TABLE OF CONTENTS

 

 

ARTICLE 1 DEFINITIONS
ARTICLE 2 MANAGEMENT OF COLLABORATION
	2.1	General
		2.1.1	Role of Committees
		2.1.2	Limitations on the Authority of Committees
	2.2	Joint Executive Committee (JEC)
		2.2.1	Formation and Purpose
		2.2.2	Specific Responsibilities of the JEC
	2.3	Joint Development and Regulatory Committee (JDC)
		2.3.1	Formation and Purpose
		2.3.2	Specific Responsibilities of the JDC
		2.3.3	Regulatory Working Group
		2.3.4	Available Resources
	2.4	Joint Commercialization Committee (JCC)
		2.4.1	Formation and Purpose
		2.4.2	Specific Responsibilities of the JCC
		2.4.3	Available Resources
	2.5	Joint Manufacturing Committee (JMC)
		2.5.1	Formation and Purpose
		2.5.2	Specific Responsibilities of the JMC
	2.6	Joint Finance Committee (JFC)
		2.6.1	Formation and Purpose
		2.6.2	Specific Responsibilities of the JFC
	2.7	General Committee Membership and Procedures
		2.7.1	Membership
		2.7.2	Meetings
		2.7.3	Decision-Making
		2.7.4	Meeting Agendas and Minutes
		2.7.5	Working Groups
		2.7.6	Interactions Between Committees and Internal Teams
		2.7.7	Project Managers
	2.8	Alliance Managers
		2.8.1	Appointment
		2.8.2	Responsibilities
	2.9	Collaboration Guidelines
		2.9.1	General
		2.9.2	Independence
	2.10	General Overview of Accounting
		2.10.1	Accounting Procedures
		2.10.2	Affiliate Agreements
	2.11	Compliance with Law

 

i

 

 

ARTICLE 3 DEVELOPMENT AND REGULATORY
	3.1	Current Status of Development of Lead Product and MDX-1379
	3.2	Global Development Plans and Budgets and Annual Development Plans and Budgets
		3.2.1	Comprehensive Development Plans and Budgets
		3.2.2	Annual Development Plans and Budgets
		3.2.3	Success Criteria for Development Activities
		3.2.4	Clinical Trials Outside Plans and Budgets
		3.2.5	MDX-1379
	3.3	Lead Development Party and Lead Regulatory Party
		3.3.1	In General
		3.3.2	Designation of Lead Development Party and Lead Regulatory Party
	3.4	Clinical and Regulatory Matters in the United States; Recalls and Withdrawals
		3.4.1	Ownership of Regulatory Filings and Approvals
		3.4.2	Preparation of Regulatory Submissions
		3.4.3	Notice of Regulatory Filing Requirements
		3.4.4	Notice of Changed Regulatory Requirements
		3.4.5	Regulatory Meetings
		3.4.6	Regulatory Data
		3.4.7	Regulatory Submissions
		3.4.8	Recalls
		3.4.9	Common Efficacy Database
		3.4.10	Pricing and Reimbursement Approvals
		3.4.11	Labeling
		3.4.12	Drug Naming Approvals
		3.4.13	Rights of Reference
	3.5	Clinical and Regulatory Matters in the Royalty Territory; Recalls and Withdrawals
		3.5.1	Ownership of Regulatory Filings and Approvals
		3.5.2	Preparation of Regulatory Submissions
		3.5.3	Regulatory Meetings; Submissions and Other Communications
		3.5.4	Pricing and Reimbursement Approvals
		3.5.5	Recalls
		3.5.6	Labeling
		3.5.7	Rights of Reference
	3.6	Development Diligence
	3.7	Costs of Development
		3.7.1	Development Cost Sharing
		3.7.2	FTE Records and Calculations
		3.7.3	Reports
		3.7.4	Regulatory Expenses
	3.8	Medarex Right to Opt-Out
		3.8.1	Financial and Data Packages

 

ii

 

		3.8.2	Right to Opt-Out
		3.8.3	Effect of Opt-Out
		3.8.4	Material Changes Prior to the Commencement of a Pivotal Trial
		3.8.5	Forced Opt-In
	3.9	Regulatory Exclusivity
	3.10	Coordination of Clinical Strategy
	3.11	Pharmacovigilance Responsibilities
	3.12	Notice of Investigation or Inquiry
	3.13	Additional Agent Selection, Development and Commercialization; Third Party Royalties
		3.13.1	Identification and Selection of Agents
		3.13.2	Agent Exclusivity
ARTICLE 4 COMMERCIALIZATION IN ROYALTY TERRITORY
	4.1	Lead Marketing Party
	4.2	Diligence for Commercialization of Products in Royalty Territory
		4.2.1	Diligent Efforts
		4.2.2	Appointment of Distributors and Co-Promoters
	4.3	Royalty Territory Commercialization Plans and Budgets
		4.3.1	Global Commercialization Plans and Budgets
		4.3.2	Pre-Launch RT Commercialization Plans and Budgets and Annual RT Commercialization Plans and Budgets
	4.4	Sales and Distribution in Royalty Territory
	4.5	Coordination of Commercialization Strategy
ARTICLE 5 COMMERCIALIZATION IN THE UNITED STATES
	5.1	General Principles of Commercialization of Products in the United States; Diligence
		5.1.1	General Principles
		5.1.2	Diligence
	5.2	Commercialization Plans and Budgets; Pre-Launch US Commercialization Plan and Budget
		5.2.1	Commercialization Plans and Budgets
		5.2.2	Global Commercialization Plan and Budget
		5.2.3	Pre-Launch US Commercialization Plans and Budgets; Annual US Commercialization Plans and Budgets
	5.3	Medarex Option to Co-Promote
		5.3.1	Option Exercise
		5.3.2	Termination of Co-Promotion Term
		5.3.3	Failure to Exercise/Expiration of Co-Promotion Rights
	5.4	Diligent Efforts for Co-Promotion Products; Lead Marketing Party; Principles of Commercialization
		5.4.1	Diligent Efforts
		5.4.2	Lead Marketing Party

 

iii

 

		5.4.3	Principles of Commercialization
	5.5	Sales Efforts and Sales Representative Deployment for Co-Promotion Products in the United States; Training
		5.5.1	Selling Effort
		5.5.2	Position of the Details to be Provided
		5.5.3	Detailing of Other Products by a Party’s Sales Force Representatives
		5.5.4	Additional Commercialization Expertise
		5.5.5	Records
		5.5.6	Determination of Sales Representative Costs Allocated to Profit and Loss
		5.5.7	Medical Liaisons
	5.6	Sales Force Capabilities; Training in the United States
	5.6	Sales Force Capabilities; Training in the United States TC
		5.6.1	General Sales Training
		5.6.2	Product-Specific Sales Training
		5.6.3	Co-Promotion-Related Meetings
		5.6.4	Training Materials
		5.6.5	Copyrights
	5.7	Co-Promotion Advertising and Promotional Materials
		5.7.1	Marketing and Other Materials
		5.7.2	Specific Responsibilities of the Parties
		5.7.3	Approval of Materials Other Than Marketing Materials
		5.7.4	Research Data
	5.8	Sales and Distribution in the United States
	5.9	Incentive Plans for Sales Representatives
	5.10	Sales Representatives
		5.10.1	Employees
		5.10.2	Independent Contractors
		5.10.3	Allocation; Turnover
		5.10.4	Inadequate Performance
		5.10.5	Compliance with Applicable Law
		5.10.6	Agreements with Sales Representatives
		5.10.7	Worker’s Compensation
		5.10.8	Employees of Hiring Party
		5.10.9	Responsibility for Employees
		5.10.10	Indemnification by Hiring Party
		5.10.11	Responsibility for Employment Terms and Policies
	5.11	Government, Managed Care and Other Accounts
ARTICLE 6 FINANCIAL TERMS
	6.1	Initial Payment
	6.2	Equity Investment
	6.3	Milestone Payments
		6.3.1	Regulatory Milestone Payments
		6.3.2	[*****]

 

[*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

iv

 

	6.4	Profit or Loss in the United States
		6.4.1	In General
		6.4.2	Additional Share; Allocation of Off-Label Sales
		6.4.3	Commercialization Overruns
	6.5	Calculation and Payment of Profit or Loss Share
		6.5.1	Reports and Payments in General
		6.5.2	Last Calendar Quarter
	6.6	Royalties to Medarex
		6.6.1	United States
		6.6.2	Japan
		6.6.3	Rest of the World
		6.6.4	Proration
	6.7	Royalty Adjustments and Other Third Party Payments
		6.7.1	Generic Products
		6.7.2	Certain Third Party Payments
		6.7.3	Existing In-License Agreements
		6.7.4	PHS License Agreement
	6.8	Reimbursement to Medarex for Certain Additional Costs
	6.9	Term of Royalties on Products and Profit Sharing
		6.9.1	Royalties
		6.9.2	Profit Sharing
		6.9.3	Non-Co-Promoted Products
	6.10	Royalties on Non-Antibody Competing Products
		6.10.1	Competing Product Royalty Rate
		6.10.2	Determination
		6.10.3	Royalty Term
	6.11	Royalty Payments and Reports
	6.12	Payment Method
	6.13	Taxes
	6.14	Blocked Currency
	6.15	Sublicenses
	6.16	Non-Monetary Consideration
	6.17	Cross Border Transactions
	6.18	Foreign Exchange
	6.19	Payments to or Reports by Affiliates
	6.20	Adjustment of FTE Rates
	6.21	[*****]
ARTICLE 7 MANUFACTURE AND SUPPLY
	7.1	Current Status of Manufacture of Lead Product
	7.2	Manufacturing Plan and Budget
	7.3	Lead Manufacturing Party
		7.3.1	In General
		7.3.2	Lead Products and Additional Products
		7.3.3	Obligations of Lead Manufacturing Party
		7.3.4	[*****]
	7.4	Manufacturing Responsibilities
		7.4.1	Chemistry, Manufacturing and Controls

 

[*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

v

 

