TABLE OF CONTENTS

 

			Page
1.	DEFINITIONS		1
2.	ADMINISTRATION OF THE COLLABORATION		27
	2.1	Joint Steering Committee	27
	2.2	Joint Development Committee	30
	2.3	Joint Life Cycle Management Committee	33
	2.4	Joint Finance Committee	34
	2.5	US Joint Marketing Committee	34
	2.6	Alliance Managers	38
	2.7	Decision Making	39
	2.8	Appointment Not an Obligation; No Breach	39
3.	DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS		40
	3.1	Implementation of Development Program	40
	3.2	Identification of Back-Up Compounds	43
	3.3	Supply of Licensed Products for Development and Commercialization	43
	3.4	Supply of Proprietary Materials	44
	3.5	Licensed Product Commercialization	45
	3.6	Development and Commercialization Diligence	46
	3.7	Compliance	46
	3.8	Cooperation	47
	3.9	Global Commercialization Coordination	47
	3.10	Reports; Information; Updates	47
	3.11	Development Cost Sharing; Reconciliation	51
	3.12	Co-Commercialization Option	53
	3.13	Expansion of the Field	57
	3.14	Additional Cancer Indications	58
	3.15	Additional Phase 5 Clinical Trials	60
4.	PAYMENTS		60
	4.1	Up-front Fee	60
	4.2	Milestone Payments	61
	4.3	Payment of Royalties; Royalty Rates; Accounting and Records	64
5.	CONFIDENTIALITY		69
	5.1	Confidentiality	69
	5.2	Publicity	70
	5.3	Publications and Presentations	71
	5.4	Prior Approved Publication	72
	5.5	Mechanism of Inhibition Information	72
6.	LICENSE GRANTS; EXCLUSIVITY		72
	6.1	Licenses	72

 

i

 

	6.2	Right to Sublicense	74
	6.3	No Other Rights	75
	6.4	Exclusivity	75
	6.5	Use of Third Party Technology	76
7.	INTELLECTUAL PROPERTY RIGHTS		77
	7.1	ARQULE Intellectual Property Rights	77
	7.2	DS Intellectual Property Rights	77
	7.3	Joint Intellectual Property Rights	77
	7.4	Patent Coordinators	78
	7.5	Inventorship	78
8.	FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS		79
	8.1	Patent Filing, Prosecution and Maintenance	79
	8.2	Legal Actions	82
9.	TERM AND TERMINATION		86
	9.1	Term	86
	9.2	Termination	86
	9.3	Consequences of Termination of Agreement	88
	9.4	Surviving Provisions	92
10.	REPRESENTATIONS AND WARRANTIES		92
	10.1	Mutual Representations and Warranties	92
	10.2	Additional Representations of ARQULE	93
	10.3	Covenants of DS Relating to Existing License Agreement	94
11.	INDEMNIFICATION		95
	11.1	Indemnification of ARQULE by DS	95
	11.2	Indemnification of DS by ARQULE	95
	11.3	Conditions to Indemnification	96
	11.4	Warranty Disclaimer	96
	11.5	No Warranty of Success	96
	11.6	Limited Liability	97
12.	MISCELLANEOUS		97
	12.1	Arbitration	97
	12.2	Notices	98
	12.3	Governing Law	99
	12.4	Binding Effect	100
	12.5	Headings	100
	12.6	Counterparts	100
	12.7	Amendment; Waiver	100
	12.8	No Third Party Beneficiaries	100
	12.9	Purposes and Scope	100
	12.10	Assignment and Successors	101
	12.11	Force Majeure	101

 

ii

 

	12.12	Interpretation	101
	12.13	Integration; Severability	101
	12.14	Further Assurances	102
	12.15	Effective Date	102

 

List of Schedules

Schedule 1	Description of ARQ 197
Schedule 2	ARQULE Patent Rights
Schedule 3	Material Terms to be Included in Co-Commercialization Agreement

 

iii

 

LICENSE, CO-DEVELOPMENT AND CO-COMMERCIALIZATION AGREEMENT

 

This LICENSE, CO-DEVELOPMENT AND CO-COMMERCIALIZATION AGREEMENT (this “Agreement” ) is entered into as of December 18, 2008 (the “Execution Date ”) and effective as of the Effective Date (as defined below), by and between ArQule, Inc., a Delaware corporation with offices at 19 Presidential Way, Woburn, Massachusetts 01801 ( “ARQULE” ), and Daiichi Sankyo Co., Ltd, a Japanese company organized under the laws of Japan with offices at 3-5-1 Nihonbashi Honcho, Chuo-ku, Tokyo 103-8426, Japan ( “DS” ).  Each of DS and ARQULE is sometimes referred to individually herein as a “Party” and collectively as the “Parties.”

 

WHEREAS, ARQULE has developed and controls certain technology and proprietary materials related to its proprietary compound ARQ 197 and is engaged in the research, development and commercialization of human therapeutics; and

 

WHEREAS, DS is engaged in the research, development and commercialization of human therapeutics; and

 

WHEREAS, the Parties desire to enter into a collaboration for the purpose of developing and commercializing products containing ARQ 197 for the prevention, diagnosis, delay and treatment of cancer.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

1.                                       DEFINITIONS

 

Whenever used in this Agreement with an initial capital letter, the terms defined in this Article 1 and in Schedule 3 attached hereto shall have the meanings specified.

 

1.1                                  “AAA” means the American Arbitration Association.

 

1.2                                  “Acceptance” means, with respect to a Drug Approval Application filed for a Product (a) in the United States, the receipt of written notice from the FDA in accordance with

 

1

 

21 CFR 314.101(a)(2) that such Drug Approval Application is officially “filed”, and (b) in the European Union, receipt of written notice of acceptance by the EMEA of such Drug Approval Application for filing under the centralized European procedure; provided, that, if the centralized filing procedure is not used, then Acceptance shall be determined upon the acceptance of such Drug Approval Application by the applicable Regulatory Authority in any Major European Country.

 

1.3                                  “Adverse Event” means any unfavorable and unintended change in the structure (signs), function (symptoms), or chemistry (laboratory data), of the body temporally associated with the use of a Licensed Product, whether or not considered related to the use of such Licensed Product.  Changes resulting from normal growth and development which do not vary significantly in frequency or severity from expected levels are not Adverse Events.

 

1.4                                  “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more affiliates, controls, or is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” means (a) ownership of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, (b) status as a general partner in any partnership, or (c) any other arrangement whereby a Person controls or has the right to control the board of directors of a corporation or equivalent governing body of an entity other than a corporation.

 

1.5                                  “Annual Net Sales” means, with respect to any Calendar Year, the aggregate amount of the Net Sales for such Calendar Year.

 

1.6                                  “API” means the active pharmaceutical ingredient known as ARQ 197 and/or any other Collaboration Compound Developed and Commercialized under this Agreement.

 

1.7                                  “Applicable Laws” means any Federal, state, local, national and supra-national laws, statutes, rules and regulations, including any rules, regulations, guidance, guidelines or requirements of Regulatory Authorities, national securities exchanges or securities listing organizations, that are in effect from time to time during the Term and applicable to a particular activity hereunder.

 

2

 

1.8                                  “Approved Non-Cancer Indication” means any Non-Cancer Indication which the Parties agree to add to the Field pursuant to Section 3.13.

 

1.9                                  “ARQ 197” means the c-Met Inhibitor Controlled by ARQULE and described more fully on Schedule 1 attached hereto.

 

1.10                            “ARQULE Background Technology” means any Technology that is used by ARQULE, or provided by ARQULE for use, in the Development Program or that is disclosed by ARQULE to DS or of which DS otherwise becomes aware solely as a result of this Agreement and that is (a) Controlled by ARQULE as of the Effective Date, or (b) conceived or first reduced to practice by employees of, or consultants to, ARQULE after the Effective Date other than in the conduct of ARQULE Development Activities and without the use in any material respect of any DS Technology, DS Patent Rights or DS Materials.  For purposes of clarity, ARQULE Background Technology shall not include ARQULE Program Technology or ARQULE’s interest in Joint Technology, but shall include all Technology relating to the mechanism of inhibition of ARQ 197.

 

1.11                            “ARQULE Co-Commercialization Activities” means, with respect to each Co-Commercialized Licensed Product, the Commercialization activities specified to be conducted by ARQULE in the Co-Commercialization Territory in any Product Commercialization Plan applicable thereto (or amendment thereto) and/or in the Co-Commercialization Agreement.

 

1.12                            “ARQULE Cost-Sharing Percentage” means fifty percent (50%).

 

1.13                            “ARQULE Decision” means all decisions concerning *.

 

1.14                            “ARQULE Development Activities” means all Development activities (including without limitation all Development activities conducted with respect to Co-Commercialized Licensed Products) specified to be conducted by ARQULE in any Global Development Plan (or any amendment thereto), as well as all Development activities conducted by ARQULE not specified in a Global Development Plan but approved by the JSC as a Unanimous Decision.

 

3

 

1.15                            “ARQULE Materials” means any Proprietary Materials that are Controlled by ARQULE and used by ARQULE, or provided by ARQULE for use, in the Development Program.  For purposes of clarity, ARQULE Materials shall include the Collaboration Compounds.

 

1.16                            “ARQULE Patent Rights” means any Patent Rights that contain one or more claims that cover ARQULE Technology, including, but not limited to, the Patent Rights listed in Schedule 2 attached hereto.  For purposes of clarity, ARQULE Patent Rights includes all ARQULE Program Patent Rights.

