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EXCLUSIVE RESEARCH, DEVELOPMENT, LICENSE AND MANUFACTURING AND SUPPLY AGREEMENT

Manufacturing Agreement

EXCLUSIVE RESEARCH, DEVELOPMENT, 

LICENSE AND MANUFACTURING
AND SUPPLY AGREEMENT | Document Parties: BAXTER HEALTHCARE SA | NEKTAR THERAPEUTICS AL, CORPORATION You are currently viewing:
This Manufacturing Agreement involves

BAXTER HEALTHCARE SA | NEKTAR THERAPEUTICS AL, CORPORATION

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Title: EXCLUSIVE RESEARCH, DEVELOPMENT, LICENSE AND MANUFACTURING AND SUPPLY AGREEMENT
Governing Law: California     Date: 3/6/2009
Industry: Medical Equipment and Supplies     Sector: Healthcare

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Exhibit 10.34

FOIA CONFIDENTIAL TREATMENT REQUESTED

EXCLUSIVE RESEARCH, DEVELOPMENT,

LICENSE AND MANUFACTURING
AND SUPPLY AGREEMENT

BY AND AMONG

NEKTAR THERAPEUTICS AL, CORPORATION

AND

BAXTER HEALTHCARE SA

AND

BAXTER HEALTHCARE CORPORATION

DATED SEPTEMBER 26, 2005

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

1. DEFINITIONS

 

 

2

 

 

 

 

 

 

2. RESEARCH AND DEVELOPMENT ACTIVITIES

 

 

16

 

 

 

 

 

 

2.1 OVERVIEW

 

 

16

 

 

 

 

 

 

2.2 NEKTAR AL PAYMENTS

 

 

17

 

 

 

 

 

 

2.3 MARKETING AUTHORIZATION

 

 

18

 

 

 

 

 

 

2.4 MATERIALS

 

 

18

 

 

 

 

 

 

2.5 HANDLING

 

 

20

 

 

 

 

 

 

2.6 SELECTION OF POTENTIAL PRODUCTS AND [***]

 

 

20

 

 

 

 

 

 

2.7 DISCLAIMER OF WARRANTY WITH RESPECT TO BAXTER MATERIALS

 

 

20

 

 

 

 

 

 

3. GOVERNANCE

 

 

21

 

 

 

 

 

 

3.1 JOINT STEERING COMMITTEE

 

 

21

 

 

 

 

 

 

3.2 RESEARCH COMMITTEE

 

 

23

 

 

 

 

 

 

3.3 DEVELOPMENT AND PRODUCTION COMMITTEE

 

 

25

 

 

 

 

 

 

3.4 AMENDMENT; WAIVER

 

 

25

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-ii-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

4. LICENSES TO NEKTAR AL LICENSED TECHNOLOGY AND BAXTER TECHNOLOGY

 

 

26

 

 

 

 

 

 

4.1 LICENSE TO BAXTER

 

 

26

 

 

 

 

 

 

4.2 TERMS OF SUBLICENSE

 

 

26

 

 

 

 

 

 

4.3 NEKTAR AL RESEARCH RIGHTS AND LIMITATIONS

 

 

27

 

 

 

 

 

 

4.4 NO IMPLIED RIGHTS OR LICENSES

 

 

28

 

 

 

 

 

 

4.5 LICENSE TO NEKTAR AL

 

 

28

 

 

 

 

 

 

4.6 MUTUAL COVENANT

 

 

28

 

 

 

 

 

 

5. MANUFACTURE AND SUPPLY OF SELECTED REAGENTS

 

 

29

 

 

 

 

 

 

5.1 [***]

 

 

29

 

 

 

 

 

 

5.2 SUPPLY PRIOR TO PIVOTAL TRIAL/SUPPLY AGREEMENT

 

 

29

 

 

 

 

 

 

5.3 PIVOTAL TRIAL AND COMMERCIAL PRODUCT SUPPLY AGREEMENT

 

 

30

 

 

 

 

 

 

6. SPECIFICATIONS AND MANUFACTURING WARRANTY FOR SELECTED REAGENTS

 

 

31

 

 

 

 

 

 

6.1 SPECIFICATIONS

 

 

31

 

 

 

 

 

 

6.2 COMPLIANCE AUDITS

 

 

31

 

 

 

 

 

 

6.3 WARRANTY

 

 

31

 

 

 

 

 

 

6.4 DISCLAIMER OF WARRANTY

 

 

32

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-iii-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

7. EXCLUSIVITY; [***]

 

 

33

 

 

 

 

 

 

7.1 NEKTAR AL

 

 

33

 

 

 

 

 

 

7.2 BAXTER

 

 

33

 

 

 

 

 

 

8. QUALITY AND COMPLAINTS

 

 

34

 

 

 

 

 

 

8.1 ANALYSIS

 

 

34

 

 

 

 

 

 

8.2 ACCEPTANCE AND REJECTION

 

 

35

 

 

 

 

 

 

8.3 REPLACEMENT OF NONCONFORMING REAGENT

 

 

36

 

 

 

 

 

 

8.4 LIABILITY TO BAXTER FOR NONCONFORMING REAGENT

 

 

36

 

 

 

 

 

 

8.5 [INTENTIONALLY OMITTED]

 

 

37

 

 

 

 

 

 

8.6 FEES FOR MANUFACTURING AND SUPPLY OF SELECTED REAGENTS PRIOR TO PIVOTAL TRIAL

 

 

37

 

 

 

 

 

 

9. MILESTONES; ROYALTY PAYMENTS; ROYALTY REPORTS

 

 

39

 

 

 

 

 

 

9.1 MILESTONE PAYMENTS

 

 

39

 

 

 

 

 

 

9.2 ROYALTIES

 

 

42

 

 

 

 

 

 

9.3 SEPARATE COMPONENTS

 

 

45

 

 

 

 

 

 

9.4 COMMERCIAL DILIGENCE

 

 

45

 

 

 

 

 

 

9.5 REPORTS, EXCHANGE RATES

 

 

46

 

 

 

 

 

 

9.6 THIRD PARTY ROYALTIES, ETC

 

 

47

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-iv-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

10. RECORDS; AUDITS; SHIPMENT TERMS; PAYMENT TERMS

 

 

47

 

 

 

 

 

 

10.1 RECORDS

 

 

47

 

 

 

 

 

 

10.2 AUDITS

 

 

48

 

 

 

 

 

 

10.3 INVOICING; PAYMENT TERMS

 

 

49

 

 

 

 

 

 

10.4 PAYMENT METHOD

 

 

49

 

 

 

 

 

 

10.5 TAXES

 

 

49

 

 

 

 

 

 

11. CONFIDENTIALITY

 

 

50

 

 

 

 

 

 

11.1 TERMINATION OF NON-DISCLOSURE AGREEMENT

 

 

50

 

 

 

 

 

 

11.2 IN GENERAL

 

 

50

 

 

 

 

 

 

11.3 ADDITIONAL PROTECTIONS

 

 

52

 

 

 

 

 

 

11.4 PERMITTED DISCLOSURES

 

 

52

 

 

 

 

 

 

11.5 IRREPARABLE INJURY

 

 

53

 

 

 

 

 

 

12. REGULATORY MATTERS

 

 

53

 

 

 

 

 

 

12.1 COMPLAINTS/ADVERSE EVENTS

 

 

53

 

 

 

 

 

 

12.2 SPECIFIC REQUIREMENTS

 

 

53

 

 

 

 

 

 

13. REPRESENTATIONS & WARRANTIES; COVENANTS

 

 

54

 

 

 

 

 

 

13.1 REPRESENTATIONS AND WARRANTIES

 

 

54

 

 

 

 

 

 

13.2 COMPLIANCE WITH LAWS

 

 

54

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-v-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

14. LIMITATION OF LIABILITY; EXCLUSION OF DAMAGES

 

 

55

 

 

 

 

 

 

14.1 LIMITATION OF LIABILITY

 

 

55

 

 

 

 

 

 

14.2 REMEDIES

 

 

55

 

 

 

 

 

 

14.3 APPLICABILITY, EXCLUSIVITY OF REMEDIES

 

 

56

 

 

 

 

 

 

15. INDEMNIFICATION; INSURANCE

 

 

56

 

 

 

 

 

 

15.1 INDEMNITY

 

 

56

 

 

 

 

 

 

15.2 INSURANCE

 

 

57

 

 

 

 

 

 

15.3 PROCEDURES

 

 

57

 

 

 

 

 

 

16. INVENTIONS, KNOW-HOW AND PATENTS

 

 

59

 

 

 

 

 

 

16.1 EXISTING INTELLECTUAL PROPERTY

 

 

59

 

 

 

 

 

 

16.2 DISCLOSURE

 

 

59

 

 

 

 

 

 

16.3 OWNERSHIP OF INVENTIONS

 

 

59

 

 

 

 

 

 

16.4 NEKTAR AL CORE TECHNOLOGY INVENTIONS

 

 

60

 

 

 

 

 

 

16.5 BAXTER CORE TECHNOLOGY INVENTIONS

 

 

61

 

 

 

 

 

 

16.6 INDIVIDUAL PATENT FILINGS

 

 

61

 

 

 

 

 

 

16.7 JOINT PATENT FILINGS

 

 

62

 

 

 

 

 

 

16.8 DISPOSITION OF INVENTIONS

 

 

62

 

 

 

 

 

 

16.9 FURTHER ACTIONS

 

 

63

 

 

 

 

 

 

16.10 PATENT MARKING AND POTENTIAL PRODUCT AND COMMERCIAL PRODUCT MARKING

 

 

63

 

 

 

 

 

 

16.11 SUPPLEMENTAL PATENT PROTECTION

 

 

63

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-vi-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

17. INFRINGEMENT

 

 

64

 

 

 

 

 

 

17.1 INFRINGEMENT OF THIRD PARTY RIGHTS

 

 

64

 

 

 

 

 

 

17.2 INFRINGEMENT BY THIRD PARTIES

 

 

65

 

 

 

 

 

 

18. [INTENTIONALLY OMITTED]

 

 

67

 

 

 

 

 

 

