Exclusive Patent And Know-How License Agreement

 

 

(C)            The research programme conducted by Professor Martin Glennie and colleagues which generated the Intellectual Property (as defined below) was funded by Tenovus, a cancer charity registered in England and Wales under number 1054015. Under the terms and conditions of Tenovus grant funding, Tenovus have co-ownership rights in the Intellectual Property.  Pursuant to an Assignment Agreement dated 29 February 2008, Tenovus’ rights in the Licensed IP have vested in Cancer Research Technology Ltd, Sardinia House, Sardinia Street, London WC2A 3NL, England (“CRT”). Southampton and CRT are therefore co-owners of the Licensed IP.  Under the terms of the CRT Agreement dated October 13, 2008 attached hereto as Schedule 2 , CRT has granted Southampton the rights to grant exclusive licenses to the Patents, Materials and Know How;

 

(D)           Southampton wishes to continue to carry out further research and development on the application of its [*] for treating disorders that may benefit from immune stimulation. Southampton wishes to retain the right to license the combination of its Materials and [*] to Third Parties;

 

(E)            Celldex wishes to seek to generate its own [*] and to develop an adjuvant/vaccine based on [*] ;

 

(F)            Celldex seeks rights to the Intellectual Property to undertake the proposed development and to manufacture, have manufactured, import, sell and use adjuvants/vaccines incorporating [*] antibodies and/or to secure sublicenses with Third Parties; and

 

(G)            Southampton is willing to provide Celldex rights to the Intellectual Property subject to the provisions of this Agreement.

 

IT IS AGREED as follows:

 

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1.             Definitions

 

In this Agreement, the following words shall have the following meanings:

 

Academic Partner		means a charitable body or academic institution or any non-for-profit entity (or similar entity).
Academic Research		means academic, non-commercial research and teaching conducted alone or in collaboration with other Academic Partners. For the avoidance of doubt, Academic Research excludes any Sponsored Research.
Affiliate		Means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.
Claims		Means all demands, claims and liability (whether criminal or civil, in contract, tort or otherwise) for losses, damages, legal costs and other expenses of any nature whatsoever and all costs and expenses (including legal costs) incurred in connection therewith.
Combination Product		Means a product that contains a Licensed Product and at least one other essential functional component.
Commercial Partner		Means any entity which is not an Academic Partner.
Confidential Information		Means proprietary information and trade secrets or confidential information relating to the business affairs or finances of the other Party supplied or otherwise made available to them or coming into their possession in relation to the performance of this Agreement, irrespective of form.
Control		Means direct or indirect beneficial ownership of 50% (or, outside a Party’s home territory, such lesser percentage as is the maximum, permitted level of foreign investment) or more of the share capital, stock or other participating interest carrying the right to vote or to

 

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		distribution of profits of that Party, as the case may be.
Cover(ed)		Means, with respect to any Patent and the subject matter at issue, that, but for a license granted under a Valid Claim of such Patent, the manufacture, use, sale, offer for sale, or importation of the subject matter at issue would infringe such Valid Claim on a country-by-country basis, or, in the case of a Patent that is a patent application, would infringe a Valid Claim on a country-by-country basis in such patent application if it were to issue as a patent.
Diligent and Reasonable Efforts		Means, with respect to the efforts to be expended by a Party with respect to the objective that is the subject of such efforts, such reasonable, good faith efforts and resources to accomplish such objective that such Party would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that with respect to the development or commercialization of a Licensed Product, such efforts shall be similar to those efforts and resources commonly used by that Party to develop or commercialize a product owned by it or to which it otherwise has rights that is at a similar stage of development or product life and is of similar market potential as the relevant Licensed Product, taking into account product labelling or anticipated labelling, present and future market potential, past performance of Licensed Products and such Party’s own pharmaceutical products that are of similar market potential, financial return, medical and clinical considerations, present and future regulatory environment and competitive market conditions, all as measured by the facts and circumstances at the time such efforts are due. Diligent and Reasonable Efforts shall be secured through the reporting obligations of Section 5.2 and Southampton’s right of termination of Section 5.4.   Diligent and Reasonable Efforts shall be determined on a market-by-market and indication-by-indication basis for a particular Licensed Product, and it is anticipated that the level of effort will be

