CO-DEVELOPMENT/CO-PROMOTION AND LICENSE AGREEMENT RELATING TO TYPE-3 INTERFERON FAMILY

Exhibit 10.1

CO-DEVELOPMENT/CO-PROMOTION AND LICENSE AGREEMENT

RELATING TO TYPE-3 INTERFERON FAMILY

by and among

ZymoGenetics, Inc.

and

ZymoGenetics, LLC

and

Bristol-Myers Squibb Company

Execution Date: January 12, 2009

“[    *    ]” = omitted, confidential material, which material has been separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment.

CONTENTS

 

 

 

 

 

 

 

LIST OF EXHIBITS

 

 

CO-DEVELOPMENT/CO-PROMOTION AND LICENSE AGREEMENT

RELATING TO TYPE-3 INTERFERON FAMILY

This Co-Development/Co-Promotion and License Agreement relating to Type-3 Interferon Family is made as of the Effective Date by and among ZymoGenetics, Inc., a Washington corporation (“ ZGEN ”), and ZymoGenetics, LLC, a Delaware limited liability company (“ ZG LLC ”), and Bristol-Myers Squibb Company, a Delaware corporation (“ BMS ”). ZGEN and ZG LLC are referred to collectively as “ Zymo ”, and any obligations attributed to Zymo hereunder shall apply jointly and severally to ZGEN and ZG LLC, however, as the owner of the Core Patents, ZG LLC has the sole right to receive the initial license fee, all Milestone Payments, all royalties and Net Profits.

RECITALS

A. Each party has an interest in the Development of potential therapies for human diseases.

B. ZG LLC has certain rights to the Type-3 Interferon Family, and the Type-3 Interferon Family has potential therapeutic value.

C. By combining their substantial experience and expertise, the parties wish, for their exclusive and mutual benefit, to work collaboratively to expedite the Development, Regulatory Approval and Commercialization of Licensed Products.

D. Each party wishes to grant to the other party certain licenses under its intellectual property rights to permit the other party to Develop, Manufacture and Commercialize Licensed Products as set forth herein.

AGREEMENT

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:

ARTICLE ONE

Definitions and Terminology

1.1 Definitions

In addition to other terms defined elsewhere in this Agreement, words and phrases with initial capitals shall have the meanings stated in Exhibit A.

1.2 Terminology

Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words “ including ,” “ includes ” and “ such as ” are used in a non-limiting sense and have the same meaning as “ including without limitation ” and “ including, but not limited to .” References to Articles, Sections, Subsections and paragraphs are to the same with all their subparts as they appear in this Agreement. “ Herein ” means anywhere in this Agreement. “ Hereunder ” and

 

“ hereto ” mean under or pursuant to any provision of this Agreement. “ Exhibit ” means an Exhibit explicitly referenced as such in this Agreement. All such Exhibits are by such references incorporated into this Agreement as if fully set forth herein. The Article and Section headings contained herein are for reference only and shall not be considered a part of this Agreement, nor shall they in any way affect the interpretation hereof. All references to dollars or $ are to the currency of the USA.

ARTICLE TWO

Scope and Exclusivity of this Collaboration

2.1 General

Except as expressly set forth in this Agreement, the parties and their Affiliates shall, in the case of the USA, during the Joint Commercialization Period and, in the case of the ROW, during the Royalty Period, work exclusively with each other to Develop, Manufacture and Commercialize Licensed Products (this “ Collaboration ”) solely in accordance with the terms of this Agreement. Except as set forth in Section 2.2 , 2.3, or 2.4 , each party shall be free to work alone or with Affiliates or Third Parties to research, Develop, Manufacture and/or Commercialize any product that is not a Licensed Product.

2.2 No Competing Program or Competing Product during Exclusivity Term

Subject to Sections 2.3 , and 2.4 , neither Zymo nor BMS nor any of their Affiliates shall, at any time during the Exclusivity Term, conduct (directly or indirectly, and either with or without a bona fide collaborator) outside of this Collaboration, any Competing Program. BMS acknowledges that pursuant to the [    *    ], by and between [    *    ] and ZG LLC, in certain circumstances [    *    ] could obtain the right to develop and commercialize [    *    ] discovered by Zymo; provided that Zymo agrees [    *    ] (as would otherwise be permitted under the [    *    ]) during the Exclusivity Term.

2.3 Competing Product Due to a Change of Control

In the event that during the Exclusivity Term, due to a Change of Control of a party, or assignment of this Agreement by a party pursuant to Section 18.5 , such party together with its Affiliates:

(a) is either (i) conducting (directly or indirectly, and either with or without a bona fide collaborator) outside the scope of this Collaboration any Competing Program; or (ii) commercializing a Competing Product; and

(b) has the power to control decisions relating to the Competing Program or Competing Product as a result of, and subsequent to, a Change of Control, such party must:

(i) continue to Develop and Commercialize any corresponding existing Licensed Product(s) using a level of Reasonable Commercial Efforts that assumes the Competing Program was not in-licensed ( i.e. , the same level of Reasonable Commercial Efforts that such party had used prior to acquiring such Competing Program pursuant to such Change of Control); and

 

(ii) use Reasonable Commercial Efforts, either:

(1) to (x) in the case of BMS, terminate this Agreement under Section 16.5, or (y) in the case of Zymo, (A) if the Competing Product is not a Competing Product as defined in paragraph 1.30(a) of Exhibit A [    *    ], give notice of a Conversion under Section 7.1.1. (assuming there has not been an earlier Conversion) or (B) if the Competing Product is a Competing Product as defined in paragraph 1.30(a) of Exhibit A [    *    ], give notice of a Conversion under Section 7.1.1 or, at Zymo’s option, an Election to Co-Fund Only under Section 7.4 ;

(2) to outlicense or divest such Competing Program to a Third Party; or

(3) to discontinue such Competing Program;

and in any case ((1), (2) or (3) above) provide written notice to the other party of its decision with respect to this Section 2.3 within, in the case of subparagraph (ii)(1)(y)(B) , [    *    ] and, in all other cases, within [    *    ] of such Change of Control and use Reasonable Commercial Efforts to effect such decision as soon as practicable but in any case no later than [    *    ] subsequent to such written notice in the case of a decision on (1), and [    *    ] subsequent to such written notice in the case of a decisions on (2) or (3). For avoidance of doubt, a party will not be deemed to be in breach of this Agreement during the period of time such actions are being taken in accordance with this Section 2.3 .

2.4 Acquisition of Hepatitis C Program Due to a Change of Control

BMS shall have the right to require Zymo to give notice of a Conversion under Section 7.1.1 or, at Zymo’s option, an Election to Co-Fund Only under Section 7.4 if:

(a) there has been a Change of Control of Zymo and not a Change of Control of BMS;

(b) the acquirer of Zymo has a continuing program to develop a product for which the primary indication is [    *    ] and as part of such program the company acquiring Zymo (x) has [    *    ] or (y) plans to [    *    ] within [    *    ] after the effective date of such Change of Control; and

(c) BMS provides written notice exercising its right to require Zymo to give notice of a Conversion under Section 7.1.1 or an Election to Co-Fund Only under Section 7.4 within [    *    ] after the later event referenced above in Subsection (b) .

 

ARTICLE THREE

Coordination of Joint Development Project and Commercialization in the USA

3.1 Joint Executive Committee

3.1.1 Formation; Composition; JEC Action

(a) The Collaboration shall be governed by a joint executive committee (the “ Joint Executive Committee ” or “ JEC ”). Each party shall appoint its representatives on the initial JEC in writing within thirty (30) days following the Effective Date and shall promptly thereafter notify the other party in writing of such appointment. Each party shall appoint representatives of sufficient seniority to make strategic decisions regarding the Joint Development Project, finally approve the Joint Development Plan and otherwise make final decisions on the sorts of matters likely to come before the JEC on behalf of their respective companies.

(b) The JEC shall have a total of six (6) members. Zymo and BMS shall each appoint three (3) members. If at any time a vacancy occurs for any reason, the party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party of any substitution of another person as its appointee on the JEC.

(c) All official actions, decisions or rulings of the JEC under this Agreement must be taken by JEC Action; provided that, BMS shall have final decision making authority with regards to any dispute related to the content of any [    *    ] or [    *    ], [    *    ] reports, [    *    ] and [    *    ] strategies and plans, [    *    ], [    *    ], [    *    ], [    *    ] (including [    *    ]-related) decisions, tactical [    *    ], and the decision to [    *    ] for any [    *    ] (other than for [    *    ]) that is not resolved by the JEC, without referring such dispute to the Senior Executives in accordance with Section 17.2 .

3.1.2 Role and Responsibilities

Subject to Sections 3.7 and 3.8 , the JEC shall be responsible for the overall direction of the Joint Development Project and Party Commercialization Tasks, including oversight of the other Committees, Working Groups, Finance Contacts and Patent Contacts. The responsibilities of the JEC shall include:

(a) Review and approval of each Long-Range Development Plan and each Annual Development Plan.

(b) Review and approval of each Long-Range Commercialization Plan and each Annual Commercialization Plan.

(c) Approval of any Combination Studies.

(d) Approve the go/no go criteria for each Decision to Proceed to Phase II and Decision to Proceed to Phase III and make each Decision to Proceed to Phase II and Decision to Proceed to Phase III. No Phase III Clinical Trial or Phase II Clinical Trial shall be Initiated as part of the Joint Development Plan without a Decision to Proceed to Phase III or Decision to Proceed to Phase II as applicable.

 

(e) Review of the Development strategies in the Joint Development Territory and the Commercialization strategies in the USA for the Licensed Products; provided that BMS shall update the JEC on global Development and Commercialization.

(f) Review and approval of Development of additional Licensed Products in addition to IFN-Lambda.

(g) Review and approval of lifecycle management and new indications for which a Licensed Product is proposed by the JDC to be Developed ([    *    ]).

(h) Review of all significant and strategic issues within the purview of another Committee or Working Group or between the parties’ respective Finance Contacts or Patent Contacts.

(i) Review and approval of the terms of all Third Party Agreements of the type described in subparagraph (a)  but not (b)  of paragraph 1.140 of Exhibit A to the extent related to rights or activities in the USA and that are proposed to be entered into by either Zymo, BMS or one of their respective Affiliates following the Effective Date.