19. TERM AND TERMINATION

 

 

67

 

 

 

 

 

 

19.1 EXPIRATION

 

 

67

 

 

 

 

 

 

19.2 DISCRETIONARY TERMINATION

 

 

67

 

 

 

 

 

 

19.3 TERMINATION FOR CAUSE

 

 

68

 

 

 

 

 

 

19.4 TERMINATION FOR INSOLVENCY

 

 

68

 

 

 

 

 

 

19.5 TERMINATION/[***] FOR LACK OF DILIGENCE

 

 

68

 

 

 

 

 

 

19.6 TERMINATION ON CHALLENGE

 

 

71

 

 

 

 

 

 

19.7 EFFECT OF TERMINATION

 

 

71

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-vii-


 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

20. ASSIGNMENT

 

 

74

 

 

 

 

 

 

21. NOTICES

 

 

74

 

 

 

 

 

 

22. MISCELLANEOUS

 

 

76

 

 

 

 

 

 

22.1 FORCE MAJEURE

 

 

76

 

 

 

 

 

 

22.2 SEVERABILITY

 

 

77

 

 

 

 

 

 

22.3 VARIATION

 

 

77

 

 

 

 

 

 

22.4 FORBEARANCE AND WAIVER

 

 

77

 

 

 

 

 

 

22.5 COUNTERPARTS; FACSIMILE

 

 

77

 

 

 

 

 

 

22.6 NO PARTNERSHIP

 

 

78

 

 

 

 

 

 

22.7 CONSTRUCTION

 

 

78

 

 

 

 

 

 

22.8 ENTIRE AGREEMENT

 

 

78

 

 

 

 

 

 

22.9 GOVERNING LAW

 

 

79

 

 

 

 

 

 

22.10 PUBLICITY

 

 

79

 

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-viii-


 

TABLE OF CONTENTS

(continued)

 

SCHEDULE I — RESEARCH PLAN

 

SCHEDULE II — MILESTONES

 

SCHEDULE III — QUALITY AGREEMENT

 

SCHEDULE IV — BAXTER DE ELOPMENT DILIGENCE TIMELINES

 

SCHEDULE V — TERMS AND CONDITIONS OF SUPPLY AGREEMENT

 

SCHEDULE VI — MANUFACTURING COST

 

SCHEDULE VII — PERMITTED ACTIVITIES

 

EXHIBIT 1 — BAXTER RESEARCH PLAN

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

-ix-


 

EXCLUSIVE RESEARCH, DEVELOPMENT, AND LICENSE
AGREEMENT

This Agreement (this “AGREEMENT”) is made and entered into as of September 26, 2005 (the “EFFECTIVE DATE”) by and among Nektar Therapeutics AL, Corporation, an Alabama corporation, having its principal place of business at 490 Discovery Drive, Huntsville, AL 35806 (“NEKTAR AL”), Baxter Healthcare SA (“BHSA”), a corporation organized and existing under the laws of Switzerland, and Baxter Healthcare Corporation (“BHC”), a Delaware corporation, having its principal place of business at One Baxter Parkway, Deerfield, Illinois 60015 (BHSA and BHC collectively referred to as “BAXTER”). NEKTAR AL and BAXTER may be referred to herein individually as a “PARTY” and collectively as the “PARTIES.”

RECITALS

WHEREAS, BAXTER is in the business of developing, making, marketing and selling biopharmaceutical products for the treatment of bleeding disorders;

WHEREAS, NEKTAR AL has proprietary technology useful for attaching poly(ethylene) glycol-based molecules to pharmaceutical compounds, and is engaged in the business of performing research in relation to REAGENTS and CONJUGATES and manufacturing bulk quantities of REAGENTS used in the manufacture of pharmaceutical products;

WHEREAS, BAXTER has developed proprietary technology concerning FACTOR VIII and [***], including the [***] for improving the half-life of FACTOR VIII, and desires to continue such development by entering into an exclusive research and development agreement with NEKTAR AL for the purpose of determining whether NEKTAR AL’s proprietary technology can improve the same, and NEKTAR AL desires to exclusively partner with BAXTER to perform such continued development for extending the half-life of FACTOR VIII using its proprietary technology directly with FACTOR VIII or [***];

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

1


 

WHEREAS, BAXTER desires to provide NEKTAR AL with recombinant FACTOR VIII and [***] to use in developing SELECTED REAGENTS and CONJUGATES, and NEKTAR AL desires to, as provided for in this AGREEMENT, provide BAXTER with CONJUGATES and SELECTED REAGENTS for BAXTER’s evaluation and potential pre-clinical, clinical and/or commercial development;

WHEREAS, BAXTER shall bear all costs associated with the research and development of NEKTAR AL’s CONJUGATES and REAGENTS into POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS, and shall have ultimate control over all product development decisions;

WHEREAS, NEKTAR AL desires to manufacture and supply BAXTER with all of its SELECTED REAGENT requirements (including pre-clinical, clinical trial, POTENTIAL PRODUCT and COMMERCIAL PRODUCT requirements) and BAXTER desires to satisfy all of its SELECTED REAGENT requirements from NEKTAR AL; and

WHEREAS, BAXTER shall have an exclusive license to any POTENTIAL PRODUCTS or COMMERCIAL PRODUCTS developed in the course of this AGREEMENT.

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this AGREEMENT and in accordance with and subject to the terms and conditions specified below, the PARTIES agree as follows:

AGREEMENT 1.
Definitions

 

1.1

 

“AFFILIATE” means, with respect to any person or entity, any other person or entity that directly or indirectly controls, is controlled by, or is under common control with, such person or entity. For purposes of this definition only, “control,” “controlled by” and “under common control with” shall mean the possession of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting stock or partnership interest, by contract or otherwise. In the case of a corporation, the direct or indirect ownership of fifty percent (50%) or more of its outstanding voting shares or the ability otherwise to elect a majority of the board of directors or other managing authority of the entity shall in any event be deemed to confer control, it being understood that the direct or indirect ownership of a lesser percentage of such shares shall not necessarily preclude the existence of control.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

2


 

 

1.2

 

“BAXTER CORE TECHNOLOGY” means:

 

(i)

 

[***];

 

 

(ii)

 

a composition of a [***] as disclosed in any of the examples of the [***] on the EFFECTIVE DATE, or [***] shall not fall within the BAXTER CORE TECHNOLOGY and shall instead be considered JOINTLY OWNED TECHNOLOGY;

 

 

(iii)

 

a method of: (a) [***]; provided that in each case none of such methods employs a NEKTAR PROPRIETARY METHOD on the EFFECTIVE DATE.

 

 

(iv)

 

methods of [***];

 

 

(v)

 

methods of [***];

 

 

(vi)

 

methods of [***];

 

 

(vii)

 

[***];

 

 

(viii)

 

methods of [***];

 

 

(ix)

 

the methods [***];

 

 

(x)

 

[***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

3


 

 

1.3

 

“BAXTER CORE TECHNOLOGY INVENTIONS” has the meaning set forth in Section 16.5.

 

 

1.4

 

“BAXTER INDEMNITEE” has the meaning set forth in Section 15.1.1.

 

 

1.5

 

“BAXTER KNOW-HOW” means all KNOW-HOW [***]. For the avoidance of doubt, [***] are excluded from the definition of BAXTER KNOW-HOW.

 

 

1.6

 

“BAXTER MATERIALS” has the meaning set forth in Section 2.4.2.

 

1.7

 

“BAXTER PATENT RIGHTS” means all claims in those PATENTS and PATENT APPLICATIONS (i) [***] and (ii) that [***].

 

 

1.8

 

“BAXTER PROPRIETARY CONJUGATE” means a CONJUGATE, the composition of matter, manufacture, use, offer for sale, sale or import of which is covered by a claim of the [***].

 

1.9

 

[***] means BAXTER’s provisional patent applications [***] (the “PROVISIONALS”), and any U.S. or other patent applications claiming priority therefrom, including any continuation, divisional, reissue, reexamination or substitution (and in each case any foreign counterpart thereto), and any extension, renewal or supplemental protection certificate; provided that the only additional information that may be added after the EFFECTIVE DATE to the disclosure of the PROVISIONALS (“ADDITIONAL INFORMATION”) in the preparation of a U.S. or other patent application claiming priority from the PROVISIONALS shall be [***]. For avoidance of doubt, BAXTER agrees that (a) [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

4


 

 

1.10

 

“BLA” means a Biologics License Application filed with the FDA pursuant to 21 C.F.R. § 601.2 et seq., or any foreign equivalent filed with the regulatory authorities in a country or territory to obtain MARKETING AUTHORIZATION for a COMMERCIAL PRODUCT in such country or territory.

 

 

1.11

 

“CLAIMS” has the meaning set forth in Section 15.1.1.

 

 

1.12

 

“COMMERCIAL DILIGENCE THRESHOLD” has the meaning set forth in Section 9.4.

 

 

1.13

 

“COMMERCIAL PRODUCT” means any POTENTIAL PRODUCT that has received MARKETING AUTHORIZATION which BAXTER, its AFFILIATES and/or SUBLICENSEES market and/or sell for administration to or use by humans or animals.

 

 

1.14

 

“CONFIDENTIAL INFORMATION” has the meaning set forth in Section 11.2.

 

1.15

 

“CONJUGATE(S)” means any chemical entity obtained by the PEGYLATION of a REAGENT to a therapeutic agent (including a THERAPEUTIC AGENT).

 

 

1.16

 

“CONTRACT MANUFACTURER” means a THIRD PARTY who (a) manufactures POTENTIAL PRODUCT or COMMERCIAL PRODUCT on behalf of BAXTER as permitted herein, or (b) manufactures SELECTED REAGENT as permitted under and pursuant to Schedule V.

 

1.17

 

“CONTROL(LED)” means the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any THIRD PARTY and, with respect to KNOW-HOW, also means that which is not known to the other PARTY prior to disclosure thereto (whether under this AGREEMENT or the NON-DISCLOSURE AGREEMENT), nor freely available from the public domain or THIRD PARTIES.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

5


 

 

1.18

 

“DEVELOPMENT AND PRODUCTION COMMITTEE” means the committee described in Section 3.3.