 

1.17                            “ARQULE Program Patent Rights” means any Patent Rights Controlled by ARQULE that contain one or more claims that cover ARQULE Program Technology.

 

1.18                            “ARQULE Program Technology” means (a) any Product Technology; (b) any Program Technology that is conceived or first reduced to practice by employees of, or consultants to, ARQULE, alone or jointly with any Third Party, without the use in any material respect of any DS Technology, DS Patent Rights, DS Materials or Joint Technology; and (c) all Collaboration Compounds.

 

1.19                            “ARQULE Technology” means, collectively, ARQULE Background Technology and ARQULE Program Technology.

 

1.20                            “Asian Territory” means Japan, China (including Hong Kong), South Korea and Taiwan.

 

1.21                            “Back-Up Compound” means any c-MET Inhibitor * or any other c-MET Inhibitor that has been discovered or, is discovered during the Term, by ARQULE, DS or jointly by ARQULE and DS, (as designated by the JSC, pursuant to Section 3.2, to use Commercially Reasonable Efforts to deliver a Back-Up Compound) and that is designated by the JSC for further Development as a Back-Up Compound pursuant to Section 3.2.

 

1.22                            “Business Day” means any day on which banking institutions in New York, New York and Tokyo are open for business.

 

4

 

1.23                            “Calendar Quarter” means the period beginning on the Effective Date and ending on the last day of the calendar quarter in which the Effective Date falls, and thereafter each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

 

1.24                            “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.

 

1.25                            “Cancer Indication” means any and all Indications for cancer or metastasis.

 

1.26                            “Challenge” means any challenge to the validity or enforceability of any of the ARQULE Patent Rights, including without limitation by (a) filing a declaratory judgment action in which any of the ARQULE Patent Rights is alleged to be invalid or unenforceable; (b) citing prior art pursuant to 35 U.S.C. §301, filing a request for re-examination of any of the ARQULE Patent Rights pursuant to 35 U.S.C. §302 and/or §311, or provoking an interference with an application for any of the ARQULE Patent Rights pursuant to 35 U.S.C. §135; or (c) filing or commencing any re-examination, opposition, cancellation, nullity or similar proceedings against any of the ARQULE Patent Rights in any country.

 

1.27                            “Clinical Trial” means a clinical study of a Licensed Product involving the administration of such Licensed Product to patients for any Targeted Indication, and includes any Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial, Phase 4 Clinical Trial and Phase 5 Clinical Trial, as applicable.

 

1.28                            “c-MET Inhibitor” means ARQ 197 and any therapeutic agent that binds the c-MET RTK and inhibits *.

 

1.29                            “Co-Commercialize” or “Co-Commercialization Activities” means with respect to any Co-Commercialized Licensed Product, the joint Detailing of such Co-Commercialized Licensed Product in the Co-Commercialization Territory using a coordinated sales force consisting of representatives of both Parties.

 

1.30                            “Co-Commercialization Territory” means the U.S. Territory.

 

5

 

1.34          “Commercialization” or “Commercialize” means any and all activities directed to the commercialization of a Licensed Product after Commercialization Regulatory Approval has been obtained, including marketing, development and scale-up of processes for Manufacture of API and Licensed Product for commercial sale, Manufacturing for commercial sale, promoting, detailing, distributing, offering to sell and selling a Licensed Product, importing a Licensed Product for sale under the Product Trademarks selected by DS, conducting post-marketing human clinical studies and interacting with Regulatory Authorities regarding the foregoing.  When used as a verb, “to Commercialize” and “Commercializing” means to engage in Commercialization and “Commercialized” has a corresponding meaning.

 

1.35          “Commercialization Regulatory Approval” means, with respect to any Licensed Product, the Regulatory Approval required by Applicable Laws to sell such Licensed Product for use for a Targeted Indication in the Field in a country or region in the Territory, as well as, to the extent required by Applicable Laws for the sale of the Licensed Product, Pricing Approvals and government reimbursement approvals.  For purposes of clarity, (a) “Commercialization Regulatory Approval” in the United States means final approval of an NDA or sNDA permitting marketing of the applicable Licensed Product in interstate commerce in the United States; (b) “Commercialization Regulatory Approval” in the European Union means marketing authorization for the applicable Licensed Product granted either by a Regulatory Authority in any Major European Country or by the EMEA pursuant to Council Directive 2001/83/EC, as amended, or Council Regulation 2309/93/EEC, as amended, together, if required by Applicable Laws, with the first Price approval and government reimbursement approval for the applicable Licensed Product granted by a Regulatory Authority in any Major European Country; and (c) “Commercialization Regulatory Approval” in any country outside of the United States or the European Union means the equivalent approval in such country.

 

1.36          “Committee” means, collectively, the JSC and the JDC, or any other committee or sub-committee to be established hereunder.

 

1.37          “Completion” means, with respect to any Clinical Trial, the date on which all material data reasonably expected to be derived therefrom has been generated and the final study report with respect thereto has been finalized.

 

7

 

1.38          “Confidential Information” means (a) with respect to ARQULE, all tangible embodiments of ARQULE Technology, (b) with respect to DS, all tangible embodiments of DS Technology and (c) with respect to each Party, (i) all tangible embodiments of Joint Technology and (ii) all information, Technology and Proprietary Materials that are disclosed or provided by or on behalf of such Party (the “disclosing Party” ) to the other Party (the “receiving Party” ) or to any of the receiving Party’s employees, consultants, Affiliates, sublicensees or Third Party subcontractors hereunder or of which the receiving Party or any of its employees, consultants, Affiliates, sublicensees or Third Party subcontractors has become aware or hereafter becomes aware solely as a result of this Agreement; provided, that, none of the foregoing shall be Confidential Information if: (A) as of the date of disclosure, it is known to the receiving Party or its Affiliates as demonstrated by contemporaneous credible written documentation, other than by virtue of a prior confidential disclosure to such receiving Party; (B) as of the date of disclosure it is in the public domain, or it subsequently enters the public domain through no fault of the receiving Party; (C) it is obtained by the receiving Party from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality to the disclosing Party; or (D) it is independently developed by or for the receiving Party without reference to or use of any Confidential Information of the disclosing Party as demonstrated by contemporaneous credible written documentation.  For purposes of clarity, unless excluded from Confidential Information pursuant to the proviso at the end of the preceding sentence, any scientific, technical or financial information of a Party that is disclosed at any meeting of any Committee or disclosed through an audit report shall constitute Confidential Information of the disclosing Party.  Subject to the rights of the Parties to make disclosures as set forth in Article 5, the terms of this Agreement shall constitute Confidential Information of each Party.  Notwithstanding the proviso (A), (C) and (D) at the end of the third preceding sentence, all Mechanism of Inhibition Information shall be ARQULE Confidential Information.

 

1.39          “Control” or “Controlled” means (a) with respect to Technology (other than Proprietary Materials) or Patent Rights, the possession by a Party of the right to grant a license or sublicense to such Technology or Patent Rights as provided herein without the payment of additional consideration to, and without violating the terms of, any agreement or arrangement with, any Third Party and without violating any Applicable Laws and (b) with respect to Proprietary Materials, the possession by a Party of the right to supply such Proprietary Materials

 

8

 

to the other Party as provided herein without the payment of additional consideration to, and without violating the terms of any agreement or arrangement with, any Third Party and without violating any Applicable Laws.

 

1.40          “Detail” means with respect to a Co-Commercialized Licensed Product, an interactive, live, face-to-face contact of a Representative within the Co-Commercialization Territory with a medical professional with prescribing authority or other individuals or entities that have a significant impact or influence on prescribing decisions, in an effort to increase physician prescribing preferences of such Co-Commercialized Licensed Product for its approved uses within the Co-Commercialization Territory.  When used as an adjective, “Detailing” means of or related to performing Details.

 

1.41          “Development” or “Develop” means, with respect to each Collaboration Compound and/or Licensed Product (including without limitation any Co-Commercialized Licensed Product), all non-clinical and clinical activities performed in order to develop formulations or forms of a Licensed Product and/or to obtain Regulatory Approval of a Licensed Product (including without limitation any Co-Commercialized Licensed Product) derived from such Collaboration Compound or Licensed Product in accordance with this Agreement.  For purposes of clarity, these activities include, without limitation, in vivo animal testing, preclinical safety testing, test method development and stability testing, regulatory toxicology studies, formulation, process development for Manufacturing of API and Licensed Product for use in Clinical Trials, scale-up of processes for Manufacturing of API and Licensed Product for use in Clinical Trials, quality assurance/quality control development, statistical analysis and report writing, clinical trial design and operations, the conduct of Clinical Trials (including the Manufacturing API and Licensed Product for use in Clinical Trials), regulatory toxicology studies, drug metabolism and pharmacokinetics studies, preparing and filing Drug Approval Applications, the conduct of Regulatory Activities related to the foregoing, consultation to key opinion leaders or outside experts (e.g. KOL meeting), and certain activities to be performed by the commercial function of the Parties for supporting Development (e.g., market research).  When used as a verb, “Developing” means to engage in Development and “Developed” has a corresponding meaning.

 

9

 

1.42          “Development Costs” means all out-of-pocket costs and internal costs incurred by a Party (or for its account by an Affiliate or a Third Party) on or after the earlier of the Execution Date or January 1, 2009 that are generally consistent with the respective Development activities of such Party in the applicable Global Development Plan and are attributable to the Development of a Licensed Product.  For purposes of clarity, Development Costs includes all External Development Costs and all Other Development Costs.

