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Exhibit 10.1
CONFIDENTIAL TREATMENT REQUESTED. Confidential portions of this
document have been redacted and have been separately filed with the
Commission.
SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT (the
“Agreement”), effective as of this 26th day of
September, 2007 (the “Effective Date”), by and between
KERYX BIOPHARMACEUTICALS, INC., with offices at 750 Lexington
Avenue, New York, NY 10022, U.S.A. (“Keryx” or
“Sublicensor”) and JAPAN TOBACCO INC., with offices
at JT
Building, 2-1, Toranomon 2-Chome, Minato-ku, Tokyo 105-8422,
Japan (“JT”)
and TORII PHARMACEUTICAL CO., LTD., with
offices at Torii
Nihonbashi Bldg., 4-1, Nihonbashi-Honcho 3-chome, Chuo-ku, Tokyo
103-8439, Japan
(“TORII”)
(JT and TORII collectively referred to herein as
“Sublicensee”);
WHEREAS ,
Sublicensor acquired an exclusive license under the Patent Rights
and Know-How to sublicense, develop, have developed, make, have
made, use, have used, offer to sell, sell, have sold, import and
export the Product in the Sublicense Territory for all Indications
in the Field (all capitalized terms as hereinafter defined)
pursuant to (i) a License Agreement, dated as of November 7, 2005
(the "Panion License Agreement") by and between Sublicensor and
Panion & BF Biotech, Inc. (“Panion”) which, in
turn, is based upon a Patent License Agreement, dated July 20, 2001
as amended pursuant to Amendment No. 1 thereto dated as of August
29, 2005 (the "Hsu License Agreement") between Dr. Chen Hsing Hsu
("Dr. Hsu") and Panion and (ii) an Exclusive License Agreement,
dated as of November 7, 2005 (the "GloboAsia License Agreement") by
and between Panion and GloboAsia, LLC
(“GloboAsia”);
WHEREAS ,
Sublicensee is interested in acquiring an exclusive sublicense
to the
Compound and Product
for all Indications in the Field in the Sublicense
Territory;
WHEREAS ,
Sublicensor has the authority and is willing to grant such a
sublicense to Sublicensee and Sublicensee is willing to accept such
sublicense from Sublicensor, under the terms and conditions set
forth in this Agreement.
NOW THEREFORE ,
in consideration of the mutual promises and covenants set forth
herein and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as
follows:
*****Confidential
Material redacted and filed separately with the
Commission.
ARTICLE
1. DEFINITIONS
As
used in this Agreement, the following terms, whether used in
the singular or the plural, shall have the following
meanings:
1.1
"Affiliate"
means any corporation or non-corporate business entity, which
controls, is controlled by, or is under common control with a
party to this Agreement. A corporation or non-corporate
business entity shall be regarded as in control of another
corporation if it owns or directly or indirectly controls at
least fifty-one percent (51%) of the voting stock of the other
corporation, or (i) in the absence of the ownership of at
least fifty-one percent (51%) of the voting stock of a
corporation, or (ii) in the case of a non-corporate business
entity, if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies
of the corporation or non-corporate business entity, as
applicable .
Notwithstanding the foregoing, the Government of Japan and
other entities controlled by the Government of Japan (other
than through Japan Tobacco Inc.) are not considered Affiliates
of Sublicensee .
1.2
“Combination
Product” means a Product containing one or more
therapeutically active ingredients in addition to the
Compound.
1.3
"Compound"
means ferric citrate: FeC
6 H
5 O
7 •
xH
2 O
1.4
*****
1.5
“Field”
means the field of nephrology.
1.6
“Follow-on
Product” means products, other than the Product, which
contain ferric ion as an
active
pharmaceutical ingredient for use in the Field, either alone,
or in combination with one or more therapeutically active
ingredients .
1.7
“Improvements”
means any and all improvements, materials, technical data and
information whether patented or unpatented, including but not
limited to any changes to, or new therapeutic applications
for, the Compound ,
the Product or in the Sublicensor Know-How or Sublicensee
Know-How including, but not limited to any analogues, or
derivatives of the Compound, and changes in the manufacturing
process for the Compound or the Product which are conceived or
reduced to practice during the term of this
Agreement.
1.8
"Indication"
means any therapeutic application for a Product (i) for the
treatment of hyperphosphatemia in end-stage renal disease, and
(ii) for all other indications covered by the Patent
Rights.
1.9
“Initiation”
means the administration of the first dose to the first
patient in a clinical trial.
1.10
"Net
Sales" with respect to any Product means the gross sales (i.e.
gross invoice prices) of such Product billed by Sublicensee
and its sublicensees ,
if any, to
Third Party customers on all sales of a Product, and exclusive
of inter-company transfer or sales, less the reasonable and
customary deductions from such gross sales,
including:
(a)
actual credited allowances to such Third Party customers for
spoiled, damaged, outdated and returned Product and for
retroactive price reductions,
(b)
the amounts of trade, cash discounts and rebates, to the
extent such discounts and rebates were not deducted by
Sublicensee at the time of invoice in order to arrive at the
gross invoice prices,
(c)
all transportation, handling charges and freight insurance,
sales taxes, excise taxes, use taxes or import/export duties
paid, and
(d)
all other reasonable and customary allowances and adjustments
actually credited to customers whether during the specific
royalty period or not.
In
the event that the Product(s) is sold as part of a Combination
Product, the Net Sales of the Product(s), for the purposes of
determining royalty payments, shall be determined by
multiplying the Net Sales of Combination Product (as defined
in the standard Net Sales definition) by the fraction, A /
(A+B) where A is the weighted average sale price of the
Product(s) when sold separately in finished form (as defined
below), and B is the weighted average sale price of the other
product(s) sold in the Sublicense Territory separately in
finished form.