 

 

1.19

 

“DISCLOSING PARTY” means the PARTY disclosing CONFIDENTIAL INFORMATION to the other PARTY hereunder.

 

1.20

 

“DOLLAR(S)” means United States dollars.

 

 

1.21

 

“EMEA” means the European Medicines Evaluation Agency, and any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products, biological therapeutic products and delivery systems in the European Union.

 

1.22

 

“ESTIMATED COST” has the meaning set forth in Schedule VI.

 

 

1.23

 

[***] means a compound that is a [***]. For clarity, [***].

 

1.24

 

“FACTOR VIII” means a compound that is a Factor VIII molecule [***]. For clarity, [***].

 

 

1.25

 

“FDA” means the United States Food and Drug Administration or any successor entity that may be established hereafter which has substantially the same authority or responsibility currently vested in the United States Food and Drug Administration.

 

1.26

 

“FIELD” means [***], either for use alone for the treatment of [***], in the treatment of Hemophilia A, or PEGYLATED FACTOR VIII or [***] for the treatment of Hemophilia A.

 

 

1.27

 

“FIRST COMMERCIAL SALE” means, with respect to a COMMERCIAL PRODUCT, the first sale by BAXTER or its AFFILIATES or SUBLICENSEES to a THIRD PARTY following receipt of MARKETING AUTHORIZATION for such COMMERCIAL PRODUCT in the country of sale.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

6


 

 

1.28

 

“FTE” means the equivalent of an employee working [***] labor hours per year.

 

 

1.29

 

“FTE RATE” has the meaning set forth in Section 2.2. 1.30 “GAAP” has the meaning set forth in Schedule VI.

 

1.31

 

“INITIAL ROYALTY TERM” has the meaning set forth in Section 9.2.

 

 

1.32

 

“INVENTIONS” means any and all ideas, concepts, methods, procedures, processes, improvements, inventions and discoveries, whether or not patentable, that are conceived or first reduced to practice during and in the course of the performance of activities conducted in connection with this AGREEMENT, including the development or manufacture of a POTENTIAL PRODUCT or a COMMERCIAL PRODUCT.

 

 

1.33

 

“JOINT INVENTION” has the meaning set forth in Section 16.3.

 

1.34

 

“JOINT PATENT APPLICATIONS” and “JOINT PATENT” have the meanings set forth in Section 16.7.

 

 

1.35

 

“JOINT STEERING COMMITTEE” means the committee described in Section 3.1.

 

 

1.36

 

“JOINTLY OWNED TECHNOLOGY” means an INVENTION covering the composition of [***].

 

1.37

 

“KNOW-HOW” means all technical, scientific and other know-how, data, materials, information, trade secrets, ideas, formulae, inventions, discoveries, processes, machines, compositions of matter, improvements, protocols, techniques, works of authorship, and results of experimentation and testing (whether or not patentable) in written, electronic, oral or any other form that is not known to the other PARTY prior to disclosure thereto (whether under this AGREEMENT or the NON-DISCLOSURE AGREEMENT), nor freely available from the public domain or from THIRD PARTIES.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

7


 

 

1.38

 

“LAW(S)” means any local, state or federal rule, regulation, statute or law in any jurisdiction relevant to the activities undertaken pursuant to this AGREEMENT or applicable to either of the PARTIES with respect to any matters set forth herein.

 

1.39

 

“MAJOR MARKETS” has the meaning set forth in Section 9.2.1.

 

 

1.40

 

“MANUFACTURING COST” has the meaning set forth in Schedule VI.

 

 

1.41

 

“MARKETING AUTHORIZATION” means the requisite governmental approval for the marketing and sale of a COMMERCIAL PRODUCT in a given country.

 

 

1.42

 

“MILESTONE” means the milestone payments set forth in Schedule II.

 

 

1.43

 

“NEKTAR AL CORE TECHNOLOGY” means:

 

(i)

 

[***];

 

 

(ii)

 

methods of [***];

 

 

(iii)

 

methods of [***];

 

 

(iv)

 

methods of [***];

 

 

(v)

 

methods of [***];

 

 

(vi)

 

[***];

 

 

(vii)

 

methods of [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

8


 

 

1.44

 

“NEKTAR AL CORE TECHNOLOGY INVENTIONS” has the meaning set forth in Section 16.4.

 

 

1.45

 

“NEKTAR AL INDEMNITEE” has the meaning set forth in Section 15.1.2.

 

 

1.46

 

“NEKTAR AL KNOW-HOW” means all KNOW-HOW [***].

 

1.47

 

“NEKTAR AL LICENSED TECHNOLOGY” means, collectively, the NEKTAR AL PATENT RIGHTS and NEKTAR AL KNOW-HOW.

 

 

1.48

 

“NEKTAR AL MATERIALS” has the meaning set forth in Section 2.4.1.

 

 

1.49

 

“NEKTAR AL PATENT RIGHTS” means all of the claims in those PATENTS and PATENT APPLICATIONS CONTROLLED by NEKTAR AL which (i) pertain to [***].

 

 

1.50

 

“NEKTAR PROPRIETARY METHODS” means (i) [***].

 

1.51

 

“NEKTAR PROPRIETARY REAGENT” means a REAGENT, the composition of matter, manufacture, use, offer for sale, sale or import of which is covered by [***].

 

 

1.52

 

“NET SALES” means the amount invoiced by BAXTER, its AFFILIATES or SUBLICENSEES for the sale to THIRD PARTIES of COMMERCIAL PRODUCT commencing with the FIRST COMMERCIAL SALE. [***]:

 

(i)

 

[***];

 

 

(ii)

 

[***];

 

 

(iii)

 

[***];

 

 

(iv)

 

[***];

 

 

(v)

 

[***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

9


 

In addition to the foregoing [***], BAXTER may [***] of the aggregate gross amount invoiced on account of sales of a COMMERCIAL PRODUCT by BAXTER, its AFFILIATES or SUBLICENSEES to THIRD PARTIES in the relevant country during the relevant calendar quarter in respect of which royalties are being calculated or (b) [***] during the relevant calendar quarter in respect of which royalties are being calculated.

[***]. In addition, BAXTER’S NET SALES hereunder are subject to the following:

 

(A)

 

[***];

 

 

(B)

 

[***];

 

 

(C)

 

[***].

 

1.53

 

“NONCONFORMING REAGENTS” has the meaning set forth in Section 6.3.

 

 

1.54

 

“NON-DISCLOSURE AGREEMENT” means that agreement entered into between the PARTIES on [***], providing for confidential treatment of the PARTIES’ information.

 

 

1.55

 

“PATENT” means any claim in a patent including any extension, substitution, registration, confirmation, reissue, supplemental protection certificate, re-examination or renewal of such patent, to the extent valid and enforceable rights are granted by a governmental authority thereunder (and in each case any foreign counterpart thereto).

 

1.56

 

“PATENT APPLICATION” means any claim in an application for letters patent, including a provisional application, converted provisional application, continuation application, a continued prosecution application, a continuation-in-part application, a divisional application, a re-examination application, and a reissue application (and in each case any foreign counterpart thereto).

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

10


 

 

1.57

 

“PEG” means poly(ethylene) glycol.

 

1.58

 

“PEGYLATION,” with correlative meanings “PEGYLATED” or to “PEGYLATE”, means covalent chemical bonding of any REAGENT (including a SELECTED REAGENT and including covalent chemical bonding through linking groups), with or to another material or materials. Such materials include, without limitation, proteins, peptides, polymers, oligomers, oligonucleotides, other biomolecules, small molecules, therapeutic agents (including a THERAPEUTIC AGENT), diagnostic agents, imaging agents and detectable labels. Additional materials that may be PEGYLATED include, without limitation, polymers, liposomes, films, chemical separation and purification surfaces, solid supports, metal/metal oxide surfaces and other surfaces such as, by way of example but not limitation, those on implanted devices, and equipment, where a REAGENT is covalently chemically bonded to one or more reactive molecules on the surface of such device or equipment. “PEGYLATION” shall include the synthesis, derivatization, characterization, and modification of PEG for such purposes, together with the synthesis, derivatization, characterization, and modification of the raw materials and intermediates for the manufacture of REAGENTS (including SELECTED REAGENTS) or products (including POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS) incorporating such REAGENT by means of covalent chemical bonding, and all methods of making and using each and all of the foregoing.

 

 

1.59

 

“PHASE 1 CLINICAL TRIAL” means the first lawful study in humans, conducted in accordance with 21 C.F.R. §312.21(a) (or the equivalent LAWS and regulations in jurisdictions outside the United States).

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

11


 

 

1.60

 

“PHASE 2 CLINICAL TRIAL” means a controlled clinical trial, conducted in accordance with 21 C.F.R. §312.21(b) (or the equivalent LAWS and regulations in jurisdictions outside the United States).

 

 

1.61

 

“PIVOTAL TRIAL,” also known as a Phase 3 clinical trial, means a controlled or uncontrolled clinical trial, conducted in accordance with § 21 C.F.R. 312.21(c) (or the equivalent LAWS and regulations in jurisdictions outside the United States).

 

1.62

 

“POTENTIAL PRODUCT” means (i) any chemical entity resulting from attachment of any THERAPEUTIC AGENT to a SELECTED REAGENT by means of PEGYLATION that is selected by the RESEARCH COMMITTEE or (ii) any product using PEGYLATION to extend or otherwise improve the half-life of [***] FACTOR VIII, whether by using PEGYLATION technology directly with [***] FACTOR VIII, or by means of the PEGYLATION of [***].

 

 

1.63

 

“PURCHASE PRICE” has the meaning set forth in Section 8.6.1

 

 

1.64

 

“QUALITY AGREEMENT(S)” shall include:

 

(i)

 

the quality agreement governing the manufacture and supply of [***], which shall be negotiated by the PARTIES [***]; and

 

 

(ii)

 

the quality agreement governing the manufacture and supply of [***], which shall be negotiated by the PARTIES [***].

The QUALITY AGREEMENT(S) shall be in substantially the same form as Schedule III hereto. For purposes hereof, [***].