(j) Oversight of intellectual property protection for Licensed Products.

(k) Subject to Section 3.9 , provision of a forum for dispute resolution for issues arising from the other Committees, Working Groups or between the parties’ respective Finance Contacts or Patent Contacts.

(l) Such other responsibilities as may be assigned to the JEC pursuant to this Agreement or as may be agreed between the parties from time to time.

The JEC may, on its own initiative and at any time, act or reverse action, within the scope of another Committee or Working Group or the parties’ respective Finance Contacts or Patent Contacts after consultation with the relevant Committee or Working Group, Finance Contacts or Patent Contacts, as appropriate.

3.1.3 Meetings and Communications

The JEC shall meet face-to-face at least semi-annually at mutually agreed upon times and locations. Unless otherwise agreed, the location of such meetings will alternate between the parties’ facilities, and the party hosting a meeting shall be responsible for chairing the meeting and secretarial duties ( i.e. , circulating an agenda and taking minutes). Either or both of the parties may, with the consent of the other party (not to be unreasonably withheld), bring other personnel employed by them or their Contractors to meetings of the JEC as observers or to present data and information relevant to the Joint Development Project or the Party Commercialization Tasks. The JEC shall also address issues as they arise in the interim via telephone conference, videoconference or electronic mail. A written agenda for each face-to-face meeting shall be circulated in advance of the meeting by the Alliance Managers, and written minutes of each meeting shall be taken by the Alliance Managers and shall include the issues discussed, decisions made and action items, if any, arising from the meeting; provided that before adjourning the JEC shall approve a written (including electronic e.g., PowerPoint slides)

 

summary of all JEC Actions taken at a particular meeting. Each face-to-face meeting of the JEC shall conclude with approval by JEC Action of the minutes of prior meetings and of all actions taken through interim communications since the last face-to-face meeting. Meeting minutes and written summaries of any action taken by way of interim communications shall be promptly submitted by the Alliance Managers:

(a) to the Project Leaders;

(b) to all members of the JEC;

(c) to the extent such minutes or action involve financial matters, to the Finance Contacts;

(d) to the extent such minutes or action involve Patent Rights or other intellectual property rights, to the Patent Contacts; and

(e) to the extent such minutes or actions involve matters related to Commercialization of a Licensed Product, to the Commercialization Leaders.

3.2 Project Leaders and Joint Development Committee

3.2.1 Project Leaders; Appointment; Role and Responsibilities

(a) Each party shall appoint its initial project leader to coordinate Development of the initial Licensed Product (each a “ Project Leader ”) within thirty (30) days following the Effective Date and shall promptly thereafter notify the other party in writing of such appointment. If at any time a vacancy occurs for any reason, the party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party of any substitution of another person as its Project Leader.

(b) Subject to Sections 3.7 and 3.8 , the Project Leaders shall coordinate the parties’ respective Party Development Tasks. Each party’s Project Leader will be available throughout the Term (including following any disbanding of the JDC) to answer any reasonable questions from the other party’s Project Leader.

(c) The Project Leaders and Commercialization Leaders shall meet as frequently as they deem necessary to ensure that the Joint Development Plan and the Joint Commercialization Plan are consistent and mutually supportive. In addition, the Project Leaders shall coordinate with the Commercialization Leaders in the submission of the Joint Development Plan and Joint Commercialization Plan to the JEC for review and approval.

3.2.2 Formation of Joint Development Committee

(a) The Project Leaders shall form and hold the first meeting of the initial product team to manage the Development of the initial Licensed Product (the “ Joint Development Committee ” or “ JDC ”) in the Joint Development Territory by the thirtieth (30 ^th ) day following the Effective Date.

 

(b) The JDC may have any number of members as may be approved by JEC Action. While the parties need not be equally represented in number of members on the JDC, the JDC will be co-led by the two (2) Project Leaders and each party shall have a single vote in the decisions of the JDC.

(c) The Project Leaders may form additional JDCs for distinct Licensed Products; provided that the individuals serving on the JDC for a Licensed Product may serve on the JDC for one or more different Licensed Products.

3.2.3 Roles and Responsibilities

(a) Within ninety (90) days after the date on which the JEC approves any Licensed Product for Development hereunder (and in the case of IFN-Lambda within sixty (60) days after the Effective Date), the JDC shall prepare and submit to the JEC a long-range development plan and high level budget forecast ( “Long-Range Development Plan” ) covering a multi-year period of at least three (3) years of the Joint Development Project for such Licensed Product consistent with each party’s long range financial forecasting. The JDC shall, as appropriate from time to time and not less often than annually, prepare and submit to the JEC any proposed updates and amendments to the Long-Range Development Plan to cover a rolling, multi-year period of at least three (3) years. A preliminary Long-Range Development Plan covering the first five (5) years of the Joint Development Project for the initial Licensed Product is attached hereto as Exhibit F, within ninety (90) days after the Effective Date the JDC shall finalize the preliminary Long-Range Development Plan for the initial Licensed Product.

(b) Within sixty (60) days after the Effective Date, the JDC shall meet to review the preliminary Long-Range Development Plan and prepare an initial development plan and budget to cover in detail the parties’ respective Party Development Tasks for the first Calendar Year of the of the Joint Development Project for the initial Licensed Product (“ Annual Development Plan ”). Thereafter, the JDC shall, as appropriate from time to time and not less often than annually, prior to the start of the Calendar Year prepare and submit to the JEC an updated Annual Development Plan to cover the forthcoming Calendar Year. In addition, within ninety (90) days after the date on which the JEC approves any additional Licensed Product for Development hereunder, the JDC shall prepare and submit to the JEC a preliminary Annual Development Plan covering the first year of the Joint Development Project for such additional Licensed Product following approval by the JEC of such additional Licensed Product.

(c) The JDC shall under the direction of the Project Leaders review the global Development and regulatory strategy, monitor its implementation for conflicts with the Joint Development Plan and make suggestions for avoiding such conflicts.

(d) Subject to Sections 3.7 and 3.8 , the JDC shall, under the direction of the Project Leaders:

(i) Plan, allocate and coordinate the respective Party Development Tasks.

(ii) Establish and monitor compliance with timelines and budgets in the Joint Development Plan for Development of the Licensed Products, including details regarding external costs and internal costs incurred against the budgeted costs. The JDC shall promptly

 

report to the JEC any actual or anticipated cost overruns in excess of [    *    ] in any budgeted category.

(iii) Formulate and propose to the JEC go/no go criteria for a Decision to Proceed to Phase II and Decision to Proceed to Phase III.

(iv) Review all material information generated in the course of implementing the Joint Development Plan.

(v) Design, in collaboration with the JCC, pharmacoeconomic studies or Phase IV Clinical Trials in the Joint Development Territory.

(vi) Monitor and coordinate all regulatory actions, communications and submissions for Licensed Products in the Joint Development Territory, including establishing the schedule and implementation strategy for all Regulatory Filings for Licensed Products.

(vii) Formulate timing and criteria for initiating the Development of a Licensed Product for new indications for consideration by the JEC, [    *    ].

(viii) Coordinate preliminary market research to support Phase III Clinical Trial design in collaboration with the JCC.

(ix) Provide on a quarterly basis updates on its activities and achievements to the JEC for review and comment.

(x) Resolve disagreements during the course of implementing the Joint Development Plan.

(xi) Coordinate with the JCC to develop and implement a publication strategy for each Licensed Product.

(xii) Coordinate with the JCC to develop and implement a strategy to engage key opinion leaders for each Licensed Product.

(xiii) Otherwise monitor compliance with the Joint Development Plan and perform such other responsibilities as may be assigned to the JDC pursuant to the Agreement or as may be agreed between the parties from time to time.

3.2.4 Meetings and Communications

The JDC shall meet as often as is deemed necessary by the Project Leaders, but at least quarterly until the First Commercial Sale of a Licensed Product, and thereafter as needed. Meetings shall take place in person, by videoconference or by telephone conference, as mutually agreed by the Project Leaders. There shall be an agenda for each meeting of the JDC, and written minutes of each meeting shall be taken by the Alliance Managers and shall include the issues discussed, decisions made and action items, if any, arising from such meeting. Unless otherwise agreed, the responsibility for chairing meetings shall alternate between the Project Leaders and the responsibility for secretarial duties ( i.e. , circulating an agenda and taking

 

minutes) shall alternate between the Alliance Managers. At each meeting of the JDC, BMS will update Zymo on any material information relating to the Development of the Licensed Products outside the Joint Development Project. Meeting minutes shall be submitted to the members of the JDC and the JEC by the Alliance Managers. The Project Leaders shall communicate at such other times as necessary to coordinate the activities of the parties.

3.2.5 Decision Making; Formalities

All official actions, decisions or rulings of the JDC under this Agreement must receive the approval of the parties, either in writing (including by email or facsimile) or by vote at a meeting of the JDC, and all significant actions, decisions or rulings shall subsequently be entered into the minutes of meetings of the JDC. In the absence of such mutual approval, either party may, subject to Section 3.9 , by formal written notice to the JEC declare the existence of a dispute at the JDC level and thereby request that such dispute be resolved by the JEC.

3.3 Commercialization Leaders and Joint Commercialization Committee

3.3.1 Commercialization Leaders; Appointment; Role and Responsibilities

(a) Each party shall appoint its initial commercialization leader to coordinate the Commercialization of a Licensed Product in the USA (each a “ Commercialization Leader ”) within thirty (30) days the Effective Date and shall promptly thereafter notify the other party in writing of such appointment. If at any time a vacancy occurs for any reason, the party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party of any substitution of another person as its Commercialization Leader for a Licensed Product. Each Licensed Product for which a Phase III Clinical Trial is Initiated as part of the Joint Development Project shall have its own Commercialization Leaders; provided that the same individual may serve as Commercialization Leader for more than one Licensed Product.

(b) Subject to Sections 3.7 and 3.8 , the Commercialization Leaders for a Licensed Product shall coordinate the parties’ respective Party Commercialization Tasks for the Licensed Product. Each party’s Commercialization Leader will also be available throughout the Term (including following any disbanding of the JCC) to answer any reasonable questions from the other party’s Commercialization Leader.

