OPTION AND LICENSE AGREEMENT

Exhibit 10.242

Portions of this exhibit marked [*] are omitted and are requested to be treated confidentially.

OPTION AND LICENSE AGREEMENT

THIS OPTION AND LICENSE AGREEMENT (the “Agreement”) is effective as of the 15 ^th day of December, 2006 (the “Effective Date”) by and among PHARMACO INVESTMENTS, INC., a Delaware corporation having a place of business at 3151 South Seventeenth Street, Wilmington, North Carolina 28412 (referred to hereinafter as “PII”), a wholly owned subsidiary of Pharmaceutical Product Development, Inc., a North Carolina corporation having its principal place of business at 3151 South 17th Street, Wilmington, NC 28412 (“PPD”), and RANBAXY LABORATORIES LTD., a corporation incorporated, organized and operating under the laws of India and having a place of business at Plot 90, Sector 32 Gurgaon 122001 (Haryana), India (hereinafter “RBX”). PII and RBX are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” PPD is a Party to this Agreement for the sole and limited purpose of agreeing to be bound by Section 12.19 of this Agreement.

WITNESSETH THAT:

WHEREAS, RBX has performed research and development with respect to a [*] identified as [*] ;

WHEREAS, PII wishes to enter into an agreement to obtain an exclusive option to acquire an exclusive license to RBX Intellectual Property (as defined below) and to develop and market therapeutic products incorporating the Compound made in accordance therewith; and

WHEREAS, RBX is willing to grant such exclusive option to acquire an exclusive license to PII under the terms and conditions set forth in this Agreement.

NOW, THEREFORE, PII and RBX hereby agree as follows:

ARTICLE I – DEFINITIONS

1.01. “AB Rated Product” means a product which has been approved by a Regulatory Agency having an approved application that contains adequate scientific evidence establishing, through in vitro and/or in vivo studies, the bioequivalence of such product to a Licensed Product developed under this Agreement and which product contains the same active pharmaceutical ingredient as such Licensed Product.

1.02. “Affiliate” of a Party hereto shall mean any entity that controls, is controlled by or is under common control with such Party. For purposes of this definition, a Party shall be deemed to control another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting equity of another entity (or other comparable ownership interest for an entity other than a corporation) or if it has management control of the other entity.

 

[ * ] Confidential treatment requested; certain information omitted and filed separately with the SEC.

1.03. “API” means active pharmaceutical ingredient.

1.04. “Clinical Studies” means Phase I Clinical Studies, Phase II Clinical Studies, Phase III Clinical Studies, and/or Post-Registration Studies.

1.05. “Combination Product” means any product in any dosage form that contains, in addition to a Licensed Product, one or more other active ingredients having significant prophylactic or therapeutic activity.

1.06. “Complete” or “Completion” , when used to describe a clinical study, shall mean the date when all data and results of such study have been collected and the final study report has been completed.

1.07. “Compound” means: (a)  [*] ; (b) any pharmaceutically acceptable salt of the foregoing; (c) any active metabolite of the foregoing; (d) any isomer of the foregoing; (e) any enantiomer of the foregoing; and (f) any prodrug of the foregoing.

1.08. “Compound Know-How” means any Know-How, including Manufacturing Know-How, that is Controlled by RBX and is necessary for the development of the Compound or a Licensed Product.

1.09. “Confidential Information” shall have the meaning set forth in Section 9.01.

1.10. “Controlled” means, with respect to any compound, material, information or intellectual property right, that the Party owns or has a license to such compound, material, information or intellectual property right and has the ability to grant to the other Party access, a license or a sublicense (as applicable under this Agreement) to such compound, material, information or intellectual property right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party existing at the time such Party would be first required hereunder to grant the other Party such access, license or sublicense.

1.11. “CTM Product” means the Compound together with any formulation ingredients in a finished pharmaceutical dosage form suitable for administration and dosing to humans in Clinical Studies, but not in suitable form for commercial sale (for example, without limitation, not in packaged form such as blister packs or other containers and not including external packaging and package inserts).

1.12. “Develop” or “Development” means conducting in vitro and/or in vivo pre-clinical investigations and Clinical Studies of the Compound (including the manufacture of CTM Product and Drug Substance) and the Licensed Products (including any placebo), and preparing, submitting and prosecuting all applications to obtain Regulatory Approval of the Licensed Products for sale in the Field in the Territory.