		7.4.2	Lead Product
		7.4.3	Back-Up Supply
	7.5	Specifications and Terms of Supply
		7.5.1	Specifications
		7.5.2	Forecasts
		7.5.3	Diligent Efforts
	7.6	Shortage of Supply
	7.7	Inventory
	7.8	Manufacturing Costs and Fees
		7.8.1	In General
		7.8.2	Capital Equipment
		7.8.3	Stability Testing and Validation Batches
	7.9	Term of Supply Obligation
	7.10	Label
ARTICLE 8 REPRESENTATIONS AND COVENANTS
	8.1	Mutual Representations and Warranties
		8.1.1	Corporate Power
		8.1.2	Due Authorization
		8.1.3	Binding Agreement
		8.1.4	Grant of Rights; Maintenance of Agreements
		8.1.5	No Restrictions
	8.2	Manufacturing Covenant
	8.3	No Debarment
	8.4	Intellectual Property Representations and Warranties
	8.5	Medarex Representations and Warranties
	8.6	DISCLAIMER
ARTICLE 9 RECORDS AND AUDIT
	9.1	Information Disclosure and Materials Transfer
		9.1.1	Manufacturing Information
		9.1.2	Information Disclosure Generally
		9.1.3	Materials Transfer
	9.2	Records and Audit
		9.2.1	Records
		9.2.2	Audits
ARTICLE 10 LICENSES AND OTHER RIGHTS
	10.1	License Grants to BMS
		10.1.1	Technology
		10.1.2	Licensed Know-How
		10.1.3	Collaboration Technology
		10.1.4	Trademarks
		10.1.5	Effect of Change of Control

 

vi

 

	10.2	License Grants to Medarex
		10.2.1	Technology
		10.2.2	Collaboration Technology
		10.2.3	Trademarks
		10.2.4	Effect of Change of Control
	10.3	Third Party Technology
		10.3.1	Existing In-License Agreements
		10.3.2	Existing Grants
		10.3.3	Retained Rights
		10.3.4	Additional Third Party Technology
	10.4	Sublicensing; Subcontracting
		10.4.1	Sublicenses
		10.4.3	Limitation on Grant of Licenses With Respect to Technology that is the Subject of a Co-Exclusive License
	10.5	Exclusivity; Competing Product
		10.5.1	Competing Product
		10.5.2	Breach
		10.5.3	Merger or Acquisition
		10.5.4	Medarex Divestiture of its Product Rights [*****]
		10.5.5	Divestment; Failure to Divest
		10.5.5	BMS Non-Antibody Competing Product
		10.5.7	Equitable Relief
	10.6	Certain Covenants; Waiver
		10.6.1	By Medarex
		10.6.2	By BMS
		10.6.3	By BMS
	10.7	Exclusive Rights
	10.8	No Implied Licenses
	10.9	No Patent Challenges
	10.10	Bankruptcy
		10.10.1	In General
		10.10.2	Access or License
		10.10.3	Rights in Bankruptcy
	10.11	HSR Act Filing
ARTICLE 11 INTELLECTUAL PROPERTY
	11.1	Ownership of Collaboration Technology and Mice-Related Technology
		11.1.1	Collaboration Technology
		11.1.2	Mice-Related Technology
	11.2	Patent Prosecution
		11.2.1	Medarex Patents and BMS Patents
		11.2.2	Medarex Collaboration Patents and BMS Collaboration Patents
		11.2.3	Joint Collaboration Patents
		11.2.4	Patent Expenses
		11.2.5	Nondisclosure

 

[*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

vii

 

		11.2.6	Patent Term Extension
	11.3	Infringement Defense
		11.3.1	Defense of Third Party Claims for a Product in the United States
		11.3.2	Defense of Third Party Claims for a Product in the Royalty Territory
		11.3.3	Settlement of Third Party Claims for a Product
		11.3.4	Allocation of Costs
	11.4	Infringement by Third Parties in the United States
		11.4.1	Notification
		11.4.2	Medarex Patents and BMS Patents
		11.4.3	Joint Collaboration Patents
		11.4.4	Enforcement Procedure
		11.4.5	Costs and Recovery
	11.5	Infringement by Third Parties in the Royalty Territory
		11.5.1	Notification
		11.5.2	Medarex Patents and BMS Patents
		11.5.3	Joint Collaboration Patents
		11.5.4	Enforcement Procedure
		11.5.5	Costs and Recovery
	11.6	Patent Marking
	11.7	Product Trademarks
		11.7.1	Ownership of Product Trademarks
		11.7.2	Use of Product Trademarks
		11.7.3	Costs
		11.7.4	Cooperation
	11.8	Other Proprietary Trademarks
		11.8.1	Ownership of Corporate Names
		11.8.2	Use of Corporate Names
		11.8.3	Cooperation
	11.9	Trademark Infringement by Third Parties
		11.9.1	Product Trademarks in the United States
		11.9.2	Defense of Third Party Claims in the Royalty Territory
		11.9.3	Infringement by Third Parties
ARTICLE 12 CONFIDENTIALITY AND PUBLICATIONS
	12.1	Treatment of Confidential Information
	12.2	Publicity
	12.3	Securities Filings
	12.4	Publications
	12.5	Patient Information
ARTICLE 13 EXPORT CONTROL
	13.1	Authority

 

viii

 

ARTICLE 14 TERM AND TERMINATION
	14.1	Term
	14.2	Termination of Agreement
		14.2.1	Voluntary Termination of Agreement or Certain Rights Hereunder by BMS
		14.2.2	Additional Rights to Terminate Agreement or Certain Rights Hereunder
		14.2.3	Termination as to One or More Countries or Products
		14.2.4	Termination of the Lead Manufacturing Party
	14.3	Licenses and Royalties Upon Termination by BMS pursuant to Section 14.2
		14.3.1	Entire Agreement
		14.3.2	Product-by-Product
		14.3.3	Country-by-Country
		14.3.4	Sublicenses
		14.3.5	Sale of Inventory
		14.3.6	Survivability of Sublicense Grants
		14.3.7	Effect of Termination on Sublicenses Granted by BMS Pursuant to Section 10.4.1
		14.3.8	Covenant Regarding Assigned Product Trademarks
	14.4	Other Effects of Termination under Section 14.2
		14.4.1	Transfer of Regulatory Documentation
		14.4.2	Transfer of Manufacturing Responsibilities
		14.4.3	Return of Information and Materials
		14.4.4	Milestone Payments
		14.4.5	Reconciliation of Profit and Loss
		14.4.6	Assistance
		14.4.7	Royalties to BMS
		14.4.8	Royalties to Medarex
		14.4.9	Indemnification
	14.5	Consequences of Material Breach by Either Party
	14.6	Survival
	14.7	Remedies
	14.8	Limited Termination Right
ARTICLE 15 INDEMNIFICATION
	15.1	Indemnification in the Territory with respect to Products other than Co-Promotion Products in the United States
		15.1.1	Indemnification by BMS
		15.1.2	Indemnification by Medarex
		15.1.3	Excluded Losses
	15.2	Indemnification with respect to Co-Promotion Products in the United States
		15.2.1	In General
		15.2.2	Certain Losses

 

ix

 

		15.2.3		Notices of Co-Promotion Product Claims
	15.3	Claims for Indemnification
	15.4	Insurance
ARTICLE 16 DISPUTE RESOLUTION
	16.1	Disputes Arising from the JEC
		16.1.2		Litigable and Arbitrable Matters
		16.1.3		Expert Matters
		16.1.4		Post-DO Party Matters
		16.1.5		BMS Final Decision-Making Authority
	16.2	Expert Resolution of Certain Disputes
	16.3	Intellectual Property Disputes
	16.4	Expedited Arbitration
	16.5	Governing Law, Jurisdiction, Venue and Service
		16.5.1		Governing Law
		16.5.2		Jurisdiction
		16.5.3		Venue
		16.5.4		Service
ARTICLE 17 MISCELLANEOUS
	17.1	Non-Solicitation of Employees
	17.2	Consequential Damages
	17.3	Entire Agreement; Amendment
	17.4	Force Majeure
	17.5	Notices
	17.6	Consents
	17.7	Assignment
	17.8	Performance by Affiliates
	17.9	Counterparts
	17.10	Severability
	17.11	Ambiguities
	17.12	Headings
	17.13	No Waiver
	17.14	No Benefit to Third Parties
	17.15	Relationship of the Parties
	17.16	Further Assurance
	17.17	Construction
	Schedules
	1.22		BMS Pre-Existing Patents
	1.116		Medarex Pre-Existing Patents
	1.172		Selected Mice-Related Patents
	12.2		Press Release

 

x

 

Execution Copy

 

COLLABORATION AND CO-PROMOTION AGREEMENT

 

THIS COLLABORATION AND CO-PROMOTION AGREEMENT (the “ Agreement ”) is made as of November 7, 2004 (the “ Execution Date ”), by and between Medarex, Inc., a New Jersey corporation having its principal place of business at 707 State Road, Princeton, New Jersey 08540-1437 (“ Medarex ”) and Bristol-Myers Squibb Company, a Delaware corporation headquartered at 345 Park Avenue, New York, New York 10154 (“ BMS ”), effective as of the Effective Date, except for Section 10.11, which shall be effective as of the Execution Date.  Medarex and BMS are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

 

RECITALS

 

WHEREAS , Medarex is a biotechnology company engaged in the research, development and potential commercialization of antibodies to antigen targets in order to develop and commercialize antibody-based products based on or incorporating such antibodies;

 

WHEREAS , Medarex has generated and is developing a certain fully-human antibody that is antagonistic to cytotoxic T-lymphocyte antigen 4 (CTLA-4) and any polymorphic variants thereof (the “ Target ”), which antibody is known as “MDX-010”;

 

WHEREAS , BMS is a worldwide, research-based pharmaceutical company, engaged in the discovery, development, manufacturing and marketing of new therapies and treatment programs;

 

WHEREAS , BMS and Medarex desire to collaborate in the development and commercialization of an antibody-based product incorporating MDX-010 as the sole active ingredient or for use together, or otherwise in combination, with MDX-1379 (gp-100) or with certain other immunotherapeutic agents, all on the terms and conditions set forth below;

 

WHEREAS , BMS and Medarex may elect to collaborate in the development or commercialization of one or more additional anti-CTLA-4 antibodies raised against the Target and that have antagonistic activity against the Target either on a stand-alone basis or for use together, or otherwise in combination, with MDX-1379 (gp-100) or with certain other immunotherapeutic agents, all on the terms and conditions set forth below;

 

WHEREAS , Medarex desires an option to co-promote such products in the United States, and, subject to such co-promotion rights and the other rights reserved to Medarex herein, BMS desires to obtain exclusive rights to commercialize and distribute such products throughout the world, and the Parties are willing to provide to one another such rights, all on the terms and conditions set forth below; and

 

WHEREAS , BMS shall purchase Medarex common stock pursuant to, and subject to the terms and conditions of, that certain stock purchase agreement by and between the Parties dated as of the Execution Date.

 

1

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

The following terms shall have the following meanings as used in this Agreement:

 

1.1                                “Act” means the United States Food, Drug, and Cosmetic Act, as amended.

 

1.2                                “Additional Agent” means any Immunotherapeutic Agent (other than a Lead Agent) that is proposed by either Party and is selected by the Parties or, solely with respect to Commercialized Agents, the JDC pursuant to Section 3.13, for Development or Commercialization hereunder in accordance with the terms of this Agreement for use together, or otherwise in combination, with the Lead Antibody or an Additional Antibody.