(c) The Project Leaders and Commercialization Leaders shall meet as frequently as they deem necessary to ensure that the Joint Development Plan and the Joint Commercialization Plan are consistent and mutually supportive. In addition, the Commercialization Leaders shall coordinate with the Project Leaders in the submission of the Joint Development Plan and Joint Commercialization Plan to the JEC for review and approval.

3.3.2 Formation of Joint Commercialization Committee for a Licensed Product

(a) The Commercialization Leaders for a Licensed Product shall form and hold the first meeting of a commercialization team to manage the Commercialization of the Licensed Product in the USA (the “ Joint Commercialization Committee ” or “ JCC ”) within sixty (60) days following the Effective Date.

 

(b) A JCC may have any number of members as may be approved by JEC Action. While the parties need not be equally represented in number of members on a JCC, a JCC will be co-led by the two (2) Commercialization Leaders and each party shall have a single vote in the decisions of the JCC.

(c) Each Licensed Product other than IFN-Lambda for which a Phase III Clinical Trial is Initiated as part of the Joint Development Project shall have its own JCC; provided that individuals may serve on the JCC for one or more different Licensed Products.

3.3.3 Roles and Responsibilities

(a) Within ninety (90) days following the Effective Date, the JCC for the first Licensed Product shall prepare and submit to the JEC an initial long-range commercialization plan and high level budget forecast covering the first three (3) years after the Effective Date (the “Long-Range Commercialization Plan” ). As appropriate from time to time and not less often than annually, the JCC for a Licensed Product shall prepare and submit to the JEC proposed updates and amendments to the Long-Range Commercialization Plan for the Licensed Product to cover, in each case, a rolling, multi-year period of at least three (3) years.

(b) Within sixty (60) days after the first JCC meeting referenced above, the JCC shall meet to review Long-Range Commercialization Plan and prepare an initial commercial plan and budget to cover in detail the parties’ respective Party Commercialization Tasks for the first Calendar Year of the of the Joint Development Project for the initial Licensed Product (“ Annual Commercialization Plan ”). Thereafter, the JCC shall, as appropriate from time to time and not less often than annually, prior to the start of the Calendar Year prepare and submit to the JEC an updated Annual Commercialization Plan to cover the forthcoming Calendar Year.

(c) Subject to Sections 3.7 and 3.8 , the JCC shall, under the direction of the Commercialization Leaders with respect to Licensed Products in the USA:

(i) Plan, allocate and coordinate the respective Party Commercialization Tasks.

(ii) Establish and monitor compliance with timelines and budgets, including details regarding external costs and internal costs incurred against the budgeted costs. The JCC shall promptly report to the JEC any actual or anticipated cost overruns in excess of [    *    ] in any budgeted category.

(iii) Review and approve advertising and promotional strategies, market research strategy, medical education strategy and early access and compassionate use strategy.

(iv) Monitor progress of the marketing, distribution and sales of Licensed Products versus the Annual Commercialization Plan and promptly report to the JEC any actual or anticipated sales short falls, timeline delays or other critical matters related to the USA Co-Promotion Agreement.

(v) Oversee plans for labeling, branding and selecting trademarks for each Licensed Product.

 

(vi) Review life cycle management opportunities.

(vii) Monitor performance of the parties’ publication review board and legal-medical review processes.

(viii) Review each party’s reports pertaining to its USA Commercialization Costs.

(ix) Review pricing and reimbursement strategies for Licensed Products in the USA.

(x) Design, in collaboration with the JDC, pharmacoeconomic studies or Phase IV Clinical Trials.

(xi) Coordinate with the JDC to develop and implement a publication strategy for each Licensed Product.

(xii) Coordinate with the JDC to develop and implement a strategy to engage key opinion leaders for each Licensed Product.

The JCC will assign Party Commercialization Tasks and, as necessary, form one or more Working Groups to take responsibility for aspects of the Joint Commercialization Plan or USA Co-Promotion Agreement as applicable.

3.3.4 Meetings and Communications

The JCC shall meet as often as is deemed necessary by the Commercialization Leaders, until Initiation of the first Phase III Clinical Trial for a Licensed Product and thereafter at least quarterly. Meetings shall take place in person, by videoconference or by telephone conference, as mutually agreed by the Commercialization Leaders. There shall be an agenda for each meeting of the JCC, and written minutes of each meeting shall be taken by the Alliance Managers and shall include the issues discussed, decisions made and action items, if any, arising from such meeting. Unless otherwise agreed, the responsibility for chairing meetings shall alternate between the Commercialization Leaders and the responsibility for secretarial duties ( i.e. , circulating an agenda and taking minutes) shall alternate between the Alliance Managers. At each meeting of the JCC, BMS will update Zymo on any material information relating to the Commercialization of the Licensed Products in the ROW. Meeting minutes shall be submitted to the members of the JCC and the JEC by the Alliance Managers. The Commercialization Leaders shall communicate at such other times as necessary to coordinate the activities of the parties.

3.3.5 Decision Making; Formalities

All official actions, decisions or rulings of the JCC under this Agreement must receive the approval of the parties, either in writing (including by email or facsimile) or by vote at a meeting of the JCC, and all significant actions, decisions or rulings shall subsequently be entered into the minutes of meetings of the JCC. In the absence of such mutual approval, either party may, subject to Section 3.9 , by formal written notice to the JEC declare the existence of a dispute at the JCC level and thereby request that such dispute be resolved by the JEC.

 

3.4 Alliance Managers

3.4.1 Appointment

Each of the parties shall appoint a single individual to act as a single point of contact between the parties to assure a successful Collaboration (each, an “ Alliance Manager ”). Each party may change its designated Alliance Manager from time to time upon written notice to the other party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the other party.

3.4.2 Responsibilities

The Alliance Managers shall use good faith efforts to attend all Committee meetings and support the co-chairpersons (or leaders) of each Committee in the discharge of their responsibilities. Alliance Managers shall be nonvoting participants in such Committee meetings, unless they are also appointed members of such Committee. An Alliance Manager may bring any matter to the attention of any Committee if such Alliance Manager reasonably believes that such matter warrants such attention. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the Committees. In addition, each Alliance Manager:

(a) will be the point of first referral in all matters of conflict resolution;

(b) will coordinate the relevant functional representatives of the parties in developing and executing strategies and plans for the Licensed Products in an effort to ensure consistency and efficiency throughout the Collaboration;

(c) will provide a single point of communication for seeking consensus both internally within the respective parties’ organizations and between the parties regarding key strategy and plan issues;

(d) will identify and bring disputes to the attention of the appropriate Committee in a timely manner;

(e) will plan and coordinate cooperative efforts and internal and external communications; and

(f) will take responsibility for ensuring that governance activities, such as the conduct of required Committee meetings and production of meeting minutes, occur as set forth in this Agreement, and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed.

3.5 Finance Contacts

(a) Each party shall appoint its initial finance contact to coordinate accounting policies and practices and otherwise support the Committees (each a “ Finance Contact ”) within thirty (30) days following the Effective Date and shall promptly thereafter notify the other party of such appointment. If at any time a vacancy occurs for any reason, the party that appointed the

 

prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party in writing of any substitution of another person as its Finance Contact.

(b) Among other things, the Finance Contacts shall coordinate the public disclosure of net sales taking into consideration BMS’ standard practices and Zymo’s reporting requirements.

(c) Each party’s Finance Contact will be available throughout the Term to answer any reasonable questions from the other party’s Finance Contact.

3.6 Working Groups

(a) From time to time, a Committee may establish and delegate duties to sub-committees or directed teams (each, a “ Working Group ”) on an “as-needed” basis to oversee particular projects or activities, which delegation shall be reflected in the minutes of the meetings of the Committee that established such Working Group. Each Working Group shall be constituted and shall operate as the Committee establishing it determines. A Working Group may be established on an ad hoc basis for purposes of a specific project, for the life of a Licensed Product, or on such other basis as the Committee establishing it determines. Each Working Group and its activities shall be subject to the oversight, review and approval of, and shall report to, the Committee that established it. In no event shall the authority of the Working Group exceed that specified for the Committee that established it. Any disagreement between the designees of BMS and Zymo on a Working Group shall be referred to the Alliance Managers and the Committee that established it for resolution.

(b) Concurrent with the formation of the initial JDC pursuant to Section 3.2.2 , a Manufacturing Working Group reporting to the JDC will be formed. The Manufacturing Working Group shall develop a plan and timeline and work with the Finance Contacts to develop a budget for Manufacturing technology transfer and any additional process Development efforts to support the Joint Development Plan, provided that after all Manufacturing-related activities to be conducted by Zymo under the Joint Development Plan have been completed (including all such process transfer), unless otherwise provided by the JDC, the Manufacturing Working Group will dissolve. The Manufacturing Working Group’s plan will be forwarded to the JDC for comment and subsequent proposal to the JEC for review and approval at the first JEC meeting as part of the Joint Development Plan.

3.7 Allocation of Party Development Tasks and Party Commercialization Tasks

The JEC, JDC and JCC shall during the Joint Commercialization Period allocate the Party Development Tasks and Party Commercialization Tasks so as to:

(a) Develop each Licensed Product for Regulatory Approval in the Joint Development Territory in accordance with the Joint Development Plan;

(b) execute the Annual Commercialization Plan;

 

(c) endeavor to take advantage of the respective resources, capabilities and expertise of Zymo and BMS; and

(d) endeavor to:

(i) maintain, to the extent reasonably practical and commercially appropriate, continuity in functions and commitments of personnel and physical resources of the parties;

(ii) avoid duplication of efforts by the parties; and

(iii) foster efficient use by the parties of resources and personnel, consistent with this Agreement, the applicable Joint Development Plan and the applicable Joint Commercialization Plan.

For clarity, as between the parties, BMS shall be solely responsible for the Commercialization of each Licensed Product in the ROW.

3.8 Operational Decisions

Day-to-day operational level decisions concerning a Party Development Task or a Party Commercialization Task shall be made by the party to which responsibility for such task has been allocated under this Agreement; provided that such decisions are not inconsistent with the Joint Development Plan, applicable Annual Development Plan, Joint Commercialization Plan or the express terms and conditions of this Agreement.