 

1.43          “Development Program” means the Development activities to be conducted during the Term with respect to each Collaboration Compound and Licensed Product (including without limitation Co-Commercialized Licensed Products) pursuant to the Global Development Plans, with the objective of developing such Collaboration Compound into a Licensed Product.

 

1.44          “DMF” means a Drug Master File maintained with the FDA or its equivalent maintained with a Regulatory Authority in other countries within the Territory.

 

1.45          “Drug Approval Application” means, with respect to each Licensed Product in a particular country or region, an application for Commercialization Regulatory Approval for such Licensed Product in such country or region, including without limitation: (a) an NDA or sNDA; (b) a counterpart of an NDA or sNDA in any country or region in the Territory; and (c) all supplements and amendments to any of the foregoing.

 

1.46          “DS Background Technology” means any Technology that is used by DS, or provided by DS for use, in the Development Program or that is disclosed by DS to ARQULE or of which ARQULE otherwise becomes aware solely as a result of this Agreement and that is (a) Controlled by DS as of the Effective Date, or (b) conceived or first reduced to practice by employees of, or consultants to, DS after the Effective Date other than in the conduct of DS Development Activities and without the use in any material respect of any Collaboration Compounds, ARQULE Technology, ARQULE Patent Rights or ARQULE Materials.  For purposes of clarity, DS Background Technology shall not include DS Program Technology or DS’s interest in Joint Technology.

 

1.47          “DS Cost-Sharing Percentage” means fifty percent (50%).

 

10

 

1.48          “DS Decision” means any decision with respect to the *.

 

1.49          “DS Development Activities” means all Development activities (including without limitation all Development activities conducted with respect to Co-Commercialized Licensed Products) specified to be conducted by DS in any Global Development Plan (or any amendment thereto), as well as all Development activities conducted by DS not specified in a Global Development Plan but approved by the JSC as a Unanimous Decision.

 

1.50          “DS Materials” means any Proprietary Materials that are Controlled by DS and used by DS, or provided by DS for use, in the Development Program.

 

1.51          “DS Patent Rights” means any Patent Rights Controlled by DS that contain one or more claims that cover DS Technology.

 

1.52          “DS Program Patent Rights” means any Patent Rights Controlled by DS that contain one or more claims that cover DS Program Technology.

 

1.53          “DS Program Technology” means any Program Technology that (a) is not ARQULE Program Technology or Joint Technology and (b) is conceived or first reduced to practice by employees of, or consultants to, DS, alone or jointly with any Third Party, without the use in any material respect of any ARQULE Technology, ARQULE Patent Rights, ARQULE Materials or Joint Technology.

 

1.54          “DS Technology” means, collectively, DS Background Technology and DS Program Technology.

 

1.55          “Effective Date” means the date of satisfaction of the HSR Conditions with respect to the transactions contemplated by this Agreement.

 

1.56          “EMEA” means the European Medicines Agency or any successor agency or authority thereto.

 

11

 

1.57          “European Union” or “EU” means the countries of the European Union, as the European Union is constituted as of the Effective Date and as it may be expanded from time to time during the Term.

 

1.58          “Execution Date” means the date set forth in the first recital above.

 

1.59          “Existing License Agreement” means the License Agreement dated as of April 27, 2007 by and between ARQULE and Kyowa with respect to the Asian Territory.

 

1.60          “External Development Costs” means any out-of-pocket external Development Costs incurred by a Party (or for its account by an Affiliate) on or after the earlier of the Execution Date or January 1, 2009 and that are payable to any Third Party.  For purposes of clarity, External Development Costs (a) shall only include the actual amounts paid by a Party to a Third Party for specific Development activities conducted by such Third Party applicable to a Licensed Product, including, without limitation all filing fees required for, and other costs associated with, the conduct of Regulatory Activities and Clinical Trials applicable to any Licensed Product; and (b) shall not include any internal costs incurred by a Party (or for its account by an Affiliate) on or after the earlier of the Execution Date or January 1, 2009 that are attributable to the Development of a Licensed Product.

 

1.61          “FDA” means the United States Food and Drug Administration or any successor agency or authority thereto.

 

1.62          “FDCA” means the United States Federal Food, Drug, and Cosmetic Act, as amended.

 

1.63          “Field” means the treatment and prevention in humans of all Targeted Indications.

 

1.64          “First Co-Commercialization Option Period” means, with respect to each Licensed Product, the period commencing on the Effective Date and continuing until * (*) days following the date that the Last Patient/Last Visit Notice is received by ARQULE.

 

1.65          “First Commercial Sale” means, with respect to a Licensed Product in a country in the Territory, the first sale, transfer or disposition for value or for an end user of such Licensed

 

12

 

Product in such country.  For purposes of clarity, the use of any Licensed Product in Clinical Trials or the disposal or transfer of Licensed Products for a bona fide charitable purpose or a commercially reasonable sampling program, shall not be deemed to be a sale, transfer or disposition for value or for an end user, with respect to a Licensed Product in a country in the Territory.

 

1.66          “Force Majeure” means any occurrence beyond the reasonable control of a Party that (a) prevents or substantially interferes with the performance by such Party of any of its obligations hereunder and (b) occurs by reason of any act of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute, casualty or accident, or war, revolution, civil commotion, act of terrorism, blockage or embargo, or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government.

 

1.67          “Global Development Plan” means, with respect to each Collaboration Compound and Licensed Product, the written plan for, and budget applicable to, the Development activities to be conducted for such Collaboration Compound and Licensed Product for the Territory, as such written plan may be amended, modified or updated in accordance with Section 3.1.2.

 

1.68          “ Global Pricing Policy ” means the establishment of the range of published prices for Licensed Products throughout the Territory.

 

1.69          “GLP” means the then current Good Laboratory Practice Standards promulgated or endorsed by the FDA or in the case of foreign jurisdictions, comparable regulatory standards promulgated or endorsed by the applicable Regulatory Authority, including those procedures contemplated by any Regulatory Filings.

 

1.70          “GMP” means current Good Manufacturing Practices that apply to the Manufacture of API and Clinical Product, including, without limitation, the United States regulations set forth under Title 21 of the United States Code of Federal Regulations, parts 210, 211 and 600-680, as may be amended from time-to-time, as well as all applicable guidance published from time-to-time by the FDA.

 

13

 

1.71          “Hatch-Waxman Act” means the Drug Price Competition and Patent Term Restoration Act of 1984, as amended.

 

1.72          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

1.73          “IND” means: (a) an Investigational New Drug Application as defined in the FDCA and regulations promulgated thereunder or any successor application or procedure required to initiate clinical testing of a Licensed Product in humans in the United States; (b) a counterpart of an Investigational New Drug Application that is required in any other country or region in the Territory before beginning clinical testing of a Licensed Product in humans in such country or region; and (c) all supplements and amendments to any of the foregoing.

 

1.74          “Indication” means any human disease or condition which can be treated, prevented, cured or the progression of which can be delayed.  For purposes of clarity, distinctions between human indications, diseases or conditions with respect to a Licensed Product shall be made by reference to the World Health Organization International Classification of Diseases, version 10 (as revised and updated, the “ICD10” ).

 

1.75          “Initiation” means, with respect to a Clinical Trial, the first date that a subject or patient is dosed in such Clinical Trial.

 

1.76          “Joint Decision” means (a) any decision as set forth in Section 3.1.4(b); (b) any decision set forth in Section 3.14; (c) any decision set forth in Section 3.15; and (d) any other decision designated as a Joint Decision herein.

 

1.77          “Joint Development Committee” or “JDC” means the committee composed of ARQULE and DS representatives established pursuant to Section 2.2.

 

1.78          “Joint Finance Committee” or “JFC” means the committee composed of ARQULE and DS representatives established pursuant to Section 2.4.

 

1.79          “Joint Life Cycle Management Committee” or “JLCMC” means the committee composed of ARQULE and DS representatives established pursuant to Section 2.3.

 

14

 

1.80          “Joint Patent Rights” means Patent Rights that contain one or more claims that cover Joint Technology.

 

1.81          “Joint Steering Committee” or “JSC” means the committee composed of ARQULE and DS representatives established pursuant to Section 2.1.

 

1.82          “Joint Technology” means any Program Technology, other than Product Technology and Collaboration Compounds, that is (a) jointly conceived or reduced to practice by one or more employees of or consultants to DS and one or more employees of or consultants to ARQULE, (b) conceived or first reduced to practice solely by one or more employees of, or consultants to, a Party resulting from the use in any material respect of any (i) Joint Technology or (ii) Patent Rights, Technology or Proprietary Materials Controlled by the other Party.

 

1.83          “Key Regulatory Filings” means (a) any IND, NDA, sNDA, other Drug Approval Applications, application for designation as an “Orphan Product(s)” under the Orphan Drug Act, for “Fast Track” status under Section 506 of the FDCA (21 U.S.C. § 356) or for a Special Protocol Assessment under Section 505(b)(4)(B) and (C) of the FDCA (21 U.S.C. § 355(b)(4)(B)) and counterparts to the foregoing in the EU or any Major European Country, periodic safety update reports, and briefing documents presented to the FDA, the EMEA or any Regulatory Authority in any Major European Country, (b) all supplements and amendments to any of the foregoing, and (c) any Regulatory Filing relating to the Licensed Product label, Targeted Indications, warnings, side effects and precautions.