In
the event that the weighted average sale price of the
Product(s) can be determined but the weighted average sale
price of the other product(s) in the Sublicense Territory
cannot be determined, Net Sales for purposes of determining
royalty payments shall be calculated by multiplying the Net
Sales of the Combination Product by the fraction A / C where A
is the weighted average sale price of the Product(s) when sold
separately in finished form and C is the weighted average
selling price of the Combination Product.
In
the event that the weighted average sale price of the other
product(s) in the Sublicense Territory can be determined but
the weighted average sale price of the Product cannot be
determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of
the Combination Product by the following formula: 1 - (B/C)
where B is the weighted average sale price of the other
product(s) when sold separately in finished form and C is the
weighted average selling price of the Combination
Product.
In
the event that the weighted sale price of both the Product(s)
and the other product(s) in the Combination Product in the
Sublicense Territory cannot be determined, the Parties will
attempt to agree on an appropriate weighted average sale price
of both the Product(s) and the other product(s) in the
Combination Product, and lacking such agreement the Net Sales
of the Product(s) shall be deemed equal to fifty percent (50%)
of the Net Sales of the Combination Product.
By
way of example, the parties assume a Combination product
“C” consisting of the Product “A” and
the other product “B.” When the weighted average
sale prices in the Sublicense Territory of A, B and C are 50,
40 and 90, respectively, the parties agree that the fraction
to be used for Net Sales calculation for determining royalty
payments shall become as follows:
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i)
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in
case the “50” and ”40” are known,
50/(50+40), i.e., 5/9;
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ii)
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in
case the “40” is unknown but “90” is known,
50/90, i.e., 5/9;
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iii)
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in
case the “50” is unknown but “90” is known,
1-40/90, i.e., 5/9; and
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iv)
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in
case none of those is known, 1/2 unless otherwise agreed between
the parties.
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The
weighted average sale price for a Product, other product(s),
or Combination Product shall be calculated once each calendar
year and such price shall be used during all applicable
royalty reporting periods for the entire calendar year. When
determining the weighted average sale price of a Product,
other product(s), or Combination Product, the weighted average
sale price shall be calculated by dividing the sales dollars
(translated into U.S. Dollars) by the daily dose units of
active ingredient sold during the twelve (12) months (or the
number of months sold in a partial calendar year) for the
respective Product(s), other product(s), or Combination
Product. In the initial calendar year, a forecasted weighted
average sale price will be used for Product(s), other
product(s), or Combination Product. Any over or under payment
due to a difference between forecasted and actual weighted
average sale prices will be paid or credited in the first
royalty payment of the following calendar year.
The
Parties acknowledge that the foregoing determination for Net
Sales of Combination Products may not be the same as the
determination for Net Sales of Combination Products to be
agreed upon between Sublicensor and Panion in accordance with
the Panion License Agreement. Sublicensor agrees to use its
commercially reasonable efforts to obtain Panion’s
agreement to adopt the terms of this Section 1.10 to calculate
Net Sales of Combination Products and will keep Sublicensee
informed of ongoing negotiations concerning the provisions for
Combination Products with Panion. In the event Sublicensor and
Panion agree upon a different determination, Sublicensor shall
immediately seek Sublicensee’s consent to amend this
Section 1.10 to match such determination, which consent shall
not be unreasonably withheld or delayed.
The
sale of a Product solely for the research or clinical testing
of such Product shall be excluded from the computation of Net
Sales of such Product, provided that Sublicensee's sale of the
Product was at cost, and such Product was used for research or
clinical testing.
1.11
"Patent
Rights" means the patents
and patent applications set forth in
Exhibit 1 (which
shall be updated from time to time by Sublicensor), patents and
patent applications in which Sublicensor holds rights and which are
directed to Sublicensor’s interest in Improvements, and any
and all patents in which Sublicensor holds rights and that may
issue from all such patent
applications, including any and all divisions, continuations,
continuations-in-part, extensions, substitutions, renewals,
registrations, supplementary protection certificates,
revalidations, reissues or additions of or to any of the aforesaid
patents and patent applications, and any additional patents or
patent applications to which Sublicensor acquires rights
,
including rights to license, during
the term of this Agreement which pertain in any way to the use or
manufacture of the Compound or the Product.
1.12
"Product"
means any
pharmaceutical products
that contain the Compound as a therapeutically
active
ingredient
either
alone or in combination with other active ingredients
in
any formulation or presentation .
1.13
“Proprietary
Information” means all information, including without
limitation all Sublicensee Know-How, Sublicensor
Know-How, Sublicensee
Development Data, Sublicensor Development Data
and
all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether
communicated in writing, orally or electronically which is
provided by one party to the other party in connection with
this Agreement.
1.14
"Registration"
in relation to any Product means such approvals by a
Regulatory Authority in a country or community or association
of countries as may be legally required before such Product
may be commercialized in such country or community or
association of countries.
1.15
“Regulatory
Authority” means the Ministry
of Health, Labor and Welfare of Japan (hereinafter referred to
as the “MHLW”) and any other applicable
regulatory
authority in the
Sublicense Territory involved in granting regulatory approval
for the Product.
1.16
“Sublicense
Territory” means Japan.
1.17
“Sublicensee
Development Data” means and includes all data relating
to the Compound or the Product and all chemistry,
manufacturing and control data relating to the development and
manufacture of the Compound or the Product, results of
pre-clinical and clinical studies and all other documentation
containing or embodying any pre-clinical, clinical, chemistry,
manufacturing and control data relating to any application for
Registrations for a Product, including,
but not limited to, documents submitted to the Regulatory
Authority, which
is generated or acquired by Sublicensee during the term of
this Agreement.