3.9 Escalation to Joint Executive Committee

While the parties desire whenever possible to resolve differences of opinion by mutual agreement, they also intend that members of the Committees will be high-level decision-makers within each party’s organizations. Consequently, the parties agree to the following process:

(a) Prior to referring any dispute to the JEC from another Committee or the Finance Contacts, the parties respective Alliance Managers shall meet and discuss the matter to facilitate the resolution of the dispute. The Alliance Managers shall meet as soon as practicable but in any event within ten (10) business days after they became aware of the dispute. If the matter [    *    ] on the [    *    ], [    *    ] or [    *    ] set forth in an Annual Development Plan or Annual Commercialization Plan, then either the Alliance Managers, a Project Leader or Commercial Leader may refer the matter to the JEC, and the Alliance Managers shall ensure that summaries of the dispute are prepared in writing and circulated to the members of the JEC. The Alliance Managers shall circulate the summary to the JEC as soon as practicable but in any event within thirty (30) days after they became aware of the dispute.

(b) Any dispute at the level of a Working Group shall be referred to the Committee that formed such Working Group and to the parties’ respective Alliance Managers for resolution and have such dispute resolved in accordance with Section 3.2.5 or 3.3.5 , as applicable.

(c) Any dispute between the Patent Contacts shall be referred to the parties’ respective Alliance Managers who shall summarize the dispute in writing and circulate it to the

 

members of the JEC as soon as practicable but in any event within thirty (30) days of becoming aware of such dispute.

ARTICLE FOUR

Discovery and Development of Licensed Products

4.1 Initial Joint Development Project; Collaborative Development Efforts for the Joint Development Project

(a) The initial Joint Development Project’s first priority as of the Effective Date will be to achieve Regulatory Approval of IFN-Lambda in the USA for the treatment of hepatitis C in accordance with the Joint Development Plan. For clarity, this may include the conduct of studies to support the Regulatory Approval of IFN-Lambda throughout the Joint Development Territory.

(b) Each of the parties shall use its respective Reasonable Commercial Efforts during the Joint Commercialization Period to:

(i) Develop each Licensed Product for Regulatory Approval by both the FDA and the European Commission, including performing its Party Development Tasks in accordance with the Joint Development Plan; and

(ii) provide the other party with such information and other assistance as is reasonably required for such other party to perform its Party Development Tasks.

(c) Each party shall be responsible for the selection and supervision of its personnel who are assigned any Party Development Tasks pursuant to this Agreement, and shall conduct all of its Development and regulatory activities in accordance with good scientific and clinical practice, and in compliance in all material respects with Applicable Law to achieve its objectives efficiently and expeditiously.

(d) For the sake of clarity, BMS shall be responsible for all studies (and all Regulatory Filings and interactions with Regulatory Agencies) required solely for Regulatory Approval outside the Joint Development Territory.

(e) Zymo, under the direction and oversight of the JDC, shall be responsible for conducting those studies assigned to it in the Joint Development Plan, and in accordance with the Joint Development Plan. Zymo shall provide BMS, via the JDC and Finance Contacts, with the opportunity to review and comment on any proposed agreement with any contract research organization for the conduct of such studies and any proposed amendments thereto, and any protocols included in such agreements (or attachments thereto). Zymo will not be obligated to perform any Party Development Tasks which it does not accept at the time the Joint Development Plan is approved by JEC Action.

(f) For any pre-clinical and clinical studies conducted by Zymo pursuant to the Joint Development Plan and Annual Development Plan, Zymo shall prepare the applicable reports and support for Regulatory Filings in connection with such studies and provide same to BMS. For the ongoing Phase Ib trial, Zymo shall provide such reports to BMS for review and comment prior to filing any such reports or Regulatory Filings.

 

4.2 Technology Transfer

4.2.1 Initial Transfer

Promptly following the Effective Date, Zymo shall, at its cost:

(a) provide to BMS all Materials necessary or useful for the continued Development and Manufacture of Licensed Products (including any cell lines, plasmids, constructs, or material useful in the production of Licensed Products such as IFN-Lambda) that are within the Zymo Enabling Technology existing as of the Execution Date, other than the supplies to be provided pursuant to Section 6.1 ; and

(b) disclose to BMS all material data and information, including all data from the IND, including annual reports and amendments, CMC information, Manufacturing processes and protocols, material safety information and exposure guidelines, clinical and preclinical data, safety monitoring reports, Regulatory Filings (including any regulatory correspondence and contact reports), quality and compliance information, and study reports that are within the Zymo Enabling Technology existing as of the Execution Date (including, for clarity, all material data and information related to IFN-Lambda).

In addition, pursuant to Section 6.1(c) Zymo shall provide the first [    *    ] of consulting time to transition the Manufacturing processes for IFN-Lambda to BMS or a Third Party manufacturer selected by BMS at Zymo’s expense. Thereafter, such time shall be included in Joint Development Costs. Zymo shall use Reasonable Commercial Efforts to provide the consulting time needed to complete the transfer of the applicable Manufacturing processes.

4.2.2 Continuing Exchange of Technology

Throughout the Joint Commercialization Period, BMS and Zymo will each provide to the other party full disclosure, including paper reports and/or electronic access, of BMS Enabling Technology, Zymo Enabling Technology and Project Technology Controlled by such party, including process transfer and validation, assay transfer and validation and Manufacturing transfer and validation. New BMS Enabling Technology, Zymo Enabling Technology or Project Technology shall be disclosed promptly following its discovery or generation. Any costs incurred under this Section 4.2.2 shall be Joint Development Costs or USA Commercialization Costs, as appropriate.

4.3 Party Development Tasks

The Party Development Tasks shall include with respect to a particular Licensed Product, those tasks assigned to a party in the Joint Development Plan as agreed to by the parties for such Licensed Product in the Joint Development Territory. BMS shall have as a Party Development Task responsibility for sourcing all control arm and concomitant medication, i.e. , IFN alpha and ribavirin for all the relevant studies.

 

4.4 Regulatory Matters

4.4.1 Clinical Trial Data

(a) All clinical data and reports related to clinical trials for Licensed Products conducted pursuant to a Joint Development Project shall be owned by BMS, provided that Zymo shall have use of, and right of reference to, all data and reports related to such clinical trials for Licensed Products solely for purposes of performing its obligations under this Agreement. All data, database information and reports from clinical trials for Licensed Products conducted pursuant to a Joint Development Project shall be centralized and held at a location to be chosen by BMS, with a duplicate set available to Zymo.

(b) Promptly following the Effective Date, the parties shall exchange their respective policies regarding the protection of patient data and hereby agree to comply with BMS’ privacy policy to allow the sharing of data and reports related to clinical trials for Licensed Products conducted pursuant to a Joint Development Project.

4.4.2 Regulatory Submissions

(a) Unless otherwise required by relevant Regulatory Agencies:

(i) Subject to Subparagraph (iii) below, BMS shall be the Lead Regulatory Party for all Development activities under the Development Plan, and it shall own all corresponding Regulatory Filings, including INDs.

(ii) Zymo shall provide to BMS copies of all Regulatory Filings described in Section 4.2.1(b) .

(iii) Zymo shall be the Lead Regulatory Party with respect to [    *    ], and it shall own all corresponding Regulatory Filings, including INDs, until at least the time of [    *    ] clinical trial; provided that, following the earlier of (A) [    *    ] and (B) the completion of the [    *    ], the JDC shall agree to a plan whereby Zymo shall assign to BMS all Regulatory Filings described in Subparagraph (ii) and this Subparagraph (iii) , after which Zymo shall no longer be the Lead Regulatory Party. The parties agree that the target date for such assignment shall be the [    *    ], however, the parties agree that the timely [    *    ] is of a high priority and the JDC may delay such assignment if necessary to expedite the [    *    ].

(b) For each Licensed Product Developed or Commercialized under this Agreement, the Lead Regulatory Party shall promptly provide the other party with, as applicable, (i) copies of all material Regulatory Filings in the Joint Development Territory; and (ii) reasonable advance notice (to the extent practicable) of scheduled meetings with the FDA or other relevant Regulatory Agency in the Joint Development Territory that pertain to such Licensed Product. Consistent with Applicable Laws, the Lead Regulatory Party shall afford representatives of the other party a reasonable opportunity to comment on such Regulatory Filings, and shall reasonably consider such comments, and, to the extent not prohibited by Applicable Law, shall afford medical, scientific and/or regulatory representatives of the other party an opportunity, at such other party’s option, to attend such meetings with the relevant Regulatory Agency in the Joint Development Territory, to the extent reasonably practicable under the circumstances. In

 

addition, if Zymo receives written notice from a Regulatory Agency during the time it is the Lead Regulatory Party that it will become subject to an inspection or audit by such Regulatory Agency with respect to a Licensed Product, Zymo shall notify BMS and shall afford BMS’ regulatory representatives an opportunity, at BMS’ option, to attend such inspection or audit pertaining to such Licensed Product, to the extent reasonably practicable under the circumstances. During the time that Zymo is conducting any clinical trials with a Licensed Product pursuant to the Joint Development Plan, Zymo shall work with BMS to ensure compliance with the clinical trial disclosure obligations as described in the Safety Data Exchange Agreement.

(c) The Lead Regulatory Party shall not transfer title or otherwise attempt in any manner to dispose of any Regulatory Filings in the Territory or otherwise impair the other party’s rights in such filings or subsequent Regulatory Approvals.

(d) Prior to a Conversion, the content and language of the proposed package insert, and all changes thereto, including all safety-related package insert changes for Licensed Products in the USA, shall be reviewed and approved by the JDC prior to submission to the applicable Regulatory Agency. BMS shall be responsible for all content and language of the proposed package insert, and all changes thereto, including all safety-related package insert changes for Licensed Products in the rest of the Territory.

(e) If the arrangement described in this Section 4.4.2 results in significant logistical difficulties or otherwise causes a material delay, the JEC shall discuss alternatives.