 

1.3                                “Additional Antibody” means any Antibody, other than the Lead Antibody or any Excluded Antibody, that is Controlled by Medarex or BMS or any of their respective Affiliates (other than any Affiliate that becomes such as a result of a Change of Control Transaction if any such Affiliate Controlled the Antibody prior to such Change of Control Transaction) as of the Execution Date or at any time during the term of this Agreement.

 

1.4                                “Additional Indication” means (a) in the case of the Lead Product, each indication (or any label expansion for an existing indication that requires a Clinical Trial), other than any Lead Indication that is proposed by a Party and is selected as an indication to be Developed or Commercialized in accordance with Section 3.2.1, (b) in the case of any Additional Product, each indication (including, for clarity, the first indication) (or any label expansion for an existing indication that requires a Clinical Trial) that is proposed by a Party and selected as an indication for which such Additional Product will be Developed or Commercialized hereunder in accordance with Section 3.2.1 and (c) in the case of MDX-1379, each indication (or any label expansion for an existing indication that requires a Clinical Trial) that is proposed by a Party and selected as an indication for which MDX-1379 will be Developed or Commercialized hereunder, pursuant to Section 3.2.1.  For clarity, (x) an Additional Indication may include the Development of a Product either for use as monotherapy for an indication or for use together, or otherwise in combination, with an Additional Agent for an indication, each of which (including each use with a separate Agent) shall be deemed to be a separate Additional Indication even if each such indication is for use against the same tumor type and (y) the Development of a Product for use as a first-, second- or third-line therapy, or as an adjuvant therapy, for a particular tumor type shall each be deemed to be a separate Additional Indication; provided, however , that if the Parties agree, or the FDA advises or requires, that the Pivotal Trials for a particular line of therapy for a particular tumor type include separate Clinical Trials, or separate arms of a single Clinical Trial, for a Product as both a monotherapy and for use together, or in combination, with an Agent, then such Clinical Trial(s) shall be deemed to be conducted for a single Additional Indication.

 

2

 

1.5                                “Additional Product” means any pharmaceutical product, other than the Lead Product, that contains or incorporates an Additional Antibody that is selected by the JEC (or the Designated Officers (in accordance with Section 16.1.1, following compliance with Section 2.7.3(c)) or BMS (in accordance with Section 16.1.5, following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1)) for Development pursuant to Section 3.2.1(b).  For clarity, “Additional Product” excludes any Agent unless the Parties otherwise mutually agree in writing.

 

1.6                                “Affiliate” means an individual, trust, business trust, joint venture, limited liability company, partnership, corporation, association or any other entity that (directly or indirectly) controls, is controlled by, or is under common control with a Party.  For purposes of this definition, the term “ control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”) as used with respect to a person or entity, means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such person or entity, whether through the ownership of voting securities, by contract or otherwise.

 

1.7                                “Agent” means any Lead Agent or any Additional Agent, as applicable, and “Agents” means, collectively, any of the Lead Agents or the Additional Agents.

 

1.8                                “Allowable Expenses” means, subject to the other provisions of this Agreement, the following expenses that are specifically identifiable or reasonably allocable to the Commercialization of a Co-Promotion Product in the United States:  (a) Manufacturing Costs for Co-Promotion Products included in Net Sales in the United States (including inventory build-up in advance of Product launch, (b) Distribution Costs, (c) Third Party Payments that are reasonably allocable to the Commercialization of a Co-Promotion Product in the United States or the manufacture of a Co-Promotion Product for Commercialization in the United States, (d) Sales and Marketing Costs, (e) Patent Costs (to the extent not otherwise reimbursed through recoveries obtained in connection with any litigation as contemplated under Section 11.4.5, (f) Trademark Costs (to the extent not otherwise reimbursed under Section 11.9), (g) Regulatory Expenses that are reasonably allocable to the Commercialization of a Co-Promotion Product in the United States, (h) Medical Education Costs, (i) Phase IV Costs and (j) costs associated with patient assistance programs; provided , however , that in each of clauses (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j), such expenses shall, subject to permitted Commercialization Overruns pursuant to Section 6.4.3, be included within “Allowable Expenses” for a Co-Promotion Product only to the extent consistent with the applicable Pre-Launch US Commercialization Plan and Budget and Annual US Commercialization Plan and Budget.  The components of Allowable Expenses shall be calculated in accordance with the applicable definition thereof and the applicable terms of this Agreement.

 

1.9                                “ANDA” means an Abbreviated New Drug Application, or equivalent thereof outside of the United States.

 

1.10                         “ Antibody ” means any antibody, or fragment thereof, whether human, humanized, chimeric, murine or from any other source (and including bispecific antibodies, single chain antibodies, and immunoconjugated antibodies), that (a) has been raised, engineered or otherwise optimized to bind specifically and directly to the Target (whether exclusively or in

 

3

 

addition to any other target such Antibody may modulate), and (b) once bound to the Target, has antagonistic activity against or otherwise blocks the immunosuppressive signaling of the Target.  For clarification, (x) any antibody or fragment thereof, whether human, humanized, chimeric, murine or from any other source (and including bispecific antibodies, single chain antibodies, and immunoconjugated antibodies) that is Derived from an Antibody, binds specifically and directly to the Target, and otherwise meets the requirements of clause (b) above, shall be an Antibody for purposes of this Agreement and (y) any fusion protein comprised of a fragment of an Antibody and that uses such fragment in order to bind to the Target shall be considered an Antibody for purposes of this Agreement.  For clarification, the Lead Antibody is an Antibody.  For the avoidance of doubt, those fusion proteins known as [*****] ^† and [*****]shall not be considered Antibodies for purposes of this Agreement.

 

1.11                         “Antibody Competing Product” means any Competing Product comprised in whole or in part of an Antibody, but not a Non-Antibody Substance.

 

1.12                         “Appealable Matter” means any dispute between the Parties (or their respective designees on any Committee) concerning (a) whether the Development or proposed Development activities with respect to a Product (i) in the United States are having or may reasonably be expected to have a material adverse effect on the Development or Commercialization of any Product in the Royalty Territory, or (ii) in the Royalty Territory are having or may reasonably be expected to have a material adverse effect on the Development or Commercialization of any Product in the United States, or in either case ((i) or (ii)) the Parties’ respective rights and obligations under this Agreement with respect to such Development activities or such Products or Indications, (b) whether the Commercialization (including any proposed or required Phase IV Studies) of any Product (i) in the United States is having or may reasonably be expected to have a material adverse effect on the Development or Commercialization of any Product in the Royalty Territory, or (ii) in the Royalty Territory is having or may reasonably be expected to have a material adverse affect on the Development or Commercialization of any Product in the United States, or in either case ((i) or (ii)) the Parties’ respective rights and obligations under this Agreement with respect to such Commercialization activities or such Products or Indications, including disputes concerning the impact of cross-border transfers of Product purchased in one country or territory and imported into another country or territory for resale or (c) the scientific integrity of any Phase IV Study to be conducted in the Territory that is proposed to the JDC for its review and approval as contemplated by Section 2.3.2.  For the avoidance of doubt, any dispute as to whether an adverse effect is material for purposes of clause (a) or (b) shall be an Appealable Matter.

 

1.13                         “Applicable Law” means the applicable laws, rules and regulations, including any rules, regulations, guidelines, or other requirements of the Regulatory Authorities, that may be in effect from time to time in the Territory.

 

1.14                         “Approval” means: (a) in the United States, receipt from the FDA of any and all approvals, licenses, registrations or authorizations necessary to market a Product; and (b) in the

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

4

 

Royalty Territory, receipt from the applicable Regulatory Authority in a given country or countries (or, if applicable, the EU) of any and all approvals, licenses, registrations or authorizations necessary to market a Product in such country or countries, in each case ((a) and (b)), including receipt of pricing/reimbursement approval, where applicable.

 

1.15                         “Approved Plan” means, with respect to a Product, any one or more of the Global Development Plan and Budget, each Annual Development Plan and Budget, the Global Commercialization Plan and Budget, each Pre-Launch US Commercialization Plan and Budget, each Annual US Commercialization Plan and Budget, each Pre-Launch RT Commercialization Plan and Budget, each Annual RT Commercialization Plan and Budget, and each Manufacturing Plan and Budget, in each case as adopted or approved hereunder, as the case may be.

 

1.16                         “Arbitrable Matter” means (a) any Unresolved DO Matter concerning whether the exercise by BMS of its final decision-making authority pursuant to Section 2.7.3(e) or Section 16.1.5 complies with such sections or whether a matter is within such final decision making-authority, (b) any dispute as to whether Medarex provided a Good-Faith R&D Budget in bad faith pursuant to Section 3.8.5, (c) any dispute as to whether a Party is in material breach of any obligation as Lead Manufacturing Party under this Agreement as set forth in Section 14.2.4, and (d) any dispute as to whether a breach of a material obligation or a breach of this Agreement is a material breach thereof for purposes of Section 14.5 (but not for purposes of any other Sections of this Agreement).

 

1.17                         “BMS Collaboration Technology” means (a) any and all Information, Materials and inventions conceived, discovered, developed or otherwise made, solely by or on behalf of BMS or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than Medarex and its Affiliates) after the Execution Date and during the term of this Agreement, (i) in connection with activities conducted under an Approved Plan, (ii) in connection with the research and Development of Antibodies pursuant to Section 3.2.4(b) (except that in the case of any such Information, Materials or inventions Controlled by an Affiliate of BMS, which becomes such an Affiliate after the Execution Date, such Information shall be excluded to the extent it was Controlled by such Affiliate prior to becoming an Affiliate of BMS), or (iii) otherwise in furtherance of the Collaboration as reflected in the minutes of a meeting of the applicable Committee, in each case ((i), (ii) and (iii)), whether or not patented or patentable, but excluding any BMS Pre-Existing Technology, Mice-Related Technology, Mice Materials and Joint Collaboration Technology (collectively, “ BMS Collaboration Know-How ”) and (b) Patents and other intellectual property rights with respect to the Information, Materials and inventions described in clause (a) above (collectively, “ BMS Collaboration Patents ”); provided , however , upon termination of this Agreement pursuant to Section 14.2 with respect to a Product, BMS Collaboration Technology shall be limited to (x) BMS Collaboration Know-How and those BMS Collaboration Patents with respect to such Product that are in existence as of the date of termination and (y) those Patents that are filed thereafter to the extent that they claim BMS Collaboration Know-How included in clause (x) above.  For purposes of this definition, the determination of whether Information, Materials and inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

5

 

1.18                         “BMS Controlled Agents” means any Immunotherapeutic Agent (including any Commercialized Agent) Controlled by BMS or its Affiliates.