1.18
“Sublicensee
Know-How” means all information and materials, including
but not limited to, discoveries, processes, instructions,
formulas, data, inventions, know-how and trade secrets,
patentable or otherwise, which arise out of the development,
manufacture and commercialization by Sublicensee of the
Compound or the Product, including, without limitation,
Sublicensee
Development Data and all
biological, chemical, pharmacological, toxicological,
pharmaceutical, physical, analytical, clinical, safety,
manufacturing and quality control data and information related
thereto, and all applications, registrations, licenses
authorizations, documents, approvals and correspondence
relating to the Compound or the Product, including without
limitation, correspondence submitted to Regulatory
Authorities, and all information and data contained in
Registrations. Sublicensee Know-How shall also include
Sublicensee’s interest in Improvements.
1.19
“Sublicensor
Development Data” means and includes all data to which
Sublicensor has rights relating to the Compound or the Product
and all chemistry, manufacturing and control data relating to
the development and manufacture of the Compound or the
Product, results of pre-clinical and clinical studies and all
other documentation containing or embodying any pre-clinical,
clinical, chemistry, manufacturing and control data relating
to any application for Registrations for the Product,
including,
but not limited to, documents submitted to the regulatory
authorities outside the Sublicense Territory,
whether
such Sublicensor Development Data is in existence as of the
Effective Date or is generated or acquired by Sublicensor
during the term of this Agreement.
1.20
"Sublicensor
Know-How” means all information and materials to which
Sublicensor has rights, including but not limited to,
discoveries, processes, formulas, instructions, data,
inventions, know-how and trade secrets, patentable or
otherwise, in each case, which as of the Effective Date and
during the term of this Agreement are necessary or useful to
Sublicensee in connection with the development, registration,
manufacture, marketing, use or sale of a Product. Sublicensor
Know-How shall also include without limitation,
Sublicensor
Development Data and all
biological, chemical, pharmacological, toxicological,
pharmaceutical, physical, analytical, clinical, safety,
manufacturing and quality control data and information related
thereto, and all applications, registrations, licenses,
authorizations, documents, approvals and correspondence
relating to a Compound
or a Product. Sublicensor Know-How shall also include
Sublicensor’s interest in Improvements.
1.21
"Third
Party" means any entity other than Sublicensor or Sublicensee
or their respective Affiliates.
1.22
"Valid
Claim" means a claim of an issued and unexpired patent
included within the Patent Rights which has not been held
unenforceable or invalid in the applicable jurisdiction by a
decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be
invalid or unenforceable through dedication, disclaimer or
otherwise.
ARTICLE
2. REPRESENTATIONS AND WARRANTIES
2.1
Mutual .
Each party represents and warrants to the other party that it has
the full right and authority to enter into this Agreement, and
that, to the best of its knowledge, there are no prior agreements,
commitments or other obstacles which could prevent it from carrying
out all of its obligations hereunder.
2.2
Sublicensor .
Sublicensor represents to Sublicensee that as of the date
hereof:
(a)
it
is the exclusive licensee in the Sublicense Territory of the
entire right, title and interest in and to the Patent Rights,
and to the best of its knowledge, there are no charges,
encumbrances, licenses, options, restrictions, liens, rights
of others, disputes, proceedings or claims relating to,
affecting, or limiting its rights or the rights of Sublicensee
under this Agreement other than those included in provisions
of the Panion License Agreement, the Hsu License Agreement and
the GloboAsia License Agreement that have been previously
disclosed to Sublicensee;
(b)
it
has the right ,
to
enter into this Agreement and to grant the sublicense granted
herein, and
there
is nothi ng
in any Third Party agreement Sublicensor has directly or
indirectly entered into as of the Effective Date, which in any
way, will limit the ability of Sublicensor to perform any and
all of the obligations undertaken by Sublicensor hereunder
other than the provisions of the Panion
License
Agreement ,
the Hsu License Agreement and
the GloboAsia
License Agreement that
have been previously disclosed to Sublicensee;
(
c
)
there
is
no
claim,
pending
or
threatened, of
infringement ,
interference or invalidity regarding any part or all of the
Patent Rights and their use as contemplated in this Agreement,
and it has no present knowledge from which it can be inferred
that the Patent Rights are invalid or that their exercise
would infringe the patent rights of any Third Party
;
(
d
)
it
is a party to the Panion License Agreement, under which it
acquired an exclusive license under the Patent Rights and
Licensor Know-How (as defined in the Panion License Agreement)
to sublicense, develop, have developed, make, have made, use,
have used, offer to sell, sell, have sold and import and
export the Product in the Sublicense Territory for all
Indications in the Field and that the
Panion License Agreement remains valid and in effect and has
not been amended nor has any provision thereof been waived and
to its knowledge the Hsu License Agreement and GloboAsia
License Agreement remain valid and in effect and have not been
amended;
(
e
)
there
are no other patents owned or licensed by Sublicensor or its
Affiliates, other than the Patent Rights, that would impair
Sublicensee’s ability to exercise its rights under this
Sublicense Agreement and, to its knowledge, there are no other
patents owned or licensed by Third Parties that would impair
Sublicensee’s ability to exercise its rights under this
Sublicense Agreement;
(
f
)
it
will not enter into any agreement after the Effective Date
which will limit its ability to perform any and all of the
obligations undertaken by Sublicensor hereunder
;
(g)
neither
this Agreement, nor, to its knowledge, any document or piece
of Sublicensor Development Data, Sublicensor Know-How or
Patent Rights contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make
the statements contained herein or therein misleading;
and
(h)
to
its knowledge, the Patent Rights, including, but not limited
to, U.S. Patent No. 5,753,706 are valid and free from any lien
or encumbrances.