 

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		different for different markets, and will change over time, reflecting changes in the status of the Licensed Product and the market(s) involved.
Effective Date		Means the effective date of this Agreement as set forth above.
Field		Means all therapeutic or prophylactic uses, including uses as adjuvants or vaccines, in the Territory of [*] , alone or in combination with any other pharmaceutical agent, other than the Southampton Field.
Intellectual Property		Means the Patents, Materials, Know-how, and Confidential Information.
Know-how		Means Confidential Information in the form of technical information in the Field relating to the Patents, Materials and/or Licensed Products and developed by or under the supervision of Professor Martin Glennie prior to the Effective Date and specifically set forth on Schedule 1 Part B hereof and transferred to Celldex prior to the end of the Extended Transfer Period pursuant to Section 3.1 hereof, including any utility models and registered designs, together with applications for any of the foregoing and the right to apply for any of the foregoing, copyrights, database rights and design rights and in which Southampton has the necessary rights to enable it to grant the license set out in Clause 2.1.2.
Licensed Products		Means any and all products in the Field that are developed, manufactured, sold or otherwise supplied by Celldex or its sub-licensee (including any Affiliate of Celldex) and (a) which is Covered by the Patents in the country of manufacture and/or sale, and/or (b) incorporate or was developed making use of any of the Know-how and/or Materials.
Materials		Means [*] thereof generated by Celldex, its Affiliates or sub-licensees.

 

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Net Receipts

Means the amount of any payment (excluding Value Added Tax) and the value of any non monetary receipt (subject to the provisions below) obtained by, or due to, Celldex or its Affiliate, in relation to the sub-licensing (including the grant of any option over a sub-license) of any of the Intellectual Property and including any of the following:   (a)         up-front, milestone (whether at the stage of development, marketing or otherwise), success, bonus, maintenance and periodic (including annual) payments due under any sub-license agreement;   (b)         payments in respect of the funding of research or development activities related to any Licensed Product, to the extent that such payments exceed a reasonable level of payment for such activities;   (c)         where any sub-license is to be granted under cross licensing arrangements, the value of any cross license obtained under such arrangements, solely to the extent that the value of such cross license has been independently valued in and is easily ascertainable from a separate non-exclusive arms-length agreement between the cross licensor and an independent Third Party;   (d)         any premium paid over the fair market value of shares, options or other securities in respect of any of the share capital of Celldex or its Affiliate;   (e)         any loan, guarantee or other financial benefit made or given other than on normal market terms; and   (f)          payments in the form of any shares, options or other securities that are not freely transferable and that are obtained from a Third Party, valued at the time such shares, options, or other securities are monetized. Net receipts in the form of freely transferable shares, options, or other securities

 

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		shall be subject to Section 4.6.1;   but excluding (i) any payments in respect of the funding of research or development activities related to any Licensed Product not included in (b) above, (ii) any payment at the fair market value for shares, options or other securities in respect of any of the share capital of Celldex or its Affiliate, (iii) any sum of money falling within the definition of Net Sales Value, or (iv) any non-monetary value received with the exception of Third Party shares, options or other securities as set forth above.
Net Sales Value		Means the invoiced price of Licensed Products sold by Celldex, its Affiliates or its sub-licensees under any of the Intellectual Property to independent Third Parties in arm’s length transactions exclusively for money or, where the sale is not at arm’s length and exclusively for money the price that would have been so invoiced if it had been at arm’s length and exclusively for money after deduction of all documented:   (a)         normal trade discounts actually granted and any credits actually given for rejected or returned Licensed Products including, those granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions;   (b)         costs of packaging, insurance, carriage and freight, provided in each case that the amounts are separately charged on the relevant invoice;   (c)         value added tax or other sales tax; and   (d)         import duties or similar applicable government levies;   (e)         bad debts related to such Licensed Product to the extent actually written-off;

 