 

[ * ]

Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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1.13. “Development Plan” means the initial plan to Develop the first Licensed Product for the Indication, attached hereto as of the Effective Date as Schedule 1.13 , as such Development Plan may be modified or updated in accordance with Section 4.01.

1.14. “Diligent Efforts” means the carrying out by PII, its Affiliate, sublicensee or Third Party Partner of obligations or tasks in a sustained and continuous manner consistent with the efforts a reasonable Third Party, engaged in the development and commercialization of pharmaceutical products for human use, ordinarily devotes (including meeting the timelines for development and commercialization) to a research, development or marketing project for a pharmaceutical product or products of similar market potential, profit potential or strategic value to that of the Compound based on conditions then prevailing. Diligent Efforts includes without limitation, using commercially reasonable efforts to sublicense the licenses granted under this Agreement to a Third Party for the continued development, manufacture and commercialization of the Compound and the Licensed Products. Notwithstanding the foregoing, the requirement to exercise “Diligent Efforts” does not require that PII conduct Clinical Studies or other Development studies relating to the Compound of the size and scope previously conducted by Third Party pharmaceutical companies to obtain Regulatory Approval of statin products for the Indication, except to the extent PII is otherwise required to do so by the FDA. Without limiting the Parties’ rights under Section 12.18 , the Parties understand and agree that delays resulting from the occurrence of Force Majeure events or Interfering Events shall not be grounds for RBX to claim a failure to use Diligent Efforts or that a material breach of this Agreement has occurred; provided, however, that (i) PII uses Diligent Efforts to avoid the occurrence of such delays, and (ii) uses Diligent Efforts to reduce the impact of such delays following their occurrence.

1.15. “Drug Substance” means the Compound suitable for administration and dosing to a human.

1.16. “EMEA” means the European Medicine Agency.

1.17. “Enforceable Claim” means a claim included in an issued and unexpired patent that has not been: (i) abandoned or disclaimed; or (ii) declared invalid or unenforceable by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal.

1.18. “FDA” means the United States Food and Drug Administration, or any successor thereto.

1.19. “FD&C Act” means the United States Food, Drug and Cosmetic Act, as amended and the rules and regulations of the FDA promulgated thereunder.

1.20. “Field” means all human uses.

1.21. “First Commercial Sale” means the first transaction following Regulatory Approval of a Licensed Product in which PII, its Affiliate, sublicensee or Third Party Partner transfers physical possession and title to such Licensed Product to a Third Party in exchange for value and after which transfer the seller has no right or power to determine the Third Party’s resale price. Transfer for research, clinical development or testing only purposes shall not constitute the First Commercial Sale.

 

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1.22. “ Force Majeure” shall mean conditions or events that are beyond the control of a Party or any Third Party vendors, sublicensee or Third Party Partner of PII, including, without limitation, fire, flood, earthquake, storm, war, acts of God, accident, voluntary or involuntary compliance with any regulation, law or order of any government, civil commotion, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, explosion and/or any other cause or externally induced casualty beyond such Party’s control; provided , however , that except as specifically provided above, Force Majeure shall not include delays caused by the conduct of Third Party vendors, sublicensees or a Third Party Partner of PII in the Development, Regulatory Approval or commercialization of the Licensed Products, including, without limitation, manufacturers of the Licensed Products.

 

1.23.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

1.24. “GMP” means the FDA’s then-current good manufacturing practices applicable to the manufacture of pharmaceutical products for human use in the United States, the FDA’s guidance documents, and all successor regulations and guidance documents.

1.25. “IND” means Investigational New Drug Application submitted to the FDA in conformance with applicable laws and regulations and the foreign equivalent of such application in non-U.S. countries of the Territory.

1.26. “Indication” means dyslipidemia, including, without limitation, hypercholesterolemia, hyperlipidemia or hypertriglyceridemia.