2.3
Sublicensee .
Sublicensee represents to Sublicensor that as of the date
hereof:
(a)
it
has the right to enter into this Agreement and to its
knowledge, ther
e
is nothing in any Third Party agreement Sublicensee
has
entered into as of the Effective Date, which in any way, will
limit the ability of Sublicensee
to perform any and all of the obligations undertaken by
Sublicensee hereunder, and
(b)
neither
this Agreement, nor, to its knowledge, any document provided
to Sublicensor in connection with the Agreement as of the
Effective Date contains any untrue statement of a material
fact or omits to state a material fact necessary in order to
make the statements contained herein or therein misleading;
and
(c)
it
will not enter into any agreement after the Effective Date
which will limit its ability to perform any and all of the
obligations undertaken by Sublicensee hereunder.
ARTICLE
3. LICENSE GRANT AND GOVERNANCE
3.1
Grant .
Subject to the terms and conditions of this Agreement, Sublicensor
hereby grants to Sublicensee an exclusive sublicense
,
with the right to further sublicense to its Affiliates,
to
develop, have developed, make, have made, use, have used, offer to
sell, sell, have sold, and import and export the Product or the
Compound in the Sublicense Territory and
to make, manufacture, have made and have manufactured outside the
Sublicense Territory under
the Sublicensor Know-How, and the Patent Rights for all Indications
in the Field.
3.2
Sublicensing .
Sublicensee
shall
be entitled to sublicense to third parties the right to manufacture
the Product or the Compound, provided such third party
manufacturers are permitted to sell only to Sublicensee or their
Affiliates. Except as expressly permitted under Sections 3.1 and
3.2, Sublicensee may not grant further sublicenses under this
Agreement without the written consent of Sublicensor,
which consent shall not be unreasonably withheld or delayed. For
the avoidance of doubt, Sublicensor and Sublicensee agree that this
Section does not apply to Third Party distributors and that
Sublicensee may contract with Third Party distributors without the
written consent of Sublicensor.
3.3
Retained Rights .
The grant of licenses under Section 3.1 shall not preclude
Sublicensor from utilizing the Patent Rights and Sublicensor
Know-How, and any Improvements related thereto, for the purpose of
carrying out development and commercialization activities relating
to the Product in connection with Sublicensor’s rights
outside of the Sublicense Territory, p
rovided,
however, that Sublicensor shall not sell and shall cause its
Affiliates and its sublicensees not to sell Compound or Product to
customers outside the Sublicense Territory which Sublicensor, its
Affiliate or its sublicensee knows, or has reason to know, plan to
resell for use in the Sublicense Territory. In
addition, Sublicensor will not conduct clinical trials of the
Compound or Product in the Sublicense Territory except upon the
prior written consent of Sublicensee.
3.4
Sublicense Territory .
Other than as permitted by this Article 3, Sublicensee shall not
develop, manufacture, sell, use, offer for sale or import any
Product or Compound outside of the Sublicense Territory, without
the prior written consent of Sublicensor, which Sublicensor
may
grant or withhold in its sole discretion. Sublicensee
shall not sell and shall cause its Affiliates and its sublicensees
not to sell Compound or Product to customers in the Sublicense
Territory which Sublicensee, its Affiliate or its sublicensee
knows, or has reason to know, plan to resell for use outside the
Sublicense Territory.
3.5
Territories without Patent Protection .
Nothing
in this Agreement precludes Sublicensee from developing,
manufacturing, selling, using, offering for sale or importing
Product in territories where Patent Rights do not exist or have
already expired in their entirety. Notwithstanding
the foregoing, Sublicensee shall not be entitled to use Proprietary
Information solely owned by Sublicensor outside of the Sublicense
Territory other than to make, manufacture, have made or have
manufactured the Product outside the Sublicense Territory for sale
within the Sublicense Territory.
3.6
Joint Steering Committee .
To coordinate the activities under this Agreement, the parties will
form a Joint Steering Committee (the “JSC”). The JSC
will meet on a schedule to be determined by parties, but not less
than twice yearly, and will be responsible for generally sharing
information regarding the activities of the parties and shall
include, without limitation, (a) review
of
non-clinical and toxicology programs to maximize the potential for
use in multiple territories, (b) periodic updates on the status of
the clinical development program and sharing of pharmacovigilance
information, (c) review of marketing plans and sales forecasts and
the coordination of activities at international conferences,
(d) coordination
of marketing activities that have an international component,
including medical education and promotion, and (e)
determining
cost allocation for joint activities .
Sublicensor
and Sublicensee shall each appoint one of its members as a JSC
co-chair (“JSC Co-Chair”). Sublicensor’s JSC
Co-Chair shall be chairperson of all the JSC meetings. The JSC
Co-Chairs shall be jointly responsible for preparing the
meeting agenda, and Sublicensor’s JSC Co-Chair shall be
responsible for preparing the first draft of the minutes from
such meeting. JSC meeting minutes shall be distributed in
draft form to the members of the JSC not later than thirty
(30) days following each JSC meeting, and shall be deemed
accepted and effective unless the other Party’s JSC
Co-Chair has objected to the same in writing within thirty
(30) days of its receipt of such minutes. Final minutes of
each JSC meeting shall be promptly distributed to the Parties.