4.4.3 Rights of Reference

After the assignment of the Regulatory Filings pursuant to Section 4.4.2(a)(iii) , Zymo shall have the right to cross reference, file or incorporate by reference any regulatory filing or drug master file (as defined in the Code of Federal Regulations) (and any data contained therein) for any Licensed Products, or any component thereof, made in any country in the Territory (including all Regulatory Approvals) in order to conduct its Party Development Tasks as described in the Joint Development Plan and otherwise fulfill its obligations under this Agreement. Each party shall support the other, as may be reasonably necessary, in obtaining Regulatory Approvals for each Licensed Product in the Joint Development Territory, including providing necessary documents, or other materials required by Applicable Law to obtain Regulatory Approvals, in each case in accordance with the terms and conditions of this Agreement.

4.4.4 Regulatory Meetings and Communications

(a) The applicable party shall be responsible for conducting meetings and discussions with a Regulatory Agency related to a regulatory submission for which it is the Lead Regulatory Party. Each party shall be given the opportunity to have one or more of its representatives participate in all substantive discussions and meetings conducted by the other party with the FDA, the EMEA and the CHMP that relate to Licensed Products, including with respect to any INDs and BLAs.

 

(b) Each party shall timely provide the other party with a copy of any material documents or reports to be filed with the FDA and the EMEA under this Agreement. The JDC shall discuss all such material documents or reports prior to filing. The JDC, through its members with regulatory and drug safety expertise, shall develop processes and procedures for the conduct and reporting to the parties of telephone communications and written correspondence with the FDA and the EMEA related to Licensed Products. To the extent either party receives material written or oral communication from the FDA or the EMEA relating to Licensed Products, the party receiving such communication shall notify the other party and provide a copy of any written communication, or notes of any oral communication, to the other party as soon as reasonably practicable.

4.4.5 Regulatory Inspection Right

Each party shall use Reasonable Commercial Efforts to secure for the other party the right from its trial sites and other Contractors regarding any clinical trials which it conducts on Licensed Products pursuant to the Joint Development Plan to enter the relevant facilities of it and its Affiliates (to the extent such Affiliate is involved in the conduct of the such clinical trials) once per Calendar Year during normal business hours and upon reasonable advance notice to inspect and verify compliance with applicable regulatory and other requirements as well as with this Agreement. Such inspection right shall include the right to examine any internal procedures or records of such party primarily relating to a Licensed Product. Each party shall give the other party or its authorized representative all necessary and reasonable assistance for a full and correct carrying out of the inspection. Such inspection shall not relieve either party of any of its obligations under this Agreement. In the event a party is unable to secure such inspection rights from any of its trial sites or Contractors, it agrees to use Reasonable Commercial Efforts to secure such rights for itself or a Third Party auditor, and, if requested by the other party, shall exercise such rights, at the other party’s expense, on behalf of the other party and fully report the results thereof to the other party.

4.4.6 Clinical Trial Disclosures

(a) Zymo will be responsible, in conformance with the clinical trial disclosure provisions of Applicable Law, for complying with and posting required information for Licensed Product(s) during the time Zymo remains the Lead Regulatory Party and regulatory sponsor for such Licensed Product(s), and Zymo will promptly provide BMS with evidence of such compliance.

(b) Upon BMS assuming regulatory responsibility pursuant to Section 4.4.2(a)(iii) , Zymo agrees to provide BMS with any and all information necessary for BMS to comply with: (i) Applicable Law; (ii) the Pharmaceutical Research and Manufacturers of America (PhRMA) Guidelines on the listing of Clinical Trials and Publication of Clinical Trial results; (iii) BMS’ procedural document concerning Clinical Trial Registration and Disclosure of Results as amended from time to time, a copy of which directive is attached hereto as Exhibit K ; (iv) the agreement of BMS concerning disclosure of BMS-sponsored clinical trials as set forth in Exhibit C to the Stipulation and Agreement of Settlement entered into by BMS in February of 2006 to settle a consolidated securities class action litigation pending in the U.S. District Court for the District of New Jersey that related to the BMS investigational compound, omapatrilat

 

(VANLEV™), a copy of which is attached hereto as Exhibit J and; (v) any other BMS policies or policies agreed to by the parties with respect to same (to the extent same either are not in direct conflict with Applicable Law directive or stipulation and agreement referred to in clauses (i), (ii), (iii) and (iv) above). In the event BMS proposes to amend the directive referred to in clause (iii) above or to adopt any other policies or guidelines concerning such disclosures, BMS shall [    *    ].

4.5 Reporting; Adverse Drug Reactions

4.5.1 Adverse Event Reporting

As between the parties: (a) Zymo shall be responsible for the timely reporting of all adverse drug reactions/experiences, product quality, product complaints and safety data relating to Licensed Products to the appropriate Regulatory Agencies in the Territory until the transfer of the Regulatory Filings pursuant to Section 4.4.2(a)(iii) ; and (b) BMS shall be responsible for the timely reporting of all adverse drug reactions/experiences, product quality, product complaints and safety data relating to Licensed Products to the appropriate Regulatory Agencies following the transfer of the Regulatory Filings pursuant to Section 4.4.2(a)(iii) ; all in accordance with the Applicable Laws of the relevant countries. Each party shall cause its Affiliates and Sublicensees to comply with such reporting obligations.

4.5.2 Global Safety Database and Pharmacovigilance

Subject to the terms of this Agreement, ninety (90) days before the first transfer of Regulatory Filings from Zymo to BMS pursuant to Section 4.4.2(a)(iii) , BMS and Zymo (under the guidance of their respective Pharmacovigilance Departments, or equivalent thereof) shall define and finalize the responsibilities of the parties to protect patients and promote their well-being in connection with the use of Licensed Products in the form of a safety data exchange agreement ( “Safety Data Exchange Agreement ” or “ SDEA ”)), until such SDEA is executed the parties shall follow the procedures outlined on Exhibit I . These responsibilities shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the parties) and regulatory submission of adverse event reports, pregnancy reports, and any other information concerning the safety of any Licensed Product. Such guidelines and procedures shall be in accordance with, and enable the parties and their Affiliates to fulfill, local and international regulatory reporting obligations to Regulatory Agencies. Furthermore, such agreed procedures shall be consistent with relevant ICH guidelines, except where said guidelines may conflict with existing local regulatory safety reporting requirements, in which case local reporting requirements shall prevail. After transfer of the Regulatory Filings pursuant to Section 4.4.2(a)(iii) , BMS shall control the global pharmacovigilance database with respect to each Licensed Product and the Safety Data Exchange Agreement shall provide for such control by BMS.

4.5.3 Recalls

Any decision to initiate a recall or withdrawal of a Licensed Product in the Territory shall be made by BMS, after consultation with the JEC; provided, however, that if, as a result of patient safety concerns, there is not sufficient time for the JEC to meet, and in any event before

 

BMS initiates a recall or withdrawal, the parties shall promptly and in good faith discuss the reasons therefor and the strategy for implementing any such recall or withdrawal. In the absence of indemnification under Article Fifteen , the costs of any such recall or withdrawal in the USA relating to: (a) the Development of a Licensed Product for an indication prior to the Regulatory Approval shall be treated as Joint Development Costs; or (b) the Commercialization of a Licensed Product shall each be included in USA Commercialization Costs. Under no circumstances shall either party unreasonably object to a recall or withdrawal requested by the other party and, with respect to a Licensed Product, neither party shall have any right to object to a recall or withdrawal requested by the other party for failure of a Licensed Product to meet the specifications, for material safety concerns, for the manufacture of a Licensed Product in a manner that does not comply with Applicable Law or as requested by Regulatory Agencies. In the event of any recall or withdrawal, BMS shall take any and all necessary action to implement such recall or withdrawal in accordance with Applicable Law, with assistance from Zymo as reasonably requested.

4.6 Clinical Development

4.6.1 Combination Studies; BMS Molecules

If a Combination Molecule approved for inclusion in a Combination Study is owned or controlled by BMS, only [    *    ] the costs of such Combination Study will be eligible for consideration as Joint Development Costs ( i.e. , subject to the criteria set forth in the definition of “ Joint Development Costs ”). In addition, in considering which Combination Molecule to include in a Combination Study, the JEC shall make the decision in the best interest of the Licensed Product.

4.6.2 New Indications

The JEC is responsible for approval of the Development of a Licensed Product for any new indications in the Joint Development Territory, including, without limitation, HBV and multiple sclerosis. If either party wishes to Develop a Licensed Product for a new indication, such party shall notify the JDC with information describing the proposed target product profile and development program, and the JDC shall determine whether it wishes to recommend such new indication to the JEC for Development as part of the Joint Development Project. The JEC, in turn, shall determine whether it wishes to approve such new indication for Development and Commercialization pursuant to this Agreement.

4.7 Joint Development Costs

4.7.1 Cost Sharing of Joint Development Costs

Any Joint Development Costs incurred by either party after [    *    ] shall be borne by the parties as set forth in this Section 4.7.1 , regardless of which party is allocated, performs or incurs the cost of the relevant Party Development Tasks. The parties shall bear Joint Development Costs as follows:

 

(a) Zymo shall bear the first One Hundred Million United States Dollars ($100,000,000) of all Joint Development Costs (such amount, the “ Zymo Initial Funding Allocation ”); and

(b) with respect to Joint Development Costs in the absence of a Conversion and in excess of the Zymo Initial Funding Allocation, BMS shall bear eighty percent (80%) of all such Joint Development Costs, and Zymo shall bear twenty percent (20%) of all such Joint Development Costs. For clarity, in the event there has been a Conversion, Section 7.2.1 shall apply.

Notwithstanding anything else in this Agreement, neither party will have an obligation to reimburse the other for the clinical patient or site related costs of a Phase III Clinical Trial unless a Decision to Proceed to Phase III has been made.