1.27. “Interfering Event” means (i) any decision ruling, directive, instructions, position, guidance or other action, whether in writing or otherwise of a Regulatory Agency, IRB or ethics committee, any change in a Regulatory Agency, IRB or ethics committee approval processes or regulatory requirements (including Clinical Study requirements) from those in effect on the Effective Date, or any inaction on the part of a Regulatory Agency, IRB or ethics committee, in each case that materially affects the requirements for, or the timeline of, the Development and Regulatory Approval of the Licensed Product(s) in the U.S. or other countries in which Regulatory Approval is being, or is required to be, sought, (ii) a Licensed Product Manufacturing Failure, or (iii) a determination by PPD, in the exercise of its reasonable discretion, that data or other information obtained during the course of, or as a result of, any Clinical Study for the Compound or Licensed Product(s) will have a material adverse affect on the safety or efficacy of the Licensed Product(s) or require that additional Development activities be conducted (exceeding that provided in the then current Development Plan) for the Development and Regulatory Approval of the Licensed Product(s).

 

1.28.

“Joint Invention” shall have the meaning in Section 7.01.

 

1.29.

“Joint Patents” shall have the meaning in Section 7.03.

 

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1.30. “Joint Patent Rights” shall have the meaning in Section 7.01.

1.31. “Know-How” means any unpatented or unpatentable inventions, information, data, drawings, plans, specifications and designs relating to the Compound, a CTM Product or a Licensed Product including, in particular, any marketing information, preclinical, clinical, toxicology, analytical, regulatory, ADME information and/or data. As used herein, “ADME” refers to absorption, distribution, metabolism and excretion information and/or data of the Compound or Licensed Product.

1.32. “Licensed Product” means any product: (i) which contains the Compound, or any isomer, homolog, analog or prodrug of the Compound, or (ii) which, if made, used or sold in the absence of the license granted by RBX to PII under this Agreement, would infringe an Enforceable Claim of a RBX Patent or Joint Patent.

1.33. “Licensed Product Manufacturing Failure” means any failure, disruption, delay or any other problem encountered by PII, its contract manufacturer or Third Party Partner relating to the manufacture, formulation or production of API, CTM Product or Licensed Product under the Development Plan.

1.34. “MAA” means Marketing Authorization Application submitted to the EMEA.

1.35. “Major Regulatory Filings” has the meaning provided in Section 4.03.

1.36. “Manufacturing Know-How” means any Know-How that is Controlled by RBX and relates to the manufacture of the Compound or a Licensed Product including processes and analytical methods therefore.

1.37. “NDA” means a New Drug Application, as defined in the FD&C Act and applicable FDA rules and regulations, and the foreign equivalent of such application in non-U.S. countries of the Territory.

1.38. “Net Sales” means the total gross sales (number of units shipped times the invoice price per unit) of all Licensed Products by PII, its Affiliates, sublicensees (including sublicensees of any sublicensee), Affiliates of sublicensees and/or a Third Party Partner in the Territory to Third Parties, less the following deductions to the extent actually paid or allowed: (i) quantity discounts, cash discounts or chargebacks actually granted, allowed or incurred in the ordinary course of business in connection with the sale of Licensed Product; (ii) sales and excise taxes, customs and any other taxes, all to the extent added to the sale price and paid by the selling party and not refundable in accordance with applicable law (but not including taxes assessed against the income derived from such sale); (iii) freight, insurance and other transportation charges to the extent added to the sale price and set forth separately as such in the total amount invoiced; (iv) reserves for amounts to be repaid or credited by reason of rejections, defects, recalls or returns or because of retroactive price reductions, chargebacks, rebates or commissions; (v) rebates or allowances actually granted or allowed to group purchasing organizations, managed health care organizations and to governments, including their agencies, or to trade customers, in each case that are not Affiliates, sublicensees or a Third Party Partner of PII; and (vi) allowances or credits

 

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to customers, not in excess of the selling price of Licensed Product, on account of governmental requirements, rejection, outdating recalls or return of the Licensed Product, made in accordance with GAAP and PII’s accounting policies. Sales between PII and its Affiliates, sublicensees and a Third Party Partner of PII shall not be treated as Net Sales hereunder. The calculation of Net Sales shall be made in accordance with GAAP and PPD’s accounting policies.

1.39. “ Option ” shall have the meaning provided in Section 2.01 hereof.

1.40. “ Option Period ” shall have the meaning provided in Section 2.02 hereof.

1.41. “ Option Termination Date ” shall mean April 1, 2007.

1.42. “Partnering Agreement” means an executed and in-force written agreement between PII and a Third Party, wherein such Third Party is granted the right to develop (if applicable) and commercialize, alone or in collaboration with PII, a human therapeutic product that comprises the Compound. For clarity, an agreement in which PII engages a Third Party to perform, on behalf of PII, certain obligations of PII under the Development Plan is not a Partnering Agreement.