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provided that such deductions do not exceed reasonable and customary amounts in the markets in which such sales occurred.   In the case of Combination Products, Net Sales Value means the gross amount billed or invoiced on sales of the Combination Product less the deductions set forth above, multiplied by a proration factor that is determined as follows:   (i)    If all essential functional components of the Combination Product were sold separately during the same or immediately preceding Sales Year, the proration factor shall be determined by the formula [A/(A+B)], where A is the aggregate gross sales price of each of the essential functional components including the Licensed Product during such period when sold separately from the other essential functional components, and B is the aggregate gross sales price of each of the essential functional components excluding the Licensed Product during such period when sold separately from the Licensed Product components, the periods not being more than 12 months from date of proration; or   (ii)   If all essential functional components of the Combination Product were not sold separately during the same or immediately preceding Sales Year (i.e., if at least one of the essential functional components was not sold separately), the proration factor shall be determined by the formula [C/C+D], where C is the fair market value of the Licensed Product essential functional components during the prior Sales Year and D is the fair market value of the other essential functional components during the prior Sales Year with such fair market values being determined in good faith by agreement of the Parties.   Sales between Celldex, its Affiliates and sub-licensees shall not be considered for the purposes of this definition unless there is no subsequent sale to a person who is not Celldex, its Affiliate or sub-licensee in an arm’s length transaction exclusively for money.

 

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		respect to a Licensed Product anywhere in the Territory
Sales Year		Means each period of a year commencing on the first day of July that follows the date of first commercial sale by Celldex or any sub-licensee for the first Licensed Product, or on any anniversary of that date.
Sponsored Research		means research undertaken at the request of, or in collaboration with, any entity which is a Commercial Partner where any resulting Intellectual Property is encumbered in favour of such entity.
Southampton Field		Means all therapeutic or prophylactic uses, including uses as adjuvants or vaccines, in the Territory of [*] in combination with the Southampton-proprietary [*] thereof where such use includes the in vivo administration of such [*] and such [*] to a mammal or the in vitro use of such [*] and such [*] , wherein the [*] .
Term		Means the term of this Agreement as set forth in Clause 8.1.
Territory		Means the world
Third Party		Means an entity or person other than Southampton or Celldex or their respective Affiliates and sub-licensees under this Agreement.
Tobacco Party		means any corporation, company, partnership or other organisation or person with a material interest in the tobacco industry;

 

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Valid Claim

means a claim of an issued (granted) and unexpired patent, or a claim of a pending patent application, where such pending application has been pending for less than ten (10) years from its earliest priority date, or a claim of an issued (granted) and unexpired patent issued from such a pending patent application during or after such ten (10) year period, which in any of the foregoing cases has not been withdrawn, cancelled, abandoned, disclaimed, or held permanently revoked, unenforceable or invalid by a decision of an administrative agency or court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise;

 

2               Grant of rights

 

2.1            Subject to Clause 2.4, Southampton hereby grants to Celldex, subject to the provisions of this Agreement:

 

2.1.1         an exclusive non-transferable (except as expressly permitted under this Agreement) license in the Field under the Patents, with the right to sublicense, subject to clause 2.3 below, to research, develop, manufacture, have manufactured, use, import, offer for sale and sell Licensed Products in the Territory;

 

2.1.2         an exclusive license in the Field to use the Know-How, with the right to sub-license, subject to clause 2.3 below, to research, develop, manufacture, have manufactured, use, import, offer for sale and sell Licensed Products in the Territory;

 

2.1.3         an exclusive license in the Field to use the Materials subject to clause 2.3

 

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below, solely for research and development purposes.  For the avoidance of doubt Celldex shall not humanise any of the Materials nor administer the Materials, or any substances contacted with the Materials, to human subjects.

 

2.2            The Parties shall execute such formal licenses as may be necessary or appropriate for registration with Patent Offices and other relevant authorities in particular territories.  In the event of any conflict in meaning between any such license and the provisions of this Agreement, the provisions of this Agreement shall prevail.  The Parties shall use reasonable endeavours to ensure that, to the extent permitted by relevant authorities, this Agreement shall not form part of any public record.