 

1.84          “Kyowa” means Kyowa Hakko Kirin Co., Ltd.

 

1.85          “Last Patient/Last Visit ” means the date on which the last patient has his or her last visit (either for therapeutic or follow-up purposes) during a Phase 3 Clinical Trial.

 

1.86          “Licensed Patent Rights” means any ARQULE Patent Rights and ARQULE’s interest in Joint Patent Rights that (a) contain one or more claims that cover any Collaboration Compound or Licensed Product, including its manufacture or its formulation or a method of its delivery or of its use, or (b) are necessary or useful for DS to exercise the licenses granted to it hereunder.

 

15

 

 

 

 

insurance and/or storage of such Licensed Product.  For purposes of clarity, all allocations under this Section shall be based on space occupied or head-count or other activity-based method.

 

1.92          “Manufacturing Development” means, with respect to a Collaboration Compound and/or Licensed Product, all activities related to the optimization of a commercial-grade Manufacturing process for the Manufacture of such Collaboration Compound and/or Licensed Product including, without limitation, test method development and stability testing, formulation, validation, productivity, trouble shooting and next generation formulation, process development, Manufacturing scale-up, strain improvements, development-stage Manufacturing, and quality assurance/quality control development.

 

1.93          “Mechanism of Inhibition Information” means any information or Technology relating to, or arising out of, the mechanism by which ARQ 197, any Back-Up Compound or any proposed Back-Up Compound inhibits *, including without limitation, any information or Technology relating to the binding of ARQ 197, any Back-Up Compound or any proposed Back-Up Compound to its target.

 

1.94          “MiT Tumor” means a microphthalmia transcription factor tumor, including clear cell sarcoma, alveolar soft part sarcoma and renal call carcinoma.

 

1.95          “NDA” means a New Drug Application, as defined in the FDCA and regulations promulgated thereunder or any successor application or procedure required to sell a Product in the United States.

 

1.96          “Net Sales” means the gross amount billed or invoiced by DS or any of its Affiliates or Sublicensees to Third Parties throughout the Territory for sales or other dispositions or transfers for value of Licensed Products less (a) allowances for normal and customary trade, quantity and cash discounts (including discounts imposed by way of wholesaler fees) actually allowed and taken, (b) transportation, insurance and postage charges, if prepaid by DS or any Affiliate or Sublicensee of DS and included on any such party’s bill or invoice as a separate item, (c) credits, rebates, returns pursuant to agreements (including, without limitation, managed care agreements) or government regulations, to the extent actually allowed, and (d) sales, use and

 

17

 

other consumption taxes similarly incurred to the extent included on the bill or invoice as a separate item.  In addition, Net Sales are subject to the following:

 

(i)             If DS or any of its Affiliates or Sublicensees effects a sale, disposition or transfer of a Licensed Product to a customer in a particular country other than on customary commercial terms or as part of a package of products and services, the Net Sales of such Licensed Product to such customer shall be deemed to be the “fair market value” of such Licensed Product.  For purposes of this subsection, “fair market value” shall mean the value that would have been derived had such Licensed Product been sold as a separate product to another customer in the country concerned on customary commercial terms.

 

(ii)            In the case of pharmacy incentive programs, hospital performance incentive program chargebacks, disease management programs, similar programs or discounts on “bundles” of products, all discounts and the like shall be allocated among products on the basis on which such discounts and the like were actually granted or, if such basis cannot be determined, in proportion to the respective list prices of such products or such other reasonable allocation method as the Parties shall agree.

 

(iii)           For purposes of clarity, use of any Licensed Product in Clinical Trials, pre-clinical studies or other research or development activities, or disposal or transfer of Licensed Products for a bona fide charitable purpose or a commercially reasonable sampling program, shall not give rise to any Net Sales.

 

(iv)           Net Sales shall not include sales or transfers between DS and its Affiliates or Sublicensees unless the Licensed Product is consumed by the Affiliate or Sublicensee.

 

1.97          “Non-Cancer Indication” means any Indication that is not a Cancer Indication.

 

1.98          “Ongoing Regulatory Filing” means the Regulatory Filing with respect to ARQ-197 filed by or on behalf of ARQULE as of the Effective Date.

 

1.99          “Other Development Costs” means any Development Costs incurred by a Party (or for its account by an Affiliate) on or after the earlier of the Execution Date or January 1, 2009 that are not External Development Costs.

 

18

 

1.100        “Patent Rights” means the rights and interests in and to issued patents and pending patent applications (which, for purposes of this Agreement, include certificates of invention, applications for certificates of invention and priority rights) in any country or region, including all provisional applications, substitutions, continuations, continuations-in-part, divisions, renewals, all letters patent granted thereon, and all reissues, re-examinations and extensions thereof, and all foreign counterparts of any of the foregoing.  Patent Rights shall include pediatric exclusivity attached to issued patents pursuant to 21 U.S.C. 355a (Section 505A of the FDCA) and pediatric exclusivity under analogous laws in countries other than the United States of America.

 

1.101        “Permitted Transactions” means any agreement by and between a Party and (a) any Third Party pursuant to which such Third Party conducts contract services permitted pursuant to Section 6.2.1 of this Agreement or (b) any Third Party non-profit or academic institution, which agreement provides for the grant to the Party entering into the agreement of all rights to Technology and Patent Rights relating to the use of Collaboration Compounds that are conceived or reduced to practice by the Third Party non profit or academic institution under such agreement, with the right to sublicense to the other Party.

 

1.102        “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision, department or agency of a government.

 

1.103        “Phase 1 Clinical Trial” means a Clinical Trial in humans conducted in normal volunteers or in patients, to get information on product safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in Federal Regulation 21 C.F.R. § 312.21(a).  Any clinical trial in any country that would satisfy the requirements of 21 CFR § 312.21(a) shall be a Phase 1 Clinical Trial.

 

1.104        “Phase 2 Clinical Trial” means, as to a particular Licensed Product for any Targeted Indication, a Clinical Trial in humans of the safety and/or dose ranging and/or efficacy of such Licensed Product, which is prospectively designed to generate sufficient data (if

 

19

 

successful) to commence Phase 3 Clinical Trials, as further defined in Federal Regulation 21 C.F.R. § 312.21(b).  Any clinical trial in any country that would satisfy the requirements of 21 CFR § 312.21(b) shall be a Phase 2 Clinical Trial.

 

1.105        “Phase 3 Clinical Trial” means, a Clinical Trial in humans of the efficacy and safety of a Licensed Product, which is prospectively designed to demonstrate statistically whether such Product is effective and safe for use in a particular indication in a manner sufficient to file an NDA or other Drug Approval Application to obtain regulatory approval to market the Licensed Product, as further defined in Federal Regulation 21 C.F.R. § 312.21(c); provided that if the results of any Clinical Trial are used as the basis for filing a Drug Approval Application, then such Clinical Trial will be deemed to be a Phase 3 Clinical Trial, whether or not it meets the requirements of 21C.F.R §312.21(c).  Any clinical trial in any country that would satisfy the requirements of 21 CFR § 312.21(c) shall be a Phase 3 Clinical Trial.

 

1.106        “Phase 4 Clinical Trial” means a post-registrational Clinical Trial conducted in any country or countries and required as a condition to, or for the maintenance of, any Regulatory Approval for a Licensed Product in the Territory.

 

1.107        “Phase 5 Clinical Trial” means a post-registrational Clinical Trial conducted in any country or countries and not required as a condition to, or for the maintenance of, any Regulatory Approval for a Licensed Product in the Territory.  For purposes of clarity, Phase 5 Clinical Trials are commonly referred to as “marketing” Clinical Trials.

 

1.108        “Phase 2 Development Activities” means, with respect to each Collaboration Compound, all clinical Development activities conducted by the Parties in accordance with any Global Development Plan up to and including the Completion of Phase 2 Clinical Trials, including without limitation, the conduct of activities related to the Manufacture of Collaboration Compounds for such Phase 2 Clinical Trials.

 

1.109        “Phase 3 Development Activities” means, with respect to each Collaboration Compound, all clinical Development activities conducted by the Parties in accordance with any Global Development Plan with respect to Phase 3 Clinical Trials of such Collaboration Compound and including the Completion of Phase 3 Clinical Trials, including without limitation,

 

20

 

the conduct of activities related to the Manufacture of Collaboration Compounds for such Phase 3 Clinical Trials.

 

1.110        “Post-Registration Activities” means, with respect to each Collaboration Compound or Licensed Product, all clinical Development activities conducted by the Parties in accordance with any Global Development Plan for a specific Targeted Indication after the filing of an NDA with respect to such Collaboration Compound or Licensed Product for which an NDA has been filed for such Targeted Indication, up to and including the Completion of Phase 4 Clinical Trials and Phase 5 Clinical Trials with respect to such Collaboration Compound or Licensed Product and the conduct of activities related to the Manufacture of Collaboration Compounds or Licensed Products for such Clinical Trials.

 

1.111        “Pricing” means the determination of Licensed Product pricing at all levels, including wholesale, retail, hospital, clinic, health care provider, HMO, non-profit entity or government entities, including average sales price, average wholesale price and best price.

 

1.112        “Pricing Approval” means the approval by the appropriate Regulatory Authority in a country or jurisdiction of the price and reimbursement for a Licensed Product.