1.43. “Patent” means (i) unexpired letters patents (including inventor’s certificates) of which not all claims have been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof and (ii) pending applications for letters patent, including without limitation any continuation, division or continuation-in-part thereof and any provisional applications.

1.44. “Phase I Clinical Study” means that portion of the Development program that generally provides for the first introduction into humans of the Compound with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of the CTM Product in healthy patients, and generally consistent with 21 CFR §312.21(a), or its foreign equivalent in non-U.S. countries of the Territory. A Phase I Clinical Study can comprise a Phase Ia clinical study and a Phase Ib clinical study. A Phase Ia clinical study is a study performed in healthy humans. A Phase Ib clinical study is a study performed in human patients.

1.45. “Phase II Clinical Study” means a clinical trial of the Compound on patients, including possibly pharmacokinetics and dose ranging studies, the principal purposes of which are to make a preliminary determination that the Compound is safe for its intended use and to obtain sufficient information about the Compound’s efficacy to permit the design of further clinical trials, and generally consistent with 21 CFR §312.21(b), or its foreign equivalent in non-U.S. countries of the Territory. A Phase II Clinical Study can comprise a Phase IIa clinical study and a Phase IIb clinical study.

1.46. “Phase III Clinical Study” means a clinical trial involving administration of the Compound to sufficient numbers of human patients with the goal of establishing that the Compound is safe and efficacious for its intended use, to define warnings, precautions and

 

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adverse reactions that are associated with the drug or label expansion of the Compound, and to be considered as a pivotal study for submission of an NDA; and generally consistent with 21 CFR §312.21(b), or its foreign equivalent in non-U.S. countries of the Territory. A Phase III Clinical Study can comprise a Phase IIIa clinical study and a Phase IIIIb clinical study. A Phase IIIb clinical study is performed to further define findings found in a Phase IIIa clinical study.

1.47. “Post-Registration Studies” means Clinical Studies which are conducted in a particular country after the attainment of Regulatory Approval from the appropriate Regulatory Agency in that country, which studies are conducted for a variety of purposes including, but not limited to, post-marketing surveillance and/or other studies intended to confirm or enhance the commercial profile of the particular Licensed Product.

1.48. “PII Information” means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, databases, inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and patent and other legal information or descriptions produced by PII in the course of developing a Licensed Product, including PII Compound Information.

1.49. “PII Patents” shall have the meaning set forth in Section 7.03(b).

1.50. “PII Compound Information” means the data and results generated from the pre-clinical and clinical investigation and Development, and Clinical Studies and testing of the Compound and/or the Licensed Products during the term of this Agreement in the course of the Development Plan or related work on the Compound or Licensed Products by PII or on behalf of PII, its Affiliates, sublicensees and/or a Third Party Partner.

1.51. “Regulatory Agency” means the FDA or an equivalent non-U.S. regulatory agency.

1.52. “RBX Intellectual Property” means (i) the Compound Know-How, including, without limitation, Manufacturing Know-How, (ii) RBX Patents, and (iii) RBX’s portion of Joint Patent Rights.

1.53. “RBX Patents” means all Patents that are owned or Controlled by RBX or its Affiliates during the term of this Agreement and that claim the Compounds or any Licensed Products or the Development, manufacture, intermediates made during the manufacture thereof, purification, use or formulation thereof. RBX Patents include without limitation patents that claim RBX Intellectual Property. RBX Patents as of the Effective Date are listed in Schedule 1.53 .

1.54. “Regulatory Approval” means the product license or marketing approval necessary as a prerequisite for marketing a Licensed Product in a particular country in the Territory, including, where applicable, pricing and reimbursement approval.

1.55. “Regulatory Documentation” means all regulatory filings and supporting documents created, submitted to a Regulatory Agency (including any supra-national agency such as in the

 

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European Union) relating to a Licensed Product, and all data contained therein, including, without limitation, the contents of any IND(s), NDA(s), Drug Master File (“DMF”), correspondence to and from the Regulatory Agency or governmental authority outside of the United States, minutes from meetings (whether in person or by audioconference or videoconference) with regulatory authorities, registrations and licenses, regulatory drug lists, advertising and promotion documents shared with regulatory authorities, adverse event files, complaint files and manufacturing records.