 

1.19                         “BMS Non-Collaboration Technology” means (a) any and all Information, Materials and inventions (i) conceived, discovered, developed or otherwise made, solely by or on behalf of BMS or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than Medarex and its Affiliates), or (ii) acquired or otherwise used (but only to the extent Controlled) by BMS or its Affiliates, in each case ((i) and (ii)), after the Execution Date and during the term of this Agreement, that are necessary or reasonably useful in the Development, Commercialization, manufacture or use of MDX-1379, an Antibody, Product or Non-Antibody Substance, whether or not patented or patentable, but excluding any Excluded Technology, Collaboration Technology, BMS Pre-Existing Technology, Mice-Related Technology and Mice Materials (collectively, “ BMS Non-Collaboration Know-How ”), and (b) Patents and other intellectual property rights with respect to the Information, Materials and inventions described in clause (a) above (collectively, “ BMS Non-Collaboration Patents ”); provided , however , upon termination of this Agreement pursuant to Section 14.2 with respect to a Product or MDX-1379, BMS Non-Collaboration Technology shall be limited to (x) BMS Non-Collaboration Know-How and BMS Non-Collaboration Patents with respect to such Product that are in existence as of the date of termination, and (y) those Patents that are filed thereafter to the extent that they claim BMS Non-Collaboration Know-How included in clause (x) above.  For purposes of this definition, the determination of whether Information, Materials and inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

1.20                         “BMS Patents” means the BMS Pre-Existing Patents and the BMS Non-Collaboration Patents.

 

1.21                         “BMS Pre-Existing Know-How” means Information that is (a) Controlled by BMS or its Affiliates as of the Execution Date and (b) necessary or reasonably useful in the Development, manufacture, Commercialization or use of (i) an Antibody, alone or for use together or in combination with an Agent, or (ii) MDX-1379.   Notwithstanding anything herein to the contrary, BMS Pre-Existing Know-How shall exclude Information and inventions to the extent covered or claimed by the BMS Pre-Existing Patents that are publicly disclosed.

 

1.22                         “BMS Pre-Existing Patents” means all Patents that (a) are Controlled by BMS or its Affiliates as of the Execution Date, and (b) are necessary or reasonably useful in the Development, manufacture, Commercialization or use of (i) an Antibody or a Non-Antibody Substance, alone or for use together or in combination with one or more Immunotherapeutic Agents, (ii) MDX-1379, or (iii) the Target, but excluding any Excluded Technology.  It is understood and agreed that “BMS Pre-Existing Patents” include those issued and published Patents listed on Schedule 1.22 and the pending Patent applications as Previously Disclosed.

 

1.23                         “BMS Pre-Existing Technology” means the BMS Pre-Existing Patents and BMS Pre-Existing Know-How.

 

6

 

1.24                         “BMS Technology” means the BMS Pre-Existing Technology and the BMS Non-Collaboration Technology.

 

1.25                         “Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are required by law to remain closed.

 

1.26                         “Call Center” means the customer support center established in the United States by the Parties under the direction of the JCC in cooperation with the RWG.

 

1.27                         “Cancer” means any type of cancer in any cell or organ in a human body, including any Core Cancer.

 

1.28                         “Cell Genesys Agreement” means that certain Collaboration Agreement between Medarex and Cell Genesys, Inc. (“ Cell Genesys ”), effective as of May 7, 2003.

 

1.29                         [*****] ^†

 

1.30                         “Change of Control Transaction” means, with respect to a Party:

 

1.30.1  the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a “ Specified Person ”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of fifty percent (50%) or more of either (a) the then outstanding shares of common stock of such Party (the “ Outstanding Common Stock ”) or (b) the combined voting power of the then outstanding voting securities of such Party entitled to vote generally in the election of directors of such Party (the “ Outstanding Voting Securities ”); provided , however , that for the purposes of this subsection 1.30.1, the following acquisitions of securities of such Party shall not constitute a Change of Control Transaction of such Party:  (a) any acquisition by such Party, (b) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by such Party or any corporation controlled by such Party or (c) any acquisition by any corporation pursuant to a transaction which complies with clauses (a) and (b) of subsection 1.30.2 of this definition;

 

1.30.2  the consummation of any acquisition, merger or consolidation involving any Third Party (a “ Business Combination Transaction ”), unless immediately following such Business Combination Transaction, (a) the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Business Combination Transaction beneficially own, directly or indirectly, fifty percent (50%) or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Business Combination Transaction (including a corporation which as a result of such transaction owns the then-outstanding securities of such Party or all or substantially all of such Party’s assets either directly or through one or more subsidiaries) in substantially the same

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

7

 

proportions as their ownership, immediately prior to such Business Combination Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be and (b) fifty percent (50%) or more of the members of the board of directors of the corporation resulting from such Business Combination Transaction were members of the Board of Directors of such Party at the time of the execution of the initial agreement, or of the action of the Board of Directors of such Party, providing for such Business Combination Transaction; or

 

1.30.3  a Party or any of its Affiliates sells or transfers to any Specified Person(s) (other than the other Party or its Affiliates) in one or more related transactions properties or assets representing all or substantially all of such Party’s business to which this Agreement relates at the time of such sale or transfer.

 

1.31                         “Clinical Costs” means, subject to the other provisions of this Agreement, the FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs recorded as an expense in accordance with GAAP by or on behalf of (a) Medarex or any of its Affiliates prior to the Execution Date to the extent specifically identifiable or reasonably allocable to the Melanoma Trial for the Lead Product and to the extent such expenses have been Previously Disclosed, and (b) a Party or any of its Affiliates after the Execution Date, during the term of and pursuant to this Agreement, that are specifically identifiable or reasonably allocable to Clinical Trials of a Product for an Indication, conducted in any country throughout the world, but excluding Regulatory Expenses.  Subject to the foregoing, Clinical Costs shall include such costs in connection with the following activities:  (i) the preparation for and conduct of clinical trials (except for related Manufacturing Costs otherwise included in Development Costs); (ii) data collection and analysis, and report writing; and (iii) clinical laboratory work.  For the avoidance of doubt, Clinical Costs shall not include costs incurred (whether or not accrued as of, on or after the Execution Date) in connection with (x) Phase IV Studies, or (y) Clinical Trials that are intended solely to support Approval in the Royalty Territory.

 

1.32                         “Clinical Trial” means a Phase I Clinical Trial, Phase I/II Clinical Trial, Phase II Clinical Trial, Phase III Clinical Trial or a Phase IIIB Clinical Trial and “Clinical Trials” means all of the foregoing clinical trials.

 

1.33                         “Collaboration Know-How” means the BMS Collaboration Know-How, Medarex Collaboration Know-How or Joint Collaboration Know-How, as applicable.

 

1.34                         “Collaboration Patents” means the BMS Collaboration Patents, Medarex Collaboration Patents or Joint Collaboration Patents, as applicable.

 

1.35                         “Collaboration Technology” means the BMS Collaboration Technology, Medarex Collaboration Technology, or Joint Collaboration Technology.

 

1.36                         “Commercial Distributor” means, with respect to a country, any Third Party that is used by pharmaceutical manufacturers generally in such country on a non-exclusive basis, and without any intellectual property right or license grant from the pharmaceutical manufacturers, to distribute (but not to market or promote) finished, packaged pharmaceutical products to pharmacies, managed care organizations, governmental agencies ( e.g ., federal, state and local), and other group purchasing organizations ( e.g. , pharmaceutical benefits managers

 

8

 

(“ PBMs ”)) and the like in such country.  For clarity, a Commercial Distributor of a Product or MDX-1379 in a country shall not include any person or entity that has been granted a right, whether by license or otherwise and whether express or implied (including by subcontract or agency), by a Party or its Affiliates to research, Develop or manufacture any such Product or MDX-1379 or that otherwise assumes any regulatory or other responsibilities with respect to obtaining or maintaining Approvals for such Product or MDX-1379 in such country.

 

1.37                         “Commercialize” means to promote, market, distribute, sell (and offer for sale or contract to sell) or provide product support for a Product or MDX-1379, including by way of example:

 

1.37.1  detailing and other promotional activities in support of a Product or MDX-1379;

 

1.37.2  advertising and public relations in support of a Product or MDX-1379, including market research, development and distribution of selling, advertising and promotional materials, field literature, direct-to-consumer advertising campaigns, media/journal advertising, and exhibiting at seminars and conventions;

 

1.37.3  developing reimbursement programs and information and data specifically intended for national accounts, managed care organizations, governmental agencies ( e.g ., federal, state and local), and other group purchasing organizations, including pull-through activities;

 

1.37.4  Co-Promotion activities not included in the above;

 

1.37.5  conducting Medical Education Activities and journal advertising; and

 

1.37.6  conducting Phase IV Studies.

 

“Commercializing” and “Commercialization” shall be interpreted accordingly.

 

1.38                         “Committee” means any of the Joint Executive Committee, Joint Development and Regulatory Committee, Joint Commercialization Committee, Joint Manufacturing Committee or Joint Finance Committee, as the case may be.

 

1.39                         “Compendia Listing” means a listing for a tumor type in the United States for a Product that is supported by a citation in at least one of the following authoritative drug reference books: (a) the American Society of Health-System Pharmacists’ American Hospital Formulary Service (AHFS), or (b) the U.S. Pharmacopoeia Drug Information, or in another similar authoritative drug reference book that is relied on by Third Party payors in authorizing reimbursement for such Product for such tumor type.

 

1.40                         “Competing Product” means, on a Region-by-Region basis, with respect to any country in a Region, any pharmaceutical product (other than a Product) that either (a) is the subject of pre-clinical development or is in clinical development, (b) has received marketing authorization from the Regulatory Authorities or, where applicable, is the subject of a

 

9

 

Compendia Listing or (c) is being commercialized; and, in each case ((a), (b) and (c)), that is comprised in whole or in part of any [*****], ^† whether or not such [*****] binds to another target in addition to the Target.  For clarity, the term “Competing Product” does not include an Agent unless the Parties otherwise mutually agree in writing.

 

1.41                         “Competing Product Net Sales” means the amount billed by a Party, an Affiliate or any sublicensee for sales of a Non-Antibody Competing Product to a Third Party, in each case calculated in accordance with the definition of Net Sales as if such Non-Antibody Competing Product were a Product for purposes of such definition.  For the avoidance of doubt, Competing Product Net Sales shall be subject to the same deductions ( e.g ., for discounts, etc.) and adjustments ( e.g ., in the case of a combination product) as would apply in the case of a Product.