 

1.113        “Primary Detail Equivalent” means (i) if only a Licensed Product is Detailed, one Detail of such Licensed Product or (ii) if a Licensed Product is Detailed with another product, * percent (*%) of a Detail if the Licensed Product is Detailed in the first position and * percent (*%) of a Detail if the Licensed Product is Detailed in the second position or (iii) if a Licensed Product is Detailed other than in the first or second position, such percentage of a Detail as the Parties shall agree upon in the Co-Commercialization Agreement.

 

1.114        “Product Commercialization Plan” means, with respect to each Licensed Product (including without limitation any Co-Commercialized Licensed Product), the written plan for the Commercialization of such Licensed Product in the Territory (including, without limitation, expected pre-launch and launch activities (other than for Development), Manufacturing scale-up, Manufacture, formulation and filling requirements for such Licensed Product and a detailed strategy, budget and proposed timelines), as such plan may be amended or updated.  Each Product Commercialization Plan, and each amendment, modification or update to

 

21

 

each Product Commercialization Plan, shall be prepared by, or at the direction of, DS, and approved by the JSC at such time as the JSC may from time to time direct and in any event, on or prior to the initiation of Commercialization activities with respect to the Licensed Product.

 

1.115        “Product Technology” means any Program Technology that covers the composition of matter, synthesis, formulation, delivery, mechanism of action, mechanism of inhibition and/or use of a Collaboration Compound and/or Licensed Product.

 

1.116        “Product Trademark” means any trademark or trade name, whether or not registered, or any trademark application or renewal, extension or modification thereof, in the Territory, or any trade dress and packaging, in each case that are used with any Licensed Product by DS, together with all goodwill associated therewith and promotional materials relating thereto.

 

1.117        “Program Technology” means any Technology (including, without limitation, any new and useful process, method of manufacture or composition of matter) or Proprietary Material (a) that is conceived and first reduced to practice (actually or constructively) by either Party or jointly by both Parties in the conduct of the Development Program and/or in the Commercialization of Licensed Products, or (b) that is conceived and first reduced to practice by employees of, or consultants to, one Party after the Effective Date other than in the conduct of Development activities with the use in any material respect of any Technology, Patent Rights or Proprietary Materials of the other Party.  For purposes of clarity, Program Technology shall include any such Technology that is a process for modifying, optimizing, using, formulating, delivering and/or stabilizing any Collaboration Compound or Licensed Product.

 

1.118        “Proprietary Materials” means any tangible chemical, biological or physical materials (a) that are furnished by or on behalf of one Party to the other Party in connection with this Agreement, whether or not specifically designated as proprietary by the transferring Party, or (b) that are otherwise conceived or reduced to practice in the conduct of the Development Program and/or in connection with the Commercialization of Licensed Products.

 

1.119        “Regulatory Activities” means all activities relating to the obtaining and maintaining of any Regulatory Approval with respect to a Licensed Product, including without

 

22

 

limitation, the preparation and filing of Regulatory Filings and interacting with Regulatory Authorities with respect to such Regulatory Filings.

 

1.120        “Regulatory Approval” means, with respect to any country or region in the Territory, any approval, product and establishment license, registration or authorization of any Regulatory Authority required for the Manufacture, use, storage, importation, exportation, transport, distribution or sale of a Licensed Product in such country or region.

 

1.121        “Regulatory Authority” means the FDA, or any counterpart of the FDA outside the United States, or any other national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity with authority over the distribution, importation, exportation, Manufacture, production, use, storage, transport, clinical testing or sale of a Licensed Product.

 

1.122        “Regulatory Filings” means, collectively: (a) all INDs, NDAs, BLAs, establishment license applications, DMFs, applications for designation as an “Orphan Product(s)” under the Orphan Drug Act, for “Fast Track” status under Section 506 of the FDCA (21 U.S.C. § 356) or for a Special Protocol Assessment under Section 505(b)(4)(B) and (C) of the FDCA (21 U.S.C. § 355(b)(4)(B)) and all other similar filings (including, without limitation, counterparts of any of the foregoing in any country or region in the Territory); (b) all supplements and amendments to any of the foregoing; and (c) all data and other information contained in, and correspondence relating to, any of the foregoing.

 

1.123        “ROW Territory” means all of the countries and territories of the world other than the U.S. Territory and the Asian Territory.

 

1.124        “Royalty Term” means on a Licensed Product-by-Licensed Product and country-by-country basis, the period beginning on the date of First Commercial Sale of a Licensed Product in a country and ending on the later to occur of (a) expiration of the last to expire of the Licensed Patent Rights or Joint Patent Rights having a Valid Claim in such country that Covers such Licensed Product or its manufacture, use, import, offer for sale or sale or (b) * (*) years from the date of the First Commercial Sale of such Licensed Product in such country, and “Cover” as used herein means, with respect to a Licensed Product, composition, technology,

 

23

 

process or method that, in the absence of ownership of or a license granted under a Valid Claim, the manufacture, use, offer for sale, sale or importation of such Licensed Product or the practice of such technology, process or method would infringe such Valid Claim of the Licensed Patent Rights or Joint Patent Rights (or, in the case of a Valid Claim of the Licensed Patent Rights or Joint Patent Rights that has not yet issued, would infringe such Valid Claim if it were to issue).

 

1.125        “Second Co-Commercialization Option Period” means, with respect to each Licensed Product, the period commencing on the date that the NDA Filing Notice is received by ARQULE and continuing for a period of * (*) days thereafter.

 

1.126        “Shared Development Costs” means, with respect to a Party, * percent (*%) of the aggregate amount of the External Development Costs incurred by such Party in the conduct of Development activities.

 

1.127        “sNDA” means a Supplemental New Drug Application, as defined in the FDCA and applicable regulations promulgated thereunder.

 

1.128        “Sublicensee” means any Third Party to which a Party grants a sublicense in accordance with Section 6.2.2.

 

1.129        “Targeted Indications” means (a) all human Cancer Indications and (b) any Approved Non-Cancer Indications.

 

1.130        “Technology” means, collectively, inventions, discoveries, improvements, trade secrets and proprietary methods, whether or not patentable, including without limitation: (a) methods of Manufacture or use of, and structural and functional information pertaining to, chemical compounds or other therapeutic agents and (b) compositions of matter, data, formulations, processes, techniques, know-how and results (including any negative results).

 

1.131        “Territory” all countries and territories of the world other than the Asian Territory, consisting of the U.S. Territory and the ROW Territory.

 

1.132        “Third Party” means a Person other than DS and ARQULE and their respective Affiliates.

 

24

 

1.133        “Third Party Data Provider” means IMS Health and/or any other Third Party reasonably acceptable to the Parties that performs market analyses and provides sales data for the biotechnology or pharmaceutical industry.

 

1.134        “Unanimous Decision” means (a) any decision with respect to * and any amendment to any such *; (b) any decision that would *; (c) any decision to *; (d) any decision requiring a Party to *; (e) any decision applicable to * and any *; (f) any decision to * and (g) any other decision designated as a Unanimous Decision herein.

 

1.135        “US Joint Marketing Committee” or “USJMC” means the committee composed of ARQULE and DS representatives established pursuant to Section 2.5.

 

1.136        “U.S. Territory” means the United States of America and its territories, including, without limitation, Puerto Rico and the U.S. Virgin Islands.

 

1.137        “Valid Claim” means (a) any claim of an issued unexpired patent that, (i) has not been permanently revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, (ii) has not been rendered unenforceable through disclaimer or otherwise, and (iii) is not lost through an interference proceeding; or (b) any claim of a pending patent application that has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, and which pending patent application has been pending for less than * (*) years since its earliest priority date.  In the event subsequent to such * (*) year period, such pending claim is issued as a claim of an issued and unexpired patent included within (a) above, such claim shall be reinstated thereafter as a “Valid Claim” in accordance with clause (a) above.

 

25

 

 

 

MiT Tumor Milestones		4.2.2(d)
NDA Filing Notice		3.12.1(a)
New Cancer Indication		3.14
Non-Filing Party		8.1.4
Other Products		4.3.1(a)(i)
Party/Parties		Preamble
Patent Coordinator		7.4
Permitted Employee		5.1.2
Phase 3 Costs		3.11.2(a)(ii)
Prior CDA		12.13
Product-Related Data		3.10.3
receiving Party		1.38
Recipient Party		3.4
Regulatory Transition Plan		3.1.4(a)
Supply Agreement		3.3.3
Term		9.1
Third Party Development Technology		6.5.2
Total Reimbursable Costs		3.14
Transferring Party		3.4
Upfront Fee		4.1

 

2.              ADMINISTRATION OF THE COLLABORATION

 

2.1            Joint Steering Committee .

 

2.1.1         Establishment .  As soon as practicable after the Execution Date, ARQULE and DS shall establish the Joint Steering Committee.  The JSC shall have and perform the responsibilities set forth in Section 2.1.4.

 

2.1.2         Membership .  Upon establishment of the JSC, each of ARQULE and DS shall designate in writing four (4) representatives, or such other equal number of representatives as the Parties agree, to the JSC, who shall be senior level personnel.  One (1) representative of each Party shall be designated as a co-chair of the JSC.  Each Party shall have the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JSC by giving written notice to the other Party.