 

1.65

 

“REAGENT” means a PEG derivative used in the manufacture of a pharmaceutical or diagnostic product or medical device, including a SELECTED REAGENT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

12


 

 

1.66

 

“RECIPIENT” means the PARTY receiving CONFIDENTIAL INFORMATION hereunder.

 

 

1.67

 

“RESEARCH COMMITTEE” means the committee described in Section 3.2.

 

1.68

 

“RESEARCH PLAN” means the PARTIES’ respective activities and responsibilities as set forth in the RESEARCH PLAN attached hereto as Schedule I, as amended and revised by the RESEARCH COMMITTEE from time to time.

 

 

1.69

 

“RESPONSIBLE PARTY” has the meaning set forth in Section 16.7.

 

1.70

 

“ROYALTY RATE” means the following:

 

 

(i)

 

[***] NET SALES of all COMMERCIAL PRODUCTS sold in a calendar year;

 

(ii)

 

[***] NET SALES of all COMMERCIAL PRODUCTS sold in such calendar year; and

 

 

(iii)

 

[***] NET SALES of all COMMERCIAL PRODUCTS sold in such calendar year [***].

By way of example but not limitation, if NET SALES of all COMMERCIAL PRODUCTS sold in a calendar year are [***] then BAXTER shall pay to NEKTAR AL a royalty of [***] on the [***] of such NET SALES, [***] on the portion of such NET SALES between [***] and [***] and [***] on the portion of such NET SALES [***]. For clarity, the ROYALTY RATE shall be applied to the aggregate annual worldwide NET SALES of all COMMERCIAL PRODUCTS, and [***]. By way of example but not limitation, if during any one calendar year, there are two (2) COMMERCIAL PRODUCTS being sold by or on behalf of BAXTER or its AFFILIATES or SUBLICENSEES, and NET SALES of one COMMERCIAL PRODUCT sold in such calendar year are [***], and NET SALES of the other COMMERCIAL PRODUCT sold in the same calendar year are [***] then, for the purposes hereof, the aggregate annual NET SALES of all COMMERCIAL PRODUCTS will be deemed to be [***] for such calendar year, and BAXTER shall pay to NEKTAR AL a royalty of [***] on the [***] of such NET SALES, [***] on the portion of such NET SALES between [***] and [***], and [***] on the portion of such NET SALES in excess of [***], for total payments by BAXTER of [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

13


 

 

1.71

 

“SCIENTIFIC ADVISORS” has the meaning set forth in Section 3.1.

 

1.72

 

“SCIENTIFIC AND TECHNICAL ADVISORY BOARD” means the board described in Section 3.1.

 

 

1.73

 

“SELECTED REAGENT” means a REAGENT that is attached to a THERAPEUTIC AGENT by means of PEGYLATION in a POTENTIAL PRODUCT or COMMERCIAL PRODUCT, as selected by the RESEARCH COMMITTEE.

 

 

1.74

 

“SOLE INVENTION” has the meaning set forth in Section 16.3.

 

1.75

 

“SPECIFICATIONS” means the specifications for a SELECTED REAGENT to be used in a POTENTIAL PRODUCT or COMMERCIAL PRODUCT determined based upon definitive testing criteria that are agreed in writing by the DEVELOPMENT AND PRODUCTION COMMITTEE and which will be set forth in the applicable QUALITY AGREEMENT.

 

 

1.76

 

“SUBLICENSEE” means any person or entity, including AFFILIATES, to which BAXTER grants a sublicense (i) to research and/or develop POTENTIAL PRODUCTS or COMMERCIAL PRODUCTS or (ii) to make, have made, use, sell, have sold, offer for sale and/or import POTENTIAL PRODUCTS or COMMERCIAL PRODUCTS (which for the purposes hereof will include the right to distribute, market or promote).

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

14


 

 

1.77

 

“SUPPLY AGREEMENT” means the supply agreement to be entered into by the PARTIES in accordance with Section 5.3.

 

 

1.78

 

“TERM” has the meaning set forth in Section 19.1.

 

 

1.79

 

“TERRITORY” means the world.

 

 

1.80

 

“THERAPEUTIC AGENT” means [***] FACTOR VIII [***] of each of the foregoing. For clarity, THERAPEUTIC AGENT does not include [***].

 

1.81

 

“THIRD PARTY” means any entity other than NEKTAR AL, BAXTER, a SUBLICENSEE of BAXTER or their respective AFFILIATES, whether such THIRD PARTY is a person, company, corporation, limited liability company, partnership or other such legal entity, or a division or operating or business unit of such legal entity.

 

 

1.82

 

“VALID PATENT CLAIM” means a claim of an issued and unexpired PATENT within the [***] covering the manufacture, use, sale, offer for sale or import of a SELECTED REAGENT or a COMMERCIAL PRODUCT, which PATENT is owned or CONTROLLED by NEKTAR AL or jointly by the PARTIES and has not (a) expired or been canceled, (b) been declared invalid by an unreversed and unappealable decision of a court or other appropriate body of competent jurisdiction, (c) been admitted to be invalid or unenforceable through reissue, disclaimer, or otherwise or (d) been abandoned.

 

1.83

 

[***] means the [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

15


 

2.

 

RESEARCH AND DEVELOPMENT ACTIVITIES

 

2.1

 

OVERVIEW. The PARTIES’ research and development responsibilities are set forth in the RESEARCH PLAN, which shall be an evolving document that is updated and revised from time to time in writing by the RESEARCH COMMITTEE.

As decided by the RESEARCH COMMITTEE provided for in Section 3.2, and provided that BAXTER provides NEKTAR AL with [***] in a timely manner in accordance with the time frames set forth in the RESEARCH PLAN as provided for herein, NEKTAR AL shall, in a timely manner in accordance with the time frames set forth in the RESEARCH PLAN, provide BAXTER with [***] in its research and development activities to extend the half-life of FACTOR VIII using PEGYLATION directly with FACTOR VIII [***]. BAXTER shall, in a timely manner in accordance with the time frames set forth in the RESEARCH PLAN, provide NEKTAR AL with [***] to use in developing REAGENTS and CONJUGATES.

NEKTAR AL shall use commercially reasonable efforts to collaborate and cooperate with BAXTER in researching and developing CONJUGATES and REAGENTS (including SELECTED REAGENTS) to be utilized in developing POTENTIAL PRODUCTS pursuant to the RESEARCH PLAN, as amended from time to time. [***] After the RESEARCH COMMITTEE selects one or more CONJUGATES to develop into POTENTIAL PRODUCTS, the REAGENT that is used to make each such CONJUGATE shall be deemed a SELECTED REAGENT hereunder, and [***].

[***], in accordance with the RESEARCH PLAN, and for all costs and expenses associated therewith (subject to the approval requirements set forth herein).

For clarity, [***]. During such clinical trials, or in the event of the cancellation or failure of any such clinical trials, [***], in accordance with Section 3.2.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

16


 

 

2.2

 

NEKTAR AL PAYMENTS. In addition to the MILESTONES and royalties to be paid by BAXTER to NEKTAR AL hereunder, BAXTER shall pay NEKTAR AL for all [***] directly incurred and solely associated with the development and manufacture of such CONJUGATES and REAGENTS (including SELECTED REAGENTS). NEKTAR AL’s [***], subject to the following increases: NEKTAR AL shall adjust the [***] for each calendar year commencing with the year 2006 to reflect any year-to-year increase in the Consumer Price Index (CPI) (based on a cumulative index of CPI numbers starting on the EFFECTIVE DATE to the date of the calculation of such [***]).

[***], which materials shall be equipment purchased by NEKTAR AL that is required for the performance of its activities under the RESEARCH PLAN. The cost of such additional materials shall not exceed [***]. BAXTER shall respond to such a request by NEKTAR AL promptly, and in no event later than thirty (30) days after its receipt of such request.

NEKTAR AL shall not bill BAXTER, and BAXTER shall not be required to pay NEKTAR AL, for the first [***] expended by NEKTAR AL in performing activities under the RESEARCH PLAN.

NEKTAR AL shall invoice such [***] to BAXTER on a [***], pursuant to Section 10.2. For clarity, BAXTER shall pay for [***], which shall be calculated by multiplying (i) [***] pursuant to this AGREEMENT by (ii) the quotient of (a) the [***] divided by (b) [***]. BAXTER shall pay the amounts set forth in each such invoice within [***] after the date thereof.

For clarity, BAXTER shall pay NEKTAR AL as provided for under this Section 2.2 for so long as NEKTAR AL is performing activities under the RESEARCH PLAN; provided, however, that on a POTENTIAL PRODUCT-by-POTENTIAL PRODUCT basis, [***] and, thereafter, the costs and expenses to be paid by [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

17


 

 

2.3

 

MARKETING AUTHORIZATION. As between the PARTIES, BAXTER shall be responsible for all development activities under the RESEARCH PLAN, all manufacturing activities associated with the manufacture of POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS, all activities associated with the [***], and for the [***] for COMMERCIAL PRODUCTS. [***].

 

2.4

 

MATERIALS.

 

 

2.4.1

 

NEKTAR AL MATERIALS. Any samples of SELECTED REAGENTS or CONJUGATES that are provided by NEKTAR AL to BAXTER in the course of the RESEARCH PLAN (collectively, the “NEKTAR AL MATERIALS”) are owned exclusively by NEKTAR AL and provided solely for the performance of the RESEARCH PLAN, or to otherwise extend the half-life of a THERAPEUTIC AGENT, and for no other purpose. Without limitation, BAXTER will not:

 

(i)

 

[***];

 

 

(ii)

 

[***];

 

 

(iii)

 

[***];

 

 

(iv)

 

[***];

 

 

(v)

 

[***],

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

18


 

except in each case, to extend the half-life of a THERAPEUTIC AGENT or otherwise in conjunction with the RESEARCH PLAN. For clarity, BAXTER understands and agrees that any activities (and the results thereof) that are carried out by or on behalf of BAXTER outside of the RESEARCH PLAN, which utilize any NEKTAR AL MATERIALS or CONFIDENTIAL INFORMATION of NEKTAR AL (including those activities to extend the half-life of a THERAPEUTIC AGENT utilizing any NEKTAR AL MATERIALS or any CONFIDENTIAL INFORMATION OF NEKTAR AL), are subject to and governed by the terms and conditions of this AGREEMENT. For avoidance of doubt, [***].