Each Party shall bear its own personnel and travel costs and
expenses relating to JSC meetings.
3.7
Joint Development Team .
The parties will form a Joint Development Team (the
“JDT”). The JDT will meet
on a schedule to be determined by the parties but not less than
twice yearly and will be responsible for facilitating the exchange
of preclinical data, clinical data, information, materials and
results between Sublicensor and Sublicensee and for consulting on
the regulatory development of Product in the Sublicense Territory,
including regulatory filings relating to manufacture of Product for
the Sublicense
Territory
and consultation as to changes in
specifications
or other changes for Product in the Sublicense
Territory.
3.8
Alliance Managers .
Each Party shall designate one (1) alliance manager (the
“Alliance Manager”). One of the JSC Co-Chairs or JDT
Co-Chairs may also serve as the Alliance Manager of the Party. The
Alliance Managers will manage and oversee operational activities in
connection with this Agreement, and will serve as the contact
persons concerning on-going operations under this Agreement. The
Alliance Managers shall promote effective communication between the
Parties and coordination of the Parties’ activities and
responsibilities in furtherance of the development and
commercialization of Product in the Field in the Sublicense
Territory.
3.9
Committee Decision and Dispute Resolution .
Sublicensee shall be solely responsible for making final decisions
arising out of the JSC, JDT or such other committee(s) as may be
established (“Other Committee(s)”). Notwithstanding the
foregoing, in the event that Sublicensor has a commercially
reasonable belief that action to be taken by Sublicensee is
reasonably likely to have a material adverse impact on its
activities, or the activities of its sublicensees, outside the
Sublicense Territory, Sublicensor shall notify Sublicensee of such
belief. In case Sublicensee disagrees with such belief by
Sublicensor, and the JSC, JDT or Other Committee fails to reach
unanimous agreement on such a matter and that disagreement
cannot
be resolved within a
period of fifteen (15) business days following the meeting
of the
JSC, JDT or Other
Committee ,
the matter shall be referred to the Chief Executive Officer of
Keryx and to
the President of the JT Pharmaceutical Division for
discussion and, if not resolved in such manner, shall be subject to
Arbitration pursuant
to Article 19.
*****Confidential
Material redacted and filed separately with the
Commission.
ARTICLE
4. LICENSE FEE; MILESTONE PAYMENTS
4.1
License Fee .
Sublicensee will pay to Sublicensor a non-refundable,
non-creditable license fee of twelve million dollars
($12,000,000) within
ten (10) business days after
the
Effective Date. In addition, Sublicensee will pay to Sublicensor
additional non-refundable, non-creditable license fees as
follows:
(a)
Within ten (10) business days following receipt by Sublicensee
of *****.
(b)
Within ten (10) business days following receipt by Sublicensee
of *****.
*****.
4.2
Milestone Payments .
Sublicensee
will pay to Sublicensor non-refundable, one-time milestone payments
as follows:
(a)
Within thirty (30) days following Initiation of the first
Phase II clinical trial in the Sublicense Territory:
*****;
(b)
Within thirty (30) days following Initiation of the first
Phase III clinical trial in the Sublicense Territory:
*****;
(c)
Within thirty (30) days following filing of a
first
marketing
approval application to
MHLW in
the Sublicense Territory
:
seven million dollars ($7,000,000); and
(d)
Within
thirty (30) days following a first marketing approval
by
MHLW for
a Product in the Sublicense Territory: *****.
For
the purpose of this Agreement, a Phase II clinical trial shall
mean that portion of the Regulatory Authority submission and
approval process which provides for the initial trials of
Product on a limited number of patients for the purposes of
determining dose and evaluating safety and efficacy in the
proposed therapeutic indication and a principal purpose of
which is to demonstrate a proof of concept, and a Phase III
clinical trial shall mean that portion of the Regulatory
Authority submission and approval process which provides for
the expanded trials of Product on a large number of patients
for the purposes of evaluation of the overall benefit-risk
relationship and long-term safety of the proposed therapeutic
indication.
*****Confidential
Material redacted and filed separately with the
Commission.
4.3
Sales Milestone Payments .
Sublicensee
will pay to Sublicensor the following non-refundable,
one-time milestone payments as follows:
(a)
Within sixty (60) days following attainment of annual Net
Sales in Japan equal to *****.
(b)
Within sixty (60) days following attainment of annual Net
Sales in Japan equal to *****.
(c)
Within sixty (60) days following attainment of annual Net
Sales in Japan equal to *****.
For
purposes of this Section 4.3, annual Net Sales shall be
calculated on a calendar
year basis.
Nothing herein shall preclude multiple milestone payments from
being paid in a given 12-month period if multiple milestones
have been reached.
4.4
Limitations .
It is understood and agreed that Sublicensee shall pay the
milestone payments set forth in Sections 4.2 and 4.3 only with
respect to the
first Indication for
which a Product achieves a particular milestone event, and
regardless of the number of Products which achieve a particular
milestone event and
regardless of the number of times which a particular milestone
event is achieved .
4.5
Payment Method .
All payments of license fees and milestones under this Article 4
shall be made by wire transfer in
the United States currency to a designated bank account of
Sublicensor.
ARTICLE
5. ROYALTIES
5.1
Royalties .
In consideration of the sublicense rights granted to Sublicensee
hereunder, for each Product where the manufacture, use or sale of
such Product would but for the license granted hereunder, infringe
a Valid Claim, Sublicensee shall
pay
to
Sublicensor a royalty on their
respective Net
Sales, as follows:
*****Confidential
Material redacted and filed separately with the
Commission.