 

2.1.3         Meetings .

 

(a)            Schedule of Meetings; Agenda .  The JSC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs of the

 

27

 

Collaboration and the responsibilities of the JSC.  Special meetings of the JSC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon not less than ten (10) days) written notice to the other members; provided, that, (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member.  Unless otherwise agreed by the Parties, the JSC shall meet four (4) times in each Calendar Year.  Regular and special meetings of the JSC may be held in person or by teleconference or videoconference; provided, that, meetings held in person shall alternate between the respective offices of the Parties or at other locations mutually agreeable to the JSC members.  The co-chairs shall prepare and circulate an agenda for each JSC meeting not later than one (1) week prior to such meeting.

 

(b)            Quorum; Voting; Decisions .  At each JSC meeting, the presence in person of the co-chairs shall constitute a quorum provided that minutes of the meeting are prepared as set forth below.  All members designated by a Party shall have one (1) collective vote, to be cast by such Party’s co-chair (or his designee), on all matters before the JSC at such meeting.  All decisions of the JSC shall be made by unanimous vote.  Alternatively, the JSC may act by written consent signed by the co-chairs.  Whenever any action by the JSC is called for hereunder during a time period in which the JSC is not scheduled to meet, either co-chair shall cause the JSC to meet to take the action in the requested time period by calling a special meeting or the co-chairs shall act by written consent.  Representatives of each Party or of its Affiliates who are not members of the JSC may attend JSC meetings as guests with the consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed.

 

(c)            Minutes .  The JSC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail.  Drafts of the minutes shall be prepared and circulated to the members of the JSC within a reasonable time after the meeting, not to exceed ten (10) Business Days, and the co-chairs shall alternate responsibility for the preparation and circulation of draft minutes.  Each member of the JSC shall have the opportunity to provide comments on the draft minutes.  The minutes shall be approved, disapproved and revised as soon as practicable.  Upon approval, final minutes of each meeting

 

28

 

shall be circulated to the members of the JSC by the co-chair with responsibility for preparing such minutes.

 

(d)            Expenses .  ARQULE and DS shall each bear all expenses of their respective JSC representatives related to their participation on the JSC and attendance at JSC meetings.  If any meeting is held off-site, the expense for using the necessary meeting facility is to be  born by the Party hosting such meeting.

 

2.1.4         Responsibilities .  The JSC shall be responsible for general oversight of the conduct and progress of the Development Program, and the global Development and Commercialization of Licensed Products.  Without limiting the generality of the foregoing, the JSC shall have the following responsibilities:

 

(a)            reviewing and approving the overall goals and strategy of the Development Program;

 

(b)            reviewing budgets, data, reports or other information submitted to it by any other Committee from time to time;

 

(c)            overseeing the activities and performance by each of the other Committees of its respective duties;

 

(d)            reviewing and approving each Global Development Plan (as a Unanimous Decision) and reviewing Product Commercialization Plan (as a DS Decision);

 

(e)            appointing the appropriate Committee or people for review of commercialization issues outside the United States;

 

(f)             appointing the appropriate Committee or people for review and approval of, or variances from, Global Pricing Policy (as a Unanimous Decision);

 

(g)            resolving all Committee matters that are in dispute; and

 

(h)            making such other decisions as may be delegated to the JSC pursuant to this Agreement or by mutual written agreement of the Parties during the Term.

 

29

 

2.1.5         Dispute Resolution .  The JSC members shall use reasonable efforts to reach agreement on any and all matters.  In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JSC within * (*) days after the JSC first meets to consider such matter (each such matter, a “Disputed Matter” ), then, (a) if the Disputed Matter involves a DS Decision, DS shall have the right to make the final decision on such Disputed Matter but shall only exercise such right in good faith after full consideration of the positions of both Parties; (b) if the Disputed Matter involves an ARQULE Decision, ARQULE shall have the right to make the final decision on such Disputed Matter but shall only exercise such right in good faith after full consideration of the positions of both Parties; (c) if the Disputed Matter involves a Joint Decision or a Unanimous Decision, (i) the co-chairs of the JSC shall refer such Disputed Matter to the CEO of ARQULE and the senior officer of DS or its Affiliates to be designated by the CEO of DS (the “Designated Senior Officers” ), who shall promptly initiate discussions in good faith to resolve such Disputed Matter and (ii) if such Disputed Matter is not resolved by the Designated Senior Officers within * (*) days after the date the Designated Senior Officers first met to consider such Disputed Matter or * (*) days after the date the JSC first met to consider such Disputed Matter, the Disputed Matter shall be resolved in accordance with Section 12.1; and (d) if the Disputed Matter involves a Unanimous Decision, such matter must be resolved by the JSC or the Designated Senior Officers, and shall not be submitted to the arbitration pursuant to Section 12.1.

 

2.2            Joint Development Committee .

 

2.2.1         Establishment .  As soon as practicable after the Execution Date, ARQULE and DS shall establish the Joint Development Committee.  The JDC shall have and perform the responsibilities set forth in Section 2.2.4.

 

2.2.2         Membership .  Upon establishment of the JDC, each of ARQULE and DS shall designate in writing five (5) representatives (representing each key function such as clinical development, regulatory, commercial, CM&C and project management), or such other number of representatives as the Parties agree, to the JDC.  Unless otherwise agreed by the Parties, one representative of each Party shall be designated as a co-chair of the JDC.  Each Party shall have

 

30

 

the right at any time to substitute individuals, on a permanent or temporary basis, for any of its previously designated representatives to the JDC by giving written notice to the other Party.

 

2.2.3         Meetings .

 

(a)            Schedule of Meetings; Agenda .  The JDC shall establish a schedule of times for regular meetings, taking into account, without limitation, the planning needs of the Development Program and the responsibilities of the JDC.  Special meetings of the JDC may be convened by any member upon not less than thirty (30) days (or, if such meeting is proposed to be conducted by teleconference, upon not less than ten (10) days) written notice to the other members; provided, that, (i) notice of any such special meeting may be waived at any time, either before or after such meeting and (ii) attendance of any member at a special meeting shall constitute a valid waiver of notice from such member.  In no event shall the JDC meet less frequently than four (4) times each Calendar Year.  Regular and special meetings of the JDC may be held in person or by teleconference or videoconference; provided, that, meetings held in person shall alternate between the respective offices of the Parties or at other locations mutually agreeable to the JDC members.  The co-chairs shall prepare and circulate an agenda for each JDC meeting not later than one (1) week prior to such meeting.

 

(b)            Quorum; Voting; Decisions .  At each JDC meeting, the presence in person of the co-chairs shall constitute a quorum provided that minutes of the meeting are prepared as set forth below.  All members designated by a Party shall have one (1) collective vote, to be cast by such Party’s co-chair (or his designee), on all matters before the JDC at such meeting.  All decisions of the JDC shall be made by unanimous vote.  Alternatively, the JDC may act by written consent signed by the co-chairs.  Whenever any action by the JDC is called for hereunder during a time period in which the JDC is not scheduled to meet, either co-chair shall cause the JDC to meet to take the action in the requested time period by calling a special meeting or the co-chairs shall act by written consent.  Representatives of each Party or of its Affiliates who are not members of the JDC may attend JDC meetings as guests with the consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed.

 

(c)            Minutes .  The JDC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail.  Drafts of the minutes

 

31

 

shall be prepared and circulated to the members of the JDC within a reasonable time after the meeting, not to exceed ten (10) Business Days, and the Parties shall alternate responsibility for the preparation and circulation of draft minutes.  Each member of the JDC shall have the opportunity to provide comments on the draft minutes.  The minutes shall be approved, disapproved and revised as necessary at the next JDC meeting.  Upon approval, final minutes of each meeting shall be circulated to the members of the JDC by the co-chair with responsibility for preparing such minutes.

 

(d)            Expenses .  ARQULE and DS shall each bear all expenses of their respective JDC representatives related to their participation on the JDC and attendance at JDC meetings.  If any meeting is held off-site, the expense for using the necessary meeting facility is to be  born by the Party hosting such meeting.

 

2.2.4         Responsibilities .  The JDC shall be responsible for overseeing the conduct and progress of the Development Program and the global Development of Licensed Products.  Without limiting the generality of the foregoing, the JDC shall have the following responsibilities:

 

(a)            preparing, or directing the preparation by the Parties of, the Development Program;

 

(b)            preparing, or directing the preparation by the Parties of, each Global Development Plan applicable to the Development of Licensed Products in the Territory, including the budget with respect thereto;

 

(c)            preparing, or directing the preparation by the Parties of, each amendment to any Global Development Plan applicable to the Development of Licensed Products in the Territory or the budget with respect thereto;

 

(d)            approving the Manufacturing Plan to be proposed by DS for the Manufacture of Licensed Products;

 

32

 

(e)            monitoring the progress of the Development Program under each Global Development Plan applicable to the Development of Licensed Products in the Territory and of each Party’s activities thereunder;

 

(f)             reconciling issues between the Parties with respect to the Parties’ respective share of Shared Development Costs with respect to Licensed Products;

 

(g)            reviewing and circulating to the Parties data, reports or other information submitted by either Party with respect to work conducted under the Development Program;

 

(h)            overseeing the conduct of Clinical Trials for Licensed Products in the Territory;

 

(i)             reviewing and approving any agreement entered into by a Party with a Third Party pursuant to Section 6.2.1; and

 

(j)             making such other decisions as may be delegated to the JDC pursuant to this Agreement or by the JSC or by mutual written agreement of the Parties during the Term.

 

2.2.5         Dispute Resolution .  The JDC members shall use reasonable efforts to reach agreement on any and all matters.  In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the JDC within * (*) days after the JDC first meets to consider such matter, then the matter shall be referred to the JSC for resolution pursuant to Section 2.1.5.