1.56. “Territory” shall mean all countries of the world.

1.57. “Third Party” means any person or entity other than PII or RBX, or an Affiliate of PII or RBX.

1.58. “Third Party Partner” means a Third Party that has entered into a Partnering Agreement.

ARTICLE II – OPTION TO LICENSE

2.01 License Option. In consideration for the payment by PII to RBX of the sum of [*] pursuant to the terms of a certain Letter Agreement between the Parties dated August 2, 2006, the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by RBX, subject to and upon the terms and conditions of this Agreement, RBX hereby grants to PII an exclusive option to acquire an exclusive, royalty bearing license and sublicense rights to the RBX Intellectual Property in the Field in the Territory, all as set forth in Article I and Articles III through XII of this Agreement (the “Option”).

2.02 Term of the Option. The term of the Option shall commence on the Effective Date and shall expires at 5:00 pm Eastern Standard Time on the Option Termination Date (the “Option Period”).

2.03 Exercise of Option. PII may exercise the Option during the Option Period by delivering written notice to RBX of PII’s exercise of the Option on or before the expiration of the Option Period. The date on which such notice is given in accordance with Section 12.08 shall be the “Option Exercise Date” for purposes of this Agreement. If PII does not exercise the Option on or before the expiration of the Option Period, each of the Option and this Agreement shall terminate and be of no further force and effect.

2.04 Option Covenants. Between the Effective Date and the earlier to occur of (i) the Option Exercise Date, and (ii) the Option Termination Date, RBX covenants that (a) it will take all reasonably necessary action to protect and maintain all right, title and interest in RBX Intellectual Property existing as of the Effective Date, and (b) it will not grant, sell, assign, transfer, covey, option, license, sublicense, pledge or otherwise dispose of all or any part of the RBX Intellectual Property, or any rights thereto, to a Third Party, or enter into any agreement, arrangement, understanding or discussions with a Third Party with respect thereto.

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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2.05 License Terms . Upon the timely exercise by PII of the Option in accordance with Section 2.03, effective immediately on the Option Exercise Date and without any further action or consent by RBX or PII, the provisions set forth in Article I and Articles III – XII of this Agreement shall constitute the terms and conditions of the license and sublicense rights granted by RBX to PII with respect to the RBX Intellectual Property in the Territory and in the Field related to Compound and Licensed Products.

ARTICLE III – LICENSES AND EXCLUSIVITY

3.01 License to RBX Intellectual Property . Effective as of the Option Exercise Date, subject to and upon the terms and conditions set forth herein, RBX hereby grants PII an exclusive, royalty bearing license (with the right to sublicense as provided in Section 3.02) to RBX Intellectual Property to Develop, make, have made, use, offer for sale, sell and import the Compound and the Licensed Products in the Territory and the Field.

3.02 Right to Sublicense. With respect to the licenses granted to PII in Section 3.01 above, such licenses shall include the right of PII to sublicense all or any part of such licenses to a Third Party, provided however, that (i) such sublicense is consistent with the terms of this Agreement, and (ii) PII shall provide prior written notice to RBX of the proposed sublicense. For clarification, PII has no obligation to obtain RBX’s consent to sublicense. Notwithstanding any sublicense by PII of its rights under Section 3.01 or elsewhere in this Agreement, PII shall remain the primary obligor for the completion of the Development of the Compound and Licensed Products, the commercialization of the Licensed Products and all other obligations, including payment obligations, under this Agreement and shall be responsible for any breach or failure to comply by any sublicensee or Third Party Partner of any of the obligations of PII provided in this Agreement.

3.03 Exclusivity . Except as set forth in Section 3.04, during the term of this Agreement, RBX and its Affiliates will not, directly or indirectly through or with an Affiliate, Third Party or otherwise, (i) make, use, sell or import the Compound or (ii) conduct, sponsor, fund, underwrite, initiate or otherwise participate in any development or commercialization activities (or grant any rights to Third Parties to do so) with respect to the Compound in the Field.