(a)
a
royalty of *****
of
annual Net Sales equal to or less than *****;
(b)
a royalty of ***** of annual Net Sales between
*****;
(c)
a royalty of ***** of annual Net Sales in excess of
*****.
For
purposes of this Section 5.1, royalties shall be calculated
based on total Net Sales in any given calendar year. By way of
example, if in a given calendar year Net Sales were forty (40)
billion Japanese Yen, then the amount of royalty owed for that
year would be ***** Japanese Yen (calculated as the sum of
***** x ***** plus ***** x ***** plus ***** x *****).
Notwithstanding the foregoing, in the event (i) the Panion
License Agreement expires before the termination or expiration
of this Agreement and Sublicensor is no longer required to pay
royalties to Panion under the Panion License Agreement, the
applicable royalty percentage to be paid by Sublicensee to
Sublicensor under clauses (a), (b) and (c) of this Section 5.1
shall be reduced to *****, ***** and *****, respectively, or
(ii) subject to Section 16.3, the Panion License Agreement is
terminated before the termination or expiration of this
Agreement, the royalties and other amounts to be paid by
Sublicensee to Sublicensor shall be reduced by all royalties
and other amounts payable directly by Sublicensee to
Panion.
5.2
Accrual of Royalties .
No royalty shall be payable on a Product made, sold, or used
for research
or clinical testing
purposes
or distributed as samples, provided such samples are sold by
Sublicensee at cost. No multiple royalty shall be payable because
the manufacture, use, or sale of a Product is covered by more than
one Valid Claim.
5.3
Royalty
Withheld
due to Invalid Claims .
In the event that all applicable claims of a patent included within
the Patent Rights under which Sublicensee is paying a royalty
according to Section 5.1 shall be held invalid or unenforceable by
a court of competent jurisdiction in the
Sublicense
Territory,
Sublicensee may withhold payments of royalties which would
otherwise have been due on Net Sales in the
Sublicense Territory by
reason of Sections
4.3 and 5.1
until such judgment shall be finally reviewed by an unappealed or
unappealable decree of a higher court of competent jurisdiction in
the Sublicense Territory. The Sublicensee shall promptly repay
Sublicensor any withheld royalty
payments upon
a final adjudication that the applicable claims of a patent
included within the Patent Rights under which Sublicensee is paying
a royalty under Section 5.1 are valid and enforceable.
For
clarification, the aforementioned withheld royalty shall not bear
any interest thereon.
*****Confidential
Material redacted and filed separately with the
Commission.
5.4
Compulsory Licenses .
If Sublicensee is caused to grant a compulsory license to any Third
Party with respect to a Product in the Sublicense Territory, then
the royalty rate to be paid by Sublicensee on Net Sales due on such
Product in that country under Section 5.1 shall be reduced to the
rate paid by such Third Party compulsory Sublicensee on such
Product.
5.5
Third Party Royalties .
Sublicensor shall be responsible for payment of third party
royalties owed on sales of Product in the Sublicense Territory with
respect to any issued patent or patent application that has been
published by the applicable patent office anywhere in the world
prior to and including the date that is two (2) years after the
Effective Date that are required to secure Freedom to Operate in
the Sublicense Territory. For the purposes of this Agreement,
“Freedom to Operate” shall mean such valid patents
that, but for a license, would be infringed by the development,
manufacture, use or sale of a Product for the Indication.
With
respect to patents or patent applications that are published by the
applicable patent office anywhere in the world more than two (2)
years after the Effective Date that are required to secure Freedom
to Operate in the Sublicense Territory, then (a) if a license to
such patent is limited to the Sublicense Territory, then
Sublicensor and Sublicensee shall each be responsible for ***** of
such license fees and royalty obligations; and (b) if a license to
such patent includes countries outside the Sublicense Territory,
then Sublicensor shall be responsible for ***** of such license
fees and royalty obligations and Sublicensee shall be responsible
for ***** of such license fees and royalty obligations.
Notwithstanding the foregoing, Sublicensor’s obligation to
pay Third Party royalties, including, without limitation, royalties
owed to Panion, shall not exceed the sales milestone payments and
royalties to which Sublicensor is entitled under Sections 4.3 and
5.1 of this Agreement.
5.6
Withholding
Tax .
If any payment due to Sublicensor hereunder is subject to
withholding taxes or similar governmental charge
(“Withholding Tax”) required to be paid or withheld
thereon by applicable law in Japan, then Sublicensee shall deduct
such Withholding Tax from such payment due Sublicensor hereunder at
a rate not to exceed the then-prevailing rate provided for in
applicable provisions of the Conventions between the Governments of
the United States and Japan for the Avoidance of Double Taxation
and the Evasion of Taxes (the “Convention”).
Sublicensee shall provide Sublicensor, as soon as possible, a
certificate evidencing withholding or payment of any such
Withholding Tax by Sublicensee, its Affiliates or its sublicensees
for the benefit of Sublicensor. The
parties understand as of the Effective Date that under the
provisions of
the
current Convention,
payments to Sublicensor under this Agreement are not subject to
withholding, provided
that Sublicensor provide Sublicensee with appropriate certificates
of residency as required by Japanese law .
ARTICLE
6. ROYALTY REPORTS AND ACCOUNTING
6.1
Royalty Reports and
Currency Conversion .