 

2.3            Joint Life Cycle Management Committee .  The JSC may establish the Joint Life Cycle Management Committee as a sub-Committee to the JDC, the primary purpose of which shall be to generate concepts and direct, plan, manage handoff to execution teams and joint governing committees, and monitor strategies for product innovations for the Licensed Product(s), including new indications, new combinations, dosing regimens, new formulations, and line extensions.  The JLCMC shall also ensure that critical success factors, timelines and issues are transparent to the JDC.  The JLCMC shall consist of three (3) representatives, or such

 

33

 

other equal number of representatives as the Parties agree, from each Party.  The JLCMC shall establish a life-cycle management plan for the Licensed Product on an annual basis for approval by the JDC.  In the event of a dispute, the matter shall be referred to the JDC.  If the JLCMC is not established, the functions set forth above and below shall be performed by the JDC.  If established, the JLCMC shall be responsible for (a) directing, planning and managing the transition to the applicable Committees of responsibilities with respect to the Development and Commercialization of Licensed Products and (b) generating and monitoring strategies for innovation of Licensed Products, including any strategies related to the pursuit of Non-Cancer Indications, new combinations, dosing regimens and/or line extensions with respect to Licensed Products.

 

2.4            Joint Finance Committee .  The JSC may establish the Joint Finance Committee as a sub-Committee to the JDC, the primary purpose of which shall be to provide monthly standardized financial information and analysis to project team and joint governing committees to facilitate planning, decision making, and controls in the United States.  The JFC shall consist of three (3) representatives, or such other equal number of representatives as the Parties agree, from each Party.  In the event of a dispute, the matter shall be referred to the JDC.  If the JFC is not established, the functions set forth above and below shall be performed by the JDC, or in the case of Section 3.11.2(a)(i), by the Party designated by the JSC under such section.  If established, the JFC shall be responsible for coordinating the financial information and analyses prepared by the Parties in connection with the Commercialization of Licensed Products in the U.S. Territory.

 

2.5            US Joint Marketing Committee .

 

2.5.1         Establishment .  As soon as practicable following the exercise by ARQULE of a Co-Commercialization Option with respect to a Co-Commercialized Licensed Product in accordance with Section 3.12, ARQULE and DS shall establish the US Joint Marketing Committee which shall have and perform the responsibilities set forth in Section 2.5.4.  Unless otherwise agreed by the Parties, the term for the USJMC shall commence at such time and continue for so long as a Co-Commercialized Product is being Commercialized.

 

34

 

consent.  Representatives of each Party or of its Affiliates who are not members of the USJMC may attend USJMC meetings as guests with the consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed.

 

(c)            Minutes .  The USJMC shall keep minutes of its meetings that record all decisions and all actions recommended or taken in reasonable detail.  Drafts of the minutes shall be prepared and circulated to the members of the USJMC within a reasonable time after the meeting, not to exceed ten (10) Business Days, and the Parties shall alternate responsibility for the preparation and circulation of draft minutes.  Each member of the USJMC shall have the opportunity to provide comments on the draft minutes.  The minutes shall be approved, disapproved and revised as necessary at the next USJMC meeting.  Upon approval, final minutes of each meeting shall be circulated to the members of the USJMC by the by the co-chair with responsibility for preparing such minutes.

 

(d)            Expenses .  ARQULE and DS shall each bear all expenses of their respective USJMC representatives related to their participation on the USJMC and attendance at USJMC meetings.  If any meeting is held off-site, the expense for using the necessary meeting facility is to be  born by the Party hosting such meeting.

 

2.5.4         Responsibilities .  The USJMC shall be responsible for overseeing the conduct and progress of the Co-Commercialization of each Co-Commercialized Product in the Co-Commercialization Territory.  Without limiting the generality of the foregoing, the USJMC shall have the following responsibilities:

 

(a)            preparing or directing the preparation by the Parties of, each Co-Commercialization Plan for Co-Commercialized Products in the Co-Commercialization Territory, including the budgets with respect thereto;

 

(b)            preparing or directing the preparation by the Parties of each amendment to any Co-Commercialization Plan for Co-Commercialized Products in the Co-Commercialization Territory or the related budget with respect thereto;

 

36

 

(c)            determining style guidelines and the appearance of Co-Commercialized Products in the Co-Commercialization Territory, including packaging and promotional materials;

 

(d)            determining managed health care strategy and tactics, including Pricing, rebates, discounts and charge-backs for Co-Commercialized Products in the Co-Commercialization Territory;

 

(e)            determining the appropriate use of medical science liaisons in support of the Co-Commercialized Products;

 

(f)             determining the format and quantities of promotional sales, marketing and educational materials for the Co-Commercialized Products;

 

(g)            reviewing and approving any proposals for modifications of existing Co-Commercialized Products, including, without limitation, new formulations after First Commercial Sale and line extensions;

 

(h)            agreeing upon the design and implementation of all Co-Commercialized Product launch activities;

 

(i)             monitoring the progress of Commercialization of Co-Commercialized Products in the Co-Commercialization Territory under each Co-Commercialization Plan and of each Party’s activities thereunder;

 

(j)             reviewing and circulating to the Parties data, reports or other information submitted by either Party with respect to the Commercialization of Co-Commercialized Products in the Co-Commercialization Territory;

 

(k)            determining appropriate targets for sales force staffing and territory mapping purposes, determining the appropriate level of Detailing effort to be provided by each Party in Co-Commercializing such Co-Commercialized Product and coordinating the Detailing efforts of both Parties with respect to Co-Commercialized Products;

 

37

 

(l)             overseeing all recalls, market withdrawals and any other corrective actions related to Co-Commercialized Products;

 

(m)           receiving and providing to the Parties sales reports pertaining to Co-Commercialized Products;

 

(n)            approving all Third Parties to be engaged by either Party to provide representatives to Commercialize Co-Commercialized Products, which approval shall be reflected in the minutes of the USJMC; and

 

(o)            making such other decisions as may be delegated to the USJMC pursuant to this Agreement or by the JSC or by mutual written agreement of the Parties during the Term.

 

2.5.5         Dispute Resolution .  The USJMC members shall use reasonable efforts to reach agreement on any and all matters.  In the event that, despite such reasonable efforts, agreement on a particular matter cannot be reached by the USJMC within * (*) days after the USJMC first meets to consider such matter, then the matter shall be referred to the JSC for resolution pursuant to Section 2.1.5.

 

2.6            Alliance Managers .

 

2.6.1         Appointment .  Each Party shall have the right to appoint a person who shall oversee interactions between the Parties for all matters related to the Development and Commercialization of Licensed Products between Committee meetings (each, an “Alliance Manager” ).  The Alliance Managers shall have the right to attend all Committee meetings as non-voting participants and may bring to the attention of the applicable Committee any matters or issues either of them reasonably believes should be discussed and shall have such other responsibilities as the Parties may mutually agree in writing.  Each Party may replace its Alliance Manager at any time or may designate different Alliance Managers with respect to Development and Commercialization, respectively, by notice in writing to the other Party.

 

2.6.2         Responsibilities .  The Alliance Managers, if appointed, shall have the responsibility of creating and maintaining a constructive work environment within the

 

38

 

Committees and between the Parties for all matters related to the Collaboration.  Without limiting the generality of the foregoing, each Alliance Manager shall:

 

(a)            identify and bring to the attention of the JSC, as applicable, any disputes arising between the Parties related to the Collaboration in a timely manner, including, without limitation, any asserted occurrence of a material breach by a Party, and function as the point of first referral in the resolution of each dispute;

 

(b)            provide a single point of communication for seeking consensus within the Parties’ respective organizations and between the Parties with respect to the Collaboration;

 

(c)            plan and coordinate cooperative efforts, internal communications and external communications between the Parties with respect to the Collaboration; and

 

(d)            take such steps as may be required to ensure that Committee meetings occur as set forth in this Agreement, that procedures are followed with respect to such meetings (including, without limitation, the giving or proper notice and the preparation and approval of minutes) and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed.

 

2.7            Decision Making .  All decisions made and all actions taken by any Committee or the officers of the Parties pursuant to Section 2.1.5 shall be made or taken in the best interest of the Collaboration.

 

2.8            Appointment Not an Obligation; No Breach .  The appointment of members of any Committee and the Alliance Managers is a right of each Party and not an obligation and shall not be a “deliverable” as defined in EITF Issue No. 00-21.  Each Party shall be free to determine not to appoint members to the JSC, JDC, and USJMC, and not to appoint an Alliance Manager.  If a Party (an “Appointing Party” ) does not appoint members of a Committee or an Alliance Manager, it shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such persons are appointed, the other Party may discharge the roles of the Committee for which members were not appointed by an Appointing Party.

 

39

 

3.              DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS

 

3.1            Implementation of Development Program .

 

3.1.1         Objectives of the Development Program .  The objectives of the Development Program shall be the Development of Licensed Products in order to obtain, as expeditiously as possible, Commercialization Regulatory Approval of one or more Licensed Products in the Field in the Territory pursuant to the Global Development Plans.