 

1.42                         “Control” means, with respect to any Information, Material, invention, Patent or other intellectual property right, possession by a Party or its Affiliates of the right, whether directly or indirectly, to grant the right to access or use, or to grant a license or a sublicense under, such Information, Material, invention, Patent or other intellectual property right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.  No Party (or Affiliate of a Party) shall be deemed to Control any Information, Material, invention, Patent or other intellectual property right of the other Party by virtue of the grants set forth in Sections 10.1, 10.2 and 14.3.

 

1.43                         “Co-Promote” means to perform jointly those activities normally undertaken by a pharmaceutical company’s sales force to implement marketing plans and strategies aimed at encouraging the appropriate use of a product under such product’s Trademarks.

 

1.44                         “Co-Promotion Product” means each Product with respect to which Medarex has exercised a Co-Promotion Option pursuant to Section 5.3.1; provided that after the applicable Co-Promotion Termination Date, such Product shall cease to be a Co-Promotion Product and shall be deemed to be a Non-Co-Promoted Product unless and until both Parties agree to permit Medarex to again Co-Promote such product (whereupon it shall once again be considered a Co-Promotion Product, but only during the period in which Medarex continues to Co-Promote such Product).  If Medarex exercises its Co-Promotion Option with respect to the Lead Product, it shall also Co-Promote MDX-1379 and references herein to the Co-Promotion Product shall include MDX-1379.

 

1.45                         “Core Cancer” means any of the cancer types Previously Disclosed.

 

1.46                         “Corporate Names” means (a) in the case of Medarex, the Trademark Medarex and the Medarex corporate logo or such other names and logos as Medarex may designate in writing from time to time, and (b) in the case of BMS, the Trademark Bristol-Myers Squibb and the BMS corporate logo or such other names and logos as BMS may designate in writing from time to time, in each case ((a) and (b)) together with any variations and derivatives thereof.

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

10

 

1.47                         “Cross-License Agreement” shall mean that certain Cross-License Agreement entered into by and among Abgenix, Inc., Cell Genesys, Inc., Japan Tobacco Inc., Xenotech L.P., and GenPharm International, Inc., effective as of March 26, 1997, as the same may be amended from time to time in accordance with Section 6.7.3.

 

1.48                         “Derived” means directly (but not necessarily by means of a single step) obtained, created, synthesized, derived, generated or selected.  For the avoidance of doubt, a Product will be Derived from an Antibody if (a) the composition of such Antibody, or any fragment thereof, (b) the amino acid or nucleic acid sequence or sequence information of such Antibody, or any fragment thereof, or (c) the structure or structural information of such Antibody, or any fragment thereof, is used to obtain, create, synthesize, derive, generate or select such Product or any active ingredient contained therein.

 

1.49                         “Detail” means, with respect to a Product or MDX-1379 in the United States, a face-to-face contact (including a live video presentation or a group presentation if in accordance with an Approved Plan) between a Sales Representative and a physician or other medical professional licensed to prescribe drugs, during which a Primary Position Detail, Secondary Position Detail or Tertiary Position Detail is made to such person, in each case as measured by each Party’s internal recording of such activity in accordance with Section 5.5.5; provided that such meeting is consistent with and in accordance with the requirements of Applicable Law and of this Agreement.  When used as a verb, “ Detail ” shall mean to engage in a Detail.  For the avoidance of doubt, any contact or presentation between a Sales Representative and a managed care organization (as distinguished from calls on individual physicians or other medical professionals licensed to prescribe drugs who may be affiliated with a managed care organization, in connection with their professional prescribing decisions (but not with respect to the managed care organization’s formulary)) shall not be considered a Detail for purposes of this Agreement.

 

1.50                         “Development” means, with respect to a Product or MDX-1379 for an Indication, those activities, including research, Pre-Clinical Activities, Clinical Trials, supporting manufacturing activities and related regulatory activities, that are necessary or useful to obtain and maintain Initial Regulatory Approval or a Compendia Listing, as applicable, for such Product, whether alone or for use together, or in combination, with an Agent, or MDX-1379 for such Indication.  “ Develop ” and “ Developing ” shall be interpreted accordingly.

 

1.51                         “Development Costs” means, subject to the other terms of this Agreement, the FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs recorded as an expense in accordance with GAAP by or on behalf of (a) Medarex or any of its Affiliates prior to the Execution Date to the extent specifically identifiable or reasonably allocable to the Melanoma Trial for the Lead Product and to the extent such expenses have been Previously Disclosed, and (b) a Party or any of its Affiliates after the Execution Date, during the term of and pursuant to this Agreement, that are specifically identifiable or reasonably allocable to the Development activities for a Product for the purpose of obtaining Initial Regulatory Approval or a Compendia Listing, as applicable, for such Product for the applicable Indication, which Development activities are set forth in the applicable Global Development Plan and Budget and Annual Development Plan and Budgets.  Development Costs shall include amounts paid by a Party or any of its Affiliates to Third Parties involved in the Development of a Product but shall

 

11

 

exclude Third Party Payments, except for those Third Party Payments expressly included within Development Costs pursuant to Sections 6.7.2(d)(i), 6.7.3(b)(i) and 6.7.4(b)(i).  For clarity, Development Costs shall exclude Phase IV Costs.  Subject to the foregoing, Development Costs shall include such costs in connection with the following activities:

 

1.51.1  Pre-Clinical Activity costs such as toxicology and formulation development, test method development, stability testing, quality assurance, quality control development and statistical analysis;

 

1.51.2  Clinical Costs;

 

1.51.3  Regulatory Expenses relating to the conduct of Clinical Trials, wherever performed, of a Product for an Indication for the purpose of obtaining Initial Regulatory Approval, for such Product or such Indication, to the extent incurred prior to receipt of Initial Regulatory Approval for such Indication, including as provided in Section 3.11; provided that in no event shall any Regulatory Expenses incurred in connection with pricing or reimbursement approval or other Phase IV Studies with respect to any Product be included in Development Costs;

 

1.51.4  (a) Manufacturing Costs for (i) Product for use in Clinical Trials and any Pre-Clinical Activities in support thereof and (ii) the manufacture, purchase or packaging of comparators or placebo for use in Clinical Trials (with the manufacturing costs for comparators or placebo to be determined in the same manner as Manufacturing Costs are determined for any Product) and (b) direct costs and expenses of disposal of drugs and other supplies used in such Clinical Trials and Pre-Clinical Activities;

 

1.51.5  Losses incurred in connection with Third Party Claims described in Section 15.2.2 to the extent such Losses are to be included in Development Costs in Section 15.2.2; and

 

1.51.6  Manufacturing Costs for the development of the manufacturing process for a Product, scale-up, manufacturing process validation, manufacturing improvements and qualification and validation of Third Party contract manufacturers (“ Process Development Costs ”); provided , however , that with respect to Non-Co-Promoted Products, only as necessary, or reasonably allocable, to obtaining the first Initial Regulatory Approval for such Product in the United States;

 

provided , however , that except in the case of Development Costs incurred under Section 1.51.5 above, such costs shall be included in “Development Costs” for a Product only to the extent less than or equal to the amounts set forth in the applicable Global Development Plan and Budget and Annual Development Plan and Budget (subject to permitted Development Overruns pursuant to Section 3.7.1(f)).

 

1.52                         “Diligent Efforts” means, for a Party, the performance of obligations in a sustained manner consistent with the efforts such Party devotes to a product of similar market potential or profit potential resulting from its own research efforts, based on conditions then prevailing; provided , however , if, with respect to the Commercialization or manufacture of a

 

12

---

 

Product, a Party does not have any such product of similar market potential, such Party shall use commercially reasonable efforts in the performance of its obligations hereunder.  Diligent Efforts require, without limitation, that a Party: (a) promptly assign responsibility for such obligations to a specific employee(s) who is held accountable for progress, (b) monitor such progress on an on-going basis, (c) set and consistently seek to achieve specific, meaningful and measurable objectives for carrying out such obligations, and (d) consistently make and implement decisions and allocate resources designed to advance progress with respect to such objectives.

 

Notwithstanding the preceding paragraph, in no event, except where events of force majeure apply and subject to the amendment of such plans and budgets as provided for in this Agreement, shall “Diligent Efforts” mean (i) with respect to Medarex, that it shall be required to devote more efforts to Develop, Commercialize or manufacture a Product in a given Year, than what is required under the terms of the applicable then-current Global Development Plan and Budget, Annual Development Plan and Budget, Annual US Commercialization Plan and Budget for a Co-Promotion Product, Pre-Launch US Commercialization Plan and Budget for a Co-Promotion Product, and Manufacturing Plan and Budget for a Product for such Year; and (ii) with respect to each Party, subject to Sections 3.2.3(c), 3.8.3(a), 4.2, and 5.1, that it shall be required to devote less efforts to Develop, Commercialize or manufacture a Product in a given Year, than what is required by such Party under the terms of the applicable then-current Global Development Plan and Budget, Annual Development Plan and Budget, Annual Commercialization Plan and Budget, Pre-Launch Commercialization Plan and Budget, and Manufacturing Plan and Budget for such Year.

 

1.53                         “Disclosure Letter” means one or more mutually agreed written letters or memoranda that are delivered by each of Medarex and BMS to the other contemporaneously with the execution of this Agreement and are identified therein as a Disclosure Letter contemplated by this Agreement and any replacement thereof approved in writing by both Parties.

 

1.54                         “Distribution Costs” means, to the extent not included in a Party’s Manufacturing Costs, and subject to Sections 5.5.6(c) and 15.2.1, the FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs recorded as an expense by a Party or any of its Affiliates after the Execution Date, during the term of and pursuant to this Agreement (as agreed to by the Parties from time to time) that are specifically identifiable or reasonably allocable to the commercial distribution of a Co-Promotion Product to a Third Party in the United States during the applicable Co-Promotion Term, including:

 

1.54.1  handling and transportation to fulfill orders (excluding such costs, if any, treated as a deduction in the definition of Net Sales);

 

1.54.2  customer services, including order entry, billing and adjustments, inquiry and credit and collection; and

 

1.54.3  direct cost of storage and distribution of such Co-Promotion Product.

 

The JFC may, if appropriate, agree that Distribution Costs be determined on the basis of a specified annual charge or as a percentage of Net Sales.

 

13

 

1.55                         “Dollars” or “$” means the legal tender of the United States of America.