3.04 RBX Co-Marketing Rights.

(a) RBX reserves for itself and its Affiliates the non-exclusive right to co-market the Licensed Product(s) (i) at any time in India, and (ii) as an AB Rated Product in any country in the Territory following the sale of an AB Rated Product by a Third Party in such country. Ranbaxy may contract with Third Parties for the distribution of the Licensed Products pursuant to the exercise of the co-marketing rights provided herein. As used herein, RBX’s right to “ co-market ” means the right for RBX (either itself or through its Affiliates or a Third Party) to manufacture, sell, distribute, promote and market Licensed Products under trademarks, tradenames, service marks, designs or names or other trade dress which are different from, and which are not confusingly similar to, any trademarks, tradenames, service marks, designs or names (including without limitation domain names), graphics or trade dress (including without limitation product packaging and tablet characteristics) used by PII, any PII Affiliate, any

 

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sublicensee or Third Party Partner of PII in connection with such Licensed Product. RBX agrees not to reproduce or use any text or copyrighted work covering the Licensed Product without PII’s prior written consent.

(b) If RBX decides to exercise its co-marketing rights provided in Section 3.04(a) [*] . At the time RBX decides to exercise its co-marketing rights, RBX may send to PII a written request to discuss the possibility of RBX [*] . Upon RBX’s reasonable determination that a Third Party is expected to launch within six (6) months an AB Rated Product in a country of the Territory, RBX may at such time request [*] launch of its co-marketed product in such country upon exercise of its co-marketing right as set forth in subsection (a) of this Section 3.04.

ARTICLE IV –CONDUCT OF PROJECT; DEVELOPMENT; MARKETING

4.01 General Principle . During the term of this Agreement, as between PII and RBX, PII shall be solely responsible for the Development of the Compound and the Licensed Product(s), including, without limitation, the conduct of the Development Plan for the Compound and the Licensed Product(s), and such other development activities in accordance with the Development Plan, and for the marketing, manufacture and commercialization of the Compound and the Licensed Product(s) in the Territory consistent with its obligations under this Agreement. PII will use Diligent Efforts to Develop and commercialize the Compound and at least one (1) Licensed Product for the Indication. PII shall have responsibility for, and shall exercise Diligent Efforts in, obtaining necessary Regulatory Approvals, and PII or its Affiliates, sublicensees or Third Party Partner, shall hold legal title of any [*] for the Licensed Product(s) and shall have responsibility for all the Development, manufacture and marketing activities pursuant to and in support of such applications. RBX acknowledges that the Development Plan is an initial plan and may change as a result of data obtained during the execution of the Development Plan, changes to Regulatory Agency guidelines and requirements and prevailing conditions in the marketplace for the Licensed Product. PII shall have the right to modify the Development Plan in its sole and absolute discretion, but shall use Diligent Efforts to advance the Development and commercialization of the Compound and the Licensed Product.

4.02 Development Reports.

(a) Quarterly Development Reports . PII shall furnish to the alliance manager as may be designated from time to time by RBX (the “Alliance Manager”) a quarterly written report detailing the progress of the Development, including successes, difficulties, milestone achievements and a comparison of the status of the Development as compared to the Development timeline contained in the Development Plan, including (i) a description of the status of the preparation, filing and receipt of Regulatory Approvals relating for the Licensed Product(s) in the Territory, (ii) any updates or modifications to the Development Plan, and (iii) the estimated date of the First Commercial Sale of the Licensed Products in each country of the Territory in which PII has submitted agency applications for Regulatory Approval of the Licensed Product(s). Such reports shall constitute Confidential Information under Article IX and RBX will limit disclosure to its employees on a strict need-to-know basis. The first quarterly report shall be provided to RBX on April 1, 2007 and on the first day of each July, October, January and April thereafter.

 

[ * ] Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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(b) Record Keeping. PII shall maintain written records of all research and development activities under the Development Plan, such records shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the execution of the Development Plan in sufficient detail and in good scientific manner appropriate for patent and regulatory drug development and approval purposes. RBX shall have the right to review such records annually to the extent necessary for RBX to determine that PII is fulfilling its obligations under the Agreement. The Parties acknowledge and agree that all information in such records shall be subject to the confidentiality obligations of Article IX hereof.