 

2.4.2

 

BAXTER MATERIALS. Any samples of [***] FACTOR VIII [***] provided by BAXTER to NEKTAR AL (collectively, the “BAXTER MATERIALS”) are owned exclusively by BAXTER and provided solely for the development of CONJUGATES and REAGENTS to extend the half-life of a THERAPEUTIC AGENT in conjunction with the RESEARCH PLAN, and for no other purpose. Without limitation, NEKTAR AL will not:

 

(i)

 

[***];

 

 

(ii)

 

[***];

 

 

(iii)

 

[***];

 

 

(iv)

 

[***]; or

 

 

(v)

 

[***],

except in each case, to extend the half-life of a THERAPEUTIC AGENT in conjunction with the RESEARCH PLAN.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

19


 

 

2.5

 

HANDLING. The PARTIES understand and agree the BAXTER MATERIALS and NEKTAR AL MATERIALS may have unpredictable and unknown biological and/or chemical properties and that they are to be handled and used with caution. The PARTIES will handle and use such materials and conduct their respective activities under the RESEARCH PLAN in compliance with all applicable LAWS. Each PARTY will maintain reasonable security measures, no less strict than it maintains to protect its own valuable tangible property, to protect the other PARTY’S materials against loss, theft or destruction. Other than in connection with the performance of its obligations under this AGREEMENT, neither PARTY will sell, lease, license, copy, transfer, disclose or otherwise provide access to the other PARTY’s materials to any person, entity or location without the prior written consent of the other PARTY, such consent not to be unreasonably withheld or delayed. This provision shall not prevent BAXTER from sublicensing (to the extent provided for in Article 4) or outsourcing some or all if its research or development activities. In such case, BAXTER shall require any SUBLICENSEE or THIRD PARTY performing such obligations to be bound by similar security, handling, confidentiality and assignment of INVENTIONS obligations as are set forth in this AGREEMENT, including without limitation, under Sections 2.4.1, 2.5 and 4.4 and Articles 11 and 16.

 

2.6

 

SELECTION OF POTENTIAL PRODUCTS AND [***]. The RESEARCH COMMITTEE shall select POTENTIAL PRODUCT(S) from the CONJUGATES and SELECTED REAGENTS provided by NEKTAR AL and, following such selection, [***].

 

 

2.7

 

DISCLAIMER OF WARRANTY WITH RESPECT TO BAXTER MATERIALS. BAXTER HEREBY ACKNOWLEDGES THE EXPERIMENTAL NATURE OF THE RESEARCH AND THAT NEKTAR AL CANNOT GUARANTEE OR PROVIDE ANY WARRANTIES REGARDING THE QUANTITY OF BAXTER MATERIALS REQUIRED TO CONDUCT THE RESEARCH OR TO BE CONSUMED IN THE PERFORMANCE OF THE RESEARCH. EXCEPT IN THE CASE OF NEKTAR AL’S NEGLIGENCE OR WILLFUL MISCONDUCT, NEKTAR AL SHALL NOT BE LIABLE FOR ANY DAMAGES OR LOSSES SUFFERED BY BAXTER ARISING FROM THE USE, CONSUMPTION OR LOSS OF BAXTER MATERIALS IN THE PERFORMANCE OF THE RESEARCH PURSUANT TO THIS AGREEMENT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

20


 

3.

 

GOVERNANCE

 

3.1

 

JOINT STEERING COMMITTEE. To facilitate communication between the PARTIES, implement the RESEARCH PLAN and oversee development of POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS (all during the TERM), the PARTIES shall appoint a JOINT STEERING COMMITTEE consisting of [***] representatives from each of NEKTAR AL and BAXTER. The initial representatives are:

 

 

 

 

BAXTER: [***]

 

 

 

 

NEKTAR AL: [***]

and the initial meeting of the JOINT STEERING COMMITTEE shall take place no later than [***] after the EFFECTIVE DATE. Each PARTY may replace its representatives on the JOINT STEERING COMMITTEE by prior written notice to the other PARTY. The JOINT STEERING COMMITTEE shall supervise the activities of the RESEARCH COMMITTEE and the DEVELOPMENT AND PRODUCTION COMMITTEE; resolve issues referred by members of the RESEARCH COMMITTEE and the DEVELOPMENT AND PRODUCTION COMMITTEE; make strategic decisions related to research and development activities in connection with POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS; review the progress of research and development activities in connection with POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS with respect to BAXTER’s progress in pre-clinical studies, clinical trials, and meeting the Development Diligence Timeline set forth in Schedule IV; and review progress in seeking MARKETING AUTHORIZATIONS. The JOINT STEERING COMMITTEE shall also be responsible for sharing certain data and information relating to the PARTIES’ respective research and development, manufacturing and commercialization activities in connection with the POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS, which data and information shall include, without limitation, the following: (i) any delays in meeting the Development Diligence milestone dates set forth in Schedule IV; (ii) any failure in any pre-clinical or clinical trials; (iii) any termination of active development of any POTENTIAL PRODUCT or SELECTED REAGENT; (iv) commencing any clinical trial and completing any clinical trial; and (v) summary data demonstrating whether the milestone success criteria set forth in Schedule II (including endpoints) have been met. [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

21


 

The JOINT STEERING COMMITTEE shall meet at such times and places, in person or by telephone conferencing, web-conferencing, video conferencing or other electronic communication, as it shall determine to carry out its responsibilities. The JOINT STEERING COMMITTEE shall operate [***]. If a dispute arises regarding matters within the scope of responsibilities of the JOINT STEERING COMMITTEE (other than disputes referred to the JOINT STEERING COMMITTEE by the RESEARCH COMMITTEE for resolution in accordance with Section 3.2), and the JOINT STEERING COMMITTEE fails to reach a consensus on its resolution [***], then the dispute shall be referred to the senior management representatives of each PARTY. For purposes of the JOINT STEERING COMMITTEE, BAXTER’S senior management representative shall be its [***].

The PARTIES to the JOINT STEERING COMMITTEE shall create a SCIENTIFIC AND TECHNICAL ADVISORY BOARD for the purpose of reviewing results and decisions occurring from the development of a POTENTIAL PRODUCT. The SCIENTIFIC AND TECHNICAL ADVISORY BOARD shall consist of [***]. The SCIENTIFIC AND TECHNICAL ADVISORY BOARD should bring their expertise to support matters referred to it by the RESEARCH COMMITTEE or the DEVELOPMENT AND PRODUCTION COMMITTEE. Any representative on the RESEARCH COMMITTEE or the DEVELOPMENT AND PRODUCTION COMMITTEE may refer matters to the SCIENTIFIC AND TECHNICAL ADVISORY BOARD for its input and advice. The input and advice of the SCIENTIFIC AND TECHNICAL ADVISORY BOARD shall be for informational purposes only and shall not be binding on the PARTIES.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

22


 

 

3.2

 

RESEARCH COMMITTEE. The RESEARCH COMMITTEE shall be comprised of appropriate representatives of both PARTIES, initially consisting of [***] representatives from each of NEKTAR AL and BAXTER. Each PARTY shall appoint a RESEARCH PLAN team leader (and other key contacts, as necessary) to serve as principal RESEARCH COMMITTEE liaisons for the PARTIES. Employees of each PARTY who are not on the RESEARCH COMMITTEE may attend meetings of the RESEARCH COMMITTEE, as required to further the research and development of POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS. The initial team leader and PARTY representatives are:

BAXTER: (1) [***]

NEKTAR AL: (1) [***]

Any representative of the RESEARCH COMMITTEE may designate another individual from such representative’s PARTY to attend a meeting of the RESEARCH COMMITTEE in his or her place. In such case, the representative shall notify the other PARTY’s representative in writing prior to the applicable meeting.

The RESEARCH COMMITTEE shall plan and manage the research and development activities to be conducted in connection with CONJUGATES, POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS and to facilitate communication on research and development issues between the PARTIES. The RESEARCH COMMITTEE shall also be responsible for the sharing of certain data relating to the PARTIES’ respective research and development activities in connection with the RESEARCH PLAN and data related to CONJUGATES and POTENTIAL PRODUCTS, including the results [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

23


 

Modification to, and implementation of, the RESEARCH PLAN and other day-to-day research and development activities shall be managed by the RESEARCH COMMITTEE, subject to oversight by the JOINT STEERING COMMITTEE. The RESEARCH COMMITTEE shall meet no less frequently than [***] in person, by teleconference, web-conference or video conference as agreed upon by the PARTIES.

Notwithstanding anything herein to the contrary, the RESEARCH COMMITTEE shall operate by consensus with representatives of NEKTAR AL having [***] and representatives of BAXTER having [***]. In the event of any disagreements between the PARTIES’ representatives at the RESEARCH COMMITTEE level (including, without limitation, with respect to selection of a SELECTED REAGENT), the disagreement shall be referred to the JOINT STEERING COMMITTEE for resolution and, if the JOINT STEERING COMMITTEE is unable to resolve the disagreement within [***] after the matter is referred to the JOINT STEERING COMMITTEE, [***].