 

1.56                         “DP 5 Decision Point” means the later of (a) the date that BMS’ Brand Development Operating Committee, or any successor thereto, approves BMS’ internal recommendations to invest resources in Phase III Clinical Trials for an Indication for a Product and (b) the date that BMS notifies Medarex in writing of such approval.  Typically, the information considered by BMS’ Brand Development Operating Committee in connection with such DP 5 Decision Point shall include the following:  (i) clinical proof-of-principle achieved, (ii) safety, tolerability, pharmacokinetic and clinical data in patients that meets predetermined criteria, (iii) manufacturing assessment and initial manufacturing plan have been completed, (iv) end of Phase II meeting with FDA (if any) has been held and relevant advice incorporated into the clinical plan, and (v) market research, market dynamics analysis, pricing/reimbursement sensitivity analysis, and financial modeling completed and early commercial assessment have been completed.

 

1.57                         “Drug Approval Application” means a Biologics License Application or a New Drug Application (each, a “ BLA ”), as defined in the Act, and the regulations promulgated thereunder, or any corresponding foreign application in the Royalty Territory, including, with respect to the European Union, a Marketing Authorization Application (“ MAA ”) filed with the EMEA pursuant to the centralized Approval procedure or with the applicable Regulatory Authority of a country in the European Union with respect to the mutual recognition or any other national Approval procedure.

 

1.58                         “Earliest Permitted Launch Date” means, with respect to a Region, the first date on which (a) there is no longer any Valid Claim of any Gilead/UC Patent in any country in such Region, and (b) either (i) there is no longer any Valid Claim of a Medarex Pre-Existing Patent, BMS Pre-Existing Patent or Collaboration Patent claiming or covering the composition or utility of a Product in any country in such Region, or (ii) two (2) or more distinct Competing Products ( i.e. , distinct compositions of matter) (other than any Product Developed or Commercialized hereunder) have received marketing approval from applicable Regulatory Authorities and are lawfully being marketed and sold in any country in such Region without infringing either Party’s Patent or Data Exclusivity rights.

 

1.59                         “Effective Date” means the first date on which the condition precedent set forth in Section 10.11 has been satisfied.

 

1.60                         “EMEA” means the European Medicines Agency, and any successor agency thereto.

 

1.61                         “Europe” means the countries comprising the European Union as it may be constituted from time to time, together with those additional countries comprising the European Economic Area as it may be constituted from time to time (as of the Execution Date, Iceland, Liechtenstein and Norway), Switzerland, and those additional countries comprising “Europe” as a sales reporting region, as such term is customarily defined by BMS which, as of the Execution Date, is as Previously Disclosed.

 

14

 

1.62                         “European Union” or “EU” means the economic, scientific and political organization of member states, and which, as of the Execution Date, consist of Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United Kingdom, and that certain portion of Cyprus included in such organization.

 

1.63                         “Excipients” means any drug delivery vehicle, adjuvant, or excipient for use in the delivery or administration ( e.g. , to ameliorate local toxicity caused by IV administration) of a Product.

 

1.64                         “Excluded Activities” means, with respect to a Product, all Development activities with respect to any Partially Co-Funded Indication during the period in which any such Indication is a Partially-Co-Funded Indication.

 

1.65                         “Excluded Antibody” means any Antibody (other than the Lead Antibody) that has the same amino acid sequences for CDR 1, 2 and 3 of the heavy chain variable region as that of any other antibody or fragment thereof, whether human, humanized, chimeric, murine or from any other source, which other antibody or fragment is raised, engineered or otherwise optimized for its modulatory activity against a single target (other than the Target) by Medarex or any of its Affiliates or sublicensees.

 

1.66                         “Excluded Technology” means (a) claims under a Patent to the extent they claim or cover (i) any composition of matter of any substance other than an Antibody, MDX-1379 or the Target or (ii) any method of manufacture for any composition of matter of any substance other than an Antibody, Product or MDX-1379, and (b) any Information that is not disclosed in any such published or issued Patents, and is not otherwise in the public domain, that relates solely to the manufacturing of any substance other than an Antibody, Product or MDX-1379.

 

1.67                         “Exclusivity End Date” means, with respect to a Product, the date on which the royalty rate with respect to such Product, assuming for purposes of this definition that such Product is a Non-Co-Promoted Product, would first be reduced in the United States by operation of either Section 6.7.1 or Section 6.9.1.

 

1.68                         “Existing In-License Agreements” means those license agreements entered into by and between Medarex or its Affiliates, on the one hand, and certain Third Parties on the other hand, pursuant to which Medarex controls certain Medarex Technology prior to the Execution Date, as Previously Disclosed.

 

1.69                         “Existing Out-License Agreements” means those license agreements entered into by and between Medarex or its Affiliates, on the one hand, and certain Third Parties on the other hand, pursuant to which Medarex grants licenses or other rights to certain Medarex Technology prior to the Execution Date, as Previously Disclosed.

 

1.70                         “Existing Supply Agreements” means those agreements entered into by and between Medarex or its Affiliates, on the one hand, and certain Third Parties on the other hand, pursuant to which such Third Parties supply to Medarex the Lead Antibody or MDX-1379 or any component thereof prior to the Execution Date, as Previously Disclosed.

 

15

 

1.71                         “Existing Third Party Agreements” means the Existing In-License Agreements, the Existing Out-License Agreements, the Existing Supply Agreements and the Other Existing Agreements and Studies, as applicable.

 

1.72                         “Expert” means a mutually acceptable, disinterested, conflict-of-interest-free individual not affiliated with either Party who (a) with respect to disputes of a primarily scientific, technical or regulatory nature hereunder ( e.g. , disputes referred to such Expert in accordance with Section 3.2.3) shall be an individual with appropriate scientific, technical or regulatory expertise to resolve such disputes, or (b) with respect to disputes of a primarily business or financial nature ( e.g. , disputes referred to such Expert in accordance with Section 6.6.1(b)) shall be an individual who either (i) formerly held the position of a chief financial officer or a comparable business unit head of a publicly-held biotechnology or pharmaceutical company or (ii) otherwise possesses appropriate expertise to resolve such disputes.  The Expert shall not be or have been at any time an Affiliate, employee, consultant, officer or director of either Party or any of its respective Affiliates.

 

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

 

1.74                         “Field” means all human and animal uses, including any therapeutic, diagnostic, pharmacogenomic or prophylactic purpose.

 

1.75                         “FTE” means the equivalent of the work of one (1) employee full time for one (1) Year (consisting of at least a total of [*****] ^† hours per Year, or such other number as may be agreed by the JFC) of work directly related to the Development or Commercialization of a Product or any other activities contemplated under this Agreement.  No additional payment shall be made with respect to any person who works more than [*****] hours per Year (or such other number as may be agreed by the JFC) and any person who devotes less than [*****] hours per Year (or such other number as may be agreed by the JFC) shall be treated as an FTE on a pro-rata basis upon the actual number of hours worked divided by [*****] (or such other number as may be agreed by the JFC).

 

1.76                         “FTE Cost” means the FTE rate(s) for each category of employee who will be performing services under this Agreement, and, as of the Execution Date, are as Previously Disclosed.  Such rates shall be adjusted subsequently in accordance with Section 6.20 and may also be adjusted by mutual written agreement of the Parties; provided , however , that in the event of a Change in Control Transaction for a Party, the FTE rate for such Party shall be adjusted to reflect the acquiror’s FTE rate (as customarily used by such acquiror in determining the fully absorbed cost of a full-time employee in the applicable functional area on a worldwide basis or a Region-by-Region basis, as determined by the JFC).

 

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

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

16

 

1.78                         “Genentech Agreement” means the Non-Exclusive Cabilly Patent License Agreement between Medarex and Genentech, Inc., dated as of October 25, 2004.

 

1.79                         “Generic Product” means, with respect to a particular Product in a country, a pharmaceutical product that (a) contains the same active ingredient(s) (including the same Antibody) as such Product, and (b) is approved for use in such country (pursuant to 21 U.S.C. 355(b)(2), an ANDA, a separate New Drug Application (as defined in the Act) or BLA, Compendia Listing, other Drug Approval Application or otherwise), and whether for use as monotherapy or for use in combination with any Immunotherapeutic Agent or other vaccine, biologic or compound.  For purposes of this definition of “Generic Product,” an Antibody shall be the same as the Antibody contained in a Product only if both Antibodies have the same amino acid sequences for CDR 1, 2 and 3 of the heavy chain variable region.  For clarity, active ingredients shall not include Excipients.

 

1.80                         “Gilead/UC Agreements” means that certain (a) Collaboration and License Agreement between NeXstar Pharmaceuticals, Inc. (a predecessor in interest of Gilead Sciences, Inc.) and Medarex, effective as of March 29, 1999, as amended by a First Amendment thereto, effective as of July 13, 2004, and (b) that certain Exclusive License Agreement between The Regents of the University of California and NeXstar Pharmaceuticals, Inc. (a predecessor of Gilead Sciences, Inc.), effective as of April 1, 1999, as supplemented by that letter between The Regents of the University of California and Medarex, effective as of October 18, 2004.

 

1.81                         “Gilead/UC Patent” means any Patent in-licensed by Medarex pursuant to the Gilead/UC Agreement.

 

1.82                         “Good Manufacturing Practices” or “cGMP” means current good manufacturing practices for biological and other pharmaceutical products (and components thereof) as described in regulations promulgated by the FDA, or an equivalent Regulatory Authority, as applicable from time to time.

 

1.83                         “HSR Act” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time, and the rules, regulations, guidance and requirements promulgated thereunder as may be in effect from time to time.

 

1.84                         “IDM Agreement” means that certain Development Collaboration and Supply Agreement between Medarex and IDM S.A. (“IDM”), effective as of May 24, 2002.

 

1.85                         “Immunotherapeutic Agent” means any vaccine, biologic or compound (other than a Product or a Non-Antibody Substance) as to which a Party believes the prophylactic or therapeutic activity of such vaccine, biologic or compound might be enhanced by its use in combination with the Lead Antibody or an Additional Antibody.

 

1.86                         “IND” means an Investigational New Drug application filed with the FDA for authorization to commence human clinical trials, and its equivalent in other countries or regulatory jurisdictions.

 

1.87                         “Indication” means, in the case of any Product, any Lead Indication or Additional Indication with respect to such Product.

 

17

 

1.88                         “Information” means techniques and data relating to the research, Development, manufacture, Commercialization or use of a Product, including inventions, practices, methods, knowledge, know-how, test data, including pharmacological, toxicological, biological, chemical and physical and pre-clinical and clinical test data, analytical and quality control data, regulatory submissions, correspondence and communications, marketing, pricing, distribution, cost, sales, manufacturing, patent and legal data or descriptions.

 

1.89                         “Initial Approval” of a Product means (a) with respect to the United States, the Initial Regulatory Approval for such Product in the United States; and (b) with respect to a country in a regulatory jurisdiction in the Royalty Territory (i) the Initial Regulatory Approval for such Product in the applicable regulatory jurisdiction and (ii) the receipt of any pricing and reimbursement approvals in such country or jurisdiction that are required for the first commercial sale of such Product in such country or jurisdiction.