4.03 Development; Regulatory Activities and Approvals.

(a) PII shall use Diligent Efforts and be responsible for the conduct of the Development of the Compound and the Licensed Product(s) within the Territory in order to obtain and maintain Regulatory Approval of a [*] (“Major Regulatory Filings”) for a Licensed Product for the Indication as promptly as practicable. In executing the Development Plan, PII shall be solely responsible for all costs and expenses relating to the Development Plan and obtaining Regulatory Approval for the Licensed Product(s). Without limiting the generality of the foregoing, PII shall be responsible for the preparation, filing and prosecution of all agency applications for obtaining Regulatory Approvals in the Territory which are required to commercially sell or use the Licensed Product(s) in the Territory and for all subsequent related submissions. All Regulatory Documentation and Regulatory Approvals in the Territory shall be owned and filed in the name of PII. PII shall use Diligent Efforts in preparing the Major Regulatory Filings for Regulatory Approval of the Licensed Product(s) and in causing such agency applications to progress through the Regulatory Approval process. PII shall use Diligent Efforts for the preparation and submission of all governmental and agency applications for Regulatory Approval for a Licensed Product for the Indication in countries of the Territory other than [*] (which are addressed separately above) in which PII determines to submit agency applications, and the receipt of such Regulatory Approvals, including, without limitation, pricing and reimbursement approval, where applicable.

(b) If PII receives a written communication from a Regulatory Agency, either directly or through a sublicensee or a Third Party Partner of PII, relating to the Compound or the Licensed Product(s) which relate to the Development, marketing, safety or efficacy of the Compound or the Licensed Products, and which would materially affect the time for receipt of Regulatory Approval of such Licensed Product(s) or the ability of PII to Develop or market such Licensed Product(s), PII shall promptly provide RBX’s Alliance Manager (as provided in Section 4.02(a)) with a summary of such information. Such summary shall be subject to the confidentiality obligations of Article IX hereof.

4.04 Launch and Marketing.

(a) PII, at is sole cost and expense, shall use Diligent Efforts to complete the First Commercial Sale of a Licensed Product in [*] as soon as practicable after Regulatory Approval has been obtained for such Licensed Product, and thereafter shall use Diligent Efforts to manufacture, promote, distribute, market, advertise and sell the Licensed Product (or cause the manufacture, promotion, distribution, marketing, advertisement and sale of the Licensed

 

[ * ]

Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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Product) to the extent reasonable in light of the market and potential market for the Licensed Product and in a manner consistent with which a Third Party engaged in the commercialization of pharmaceutical products for human use ordinarily devotes to marketing for a pharmaceutical product having similar market potential, profit potential or strategic value to that of the Licensed Product in a particular country of the Territory. For the sake of clarity, RBX acknowledges and agrees that, based on market conditions, including pricing conditions and environment, then existing in [*] , PII may delay or elect not to manufacture, promote, distribute, market, advertise or sell the Licensed Product in any such Country. Without limiting the foregoing, not later than 30 days following the end of each calendar year following the First Commercial Sale of any Licensed Product, PII shall provide to RBX a written report summarizing PII’s (or its Third Party Partner’s) marketing efforts relating to the Licensed Product during such annual period.

(b) Restrictive Covenant. Neither PII nor any of its Affiliates shall develop, license, acquire, file for Regulatory Approval, market, promote, sell or distribute [*] other than the Compound and the Licensed Product(s) hereunder, or [*] other than the Compound and the Licensed Product(s) hereunder in combination with another active ingredient in any country of the Territory during the term of this Agreement, except that PII and any of its Affiliates may provide services to Third Parties in connection with the preclinical and clinical development or post-marketing studies of one or more [*] , provided that (i) such services are limited to those that are usual and customary for clinical research organizations in general, and PII and its Affiliates in particular; and (ii) PII and its Affiliates shall not retain (1) any right, title, interest or license in any such [*] ; or (2) any right to receive (directly or indirectly) any consideration in connection with the subsequent development, regulatory filings, regulatory approval, promotion or sales of such [*] (other than normal and customary fees and expenses charged by PII and its Affiliates for any such services).

4.05 Transfer of Know-How.

(a) To facilitate PII’s accomplishment of the responsibilities set forth in this Article IV, RBX shall supply PII with copies of all documents pertinent to the Development of the Compound which are in the possession of RBX or its Affiliates as of the Effective Date including but not limited to those documents listed in Schedule 4.05 . RBX shall use reasonable commercial efforts to provide such documents to PII within forty-five (45) days of the Option Exercise Date. RBX will provide PII with all relevant information available and known to RBX concerning the safety, handling, use, disposal and environmental effects of Compound or as may be useful to PII to conduct the Development Plan, including but not limited to any communications with regulatory agencies. The Parties acknowledge and agree that all such Compound-related information, including, without limitation, the Manufacturing Know-How, shall be subject to the confidentiality obligations of Article IX hereof.