 

3.1.2         Preparation of Global Development Plan .  A clinical development plan for the Development of the Collaboration Compound for each Targeted Indication has been agreed upon in writing by the Parties.  Within * (*) months of the Execution Date, a Global Development Plan, which includes at least the Phase 2 Clinical Trials described in such clinical development plan, will be prepared by the JDC and approved by the JSC.  Until a Global Development Plan is approved by the JSC, the clinical development plan described above shall be the Global Development Plan.  At least annually, during the Term, a Global Development Plan for each Collaboration Compound and Licensed Product and Targeted Indication shall be prepared or updated by the JDC and submitted to the JSC for approval at least * (*) days before the meeting of the JSC at which it will be considered.  Each Global Development Plan shall: (a) set forth *.

 

40

 

3.1.3         Responsibility for Development of Licensed Products .

 

(a)            Phase 2 Development Activities .  Except as otherwise set forth in the Global Development Plan, the Parties shall collaborate in the conduct of all Phase 2 Development Activities (including, without limitation the conduct of any Phase 2 Clinical Trials), and each Party shall have the responsibility for the conduct of all Phase 2 Development Activities (including, without limitation the conduct of all Phase 2 Clinical Trials) designated as the responsibility of such Party in any Global Development Plan.

 

(b)            Phase 3 Development Activities .  Except as otherwise set forth in the Global Development Plan, the Parties shall collaborate in the conduct of all Phase 3 Development Activities (including, without limitation the conduct of any Phase 3 Clinical Trials), and each Party shall conduct the Phase 3 Development Activities specified as its responsibility in any Global Development Plan.

 

(c)            Post-Registration Activities .  Except as otherwise set forth in the Global Development Plan, the Parties shall collaborate in the conduct of all Post-Registration Activities (including, without limitation the conduct of any Phase 4 Clinical Trials and Phase 5 Clinical Trials), and each Party shall conduct the Post-Registration Activities specified as its responsibility in any Global Development Plan.

 

(d)            Engagement of Third Parties .  Each Party shall have the right to engage Third Party contractors to perform some or all of its Development Activities in connection with the Development of Licensed Products hereunder pursuant to Section 6.2.1.

 

(e)            Conduct of Clinical Trials .  Neither Party shall conduct any Clinical Trial unless such Clinical Trial is specified to be conducted in the Global Development Plan, except as set forth in Sections 3.14 and 3.15.

 

3.1.4         Regulatory Filings; Adverse Event Reporting .

 

(a)            Regulatory Transition Activities .  As soon as practicable, but in any event on or before * (*) days from the Execution Date, ARQULE shall prepare and submit to the JDC for its review and approval a mutually-acceptable regulatory transition plan which shall

 

41

 

describe with reasonable specificity the steps to be followed, and the timelines applicable to, the transfer by ARQULE of the Ongoing Regulatory Filing (the “Regulatory Transition Plan” ).  As soon as practicable following the JDC’s approval of the Regulatory Transition Plan, (i) ARQULE shall use Commercially Reasonable Efforts to conduct the activities described in the Regulatory Transition Plan and (ii) DS shall provide such assistance as may be reasonably necessary to complete such activities.

 

(b)            Responsibility for Regulatory Filings .  Subject to the Regulatory Transition Plan and Section 3.10.6, *.  In addition, DS shall be obligated to prepare and file a Drug Approval Application based on data from Phase 2 Clinical Trials and/or Phase 3 Clinical Trials if the JSC determines, as a Joint Decision, that (i) the primary endpoints for efficacy and safety of such Clinical Trials have been met in all material respects, and (ii) there is a reasonable likelihood of approval with a label substantially equivalent to the label that will be requested in the Drug Approval Application, unless the JSC determines as a Joint Decision to delay the preparation and filing of such Drug Approval Application in order to conduct additional Clinical Trials to obtain data to maximize the likelihood of obtaining Commercialization Regulatory Approval or optimize the label.  ARQULE (i) shall, at DS’s request, provide to DS, and DS shall have the right to provide to its Sublicensees or Affiliates, copies of a drug approval application filed by Kyowa with the Regulatory Authorities in the Field outside the Territory, and grants to DS and its Sublicensees or Affiliates the right to access, reference, use and incorporate such drug approval application in the Territory; and (ii) agrees that ARQULE shall, at DS’s request, provide to DS, and that DS shall have the right to provide to its Sublicensees or Affiliates, copies of any additional information or data with respect to the Licensed Product generated by, or on behalf of, Kyowa and owned or otherwise controlled by Kyowa and necessary or useful for DS and its Sublicensees or Affiliates to obtain any Regulatory Approvals or perform such other Regulatory Activities under this Agreement, and to Develop, Manufacture and Commercialize Licensed Products.  For the avoidance of doubt, DS’s

 

42

 

obligations under this Section 3.1.4(b) shall apply to Regulatory Filings and Drug Approval Applications for Licensed Products in New Cancer Indications (as defined in Section 3.14 below).

 

3.2            Identification of Back-Up Compounds .  If the JSC determines, as a Unanimous Decision, to seek to identify a Back-up Compound for Development under this Agreement, and upon agreement by the Parties on a research plan, including the allocation of research responsibilities, a budget, and responsibility for all costs of performing such research plan, ARQULE, DS or ARQULE and DS jointly (as designated by the JSC) will use Commercially Reasonable Efforts to deliver * (*) or more c-MET Inhibitors in addition to ARQ 197 which may be Developed as a follow-up compound or simultaneously with ARQ 197 for Targeted Indications (each such compound, a “Back-Up Compound” ).  The rights and obligations of the Parties relating to each Back-Up Compound shall be identical to those applicable to ARQ 197, except as otherwise expressly provided herein.  Either Party shall notify the JSC in writing in the event it wishes to replace ARQ 197 with a specified c-MET Inhibitor developed hereunder as a Back-Up Compound or to Develop such c-MET Inhibitor as a Back-Up Compound in addition to ARQ 197.  Within * (*) days after its receipt of such notice, the JSC shall review the data information and determine, as a Unanimous Decision, whether to so designate the proposed c-MET Inhibitor as a Back-Up Compound.  Subsequent to such designation, as applicable, any reference to the Licensed Product shall be deemed to include or to be made to the Back-Up Compound for purposes of this Agreement.

 

3.3            Supply of Licensed Products for Development and Commercialization .

 

3.3.1         Manufacturing Plan .  Within * (*) days of the Execution Date, DS will propose to the JDC a plan for establishing manufacturing capabilities necessary for DS to manufacture the Licensed Product for use in the Territory (the “Manufacturing Plan” ).  Following approval of the Manufacturing Plan by the JDC, DS will use Commercially Reasonable Efforts to complete the activities and establish manufacturing capabilities in accordance with such Manufacturing Plan.  ARQULE will assist with such activities by providing DS with technical documentation as may be reasonably requested to inform DS about the Manufacturing process.  Notwithstanding the foregoing, DS will (a) retain sole responsibility

 

43

 

for the implementation and progress of the Manufacturing Plan and (b) provide ARQULE and the JDC with written notice upon its completion of the activities contemplated by the Manufacturing Plan (the “Manufacturing Plan Completion Notice” ).

 

3.3.2         Development Supply .  During the period commencing on the Effective Date and continuing until the date of receipt by ARQULE of the Manufacturing Plan Completion Notice, ARQULE will be solely responsible for supplying DS with API and/or finished Licensed Product necessary for the conduct of the Development Program under the Global Development Plan in such quantities as may be mutually agreed by the Parties.  After receipt of the Manufacturing Plan Completion Notice, DS will be solely responsible for supplying DS and ARQULE with API and/or finished Licensed Product necessary for the conduct of the Development Program under the Global Development Plan in such quantities as may be mutually agreed by the Parties.

 

3.3.3         Commercial Supply .  During the period commencing on the date of receipt by ARQULE of the Manufacturing Plan Completion Notice and continuing for the remainder of the Term, DS will be solely responsible, at its sole cost and expense, for supplying all API and finished Licensed Product necessary for Commercialization of Licensed Products in the Territory.  In the event that ARQULE requests in writing that DS supply ARQULE’s Third Party licensees and collaborators with API and/or unlabeled finished and filled Licensed Product necessary for Commercialization of Licensed Product outside of the Territory, ARQULE and DS shall negotiate in good faith and enter into a manufacture and supply agreement (the “Supply Agreement” ) detailing the terms of supply for such API and/or finished and filled Licensed Product, which Supply Agreement shall include, without limitation, the transfer price for such API and/or Licensed Product.

 

3.4            Supply of Proprietary Materials .  From time to time during the Term, either Party (the “Transferring Party” ) may supply the other Party (the “Recipient Party” ) with Proprietary Materials of the Transferring Party for use in the Development Program.  In connection therewith, each Recipient Party hereby agrees that (a) it shall not use such Proprietary Materials for any purpose other than exercising its rights or performing its obligations hereunder; (b) it shall use such Proprietary Materials only in compliance with all Applicable Laws; (c) it

 

44

 

shall not transfer any such Proprietary Materials to any Third Party without the prior written consent of the Transferring Party, except for (i) the transfer of Licensed Products for use in Clinical Trials or (ii) in a Permitted Transaction or as otherwise expressly permitted hereby; (d) the Recipient Party shall not acquire any right, title or interest in or to such Proprietary Materials as a result of such supply by the Transferring Party; and (e) upon the expiration or termination of the Development Program, the Recipient Party shall, if and as instructed by the Transferring Party, either destroy or return any such Proprietary Materials that are not the subject of the grant of a continuing license hereunder.

 

3.5            Licensed Product Commercialization .

 

3.5.1         Product Commercialization Plans .   Within * (*) days after