 

1.90                         “Initial Regulatory Approval” of a Product means (a) with respect to the United States, the approval by FDA (whether through means of a BLA, subpart E, or subpart H filing or otherwise); and (b) with respect to a country in a regulatory jurisdiction in the Royalty Territory, the approval by the applicable Regulatory Authorities of the Drug Approval Application with respect to such Product in the applicable regulatory jurisdiction (including, in the European Union, the approval by the EMEA of an MAA filed pursuant to the centralized Approval procedure, if applicable, or otherwise with respect to the mutual recognition Approval procedure on a country-by-country basis with the applicable Regulatory Authority of a country in Europe).  If “Initial Regulatory Approval” is used with respect to a particular Product (i) without reference to a particular Indication, then it shall mean the first Initial Regulatory Approval of a Product containing the particular Antibody, either as the sole active ingredient, or for use in combination with one or more Agents, irrespective of the Indication and (ii) with respect to a particular Indication, then it shall mean the first Initial Regulatory Approval of a Product containing the particular Antibody for such Indication, either as the sole active ingredient or for use in combination with one or more Agents.  Unless an Initial Regulatory Approval for a Product is expressly stated to be for an Indication, it shall be deemed to relate to the applicable Product generally, as reflected by the example set forth in clause (i) above, and not to a specific Indication.

 

1.91                         “Japan” means the country of Japan, including all of its territories and possessions.

 

1.92                         “Joint Collaboration Technology” means any and all (a) Information, Materials and inventions jointly conceived, discovered, developed or otherwise made by or on behalf of (i) Medarex or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than BMS and its Affiliates), on the one hand, and (ii) BMS or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than Medarex and its Affiliates), on the other hand, in connection with work conducted under or in connection with this Agreement, whether or not patented or patentable, but in each case excluding any Mice-Related Technology and Mice Materials (collectively, “ Joint Collaboration Know-How ”), and (b) any and all Patents and other intellectual property rights with respect to the Information, Materials and inventions described in clause (a) above (collectively, “ Joint Collaboration Patents ”).  For purposes of this paragraph, the determination

 

18

 

of whether Information, Materials and inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

1.93                         “Know-How” means, as applicable, in the case of Medarex, the Medarex Pre-Existing Know-How, the Medarex Non-Collaboration Know-How, the Medarex Collaboration Know-How or the Joint Collaboration Know-How, and in the case of BMS, the BMS Pre-Existing Know-How, the BMS Non-Collaboration Know-How, the BMS Collaboration Know-How or the Joint Collaboration Know-How.

 

1.94                         “Knowledge” means, with respect of a Party, the good faith understanding of the facts and information in the possession of an officer of such Party, or any in-house legal counsel of, or in-house Patent agents employed by, such Party or its Affiliates, without any duty to conduct any additional investigation with respect to such facts and information by reason of the execution of this Agreement.  For purposes of this definition, an “officer” shall mean any person in the position of vice president, senior vice president, president or chief executive officer of a Party.

 

1.95                         “Launch” means the first commercial sale of a Product for use or consumption by the general public in a country or regulatory jurisdiction after Approval for the marketing and sale of such Product has been obtained in such country or regulatory jurisdiction, as applicable.

 

1.96                         “Lead Agent(s)” means MDX-1379 and each other Immunotherapeutic Agent that is identified in the Global Development Plan and Budget, as Previously Disclosed, for the Lead Antibody as a candidate for Development or Commercialization hereunder for use together, or otherwise in combination, with such Lead Antibody.

 

1.97                         “Lead Antibody” means MDX-010, which has the amino acid sequences for CDR 1, 2 and 3 of the heavy chain variable region as Previously Disclosed.

 

1.98                         “Lead Development Party” means, with respect to the Development of a Product for a particular Indication for a country or with respect to a particular Clinical Trial, the Party responsible for taking the lead on Development (other than regulatory) activities either pursuant to Article 3 or as otherwise specified in the applicable Global Development Plan and Budget or Annual Development Plan and Budget.

 

1.99                         “Lead Indications” means those indications set forth in the Global Development Plan and Budget, as Previously Disclosed.

 

1.100                  “Lead Manufacturing Party” means the Party responsible for taking the lead on manufacturing activities, including arranging for Third Party or internal manufacture, as specified in or pursuant to Article 7.

 

1.101                  “Lead Marketing Party” means the Party responsible for taking the lead on certain Commercialization activities pursuant to Article 4 or Article 5, or as otherwise specified in the Global Commercialization Plan and Budget or an Annual US Commercialization Plan and Budget.

 

19

 

1.102                  “Lead Product” means any pharmaceutical product that contains or incorporates the Lead Antibody.  For clarity, “Lead Product” excludes any Agent, unless the Parties otherwise mutually agree in writing.

 

1.103                  “Lead Regulatory Party” means, with respect to the Development and Commercialization of a Product in a country, the Party responsible for taking the lead on regulatory activities either pursuant to Article 3 or as otherwise specified in the applicable Global Development Plan and Budget, Annual Development Plan and Budget, Global Commercialization Plan and Budget, Annual Commercialization Plan and Budget or Pre-Launch Commercialization Plan and Budget.

 

1.104                  “Litigable Matter” means any dispute between the Parties (or their representatives on any Committee) concerning (a) the validity, interpretation or construction of, compliance with, or breach of, this Agreement or (b) the validity, scope, enforceability, inventorship or ownership of intellectual property rights.

 

1.105                  “Major Activity” means any single activity ( e.g. , a Clinical Trial) specifically identified in a Global Development Plan and Budget as costing in excess of [*****] ^† over the course of performing the activity, even if such performance is expected to span several Years.

 

1.106                  “Major European Country” means each of France, Germany, Italy, Spain and the United Kingdom.

 

1.107                  “Major Market Country” means each of Canada, each Major European Country, Japan and the United States.

 

1.108                  “Manufacturing Costs” means, subject to Sections 7.3.2, 7.3.3, 7.3.4, 7.8 and 15.2.1, costs that relate to a Product that is either (a) supplied by a Third Party, or (b) manufactured directly by a Party or an Affiliate of a Party, determined as follows:

 

In the case of clause (a) above, Manufacturing Costs means (i) those amounts that are paid to a Third Party by a Party in connection with the manufacture of a Product, including process improvements, storage, manufacturing scale up, manufacturing site qualification, QA and QC (including testing), capital equipment, depreciation, customs duties or excise taxes, plus (ii) the relevant Party’s reasonable FTE Costs and direct out-of-pocket costs recorded as an expense by such Party in accordance with GAAP in connection with the manufacture, including Supply Chain Management and enforcement of agreements with Third Party manufacturers, of such Product, in each case ((i) and (ii)), which Third Party costs, FTE Costs and direct out-of-pocket costs shall be consistent with the applicable Manufacturing Plan and Budget.  To the extent any non-refundable or non-creditable value added or similar tax is due with respect to amounts paid to such Third Party for manufacture of any portion of a Product, such amounts shall be considered Manufacturing Costs under this clause (a).

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

20

 

In the case of clause (b) above, Manufacturing Costs shall mean, subject to Section 7.3.4, those direct costs (including raw materials, equipment and labor and costs of plant operations and plant support services (including utilities, maintenance, engineering, safety, human resources, finance, plant management and other similar activities)) and a reasonable fully-absorbed allocation of indirect and overhead expenses connected therewith (including, but subject to Section 7.8.2, indirect charges in the nature of depreciation and amortization of capitalized costs of manufacturing equipment and facilities, and a reasonable allocation of variable and fixed overhead, including reasonable capacity reservation charges to the extent allocable to forecasted production of materials for use or sale for Products) recorded as an expense by the manufacturing Party in connection with manufacturing process improvements, storage, manufacturing scale up, manufacturing site qualification, QA and QC (including testing), Supply Chain Management, capital equipment costs (where such cost are expensed by the manufacturing Party in accordance with its customary practices), customs duties or excise taxes, sales taxes paid on purchased Product and normal yield utilization and scrap factors.  All components of Manufacturing Costs shall be allocated on a basis consistent with GAAP and consistent with the cost accounting policy applied by the relevant Party to other products that it produces.  Costs that cannot be identified to a specific activity supporting product manufacturing, such as charges for corporate overhead that are not controllable by the manufacturing plant, shall not be included in the determination of Manufacturing Cost.  The inclusion of depreciation, amortization and capital equipment costs in Manufacturing Costs may be subject to adjustment as provided for in Section 7.8.2.  [*****] ^†

 

Costs under the previous two paragraphs shall include costs accrued in accordance with GAAP prior to, but unpaid as of, the Execution Date for services or supplies to be provided after the Execution Date, to the extent such accrued expenses have been Previously Disclosed.

 

Subject to the preceding three paragraphs, the Parties shall endeavor in good faith to establish a “standard cost” per unit for purposes of ongoing cost accounting purposes, which “standard cost” shall be reviewed and updated periodically as appropriate by the JFC.  The Parties shall reconcile the standard cost charges and appropriate credit or payment shall be made to effect such reconciliation as directed by the JFC not less than annually against the above Manufacturing Cost definition.

 

Third Party Payments shall not be taken into account for purpose of (a) or (b) above.

 

1.109                  “Materials” means compositions of matter, articles of manufacture, assays and pharmacological, toxicological, biological, chemical or physical materials relating to the Development, manufacture, Commercialization or use of a Product.

 

1.110                  “MDX-1379” means that certain gp100 peptide vaccine being Developed by Medarex as of the Execution Date for use together, or otherwise in combination, with MDX-010 for the treatment of metastatic melanoma.

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

21

 

1.111                  “Medarex Collaboration Technology” means (a) any and all Information, Materials and inventions conceived, discovered, developed or otherwise made, solely by or on behalf of Medarex or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than BMS and its Affiliates) after the Execution Date, during the term of this Agreement (i) in connection with activities conducted under an Approved Plan, (ii) in connection with the research and Development of Antibodies pursuant to Section 3.2.4(b) (except that in the case of any such Information, Materials or inventions Controlled by an Affiliate of Medarex, which becomes such an Affiliate after the Execution Date, such Information shall be excluded to the extent it was Controlled by such Affiliate prior to becoming an Affiliate of Medarex), or (iii) otherwise in furtherance of the Collaboration as reflected in the minutes of a meeting of the applicable Committee, in each case ((i), (ii) and (iii)) whether or not patented or patentable, but excluding any (v) Medarex Pre-Existing Technology, (w) Mice-Related Technology, (x) Mice Materials, (y) Joint Collaboration Technology and (z) any Information, Materials and inventions conceived, discovered, developed or otherwise made, by or on behalf of Medarex, its Affiliates or sublicensees in connection with the clinical trials identified in Section 3.2.4(a), unless and until such activities are set forth in a Global Development Plan and Budget and BMS reimburses Medarex for BMS’ share of such Development Costs as provided in Section 3.7 (collectively, “ Medarex Collaboration Know-How ”), and (b) Patents and other intellectual property rights with respect to the Information, Materials and inventions described in clause (a) above (collectively, “ Medarex Collaboration Patents ”); provided , however , upon termination of this Agreement pursuant to Section 14.2 with respect to a Product, Medarex Collaboration Technology shall be limited to (1) Medarex Collaboration Know-How and those Medarex Collaboration Patents with respect to such Product that are in existence as of the date of termination and (2) those Patents that are filed thereafter to the extent that they claim Medarex Collaboration Know-How included in clause (1) above.  For purposes of this definition, the determination of whether Information, Materials and inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

1.112                  “Medarex Controlled Agents” means any Immunotherapeutic Agent (including any Commercialized Agent) Controlled by Medarex or its Affiliates.