Beginning with the First Commercial Sale by Sublicensee of a
Product in the Sublicense Territory, and continuing thereafter
during the term of this Agreement, Sublicensee shall furnish to
Sublicensor a written report covering each calendar quarter (the
"Reporting Period") showing (a) the calculation of Net Sales of
each Product in the Sublicense Territory during the Reporting
Period; (b) the royalties, payable in United States Dollars, which
shall have accrued hereunder in respect of such sales with a
summary computation of such royalties; (c) withholding taxes, if
any required by law to be deducted in respect of such sales; and
(d) the exchange rates used in determining the amount of United
States Dollars payable. Royalty
reports shall be submitted to Sublicensor within forty-five (45)
days after the close of each Reporting Period. Net
Sales and royalties payable shall be expressed in both Japanese Yen
and the United States Dollars equivalent, calculated using the
simple average of the exchange rate published in the Wall Street
Journal on the last day of each month of the Reporting Period.
Sublicensee shall furnish to Sublicensor appropriate evidence of
payment of, and itemize any tax, credits or specific amount
deducted from any royalty payment.
6.2
Royalty
Payments
and Records .
Royalty payments
shall be made
by wire transfer in United States currency to a designated bank
account of Sublicensor in the United States and shall be due
forty-five (45 )
days after the close of each Reporting Period. Payment of royalties
in whole or in part may be made in advance of such due date. In
case no royalty is due for any given Reporting Period, Sublicensee
shall so report to Sublicensor. Sublicensee shall keep accurate
records for a period of at least three
(
3
)
years in sufficient detail to enable the royalty payable hereunder
to be determined and confirmed.
6.3
Right to Audit .
Upon written request of Sublicensor, but not more than
once
in
each calendar year, Sublicensee shall permit an independent public
accountant, selected by Sublicensor or Panion and acceptable to
Sublicensee, which acceptance shall not be unreasonably withheld,
to have access during normal business hours to those records of
Sublicensee as may be reasonably necessary to verify the accuracy
of the royalty reports hereunder in respect of any calendar year
ending not more than thirty-six (36) months prior to the date of
such request. The report prepared by such independent public
accountant, a copy of which promptly shall be provided to
Sublicensee, shall disclose only the amount of any underpayment or
overpayment of royalties, if any, without disclosure of or
reference to supporting documentation. If such independent
accountant's report shows any underpayment of royalties,
Sublicensee shall remit to Sublicensor the amount of such
underpayment within thirty (30) days after Sublicensee's receipt of
such report, and if such underpayment exceeds five percent (5%) of
the royalty due, Sublicensee shall reimburse Sublicensor for its
reasonable out-of-pocket expenses for the audit, upon submission of
supporting documentation. Any
overpayment of royalties shall be creditable against future
royalties payable in subsequent royalty periods, allocated evenly
over the next-following two (2) royalty periods.
In the event this Agreement is terminated or expires before such
overpayment is fully credited, Sublicensor shall pay Sublicensee
the portion of such overpayment not credited within one hundred
twenty (120) days
after
the date of such termination or expiration.
6.4
Confidentiality of Records .
Sublicensor agrees that all information subject to review under
Section 6.3 shall be deemed the Proprietary Information of
Sublicensee.
6.5
Late Payment Interest .
Royalties and other payments required to be paid by Sublicensee
pursuant to this Agreement shall, if overdue, bear interest at the
rate equal to two percent (2%) over the prime rate as quoted by
Citibank NA and not to exceed ten percent (10%) per annum
until
paid. The payment of such interest shall not preclude Sublicensor
from exercising any other rights it may have because any payment is
overdue.
ARTICLE
7. CLINICAL, PRE-CLINICAL, REGULATORY
AND
COMMERCIAL DEVELOPMENT
7.1
Clinical and Pre-Clinical Development Program
.
Sublicensee will have sole responsibility for the clinical
development of the Product in the Sublicense Territory, and shall
be solely responsible for all costs associated therewith.
Sublicensee will have final decision-making authority to decide the
protocols for all clinical and pre-clinical studies to be conducted
by Sublicensee to support the approval of the Product in the
Sublicense Territory. Notwithstanding the foregoing, Sublicensee
shall consult with Sublicensor regarding protocol design for all
clinical and pre-clinical studies. Sublicensee shall use
commercially reasonable best efforts (a) to conduct a clinical
development program directed to obtaining regulatory approval of
the Product in the Sublicense Territory (the "Development
Program") ,
and (b) if, in the opinion of Sublicensee, the results of the
Development Program so justify, to diligently seek regulatory and
pricing approval for such Product for such Indication. For purposes
of this Section, "commercially reasonable best efforts" shall mean
efforts and timelines consistent with those used by Sublicensee in
its own priority development projects with its own products deemed
to have high commercial potential. Preliminary timelines are
attached hereto as
Exhibit 3 and
shall be subject to adjustment in consultation with the
JDC.
7.2
Carcinogenicity Studies .
The parties
will
discuss in good faith potential arrangements for a carcinogenicity
study, including, without limitation, potential cost-sharing
mechanisms.
7.3
Regulatory Matters .
7.3.1
Assistance by Sublicensor .
Sublicensor shall assist Sublicensee as follows:
(a)
As
soon as practical after the Effective Date, Sublicensor will
make available to Sublicensee all Sublicensor Know-How in the
possession of Sublicensor, and will cooperate with and provide
reasonable assistance to Sublicensee in its evaluation of such
Sublicensor Know-How. On a continuing basis during the term of
this Agreement, Sublicensor shall make available to
Sublicensee all additional Sublicensor Know-How
generated ,
acquired or possessed by
Sublicensor or any Third Party on behalf of Sublicensor.
Sublicensor shall provide Sublicensee with a right of
reference to all such Sublicensor Know-How and Sublicensee
shall have the right to include such Sublicensor Know-How in
any of its applications for Registrations. All such
Sublicensor Know-How shall be deemed the Proprietary
Information of Sublicensor, and all right, title and interest
in and to such Sublicensor Know-How shall remain vested in
Sublicensor.