4.7.2 Accounting and Reconciliation

(a) Each party shall submit to the other party no later than the twenty fifth (25 ^th ) day of the last month of each Calendar Quarter a written estimate of Joint Development Costs incurred by it during such Calendar Quarter. In addition, each party shall report to the other party within thirty (30) days after the end of each Calendar Quarter with regard to the Joint Development Costs incurred by it during such Calendar Quarter. Such report shall specify in reasonable detail all expenses included in such Joint Development Costs during such Calendar Quarter and shall be accompanied by invoices, and/or such other appropriate supporting documentation. Within forty-five (45) days after the end of each of the first three (3) Calendar Quarters and, for the last Calendar Quarter in a Calendar Year, within sixty (60) days after the end of such Calendar Quarter, the party that has incurred less than its share of such Joint Development Costs shall make a reconciling payment to the other party to achieve the appropriate allocation of Joint Development Costs provided for in Section 4.7.1 . Each party’s report shall include, in addition to the Joint Development Costs incurred by it during the relevant Calendar Quarter a comparison of the amounts budgeted in the applicable Annual Development Plan for such activities and the amounts incurred by such party for such activities. The parties shall seek to resolve any questions related to such accounting statements within fifteen (15) days following receipt by each party of the other party’s report hereunder. The parties’ Finance Contacts shall facilitate the reporting of Joint Development Costs hereunder and the resolution of any questions concerning such reports. Each party shall have the right at reasonable times and upon reasonable prior notice to audit the other party’s records as provided in Section 4.7.2(f) to confirm the accuracy of the other party’s costs and reports with respect to Joint Development Costs that are shared under this Agreement.

(b) For each Licensed Product, each party shall submit to the other party at least twice each Calendar Year, at least, one (1) Calendar Quarter apart, a written forecast of the expenditures, costs and other resources to be devoted to its Party Development Tasks in accordance with the applicable Annual Development Plan broken out on a monthly basis.

(c) Each party shall record and account for its FTE effort for the Development of each Licensed Product to the extent that such FTE efforts are included in Joint Development Costs or Allowable Expenses that are, or may in the future be, shared under this Agreement, and

 

shall report such FTE effort to the JDC or the JCC, as applicable, on a quarterly basis, in each case in a manner that allocates such FTE effort to the extent practicable to each applicable indication. Except to the extent provided herein, each party shall calculate and maintain records of FTE effort incurred by it in the same manner as used for other products developed by such party. The Finance Contacts shall facilitate any reporting hereunder.

(d) Any expenses incurred by a party for Development activities related to Licensed Products that do not fall within the definitions of Joint Development Costs shall be borne solely by such party unless the JDC determines otherwise. In addition, any expenditure or cost that exceeds the amount set forth in the applicable Annual Development Plan by [    *    ] or more for a Calendar Year or any unbudgeted cost that is incurred by either party shall be borne by such party; provided that the JDC shall have the discretion to review such expenditures or costs and propose to the JEC that they be designated as Joint Development Costs, if the JEC determines that incurring such expenditures or costs was in the best interests of the Collaboration.

(e) The Joint Development Costs shall be accounted for by each party in accordance with the following cost accounting principles:

(i) The parties intend that all costs defined herein are to be: (A) determined consistent with GAAP and (B) allocated among projects and activities by each party in a good faith attempt to calculate the relative cost of each of such projects and activities in a manner consistent with such party’s usual and customary practices.

(ii) The following guidelines shall be used in determining amounts chargeable to Joint Development Costs.

(A) Consistent with Section 4.9 , if a cost is specifically and exclusively incurred for Development of a Licensed Product in a country outside the Joint Development Territory, then one hundred percent (100%) of the cost shall be incurred by BMS and none of the cost shall be included in Joint Development Costs.

(B) If a cost is incurred for Party Development Tasks applicable to the Joint Development Territory, and the data or other results arising in connection with such Party Development Task are useful for Development of a Licensed Product in a country outside the Joint Development Territory, so long as [    *    ] with respect to Development in a country outside the Joint Development Territory, then the cost shall be fully charged to Joint Development Costs. To the extent there is [    *    ] with respect to Development of a Licensed Product in a country outside the Joint Development Territory, such [    *    ] shall be fully charged to BMS pursuant to guideline (A) above and Section 4.9 , and none of such amount shall be included in Joint Development Costs.

(iii) Each party shall track FTEs by functional area and by quarter in a manner consistent with its project cost system or using such other time tracking system as such party applies with respect to its internal programs and which has been reviewed and approved by the Finance Contacts. In general, these project cost systems shall report actual time spent on specific projects, and apply the FTE Rate. The Finance Contacts shall determine the costs of which

 

individuals or functions will be reimbursed through the application of a FTE Rate, which FTE Rate shall be determined in accordance with the definition thereof.

(f) Each party shall keep detailed records of the Joint Development Costs it incurs, including all supporting documentation for such expenses. Each party shall keep such records for at least seven (7) years after the date that such expense was incurred.

4.8 Joint Development Costs Paid to Third Parties

No Third Party Development Fees shall be allowable as part of the Joint Development Costs borne by a party hereto except to the extent that the same are:

(a) within an Annual Development Plan; and

(b) paid to a Third Party in the normal course of clinical development (including payments to investigators, clinical sites, supply of Licensed Product or comparator drugs and CROs) pursuant to a Third Party Agreement that has been disclosed to the other party pursuant to Section 14.1.4 or 14.2.4 or, if it is executed following the Effective Date, in a timely fashion following its execution; provided that execution after the Effective Date of a Third Party Agreement of the type described in subparagraph (a)  but not (b)  of paragraph 1.140 of Exhibit A requires the approval of the JEC in accordance with Section 3.1.2(i) .

All other Joint Development Costs paid to a Third Party, if any, shall be borne solely by the party hereto (or its Affiliate) that is party to the applicable Third Party Agreement.

4.9 BMS’ Efforts Outside the Joint Development Project

(a) BMS shall, and shall cause its Affiliates and Sublicensees to, use Reasonable Commercial Efforts during the Term to obtain Regulatory Approval for one or more Licensed Products, in one or more indications from Regulatory Agencies (other than the European Commission) in (i) each Major ROW Country and (ii) any other country in the ROW that presents a reasonable commercial opportunity to BMS.

(b) BMS shall comply with the safety reporting contemplated by Section 4.5 in connection with its Development activities outside the Joint Development Project.

ARTICLE FIVE

Commercialization of Licensed Products

5.1 Commercialization in the USA

(a) Subject to Section 5.2 , no later than thirty (30) days after Zymo receives written notice from BMS of the FDA’s acceptance of a BLA filing in the USA for the first Licensed Product, Zymo shall confirm that it will co-fund and co-promote the Licensed Products in the USA and share in the profits and losses in accordance with Section 9.1 , as anticipated by this Agreement. Alternately, Zymo may give notice of a Conversion under Section 7.1.1 or, at Zymo’s option, an Election to Co-Fund Only under Section 7.4 .

 

If Zymo confirms that it will co-promote and co-fund, the parties shall promptly execute the USA Co-Promotion Agreement.

For avoidance of doubt, if Zymo fails to confirm that it will co-promote and co-fund, a Conversion will occur on the date thirty (30) days after the BLA filing for the first Licensed Product in the USA.

(b) Each of the parties shall use its respective Reasonable Commercial Efforts during the Joint Commercialization Period to:

(i) Commercialize Licensed Products in the USA, including performing its Party Commercialization Tasks in accordance with the applicable Joint Commercialization Plan and the USA Co-Promotion Agreement; and

(ii) provide the other party with such information and other assistance as is reasonably required for such other party to perform its Party Commercialization Tasks.

(c) Each party shall be responsible for the selection and supervision of its personnel who are assigned any Party Commercialization Tasks pursuant to this Agreement and the USA Co-Promotion Agreement.

5.2 USA Co-Promotion Agreement

Beginning twelve (12) months prior to the anticipated date for filing a BLA for the first Licensed Product in the USA, BMS and Zymo shall negotiate an agreement for the co-promotion of such Licensed Product in the USA (the “ USA Co-Promotion Agreement ”). The parties intend that final form of the USA Co-Promotion Agreement for the first Licensed Product shall be available for review by Zymo for the purpose of its determination under Section 5.1 and, therefore, notwithstanding Section 5.1 , Zymo shall not be required to confirm whether it will co-promote and co-fund until such final form USA Co-Promotion Agreement is negotiated. The USA Co-Promotion Agreement shall be subject to the terms of this Agreement and made a part of this Agreement and shall contain provisions consistent with Section 5.3 through 5.7 and other material terms, a summary of which are set forth on Exhibit G , as well as other customary terms.

5.3 Loss Relief from USA Commercialization

(a) If for any Calendar Quarter during the period starting on the Effective Date and ending on the [    *    ] anniversary of the first commercial Sale of the Licensed Product in the USA the commercial operations associated with such Licensed Product result in a Net Loss, then, [    *    ] of Zymo’s share of the Net Loss ( i.e., [    *    ] of the total Net Loss) incurred in such Calendar Quarter shall be deferred ( i.e. , Zymo will not be required to immediately reimburse BMS for such [    *    ] share of Net Loss pursuant to Section 9.1 ).

(b) If any Net Loss is deferred pursuant to Subsection (a) , then, during any Calendar Quarter following the Effective Date in which the commercial operations associated with such Licensed Product result in a Net Profit, BMS shall be obligated to pay ZG LLC [    *    ]:

(i) [    *    ];

 

(ii) [    *    ];

(iii) [    *    ];

until such time that BMS has recovered one hundred percent (100%) of the deferred Net Loss. For the sake of clarity, in no event shall any payments due to ZG LLC from BMS for a Calendar Quarter be reduced by this Section 5.3 by [    *    ]. Subject to the limitations set forth in this Subsection (b) , BMS shall be permitted to apply the remaining balance of any deferred Net Loss to reduce any payment due in a subsequent Calendar Quarter (after such Net Loss is incurred) until such Net Loss has been exhausted.

5.4 USA Commercialization Costs Paid to Third Parties

No Third Party Commercial Use Fees shall be allowable as part of the USA Commercialization Costs shared by the parties except to the extent that the same are:

(a) Liabilities incurred as contemplated by Section 12.4.1(b) (whether or not Subsection (b)  of this Section 5.4 applies); or

(b) are:

(i) within the applicable Joint Commercialization Plan; and

(ii) paid to a Third Party in the normal course of Commercializing a Licensed Product pursuant to a Third Party Agreement that has been disclosed to the other party pursuant to Section 14.1.4 or 14.2.4 or, if it is executed following the Effective Date, in a timely fashion following its execution; provided that execution after the Effective Date of a Third Party Agreement of the type described in subparagraph (a)  but not (b)  of paragraph 1.140 of Exhibit A requires the approval by JEC Action.

All other USA Commercialization Costs paid to a Third Party shall be borne solely by the party hereto (or its Affiliate) that is party to the applicable Third Party Agreement.