(b) Within ten (10) days of the Option Exercise Date, RBX shall make available for shipping, [*] totaling approximately [*] and [*] that are in RBX’s possession as of the Effective Date (“RBX [*]”). PII shall pay to RBX the amount of [*] dollars ($[*]), within thirty (30) days of an invoice for the same. PII acknowledges and agrees that RBX is providing the RBX [*] on an “as is” basis, free of any representation or warranty, including, without limitation, the warranties of merchantability or fitness for any particular purpose.

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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4.06 Manufacturing . PII shall be solely responsible for (i) the manufacture of CTM Product and Drug Substance as may be required to obtain Regulatory Approval of the Licensed Product(s) in the Territory and (ii) the manufacture of commercial requirements of the Licensed Product(s) for marketing and sale in the Territory.

 

4.07

[*].

ARTICLE V – FEES AND ROYALTIES

5.01 License Fee. PII shall, simultaneous with the provision of written notice to RBX exercising the Option on the Option Exercise Date, pay to RBX a one-time non-refundable, non-creditable license fee in the amount of two hundred fifty thousand dollars ($250,000) (the “License Fee”).

5.02 Clinical Milestone Payments. In addition to paying the License Fee, and without limiting Section 5.02(d) below, PII shall pay RBX the following non-refundable, non-creditable additional amounts upon the first occurrence of the applicable event (individually a “Milestone Payment” and collectively the “Milestone Payments”):

(a) Completion of [*]. PII will notify RBX in writing upon the Completion of the [*] in any country of the Territory to be performed in the Development Plan involving CTM Product within fourteen (14) days of such Completion. Within thirty (30) days of the Completion thereof, PII will pay RBX a one-time milestone payment of [*] . For clarity, if [*] are contemplated in the Development Plan, then Completion of the [*] shall occur upon the Completion of the [*] . In the event multiple arms of such [*] are performed using different comparitors and/or patient populations, the Milestone Payment under this Section 5.02(a) shall be triggered upon the Completion of the last arm of such [*] (expressly excluding any requirement to complete any [*] ) relating to such [*] .

(b) Completion of [*]. PII will notify RBX in writing upon Completion of the [*] in any country in the Territory to be performed in the Development Plan involving a CTM Product within fourteen (14) days of such Completion. Within thirty (30) days of the Completion thereof, PII will pay RBX a one-time milestone payment of [*] . For clarity, if [*] are contemplated in the Development Plan, then Completion of the [*] shall occur upon the Completion of the [*] . In the event multiple arms of such [*] are performed using different comparitors and/or patient populations, the Milestone Payment under this Section 5.02(b) shall be triggered upon the Completion of [*] relating to such [*] (expressly excluding any requirement to complete any [*] ).

(c) Completion of [*]. PII will notify RBX in writing upon Completion of the [*] in any country in the Territory to be performed in the Development Plan involving a CTM Product within fourteen (14) days of such Completion. Within thirty (30) days of the Completion thereof, PII will pay RBX a one-time milestone payment of [*] . For clarity, if [*] are

 

[ * ] Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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contemplated in the Development Plan, then Completion of the [*] shall occur upon the Completion of the [*] . In the event multiple arms of a [*] are performed using different comparitors and/or patient populations, the Milestone Payment under this Section 5.02(c) shall be triggered upon the Completion of [*] relating to such [*] (expressly excluding any requirement to complete any [*] ).

(d) Completion of Payments. Subject to this Section 5.02(d), PII shall only be obligated to pay the Milestone Payments under Section 5.02(a), 5.02(b) and 5.02(c) once. For clarity, except as expressly provided below, once PII makes the Milestone Payment under either Section 5.02(a), 5.02(b) or 5.02(c) relating to the Development Plan, PII shall have no further obligation to make any further Milestone Payments under Section 5.02(a), 5.02(b) or 5.02(c) to RBX for any future occurrence of such milestone event relating to another program for the Development of the Compound for the Indication. In the event that PII pursues the Development of the Compound to treat an indication that is [*] (other than [*] ), PII shall pay RBX the milestone payments set forth in Sections 5.02(a)-(c) upon the occurrence of the milestone event with respect to the