In order to enable NEKTAR AL to plan its [***] beyond those already contemplated by the RESEARCH PLAN, the RESEARCH COMMITTEE shall notify NEKTAR AL in writing no less than [***] in advance of any additional requirements for REAGENTS (including SELECTED REAGENTS) and CONJUGATES that are to be developed under the RESEARCH PLAN, or the conduct of studies or the performance of other related services under the RESEARCH PLAN.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

24


 

 

3.3

 

DEVELOPMENT AND PRODUCTION COMMITTEE. Within [***] after a POTENTIAL PRODUCT has been selected by the RESEARCH COMMITTEE, the JOINT STEERING COMMITTEE shall appoint a DEVELOPMENT AND PRODUCTION COMMITTEE to plan and manage the manufacturing and supply activities to be performed under this AGREEMENT with respect to the SELECTED REAGENT for such POTENTIAL PRODUCT, and facilitate communication between the PARTIES during such time as NEKTAR AL supplies BAXTER with such SELECTED REAGENT hereunder. The DEVELOPMENT AND PRODUCTION COMMITTEE shall be responsible for discussing in good faith and agreeing on issues relating to forecasting and contingency planning. The DEVELOPMENT AND PRODUCTION COMMITTEE shall operate by consensus with representatives of NEKTAR AL having [***] and representatives of BAXTER having [***]. In the event of any disagreements between the PARTIES’ representatives at the DEVELOPMENT AND PRODUCTION COMMITTEE level, the disagreement shall first be referred to the JOINT STEERING COMMITTEE for resolution. If the disagreement is not resolved by the JOINT STEERING COMMITTEE within [***] after the matter is referred to it for resolution, then the matter shall be referred to the senior management representatives of each PARTY for resolution, which senior management representatives shall be for Baxter [***] and for Nektar AL [***].

 

3.4

 

AMENDMENT; WAIVER. Notwithstanding anything to the contrary herein, neither the JOINT STEERING COMMITTEE, the RESEARCH COMMITTEE nor the DEVELOPMENT AND PRODUCTION COMMITTEE shall have the right or power to amend the terms of this AGREEMENT or waive rights or obligations of the PARTIES hereunder, or take any action that would conflict with any provision of this AGREEMENT, the SUPPLY AGREEMENT or a QUALITY AGREEMENT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

25


 

4.

 

LICENSES TO NEKTAR AL LICENSED TECHNOLOGY AND BAXTER TECHNOLOGY

 

 

4.1

 

LICENSE TO BAXTER. Subject to the terms and conditions of this AGREEMENT, NEKTAR AL hereby grants to BAXTER a worldwide, exclusive, royalty-bearing license, with the right to grant sublicenses as provided in Section 4.2, under the NEKTAR AL LICENSED TECHNOLOGY to develop, make, have made, import, export, use, sell, offer for sale and have sold POTENTIAL PRODUCTS and COMMERCIAL PRODUCT(S) in the FIELD. For clarity, [***].

 

4.2

 

TERMS OF SUBLICENSE. The terms of each sublicense under the license granted to BAXTER in Section 4.1 of this AGREEMENT shall provide that any SUBLICENSEE shall be subject to and consistent with the terms and conditions of this AGREEMENT; provided, however, that:

 

 

(i)

 

All royalties or other amounts due to NEKTAR AL with respect to such SUBLICENSEE’S development and/or commercialization of POTENTIAL PRODUCT or COMMERCIAL PRODUCT shall be collected by BAXTER and transmitted to NEKTAR AL in accordance with the payment terms set forth in Article 9;

 

(ii)

 

BAXTER’S grant of any sublicense shall not relieve BAXTER from any of its obligations under this AGREEMENT; and

 

 

(iii)

 

BAXTER shall remain jointly and severally liable for any breach of a sublicense by a SUBLICENSEE.

Notwithstanding the foregoing, [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

26


 

 

4.3

 

NEKTAR AL RESEARCH RIGHTS AND LIMITATIONS. Notwithstanding anything to the contrary in this AGREEMENT and without limiting any other retained rights, the license granted under Section 4.1 shall be subject to the retained right of NEKTAR AL and its AFFILIATES:

 

(i)

 

to practice the NEKTAR AL LICENSED TECHNOLOGY for the conduct of research and development of products that it is developing itself;

 

 

(ii)

 

to practice the NEKTAR AL LICENSED TECHNOLOGY for any purposes, including the research, development, manufacture and commercialization of products, whether itself or with or for others, outside of the FIELD;

 

(iii)

 

to sell REAGENTS (including SELECTED REAGENTS) through NEKTAR AL’S “catalog” for research purposes (subject to the limitations set forth below); and

 

 

(iv)

 

to perform their respective obligations to THIRD PARTIES set forth in agreements existing as of the EFFECTIVE DATE, [***].

NEKTAR AL covenants that during the TERM, [***]. NEKTAR AL further covenants that during the TERM, [***].

NEKTAR AL covenants that during the TERM, [***]. BAXTER understands and agrees that neither NEKTAR AL nor its AFFILIATES will have an obligation to [***].

For clarification, nothing in this Agreement, including any retained rights of NEKTAR AL and its AFFILIATES, grants NEKTAR AL or its AFFILIATES any rights under BAXTER PATENT RIGHTS, [***], other than for the purposes of performing any obligations under this AGREEMENT, including, without limitation, NEKTAR AL’s obligations under the RESEARCH PLAN, for the research and development for BAXTER of CONJUGATES, POTENTIAL PRODUCTS OR COMMERCIAL PRODUCTS.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

27


 

 

4.4

 

NO IMPLIED RIGHTS OR LICENSES. Neither PARTY grants to the other any rights or licenses, including to any BAXTER PATENT RIGHTS or BAXTER KNOW HOW, or NEKTAR AL PATENT RIGHTS or NEKTAR AL KNOW HOW or other intellectual property rights, whether by implication, estoppel or otherwise, except to the extent expressly provided for under this AGREEMENT. Other than as expressly provided for herein, neither BAXTER nor its AFFILIATES, SUBLICENSEES or its or their contractors, may [***].

 

4.5

 

LICENSE TO NEKTAR AL. BAXTER hereby grants to NEKTAR AL a non-exclusive, non-sublicensable, non-assignable, non-transferable, worldwide, royalty-free license, under BAXTER KNOW-HOW and BAXTER PATENT RIGHTS, and the NEKTAR AL LICENSED TECHNOLOGY that is licensed exclusively to BAXTER hereunder, for the sole purpose of performing NEKTAR AL’s obligations under this AGREEMENT, including the RESEARCH PLAN. This provision shall not prevent NEKTAR AL from [***]. BAXTER shall respond within [***] of receipt of such a request by NEKTAR AL. [***].

 

 

4.6

 

MUTUAL COVENANT. Each PARTY covenants and agrees that it and its AFFILIATES shall not use or practice the intellectual property rights licensed under this AGREEMENT except as expressly permitted by this AGREEMENT. Any use or practice of the intellectual property rights licensed under this AGREEMENT except as expressly permitted by this AGREEMENT that results in material harm to the other PARTY shall constitute a material breach of this AGREEMENT. Each PARTY covenants and agrees to cease any non-permitted use and to take all actions necessary to assign to the other PARTY any inventions made through use or practice of such PARTY’S intellectual property rights outside the scope of the license rights granted hereunder.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

28


 

5.

 

MANUFACTURE AND SUPPLY OF SELECTED REAGENTS

 

5.1

 

[***]. NEKTAR AL shall manufacture and supply and BAXTER shall purchase from NEKTAR AL, [***] of BAXTER’S and BAXTER’S AFFILIATES’ and SUBLICENSEES’ requirements of SELECTED REAGENTS, for the sole purpose of developing and manufacturing POTENTIAL PRODUCTS and COMMERCIAL PRODUCTS pursuant to the license granted hereunder.

 

 

5.2

 

SUPPLY PRIOR TO PIVOTAL TRIAL/SUPPLY AGREEMENT.

 

(i)

 

FORECAST. No later than [***] after selection of a POTENTIAL PRODUCT by the RESEARCH COMMITTEE, BAXTER shall provide NEKTAR AL with a [***] rolling forecast of its estimated requirements of the SELECTED REAGENT for such POTENTIAL PRODUCT for research, pre-clinical development and clinical development. BAXTER shall update such estimated forecast within thirty (30) days following the start of each calendar quarter. BAXTER shall issue purchase orders to NEKTAR AL [***] prior to the start of the calendar quarter (such time period to be negotiated by the PARTIES in good faith after the applicable SELECTED REAGENT is selected by the RESEARCH COMMITTEE) during which BAXTER wishes to receive supplies of SELECTED REAGENT for use in pre-clinical and Phase 1 and Phase 2 clinical development, until such time as the PARTIES execute the SUPPLY AGREEMENT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

29


 

 

(ii)

 

PRICE. The price of each SELECTED REAGENT shall be the PURCHASE PRICE, as set forth in Section 8.6.1.

 

(iii)

 

DELIVERY AND SHIPMENT; TITLE AND RISK OF LOSS. NEKTAR AL shall deliver all SELECTED REAGENT to BAXTER, and [***].

 

 

5.3

 

PIVOTAL TRIAL AND COMMERCIAL PRODUCT SUPPLY AGREEMENT. At least [***] prior to the anticipated date of commencement of the first PIVOTAL TRIAL for a POTENTIAL PRODUCT, the parties shall negotiate and execute a SUPPLY AGREEMENT for the manufacture and supply of SELECTED REAGENT for such POTENTIAL PRODUCT. The SUPPLY AGREEMENT shall be negotiated in good faith after the PARTIES have gained insight into the attributes of the SELECTED REAGENT, including quality requirements, testing requirements, production cycles and production costs. For purposes of this AGREEMENT, commencement of a clinical trial shall be deemed to occur on the date on which POTENTIAL PRODUCT is first administered to the first patient or subject in such trial.

The SUPPLY AGREEMENT shall include the essential terms and conditions set forth in Schedule V and such other terms and conditions that are usual and customary for agreements of this type.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

30


 

6.

 

SPECIFICATIONS AND MANUFACTURING WARRANTY FOR SELECTED REAGENTS

 

6.1

 

SPECIFICATIONS. The SPECIFICATIONS for SELECTED REAGENTS to be supplied pursuant to Article 5 will be set forth in the applicable QUALITY AGREEMENT. Any modifications of the SPECIFICATIONS shall require prior written approval of BAXTER and NEKTAR AL, not to be unreasonably withheld or delayed. Prior to entering into the SUPPLY AGREEMENT, BAXTER shall reimburse NEKTAR AL for its reasonable costs associated with implementing any agreed upon modifications to the SPECIFICATIONS, including without limitation any increases in MANUFACTURING COSTS. NEKTAR AL shall be responsible for any changes to SPECIFICATIONS initiated by NEKTAR AL to accommodate its business needs that do not directly relate to the development or improvement of SELECTED REAGENTS. For clarity, a change in regulatory requirements that is unique to a SELECTED REAGENT is not a NEKTAR AL business need. For example, if NEKTAR AL requests relocating the SELECTED REAGENT manufacturing operations from Alabama to California to accommodate the closure of its Alabama facility, NEKTAR AL shall be responsible for all costs related to such relocation.