5.5 BMS Sole and Primary Roles in Commercialization

(a) For each Licensed Product for which Regulatory Approval is received in the USA, BMS shall have as Party Commercialization Tasks, the sole role in [    *    ] of such Licensed Product in the USA and [    *    ] of such licensed Products in the USA.

(b) For each Licensed Product for which Regulatory Approval is received in the USA, BMS shall have as Party Commercialization Tasks, the primary role in:

(i) making decisions as to and execution of the [    *    ] or [    *    ] of such Licensed Product in the USA and [    *    ] with respect to such Licensed Product with the exception of Commercialization activities granted to Zymo in the USA Co-Promotion Agreement; and

 

(ii) all other Commercialization activities, with the input and participation of Zymo and subject to the review, modification and approval of the JCC, including:

(A) [    *    ] strategies in the USA by Sales Representatives;

(B) [    *    ] strategy for the USA;

(C) [    *    ] strategy for the USA, including activities relating to post-approval clinical studies (other than those required as a condition of Regulatory Approval);

(D) [    *    ] program strategy for the USA; and

(E) review and approval of Annual Commercialization Plan.

5.6 Reports of Sales in the USA

For each Licensed Product, BMS shall provide the JCC with (a) weekly reports of the gross sales of such Licensed Product in the USA less a standard discount within [    *    ] and (b) monthly reports of the Net Sales of such Licensed Product in the USA within [    *    ] after the end of each month.

5.7 Accounting and Reconciliation

(a) The Finance Contacts shall implement and coordinate, monthly accountings and quarterly balancing payments between Zymo and BMS comparable to Section 4.7.2 , such that each of Zymo and BMS, after such balancing payments, will, subject to Section 5.3 , on a net basis at least as current as quarterly, bear Net Losses in the same ratio as profits are shared in accordance with Section 9.1 .

(b) USA Commercialization Costs shall be the sum of the parties’ costs within the following cost categories (in accordance with the definitions thereof set forth in Exhibit A ) for the USA:

(i) Cost of Sales

(ii) Distribution Costs

(iii) Marketing Costs

(iv) Other Operating Costs

(v) Sales Costs

(c) The parties intend that all USA Commercialization Costs are to be: (i) determined in a manner consistent with GAAP and (ii) allocated among projects and activities by each party in a good faith attempt to calculate the relative cost of each of such projects and activities and in a manner consistent with such party’s usual and customary practices.

 

(d) The following guidelines shall be used in determining amounts chargeable to USA Commercialization Costs.

(i) If a cost is specifically and exclusively incurred for the Commercialization of a Licensed Product ( i.e. , for no other product) in USA ( i.e. , not in the ROW), then one hundred percent (100%) of the cost shall be charged to USA Commercialization Costs.

(ii) If a cost is specifically and exclusively incurred for the Commercialization of the Licensed Product ( i.e. , for no other product) in both USA and the ROW, then the following shall apply:

(A) If the portion of the cost incurred for the Commercialization of the Licensed Product in USA can be [    *    ] using [    *    ] (such as [    *    ]), then the portion so determined shall be charged to USA Commercialization Costs; or

(B) If the portion of the cost incurred for the Commercialization of the Licensed Product in USA cannot be [    *    ], then only [    *    ] of the applicable costs shall be charged to USA Commercialization Costs.

(iii) If a cost is not specifically and exclusively incurred for the Commercialization of the Licensed Product, then the following shall apply:

(A) If the portion of the cost incurred for the Commercialization of the Licensed Product in the USA can be [    *    ] (such as [    *    ]), then the portion so determined shall be charged to USA Commercialization Costs; or

(B) If the portion of the cost incurred for the Commercialization of the Licensed Product cannot be [    *    ], then only the [    *    ] specifically related to the Licensed Product shall be charged to USA Commercialization Costs.

5.8 Commercialization in the ROW

BMS shall use its Reasonable Commercial Efforts during the Royalty Period to Commercialize one or more Licensed Products, in one or more indications in (i) each Major EU Country where Regulatory Approval is obtained and (ii) each Major ROW Country where Regulatory Approval is obtained and (iii) any other country in the ROW where Regulatory Approval is obtained that presents a reasonable commercial opportunity for BMS. BMS shall be responsible for determining whether and on what terms to enter into any Third Party Agreements related to the Development or Commercialization of Licensed Products in ROW.

5.9 Reporting

On an annual basis within sixty (60) days after the end of each Calendar Year, beginning in the Calendar Year immediately following the year in which a Regulatory Agency grants Regulatory Approval for a Licensed Product in a country in the ROW and in the USA if a Conversion has occurred, BMS will provide Zymo with reports summarizing BMS’ Commercialization activities pertaining to such Licensed Product in such country. Such reports will include summaries of Commercialization activities undertaken by BMS during the

 

preceding Calendar Year with respect to the Licensed Product that has received Regulatory Approval, including material interactions with Regulatory Agencies relating to such Licensed Product (including any such material interactions relating to pricing and reimbursement approvals), and summaries of BMS’ proposed Commercialization activities anticipated to be conducted during the then-current Calendar Year with respect to such Licensed Product.

ARTICLE SIX

Manufacture

6.1 Preclinical and Clinical Supplies

(a) Zymo shall make its current stock of IFN-Lambda available to the parties for preclinical testing and clinical trials. The portion of the current stock of IFN-Lambda which is designated for use in the Joint Development Project shall be supplied at Zymo’s costs of Manufacture and supply, which costs shall be determined in accordance with the definition of Manufacturing Costs by the Finance Contacts based on the principles set forth in Section 5.7 . Such costs shall be treated as Joint Development Costs and will be treated as incurred as such stocks are supplied for use by a party in conducting its Party Development Tasks, and the provisions governing the supply, and timing of provision of such supply, shall be set forth in the applicable Annual Development Plan. For the portion of the current stock of IFN-Lambda which is designated for use outside the Joint Development Project, BMS shall reimburse Zymo [    *    ] of Zymo’s costs of Manufacture and supply.

(b) For the sake of clarity, Zymo shall have no obligation to Manufacture additional quantities of IFN- Lambda.

(c) The Manufacturing Working Group will be responsible to the JDC for the transfer to BMS or its Sublicensee of (i) Zymo’s current stock of IFN-Lambda, (ii) all Zymo Enabling Technology (including Materials and process information, including cell lines, plasmids and constructs) necessary or useful for the Manufacture of Licensed Products existing as of the Effective Date, and (iii) responsibility for the continuing Manufacture and supply of IFN-Lambda, including the further Manufacture of IFN-Lambda transferred to BMS by Zymo. The Manufacturing Working Group will determine whether to transfer Zymo’s current stock of IFN-Lambda in advance or on an as-needed basis. The parties acknowledge that if Zymo’s current stock is transferred on an as-needed basis or in final form, Zymo shall remain responsible for the analytical release and stability testing for any such IFN-Lambda transferred hereunder. Each party will use Reasonable Commercial Efforts to complete the transfer within [    *    ] after the Effective Date. Other than the costs associated with the initial information transfer pursuant to Section 4.2.1 , which Zymo shall solely bear, costs shall be included in the Annual Development Plan and the costs thereof shall be Joint Development Costs.

(d) Following the transfer of responsibility for the Manufacture and supply of IFN-Lambda, BMS shall be responsible to supply adequate quantities of IFN-Lambda available to the parties for preclinical testing and clinical trials. If the IFN-Lambda is designated for use in the Joint Development Project, BMS’ Manufacturing Costs shall be treated as Joint Development Costs, and the provisions governing the Manufacture and supply shall be set forth in the

 

applicable Annual Development Plan. If the IFN-Lambda is designated for use outside the Joint Development Project, BMS shall be responsible for [    *    ] of its Manufacturing Costs.

(e) BMS shall be responsible for all secondary Manufacture of Licensed Products, including (i) the process of producing Licensed Product in finished form, including filling IFN-Lambda or (ii) secondary packaging with ancillary supplies and labeling for use by an end user of Licensed Product or (iii) both. Costs associated with the secondary Manufacturing of Licensed Product supply shall be included in the Manufacturing Costs to the extent such Licensed Product supply is designated for use in the Joint Development Project and BMS shall be responsible for [    *    ] of the Manufacturing Costs (including costs for secondary Manufacturing) for Licensed Products used outside the Joint Development Project.

6.2 Commercial Manufacture

(a) BMS shall have responsibility for supply of Licensed Products (including the IFN-Lambda contained therein) for commercial sale throughout the Territory. For avoidance of doubt, BMS shall be allowed to contract with Third Parties for the Manufacture of Licensed Products in its discretion.

(b) If a Conversion has not occurred and BMS anticipates a shortfall in production of a Licensed Product, which shortfall is reasonably likely to result in the inability to meet the combined requirements of the parties for a Licensed Product in the USA and the ROW:

(i) BMS shall promptly notify Zymo in writing as to the reason for the shortfall, and state (and give reasons for) its expectations as to the duration of the shortfall;

(ii) BMS shall make Reasonable Commercial Efforts to avoid the shortfall and keep Zymo reasonably informed as to such Reasonable Commercial Efforts and their results; and

(iii) the parties shall agree upon an equitable allocation of all available Licensed Product between the USA and the ROW on the basis of the Net Sales in the respective markets in prior years and forecasts of future Net Sales in the respective markets, and taking into consideration performance versus forecast following any previous allocations under this Section 6.2 .

ARTICLE SEVEN

Conversion to Exclusive License

7.1 Conversion to Exclusive License

7.1.1 Zymo’s Option

Subject to Section 4.7.1(a) and this Article Seven , Zymo shall have the option to cease contributing to Joint Development Costs and USA Commercialization Costs for all Licensed Products in the USA, in which case the parties’ relationship with respect to all Licensed Products in the USA shall be converted from a collaborative arrangement to an exclusive royalty-bearing license arrangement (a “ Conversion ”). Zymo may exercise its option at any time by written

 

notice to BMS, but such Conversion may only be exercised a single time and, subject to Section 7.7 , will remain effective for all Licensed Products and for the remainder of the Term.

