to InterMune, within [*] Information in Marnac's or in Margolin's possession, including but not limited to: a list of Licensed Patents; any Information relating to the Licensed Patents, the [*] of Licensed Product; provided that, if Marnac or Margolin [*] of the Information and shall [*] for InterMune. InterMune acknowledges that the [*] that they have [*] With respect to such [*] the Parties agree that [*] shall not be required to [*] shall reasonably cooperate with [*] to the extent reasonably requested by [*] in relation to any [*]

         6.2    [*]     

         (a)    [*] Exhibit B contains [*] relating to [*] having a similar [*] of the Territory [*] with their cooperation [*] as of the [*] and (ii) all [*] for any [*] pursuant to the [*] as of the [*] after the [*] shall make [*] as to any [*] having a similar [*] of the Territory for the [*] and any [*] relating to such [*] in the Territory, and [*] During the period commencing on [*] and ending [*] thereafter, [*] shall provide: (i) [*] to any of the [*] (which relate to [*]) as may be reasonably [*] relating to [*] and/or to [*]; (ii) [*]; (iii) [*] upon reasonable advance notice, to [*]; and (iv) [*] in other aspects of [*] of Licensed Product. Such [*] shall include, without limitation, that [*] with each [*] that InterMune requests to [*] which shall include [*] if required for [*]

         (b)    [*] shall be entitled, to [*] in connection with [*] (which are for [*]). [*] shall be responsible for [*] in connection with the [*] to the extent that [*] from any such [*] from and after the [*] In the event that [*] with any particular [*] for which [*] resulting from such [*] With respect to the [*] from any [*] in such [*] (other than to the extent [*]) prior to [*]

         6.3    [*].     [*] prior written consent, which consent shall not be unreasonably withheld, for any [*] relating to the [*] The Parties recognize that for the [*] that are [*] of the Effective Date, and certain [*] of the Effective Date (collectively, such [*] pursuant to [*] regarding the [*] To the extent that [*] relating to any [*] the right to [*] to exercise such right in accordance with [*] The Parties recognize the [*] of one or more of [*] regarding an [*] to this arrangement, subject only to [*] with respect to such [*] as set forth in this Section 6.2. [*] as Exhibit C to this Agreement is a [*] as defined above in this Section 6.3.

         6.4    [*].     The Parties recognize that a [*] shall provide [*] shall continue to [*] on the same basis the basis upon which [*] provided that [*] as warranted by [*] shall have the right in its sole discretion to [*] in the future shall be [*] to InterMune.

7.     Intellectual Property Matters; Patents.

         7.1    Ownership.     InterMune shall solely own any Information invented or developed in connection with any Licensed Product and all intellectual property rights therein, including without limitation any patents claiming such Information.

         7.2    Control and Prosecution.     InterMune shall be responsible for and control all patent filings, and prosecute and maintain any patents, divisions, continuations with respect to the Licensed Patents in the Territory; provided, however, that InterMune shall provide Marnac with prior notice and opportunity to review and comment on any action taken by InterMune in controlling such Licensed Patents. Marnac and KDL on the one hand, and InterMune on the other hand, shall [*] Marnac and KDL shall be [*]

         7.3    Cooperation.     Each Party agrees to cooperate with the other and take all reasonable additional actions as may be reasonably required to achieve the intent of this Section 7, including, without limitation, the execution of necessary and appropriate instruments and documents.

[*]CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         7.4    Infringement of Third Party Patents.     In the event that a Third Party files an action against a Party alleging that such Party's activities under this Agreement infringe such Third Party's patent rights, such Party shall give written notice to the other Party, and the Parties will consult and cooperate on the best course of action. The Party that was sued shall have the right to defend itself against such action, and the other Party shall provide all reasonable assistance in such defense.

         7.5    Infringement of Licensed Patents.     If any Party becomes aware that a Third Party is infringing any rights in the Licensed Patents, such Party shall give written notice to the other Party describing in detail the nature of such infringement. InterMune shall have the initial right to enforce the Licensed Patents against such Third Party infringer. Marnac and KDL agree to provide InterMune all reasonable assistance, [*] in such enforcement, including without limitation being joined as a party to the suit where appropriate. In the event that InterMune fails to institute an infringement suit or take other reasonable action in response to such infringement within [*] after its receipt of notice of such infringement, Marnac shall have the right, but not the obligation, to institute such suit or take other appropriate