 

 

6.2

 

COMPLIANCE AUDITS. BAXTER will have the right to perform compliance/quality audits, as set forth in the QUALITY AGREEMENTS.

 

6.3

 

WARRANTY. NEKTAR AL warrants that each shipment of SELECTED REAGENT shall, upon delivery, be in compliance/conformity with:

 

 

(i)

 

All applicable SPECIFICATIONS,

 

 

(ii)

 

The applicable QUALITY AGREEMENT, and

 

(iii)

 

ICH Q7A GUIDELINES and LAWS, as they apply to critical raw materials, in each case with respect to those SELECTED REAGENTS used in the manufacture of (a) POTENTIAL PRODUCTS for human clinical trials and (b) for COMMERCIAL PRODUCTS.

SELECTED REAGENTS that do not meet the foregoing warranties shall be deemed “NONCONFORMING REAGENTS” for the purposes hereof.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

31


 

 

6.4

 

DISCLAIMER OF WARRANTY.

 

6.4.1

 

EXCEPT AS PROVIDED IN SECTION 6.3, NEKTAR AL PROVIDES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY SELECTED REAGENT, POTENTIAL PRODUCT OR COMMERCIAL PRODUCT, OR NEKTAR AL LICENSED TECHNOLOGY, AND HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. BAXTER ACKNOWLEDGES THAT NEKTAR AL CANNOT GUARANTEE THE SAFETY, NON-TOXICITY, FITNESS OR EFFICACY OF SELECTED REAGENTS, POTENTIAL PRODUCTS OR COMMERCIAL PRODUCTS, AND BAXTER ACCEPTS ANY AND ALL RISK RESULTING FROM ITS USE OF CONJUGATES, REAGENTS, SELECTED REAGENTS, POTENTIAL PRODUCTS OR COMMERCIAL PRODUCTS.

 

 

6.4.2

 

EXCEPT AS PROVIDED IN SECTION 6.3, NEITHER PARTY PROVIDES ANY WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE RESEARCH PLAN OR ANY REAGENT, CONJUGATE, PRODUCT (INCLUDING THE SUCCESSFUL DEVELOPMENT, REGISTRATION, MANUFACTURE OR COMMERCIALIZATION OF ANY POTENTIAL PRODUCT) OR DELIVERABLE PROVIDED PURSUANT TO THE RESEARCH PLAN, AND EACH PARTY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. FOR CLARITY, THE FOREGOING SHALL NOT DIMINISH NEKTAR AL’S OBLIGATIONS PURSUANT TO SECTION 15.1.1.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

32


 

7.

 

EXCLUSIVITY; [***]

 

7.1

 

NEKTAR AL. In consideration of the MILESTONES, royalties and other consideration set forth herein, NEKTAR AL agrees to partner exclusively with BAXTER in the FIELD. Specifically, during the TERM, other than as provided for in this AGREEMENT or under the RESEARCH PLAN, [***].

Nothing set forth in this Section 7.1 shall prohibit NEKTAR AL from owning not in excess of 5% in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange or on the NASDAQ national market system or the NASDAQ Small Cap Market.

 

7.2

 

BAXTER. For good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by BAXTER), BAXTER agrees to partner exclusively with NEKTAR AL in the FIELD. Specifically, during the TERM, [***].

NEKTAR AL acknowledges that, [***].

Nothing set forth in this Section 7.2 shall prohibit BAXTER from owning not in excess of 5% in the aggregate of any class of capital stock of any corporation if such stock is publicly traded and listed on any national or regional stock exchange or on the NASDAQ national market system or the NASDAQ Small Cap Market.

In the event that the provisions of Sections 7.1 or 7.2 should ever be deemed to exceed the limitation provided by applicable law, then the PARTIES agree that such provisions shall be reformed to set forth the maximum limitations permitted.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

33


 

8.

 

QUALITY AND COMPLAINTS

 

8.1

 

ANALYSIS. After the RESEARCH COMMITTEE’S designation of a POTENTIAL PRODUCT or a SELECTED REAGENT, the PARTIES shall cooperate and work in good faith to establish written evaluation procedures and evaluation time lines in which to analyze shipments of SELECTED REAGENTS and verify SELECTED REAGENT quality (including meeting SPECIFICATIONS) using methods consistent with test procedures set forth in the applicable QUALITY AGREEMENT. In the event the PARTIES are not able to agree upon such procedures and timelines within [***] prior to the first PHASE 1 CLINICAL TRIAL of such POTENTIAL PRODUCT, (i) the matter shall first be referred to the DEVELOPMENT AND PRODUCTION COMMITTEE for resolution in accordance with Section 3.3; (ii) if within [***] the DEVELOPMENT AND PRODUCTION COMMITTEE is unable to reach resolution, either PARTY may elect to have a mutually acceptable laboratory or consultant establish such procedures and time lines, whose determination thereof shall be binding; and (iii) if within [***] the PARTIES are unable to select a mutually acceptable laboratory or consultant, each PARTY shall select an independent consultant within [***] and such consultants shall within [***] thereof select a mutually acceptable laboratory or consultant to establish such time lines and procedures, whose determination thereof shall be binding.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

34


 

 

8.2

 

ACCEPTANCE AND REJECTION. BAXTER shall notify NEKTAR AL in writing if BAXTER believes that a shipment of SELECTED REAGENT does not comply with the testing criteria identified pursuant to Section 8.1 above within [***] after BAXTER’S receipt of the relevant shipment of SELECTED REAGENT at BAXTER’S designated destination facility (“NOTICE OF NON-CONFORMITY”), which notice shall include the basis for its assertion of such noncompliance (including, at NEKTAR AL’S request, supporting data) for purposes of consideration and verification by NEKTAR AL. Unless otherwise set forth in the SUPPLY AGREEMENT for the applicable SELECTED REAGENT, if no such written NOTICE OF NON-CONFORMITY is received by NEKTAR AL within the above [***] period, BAXTER shall be deemed to have accepted the applicable shipment of SELECTED REAGENT as meeting SPECIFICATIONS and any other quality requirements which were verified using the agreed-upon evaluation procedures set forth in the QUALITY AGREEMENT, which shall thereafter conclusively be presumed to meet the SPECIFICATIONS and such quality requirements. If NEKTAR AL receives such NOTICE OF NON-CONFORMITY within such [***] period, then NEKTAR AL will evaluate BAXTER’S NOTICE OF NON-CONFORMITY within [***] of receipt thereof and provide a written response (“RESPONSE TO NOTICE OF NON-CONFORMITY”). If NEKTAR AL fails to provide to BAXTER a RESPONSE TO NOTICE OF NON-CONFORMITY within the [***] period, then NEKTAR AL shall be deemed to have accepted BAXTER’S conclusion that the SELECTED REAGENTS are non-conforming and waived its right to object to such conclusion.

If NEKTAR AL disagrees with such NOTICE OF NON-CONFORMITY, then (i) the matter shall first be referred to the DEVELOPMENT AND PRODUCTION COMMITTEE for resolution in accordance with Section 3.3; (ii) if the DEVELOPMENT AND PRODUCTION COMMITTEE is not able to agree on such matter within [***], SELECTED REAGENT samples or documentation will be supplied to a mutually acceptable laboratory or consultant for resolution, whose determination of conformity or non-conformity shall be binding; provided that in the event the PARTIES do not select a mutually acceptable laboratory or consultant within [***], each PARTY shall select an independent testing consultant within [***] and such consultants shall select a mutually acceptable or laboratory within [***] thereof. If the SELECTED REAGENT is determined to be non-conforming, then [***]. If the SELECTED REAGENT is determined to be conforming, then [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

35


 

 

8.3

 

REPLACEMENT OF NONCONFORMING REAGENT. NEKTAR AL shall [***], supply BAXTER with a replacement quantity of SELECTED REAGENT in an amount equal to that which, pursuant to the agreed upon procedures set forth herein and in the applicable QUALITY AGREEMENT, is determined to be NONCONFORMING REAGENT. [***], BAXTER shall promptly return all NONCONFORMING REAGENT to NEKTAR AL. Unless otherwise specified in the applicable SUPPLY AGREEMENT, such replacement shipment shall be made within a reasonable period of time not to exceed [***], which period of time shall be agreed upon once the “production cycle time” for the applicable SELECTED REAGENT has been established.

 

8.4

 

LIABILITY TO BAXTER FOR NONCONFORMING REAGENT.

 

 

8.4.1

 

NONCONFORMING REAGENT DETECTABLE BY TESTING. With respect to SELECTED REAGENT that was determined to be NONCONFORMING REAGENT through testing in accordance with the agreed-upon evaluation procedures for the applicable SELECTED REAGENT established pursuant to Section 8.1 and the applicable QUALITY AGREEMENT and for which BAXTER gave to NEKTAR AL a NOTICE OF NONCONFORMITY in accordance with the requirements of Section 8.2, [***]. For clarity, if BAXTER does not comply with the procedures set forth in Section 8.2 with respect to SELECTED REAGENT and BAXTER could reasonably have detected that such SELECTED REAGENT was NONCONFORMING REAGENT through testing in accordance with the agreed-upon evaluation procedures for the applicable SELECTED REAGENT established pursuant to Section 8.1 and the applicable QUALITY AGREEMENT, or if BAXTER otherwise failed to comply with the notice requirements in Section 8.2 for NONCONFORMING REAGENT, [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

36


 

 

8.4.2

 

NONCONFORMING REAGENT NOT DETECTABLE BY TESTING. With respect to (a) NEKTAR AL’S negligence or willful misconduct regarding SELECTED REAGENT or (b) SELECTED REAGENT that is NONCONFORMING REAGENT because of breaches of the warranties set forth in Sections 6.3(ii) or (iii) that could not reasonably have been detected through testing in accordance with the agreed-upon evaluation procedures for the applicable SELECTED REAGENT established pursuant to Section 8.1 and the applicable QUALITY AGREEMENT, [***].