(b)
In
the event that Sublicensor receives any inquiries or notices
from any
Regulatory Authority which may affect the development and
marketing of a Product in the Sublicense Territory,
Sublicensor shall immediately notify Sublicensee. Sublicensor
agrees to assist Sublicensee in formulating a response to such
inquiries, including being available to meet with the
Regulatory Authority at a time and place acceptable to
Sublicensor. Sublicensee shall reimburse Sublicensor for its
reasonable expenses incurred in rendering such assistance,
upon presentation by Sublicensor of an invoice documenting
such expenses.
In
the event that Sublicensee receives any inquiries or notices
from any Regulatory Authority which may affect the development
and marketing of a Product in the Sublicense Territory,
Sublicensee shall immediately notify Sublicensor. Sublicensor
agrees to assist Sublicensee in formulating a response to such
inquiries, including being available to meet with the
Regulatory Authority at a time and place acceptable to
Sublicensee.
7.3.2
Assistance by Sublicensee .
(a)
On
a continuing basis during the term of this Agreement,
Sublicensee shall make available to Sublicensor all
Sublicensee Development Data generated by Sublicensee or any
Third Party on behalf of Sublicensee. Sublicensee shall
provide Sublicensor with a right of reference to all such
Sublicensee Development Data and Sublicensor shall have the
right to include such Sublicensee Development Data in any of
its applications for Registrations outside of the Sublicense
Territory. All such Sublicensee Development Data shall be
deemed the Proprietary Information of Sublicensee, and all
right, title and interest in and to such Sublicensee
Development Data shall remain vested in
Sublicensee.
(b)
In
the event that Sublicensee receives any inquiries from any
Regulatory Authority which may affect the development and
marketing of a Product outside
of the Sublicense Territory, Sublicensee shall immediately
notify Sublicensor. Sublicensee agrees to assist Sublicensor
in formulating a response to such inquiries, including being
available to meet with the Regulatory Authority at a time and
place acceptable to Sublicensee, if necessary. Sublicensor
shall reimburse Sublicensee for its reasonable expenses
incurred in rendering such assistance, upon presentation by
Sublicensee of an invoice documenting such
expenses.
7.3.3
Registrations .
Subject to the terms and conditions of this Agreement, each
application for Registration shall be filed in the name of
Sublicensee or a designated Affiliate. Sublicensee shall own all
right, title and interest in and to all applications for
Registrations and granted Registrations. Sublicensee shall be
responsible for all disclosures and correspondence to and with the
Regulatory Authorities, and all disclosures and correspondence with
any Regulatory Authority involving Sublicensor shall be made
through Sublicensee. Sublicensee shall keep Sublicensor advised of
the status of all Registrations and any applications for
Registration.
7.3.4
Exchange of Safety Information .
The
Parties shall exchange safety information as per ICH guidelines so
that each party can meet their regulatory requirements. The parties
agree that a detailed agreement with respect to the exchange of
safety data is to be entered into separately. Sublicensor
shall, at its own cost and expense, assemble, maintain, deploy and
make available to Sublicensee a database on any and all information
on all serious adverse events including those collected from its
existing and future sublicensees, Sublicensee and
Panion.
7.4
Commercial Matters .
Subject to the provisions
of Section
3.
9
,
Sublicensee shall have sole responsibility for all activities and
costs associated with marketing, advertising, promoting and selling
the Products in the Sublicense Territory. Sublicensee shall use its
commercially reasonable efforts
to market and sell the Product in the Sublicense Territory, in
order to maximize Net Sales. Without limiting Sublicensee’s
commercially reasonable efforts
obligation under this Section 7.4, Sublicensee shall (a) apply for
all required authorizations, including pricing and reimbursement,
from Regulatory Authorities in the Sublicense Territory as soon as
reasonably and commercially practicable following completion of all
appropriate clinical trials; and (b) make the first commercial sale
of the Product in the Sublicense Territory as soon as reasonably
and commercially practicable following the issuance of the
marketing authorizations required for the manufacturing,
distribution, marketing, sale and use of the Product in the
Sublicense Territory and the
completion of NHI
(National Health Insurance) price listing .
7.5
Indications Outside the Field .
7.5.1
In
the event Sublicensor develops, or obtains from Panion, Dr.
Hsu or GloboAsia relevant rights of, any
indications or line extensions utilizing
the Compound outside
the Field, Sublicensee shall have a Right of First
Negotiation
and
Right of First Refusal (as such terms are defined below) as
follows:
(a)
Right of First
Negotiation .
If Sublicensor (a) conceives of ,
or receives from Panion, Dr. Hsu or GloboAsia relevant rights
of, an
indication or line extension utilizing the Compound outside the
Field (a "New Development"), and (b) has the right, by license,
ownership or otherwise, to further license the New
Development in the Sublicense Territory, then Sublicensor shall
provide Sublicensee a right of first negotiation (the "Right of
First Negotiation") as follows: (i) Sublicensor shall describe the
New Development in writing in reasonable detail, and such
description shall be protected as Proprietary Information under
this Agreement (a "Confidential Disclosure"); (ii) Sublicensor
shall provide the Confidential Disclosure to Sublicensee; and (iii)
during the period commencing upon Sublicensee's receipt of the
Confidential Disclosure and expiring ninety (90) days thereafter
(the "Discussion Period"), the parties shall discuss in good faith
a license and commercialization agreement with respect to the New
Development in the Sublicense Territory. If
the parties do not reach agreement during the Discussion Period,
then the Right of First Negotiation shall expire, and Sublicensor
shall be f
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