 

2.3            Celldex shall be entitled to grant sub-licenses of its rights under this Agreement to any person and any sub-license granted shall contain the right to grant further sub-licenses, provided that:

 

2.3.1         a sub-license shall include obligations on the sub-licensee which are equivalent to relevant obligations on Celldex under this Agreement;

 

2.3.2         within sixty (60) days of the grant of any sub-license Celldex shall provide to Southampton a true copy of it, in English, and Celldex shall disclose the terms of any such sub-license agreement only to the extent that such terms impact payments due from Celldex to Southampton, and to the extent that a sub-licensee permits Celldex to disclose the terms of such a sub-license agreement; and

 

2.3.3         Celldex shall not be relieved of any of its obligations under this agreement as a result of such sub-license, including but not limited to its obligation to make payments under Section 4, and its obligation to commercialize the Licensed Technology under Section 5; and

 

2.3.4         [*] .

 

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2.4            Reserved Rights

 

2.4.1         The Parties acknowledge that under the terms of the CRT Agreement, CRT has reserved its rights to a worldwide, perpetual, irrevocable, fully paid-up, royalty-free, non-exclusive right in and to the Intellectual Property for CRT to conduct Academic Research (such right may be licensed by CRT solely to Academic Partners, including, for the avoidance of doubt, any researchers funded or employed by Tenovus and/or Cancer Research UK) the (“CRT Reserved Rights”).

 

2.4.2         Southampton reserves a worldwide, perpetual, irrevocable, fully paid-up, royalty-free, non-exclusive right in and to the Intellectual Property for Southampton and its Affiliates, to conduct Academic Research.  For the avoidance of doubt, such rights shall include the right to provide Materials to Academic Partners under limited material transfer agreement with substantially similar terms to those set out in Schedule 3 .

 

2.4.3         In no event, however, shall Southampton or CRT have the right to conduct Sponsored Research relating to the Patents, Know-How or Materials in the Field and/or the Licensed Products.

 

2.4.4         Except for the licenses expressly granted by this Clause 2, Southampton reserves all its rights. For the avoidance of doubt, such reservation of rights includes the exclusive right for Southampton and its Affiliates to use, license and sublicense Patents, Know-how and Materials for the research and development, manufacture, having manufactured, use, import, offer for sale and sale, of pharmaceutical product solely in the Southampton Field.

 

2.5            Celldex shall ensure that all of the Licensed Products marketed by it and its sub-licensees are of satisfactory quality and comply with all applicable laws and regulations in each part of the Territory.

 

3               Know-how and Confidential Information

 

3.1            Southampton shall transfer the Know-how to Celldex within eight (8) months after the

 

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Effective Date (“Transfer Period”).  Celldex and Southampton shall cooperate in arranging meetings as reasonably necessary for the effective transfer of the Know-how.  On conclusion of the Transfer Period Celldex shall confirm in writing to Southampton that transfer of the Know-how is complete, or provide details to Southampton of any outstanding Know-how which Celldex considers to have not been transferred. Southampton shall thereafter have thirty (30) days to transfer such outstanding Know-how to Celldex, or confirm to Celldex that no such Know-how exists (together with the Transfer Period, the “Extended Transfer Period”).

 

3.2            Celldex acknowledges that the Know-how is at an early stage of development.  Accordingly, specific results cannot be guaranteed and any results, materials, information or other items (together “Delivered Items”) provided under this Agreement are provided “as is” and without any express or implied warranties, representations or undertakings. As examples, but without limiting the foregoing, Southampton gives no warranty that Delivered Items are of merchantable or satisfactory quality, are fit for any particular purpose, comply with any sample or description, or are viable, uncontaminated, safe or non-toxic, provided that Southampton will notify Celldex prior to transferring such Delivered Items to Celldex of any dangerous or harmful properties of such Delivered Items actually known by Southampton at the time of such transfer.

 

3.3            Celldex undertakes that for a period of 10 years from the Effective Date or for so long as any substantial part of the Know-how remains subject to the obligations of confidence of Clause 3.4, whichever is the shorter, it shall protect the Know-how as Confidential Information and shall not use the Know-how for any purpose except as expressly licensed hereby and in accordance with the provisions of this Agreement.