7.1.2 Failure to File BLA

A Conversion shall automatically take place on the [    *    ] anniversary of the Effective Date unless (i) a BLA has been filed for a Licensed Product in the USA or (ii) notwithstanding that no such BLA has been filed, Zymo gives BMS written notice of its intention to not allow an automatic Conversion and to continue contributing to Joint Development Costs or USA Commercialization Costs for the Licensed Product and such notice is given not later than six (6) months prior to such [    *    ] anniversary.

7.1.3 Zymo’s Financial Condition

(a) If, at any time after receipt of the initial fee pursuant to Section 8.1 , the amount of Cash and Cash Equivalents on the last day of any fiscal quarter or to Zymo’s knowledge at any other time is less than [    *    ] United States Dollars ($[    *    ]) and such deficiency is not cured within [    *    ] days (“ First Financial Condition Event ”), then Zymo shall give BMS prompt written notice thereof and the parties shall discuss Zymo’s financial condition. Thereafter, Zymo may trigger a Conversion.

(b) If, at any time after receipt of the initial fee pursuant to Section 8.1 :

(i) the amount of Cash and Cash Equivalents on the last day of any fiscal quarter of Zymo or to Zymo’s knowledge at any other time is less than [    *    ] United States Dollars ($[    *    ]) and such deficiency is not cured within [    *    ] days; or

(ii) any proceeding under Title 11 is initiated against Zymo,

(each a “ Second Financial Condition Event ”), Zymo shall give BMS prompt written notice thereof and BMS may, within ten (10) days of receiving Zymo’s notice, trigger a Conversion by written notice to Zymo.

7.1.4 Effective Date of Conversion

(a) A Conversion pursuant to Section 7.1.1 shall take effect [    *    ] after BMS receives notice or, if later, on [    *    ] of the [    *    ] in which notice is given.

(b) A Conversion pursuant to Section 7.1.2 shall take effect on the [    *    ] anniversary of the Effective Date.

(c) A Conversion pursuant to Section 7.1.3 shall take effect as follows:

(i) So long as no Second Financial Condition Event occurs, if Zymo gives notice of a Conversion following the First Financial Condition Event, [    *    ] after BMS receives notice; and

 

(ii) If BMS gives notice of a Conversion after the Second Financial Condition Event, immediately upon Zymo’s receipt of BMS’ notice.

7.2 Zymo’s Continuing Financial Obligations; Wind Down of Activities

7.2.1 Joint Development Costs and USA Commercialization Costs

Following a Conversion, Zymo’s responsibility for a pro rata share of the Joint Development Costs and USA Commercialization Costs incurred with respect to the Licensed Products shall end upon the effective date of a Conversion under Section 7.1 , except for such costs incurred during the period prior to the effective date of a Conversion in accordance with the applicable Joint Development Plan and/or Joint Commercialization Plan in effect on the date the notice was given or, in the case of a Conversion under Section 7.1.2 , in effect on the [    *    ] anniversary of the Effective Date. Notwithstanding the foregoing, Zymo shall continue to be responsible for contributing the Zymo Initial Funding Allocation as described in Section 4.7.1(a) as costs are incurred in accordance with the applicable Annual Development Plan even if such costs are not incurred until after the effective date of a Conversion.

7.2.2 Wind Down of Activities

Following a Conversion, the parties shall use their respective Reasonable Commercial Efforts to wind down Zymo’s continuing Party Development Tasks and Party Commercialization Tasks after a notice of Conversion and transition them to BMS prior to the effective date of such Conversion in such a manner as not to negatively impact the Development or Commercialization of the Licensed Products. Upon a Conversion becoming effective, Zymo shall have no further responsibility for conducting new activities or funding Development or Commercialization activities with respect to the Licensed Product, and subject to Zymo’s obligation under Section 7.2.1 regarding the Zymo Initial Funding Allocation, shall complete any ongoing Development activities with respect to the Licensed Product, subject to reimbursement by BMS of [    *    ] of any costs associated with such continuing activities unless such work is transferred to BMS at the discretion of the JEC.

7.3 Consequences of Conversion

7.3.1 Governance; Responsibility for Development and Commercialization

Upon the effective date of a Conversion and thereafter:

(a) Article Three and Sections 17.1 and 17.2 shall no longer apply, and BMS shall have sole control (including decision-making authority) and responsibility for, and shall bear all of its costs and expenses associated with, the Development, Manufacture (including formulation) and Commercialization of all Licensed Products in the Territory, including the USA.

(b) Where appropriate, references to ROW shall be treated as references to the Territory, including Sections 2.1 , 4.9 , 5.7 , 5.8 , and 12.2.3 and the definition of Royalty Period, but, for clarity, not for the purpose of aggregating Net Sales as part of the calculation of the royalties due under Section 9.2 .

 

(c) BMS shall use its Reasonable Commercial Efforts during the Term to obtain Regulatory Approval for one or more Licensed Products, in [    *    ] from Regulatory Agencies in [    *    ]; provided that BMS may satisfy such obligation by sublicensing the Development and Commercialization of a Licensed Product to a Third Party pursuant to the terms of this Agreement.

(d) Beginning six (6) months after the effective date of a Conversion, and every six (6) months thereafter during the Term, BMS shall submit to Zymo a written progress report summarizing the Development performed by BMS in the Territory and anticipated Milestone Events, including the USA. All such reports shall be considered Information of BMS, provided, however, that if Zymo has a Competing Product as defined in paragraph 1.30(a) of Exhibit A as permitted in Section 2.3(b)(ii)(1)(y)(B) , then this Section 7.3.1(d) shall not require BMS to include any other Information in any such report.

7.3.2 Termination of USA Co-Promotion Agreement

On the effective date of a Conversion, any applicable USA Co-Promotion Agreement shall be terminated pursuant to its provisions.

7.3.3 No Other Changes

Except as set forth in this Section 7.3 , all other terms and obligations of this Agreement shall remain in full force and effect following a Conversion, including the terms relating to Milestone Payments.

7.4 Election to Co-Fund Only

7.4.1 Zymo’s Option

Subject to this Article Seven , Zymo shall have, in the circumstance described in Sections 2.3(b)(ii)(1)(y)(B) , 2.4 , 5.1 , and 7.7 , the option to cease performing Party Commercialization Tasks while continuing to contribute to USA Commercialization Costs ( “Election to Co-Fund Only” ). Zymo may exercise its option by written notice to BMS, but such Election to Co-Fund Only may only be exercised a single time and, subject to Section 7.7 , will remain effective for all Licensed Products and for the remainder of the Term, but for clarity shall not preclude a later Conversion by Zymo pursuant to Section 7.1.1 .

7.4.2 Effective Date of Election to Co-Fund Only

(a) An Election to Co-Fund Only pursuant to Section 2.3 shall take effect [    *    ] after BMS receives notice or, if later, on December 31st of the Calendar Year in which notice is given.

(b) An Election to Co-Fund Only pursuant to Section 2.4 or 5.1 shall take effect immediately.

 

7.5 Zymo’s Continuing Financial Obligations; Wind Down of Activities

7.5.1 Joint Development Costs and USA Commercialization Costs

Following an Election to Co-Fund Only, Zymo will continue to be responsible for its pro rata share of the Joint Development Costs and USA Commercialization Costs incurred with respect to the Licensed Products in accordance with the applicable Joint Development Plan and/or Joint Commercialization Plan.

7.5.2 Wind Down of Activities

Following an Election to Co-Fund Only, the parties shall use their respective Reasonable Commercial Efforts to wind down Zymo’s continuing Party Development Tasks and Party Commercialization Tasks after a notice of an Election to Co-Fund Only and transition them to BMS in such a manner as not to negatively impact the Development or Commercialization of the Licensed Products. Upon an Election to Co-Fund Only becoming effective, Zymo shall have no further responsibility for conducting new activities with respect to the Licensed Product.

7.6 Consequences of Election to Co-Fund Only

7.6.1 Governance; Responsibility for Development and Commercialization

Upon the effective date of an Election to Co-Fund Only and thereafter:

(i) Article Three and Sections 17.1 and 17.2 shall continue to apply, and BMS shall have sole responsibility for performing Party Development Tasks and Party Commercialization Tasks throughout the Territory, including the USA; provided, however, that if Zymo makes an Election to Co-Fund Only pursuant to Section 2.3(b)(ii)(1)(y)(B) , then Article Three and Sections 17.1 and 17.2 shall not apply.

(ii) Where appropriate, references to ROW shall be treated as references to the Territory, including Sections 2.1, 4.9, 5.7, 5.8, and 12.2.3 and the definition of Royalty Period.

(iii) BMS shall use its Reasonable Commercial Efforts during the Term to obtain Regulatory Approval for one or more Licensed Products, in one or more indications from Regulatory Agencies in (i) the USA (ii) Major EU Countries, (iii) each Major ROW Country and (iv) any other country in the Territory that presents a reasonable commercial opportunity to BMS; provided that BMS may satisfy such obligation by sublicensing the Development and Commercialization of a Licensed Product to a Third Party pursuant to the terms of this Agreement.

(iv) Beginning six (6) months after the effective date of an Election to Co-Fund Only, and every six (6) months thereafter during the Term, BMS shall submit to Zymo a written progress report summarizing the Development performed by BMS in the Territory and anticipated Milestone Events, including the USA. All such reports shall be considered Information of BMS; provided, however, that if Zymo has a Competing Product as defined in paragraph 1.30(a) of Exhibit A as permitted in Section 2.3(b)(ii)(1)(y)(B) , then this Section 7.6.1(iv) shall not require BMS to include any other Information in any such report.

 

7.6.2 Termination of USA Co-Promotion Agreement

On the effective date of an Election to Co-Fund Only, any applicable USA Co-Promotion Agreement shall be terminated pursuant to its provisions.

7.6.3 No Other Changes

Except as set forth in this Section 7.6 , all other terms and obligations of this Agreement shall remain in full force and effect following an Election to Co-Fund Only, including the terms relating to Milestone Payments.

7.7 Combined Conversion and Election to Co-Fund Only

Following Regulatory Approval of one or more Licensed Products in the USA, Zymo may make an Election to Co-Fund Only pursuant to Section 7.4 with respect to the approved Licensed Products and a Conversion pursuant to Section 7.1.1 with respect to any Licensed Products still being Developed pursuant to the Joint Development Plan.

ARTICLE EIGHT

Milestone Payments

8.1 Licensing Fees

In partial