 

8.5

 

[INTENTIONALLY OMITTED.]

 

 

8.6

 

FEES FOR MANUFACTURING AND SUPPLY OF SELECTED REAGENTS PRIOR TO PIVOTAL TRIAL.

 

8.6.1

 

From the date of selection of SELECTED REAGENT until the earlier of the date of commencement of a PIVOTAL TRIAL or the date on which the PARTIES enter into the SUPPLY AGREEMENT, BAXTER shall pay NEKTAR AL its MANUFACTURING COST plus [***] for each SELECTED REAGENT supplied to BAXTER, [***] (“PURCHASE PRICE”). BAXTER shall be entitled to audit such MANUFACTURING COST pursuant to Section 10.2.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

37


 

 

8.6.2

 

In addition to the PURCHASE PRICE, BAXTER shall [***] as described herein. [***]. To the extent available, NEKTAR AL shall [***]:

 

 

A.

 

[***];

 

B.

 

[***];

 

 

C.

 

[***];

 

D.

 

[***].

 

 

 

 

BAXTER [***] and NEKTAR AL shall provide invoices for such fees and services, as incurred. BAXTER shall also reimburse NEKTAR AL for NEKTAR AL’S reasonable pre-approved expenses incurred in connection with travel at BAXTER’S request.

 

 

 

BAXTER shall be entitled to audit such fees pursuant to Section 10.2. However, NEKTAR AL shall not be required to produce records that are not maintained in the normal course of business. For example, if NEKTAR AL [***].

 

 

8.6.3

 

BAXTER shall pay for or reimburse NEKTAR AL (as the case may be) for such [***] services or expenses within [***] after the date of NEKTAR AL’S invoice therefor. For clarity, BAXTER shall not be responsible for any fees, services, or travel that: (i) expand NEKTAR AL’s capacity to develop or produce PEG reagents for other customers; or (ii) do not directly or uniquely relate to this AGREEMENT or otherwise directly benefit BAXTER.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

38


 

9.

 

MILESTONES; ROYALTY PAYMENTS; ROYALTY REPORTS

 

9.1

 

MILESTONE PAYMENTS. BAXTER shall pay to NEKTAR AL MILESTONES in accordance with and pursuant to the events described in Schedule II hereto for POTENTIAL PRODUCT and/or COMMERCIAL PRODUCT, as the case may be. Each such MILESTONE shall be payable at the time the corresponding event occurs, and due within [***] of the event triggering such MILESTONE. All milestones payments shall not be advance payments against any royalties or other payments due and payable hereunder, but shall be in addition to any royalty or other payments due under this AGREEMENT. In the event BAXTER [***].

 

 

(i)

 

SKIPPED MILESTONE EVENT. If, for whatever reason, a particular milestone activity or event for which a MILESTONE is due is not carried out, then in such case the MILESTONE that NEKTAR AL would have received upon the occurrence of such milestone event for the POTENTIAL PRODUCT or COMMERCIAL PRODUCT had the particular milestone event been carried out shall be paid [***]. For example, [***].

 

 

(ii)

 

[***].

 

(iii)

 

NON-REFUNDABLE. Once a MILESTONE is due and payable hereunder or once a MILESTONE is paid, BAXTER shall not have any basis for claiming that such MILESTONE is not to be paid or is to be refunded (as the case may be). This provision shall not preclude BAXTER from seeking to recover damages from NEKTAR AL for the breach of this AGREEMENT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

39


 

 

(iv)

 

MARKETING AUTHORIZATION OUTSIDE OF THE FIELD. For clarity BAXTER shall have no rights whatsoever with respect to the development, manufacture, use, sale or importation of POTENTIAL PRODUCTS or COMMERCIAL PRODUCTS outside of the FIELD. For clarification, BAXTER [***]. If BAXTER desires to develop, manufacture, have manufactured, use, sell, offer for sale or import any POTENTIAL PRODUCT or COMMERCIAL PRODUCT outside of the FIELD, including without limitation obtaining MARKETING AUTHORIZATION for the addition of label claims that are outside of the FIELD for then-existing COMMERCIAL PRODUCT(S), BAXTER shall discuss the matter with NEKTAR AL. If NEKTAR AL (in its discretion) wishes to grant such additional rights to BAXTER, the PARTIES shall negotiate in good faith the terms and conditions (which may include, among other things, the payment of additional milestone payments) applicable to the grant of such rights.

 

9.1.1

 

[***] MILESTONES FOR THE DEVELOPMENT AND COMMERCIALIZATION OF ONE COMMERCIAL PRODUCT FOR THE TREATMENT OF HEMOPHILIA A. The MILESTONES that are provided for under Schedule II shall apply with respect to the first POTENTIAL PRODUCT being developed for the treatment of Hemophilia A that achieves each such MILESTONE, and the first COMMERCIAL PRODUCT receiving MARKETING AUTHORIZATION having a label indication for the treatment of Hemophilia A. Such POTENTIAL PRODUCT and COMMERCIAL PRODUCT may be the same, but in the event they are not, [***].

 

 

 

 

For clarity, BAXTER or its AFFILIATE or SUBLICENSEE, at BAXTER’S discretion, shall be [***]. In the event BAXTER or its AFFILIATE or SUBLICENSEE [***].

 

 

 

 

For example, [***], BAXTER shall [***].

 

 

 

 

NEKTAR AL shall not be entitled to additional MILESTONES for additional label claims that are obtained by BAXTER or its AFFILIATE or SUBLICENSEE for then-existing COMMERCIAL PRODUCT(S) for the treatment of Hemophilia A. For example, [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

40


 

 

9.1.2

 

ADDITIONAL MILESTONES FOR THE COMMERCIALIZATION OF MORE THAN ONE COMMERCIAL PRODUCT FOR THE TREATMENT OF HEMOPHILIA A. After the receipt of MARKETING AUTHORIZATION for the first COMMERCIAL PRODUCT, NEKTAR AL shall be entitled to receive milestone payments in addition to the MILESTONES provided for in Schedule II, for each additional POTENTIAL PRODUCT with a label indication for the treatment of Hemophilia A, for which BAXTER or its AFFILIATE or SUBLICENSEE receives a new MARKETING AUTHORIZATION in the United States and/or European Union. With respect to any additional POTENTIAL PRODUCTS [***]. The amounts of such payments will be negotiated by the PARTIES in good faith and agreed upon in a formal written amendment hereto [***], provided that the additional milestone payments for each such additional POTENTIAL PRODUCT [***].

 

 

 

 

For clarity, [***].

 

9.1.3

 

POTENTIAL PRODUCTS FOR [***]. If BAXTER elects to develop a POTENTIAL PRODUCT to treat [***], BAXTER shall pay to NEKTAR AL milestone payments in addition to the MILESTONES that are set forth in Schedule II, which additional milestone payments will be negotiated by the PARTIES in good faith and agreed upon in a formal written amendment hereto. The additional milestone payments for such POTENTIAL PRODUCT to treat [***] shall be agreed upon in advance but no later than [***].

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

41


 

 

9.1.4

 

INDICATIONS FOR [***]. While NEKTAR AL shall not be entitled to additional milestone payments for additional label claims that are obtained by BAXTER or its AFFILIATE or SUBLICENSEE for then-existing COMMERCIAL PRODUCT(S) within the FIELD, if BAXTER or its AFFILIATE or SUBLICENSEE seeks to obtain [***] are for a then-existing COMMERCIAL PRODUCT with a label indication for the [***], then in such case, additional milestone payments shall be due. The provisions of Section 9.1.2, as they pertain to [***], shall apply such that clinical development of COMMERCIAL PRODUCT(S) associated with obtaining label claims for the treatment of [***] shall be deemed to constitute development of an additional POTENTIAL PRODUCT.

 

 

9.2

 

ROYALTIES. BAXTER shall pay NEKTAR AL royalties in an amount equal to the product of the ROYALTY RATE and the annual aggregate NET SALES of all COMMERCIAL PRODUCTS on a COMMERCIAL PRODUCT-by-COMMERCIAL PRODUCT and country-by-country basis for an initial period of ten (10) years from the FIRST COMMERCIAL SALE of the applicable COMMERCIAL PRODUCT in the applicable country (the “INITIAL ROYALTY TERM”). Royalties shall be paid during the INITIAL ROYALTY TERM in each and every country where COMMERCIAL PRODUCT is sold, without regard to whether a VALID PATENT CLAIM covers the manufacture, use, sale, offer for sale or import of the COMMERCIAL PRODUCT or the SELECTED REAGENT contained in such COMMERCIAL PRODUCT.

 

 

 

 

[***]

 

indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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9.2.1

 

After the expiration of the INITIAL ROYALTY TERM for a particular COMMERCIAL PRODUCT in a particular country, BAXTER shall continue to pay such royalties on NET SALES of such COMMERCIAL PRODUCT on a world-wide basis provided that there exists, in each of the following major markets in which MARKETING AUTHORIZATION is received for such COMMERCIAL PRODUCT, a VALID PATENT CLAIM which would be infringed by the making, using, having made, offering for sale, sale or importation of such COMMERCIAL PRODUCT or the SELECTED REAGENT contained in such COMMERCIAL PRODUCT: [***] (collectively, “MAJOR MARKETS”). Such royalties shall be paid on NET SALES of COMMERCIAL PRODUCTS in those countries where the manufacture, import, use, offer for sale or sale of the applicable COMMERCIAL PRODUCT or the SELECTED REAGENT contained in such COMMERCIAL PRODUCT is not covered by a VALID PATENT CLAIM, provided that the manufacture, import, use, offer for sale or sale of such applicable COMMERCIAL PRODUCT or such SELECTED REAGENT is covered by a VALID PATENT CLAIM in each of the MAJOR MARKETS. [***].

 

9.2.2

 

If, at the time of sale of a COMMERCIAL PRODUCT in a particular country after the expiration of the INITIAL ROYALTY TERM in such country, there is no VA


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