 

3.4            Each Party (“Receiving Party”) undertakes:

 

3.4.1         to maintain as secret and confidential all Confidential Information obtained directly or indirectly from the other Party (“Disclosing Party”) in the course of or in anticipation of this Agreement and to respect the Disclosing Party’s rights therein;

 

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3.4.2         to use the same exclusively for the purposes of this Agreement;

 

3.4.3         to disclose the same only to those of its employees, directors, Affiliates, advisors, contractors and sub-licensees pursuant to this Agreement (if any) to whom and to the extent that such disclosure is reasonably necessary for the purposes of this Agreement; and

 

3.4.4         to procure that each of its employees, directors, Affiliates, advisors, contractors and sub-licensees are bound by appropriate confidentiality and non-use obligations in respect of Confidential Information belonging to the other Party.

 

3.5            The provisions of Clause 3.4 shall not apply to Confidential Information which the Receiving Party can demonstrate by reasonable, written evidence:

 

3.5.1         was, prior to its receipt by the Receiving Party from the Disclosing Party, in the possession of the Receiving Party and at its free disposal; or

 

3.5.2         is subsequently disclosed to the Receiving Party without any obligations of confidence by a Third Party without any obligation of confidence to the Disclosing Party and who has not derived it directly or indirectly from the Disclosing Party; or

 

3.5.3         is or becomes generally available to the public through no act or default of the Receiving Party or its agents, employees, Affiliates or sub-licensees; or

 

3.5.4         the Receiving Party is required to disclose to the courts of any competent jurisdiction, or to any government regulatory agency or financial authority, provided that the Receiving Party shall (i) inform the Disclosing Party as soon as is reasonably practicable, and (ii) at the Disclosing Party’s request seek to persuade the court, agency or authority to have the information treated in a confidential manner, where this is possible under the court, agency or authority’s procedures.

 

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3.6            Southampton may disclose the existence and terms of this Agreement without prior approval to Tenovus, registered charity number 1054015 and Cancer Research Technology the technology transfer company wholly owned by Cancer Research UK, registered charity number 4325234 and any other third Party(ies) who have funded some or all of the development of the Intellectual Property, and whose consents are required for Southampton to enter into this Agreement, provided that Tenovus and such other Third Party(ies) are bound by appropriate confidentiality and non-use obligations in respect of Confidential Information under this Agreement.

 

4       Payments

 

4.1            In consideration for the rights granted hereunder, during the Term and subject to Clause 4.4, Celldex shall pay to Southampton:

 

4.1.1         Within thirty (30) days after the Effective Date an upfront license fee in the amount of [*] ;

 

4.1.2         The sum of [*] within thirty (30) days after the initial human dosing study of the first Licensed Product to achieve such milestone in the Field;

 

4.1.3         The sum of [*] within thirty (30) days after the first human dosing in the first phase II study of the first Licensed Product to achieve such milestone in the Field;

 

4.1.4         The sum of [*] within thirty (30) days after the first human dosing in the first phase III study of the first Licensed Product to achieve such milestone in the Field;

 

4.1.5         The sum of [*] within thirty (30) days after the first submission for regulatory approval in the Territory with respect to the first Licensed Product to achieve such milestone in the Field .

 

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4.1.6         The sum of [*] within thirty (30) days after the first commercial sale of the first Licensed Product to achieve such milestone in the Field.

 

For the avoidance of doubt each of the sums due under Sections 4.1.2-4.1.6 shall be payable only once, on the first Licensed Product in the Field to achieve each given milestone of Sections 4.1.2-4.1.6

 

4.2            During the Term, Celldex shall pay to Southampton on a country-by-country and Licensed Product-by-Licensed Product basis (i) a royalty of [*] of Net Sales Value of all Licensed Products Covered by at least one Valid Claim of the Patents, or (ii) a royalty of [*] of Net Sales Value of all Licensed Products that are not Covered by at least one Valid Claim of the Patents and, incorporates or makes use of any Know-how which remains subject to the provisions of Clause 3.4 hereof or incorporates or makes use of any Materials, sold or otherwise supplied by Celldex, its Affiliates and/or its sub-licensees. For avoidance of doubt, the royalties payable under these Sections 4.2(i) and 4.2(ii) are mutually exclusive, and only one or the other, but not both, may be payable on the sale of a given Licensed Product.

 

4.3            During the Term, and subject to Clause 4.4, Celldex shall pay to Southampton on a country-by-country and Licensed Product-by-Licensed Product basis (i) a royalty of [*] of Net Receipts receive