 

1.113                  “Medarex Non-Collaboration Technology” means (a) any and all Information, Materials and inventions (i) conceived, discovered, developed or otherwise made, solely by or on behalf of Medarex or its Affiliates or, to the extent permitted under the applicable sublicense agreement, its sublicensees (other than BMS and its Affiliates), or (ii) acquired or otherwise used (but only to the extent Controlled) by Medarex or its Affiliates, in each case ((i) and (ii)), after the Execution Date and during the term of this Agreement, that are necessary or reasonably useful in the Development, Commercialization, manufacture or use of MDX-1379, an Antibody, Product or Non-Antibody Substance, whether or not patented or patentable, but excluding any (u) Excluded Technology, (v) Medarex Pre-Existing Technology, (w) Mice-Related Technology, (x) Mice Materials, (y) Collaboration Technology and (z) any Information, Materials and inventions conceived, discovered, developed or otherwise made, by or on behalf of Medarex, its Affiliates or sublicensees in connection with the clinical trials identified in Section 3.2.4(a), unless and until such activities are set forth in a Global Development Plan and Budget and BMS reimburses Medarex for BMS’ share of such Development Costs as provided in Section 3.7

 

22

 

(collectively, “ Medarex Non-Collaboration Know-How ”), and (b) Patents and other intellectual property rights with respect to the Information, Materials and inventions described in clause (a) above (collectively, “ Medarex Non-Collaboration Patents ”); provided , however , upon termination of this Agreement pursuant to Section 14.2 with respect to a Product or MDX-1379, Medarex Non-Collaboration Technology shall be limited to (1) Medarex Non-Collaboration Know-How and Medarex Non-Collaboration Patents with respect to such Product or MDX-1379 that are in existence as of the date of termination, and (2) those Patents that are filed thereafter to the extent that they claim Medarex Non-Collaboration Know-How included in clause (1) above.  For purposes of this definition, the determination of whether Information, Materials and inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall be made in accordance with Applicable Law in the United States.

 

1.114                  “Medarex Patents” means the Medarex Pre-Existing Patents and the Medarex Non-Collaboration Patents.

 

1.115                  “Medarex Pre-Existing Know-How” means Information that is (a) Controlled by Medarex or its Affiliates as of the Execution Date and (b) necessary or reasonably useful in the Development, manufacture, Commercialization or use of (i) an Antibody, alone or for use together or in combination with an Agent, or (ii) MDX-1379.  Notwithstanding anything herein to the contrary, Medarex Pre-Existing Know-How shall exclude (1) Information and inventions to the extent covered or claimed by the Medarex Pre-Existing Patents that are publicly disclosed, (2) any Mice-Related Know-How and (3) any Information, Materials and inventions conceived, discovered, developed or otherwise made, by or on behalf of Medarex, its Affiliates or sublicensees in connection with the clinical trials identified in Section 3.2.4(a), unless and until such activities are set forth in a Global Development Plan and Budget and BMS reimburses Medarex for BMS’ share of such Development Costs as provided in Section 3.7.

 

1.116                  “Medarex Pre-Existing Patents” means all Patents that (a) are Controlled by Medarex or its Affiliates as of the Execution Date, and (b) are necessary or reasonably useful in the Development, manufacture, Commercialization or use of (i) an Antibody or a Non-Antibody Substance, alone or for use together or in combination with one or more Immunotherapeutic Agents, (ii) MDX-1379, or (iii) the Target; but excluding in each case ((a) and (b)), any and all (x) Mice-Related Patents other than those Selected Mice-Related Patents to the extent that such Selected Mice-Related Patents claim an Antibody generated using the HuMAb Mice (y) Excluded Technology and (z) any Patents to the extent they claim or cover inventions conceived, discovered, developed or otherwise made, by or on behalf of Medarex, its Affiliates or sublicensees in connection with the clinical trials identified in Section 3.2.4(a), unless and until such activities are set forth in a Global Development Plan and Budget and BMS reimburses Medarex for BMS’ share of such Development Costs as provided in Section 3.7.  It is understood and agreed that “Medarex Pre-Existing Patents” include those issued and published Patents listed on Schedule 1.116 and the pending Patent applications as Previously Disclosed.

 

1.117                  “Medarex Pre-Existing Technology” means the Medarex Pre-Existing Patents and the Medarex Pre-Existing Know-How.

 

23

 

1.118                  “Medarex Technology” means the Medarex Pre-Existing Technology and the Medarex Non-Collaboration Technology.

 

1.119                  “Medical Education Activities” means activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, a Product sold in the United States, including by way of example:

 

1.119.1  Medical Liaison activities (with “Medical Liaisons” meaning those health care professionals (i) who are employed or engaged by a Party with sufficient medical or other pertinent health care experience to engage in in-depth discussions with physicians regarding medical issues associated with a Product, and (ii) who are not Sales Representatives);

 

1.119.2  grants to support continuing medical education or research (excluding Development activities conducted for purposes of obtaining an Initial Regulatory Approval (or a Compendia Listing) for a Product for an Indication and Phase IV Studies) related to a Product;

 

1.119.3  development, publication and dissemination of publications relating to a Product; and

 

1.119.4  conducting advisory board meetings or other consultant programs, the purpose of which is to obtain advice and feedback related to the Development or Commercialization of a Product.

 

1.120                  “Medical Education Costs” means subject to Sections 5.5, 5.6 and 15.2.1, those FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs, including costs for independent contractors engaged as permitted under this Agreement, incurred by a Party or any of its Affiliates in accordance with GAAP after the Execution Date and during the term of and pursuant to this Agreement that are specifically identifiable or reasonably allocable to Medical Education Activities with respect to any Co-Promotion Product sold in the United States during the Co-Promotion Term for such Co-Promotion Product.

 

1.121                  “Melanoma Trial” means that certain Phase III Clinical Trial for the Lead Product for HLA2+ melanoma pursuant to Protocol No. MDX-010-20.

 

1.122                  “Mice” means any (a) immunizable transgenic mice containing unrearranged human immunoglobulin transgenes inserted into mouse chromosomes, but not containing any human chromosomes or fragments thereof, that are owned or controlled by Medarex or its Affiliates (the “ HuMAb Mice ”), (b) mice developed by Kirin using certain transchromosomal technology, which mice are licensed to Medarex pursuant to that certain Collaboration and License Agreement between Kirin Brewery Co., Ltd. (“ Kirin ”) and Medarex, effective as of September 4, 2002, as amended from time to time (the “ Kirin Agreement ”), (c) mice developed through the crossbreeding of the mice described in clause (a) of this definition with the mice described in clause (b) of this definition, which are jointly owned by Medarex and Kirin pursuant to, and are subject to, the Kirin Agreement, and (d) any other transgenic or transchromosomal animals owned or controlled by Medarex or its Affiliates.

 

1.123                  “Mice Materials” means the Mice, any parts or derivatives of the Mice, including antibodies, hybridomas, cells, genetic material (including nucleotide sequences ( e.g. ,

 

24

 

DNA, RNA and complementary and reverse complementary nucleotide sequences thereto, whether coding or non-coding) with respect to the expression of an antibody or fragment thereof, and any replicates or modifications thereof or improvements thereto ( e.g. , additions, deletions or substitutions of nucleotides therein)) or other biological materials derived directly or indirectly from the Mice, but excluding the Products.

 

1.124                  “Mice-Related Know-How” means (a) any Information and inventions with respect to any Mice Materials or other biological materials derived directly or indirectly from the Mice, but excluding any Products and any Information and inventions that relate solely to the use, making, having made, offering for sale, selling or importing of Products and (b) any Information and inventions with respect to the Mice and the use, making, having made, offering for sale, selling or importing thereof, but in each case ((a) and (b)) excluding any Information and inventions to the extent covered or claimed by the Mice-Related Patents that are publicly disclosed.

 

1.125                  “Mice-Related Patents” means any Patents (including the Selected Mice-Related Patents) that are Controlled by Medarex or its Affiliates that claim or cover (a) the Mice, (b) Mice Materials or other biological materials derived directly or indirectly from the Mice, (c) any Information and inventions with respect to the foregoing in clauses (a) or (b), or (d) the use, making, having made, offering for sale, selling or importing of the foregoing in clauses (a) or (b); but excluding in each of clauses (a)-(d), any claims to the extent they cover the manufacture, use, sale, offer for sale or importation of Products.

 

1.126                  “Mice-Related Technology” means the Mice-Related Patents and Mice-Related Know-How.

 

1.127                  “MRC Agreement” means that certain License Agreement by and among the Medical Research Council, Agricultural and Food Research Council Institute of Animal Physiology and Genetics Research of Babraham Hall, and Dr. Marianne Bruggemann, on the one hand, and GenPharm International, Inc., on the other hand, effective as of October 1, 1993, as amended as of August 12, 1994, and as of April 19, 2002.

 

1.128                  “Net Sales” means the amount billed or otherwise charged by a Party, an Affiliate or any sublicensee for sales or other dispositions of a Product or MDX-1379 to a Third Party less:

 

1.128.1  discounts (including cash discounts and quantity discounts), retroactive price reductions, charge-back payments and rebates allowed, paid, or granted to managed health care organizations or to federal, state and local governments, their agencies, and purchasers and reimbursers or to trade customers as accrued by such Party in accordance with its customary practices in accordance with GAAP; provided that where any such discounts, reductions, payments or rebates for a Product (or MDX-1379) are based on sales to the customer of a bundled set of products in which such Product (or MDX-1379) is included, the applicable discount, reduction, payment or rebate for such Product (or MDX-1379) in such bundled arrangement shall be based on the weighted average selling price for the Product (or MDX-1379) units sold separately to a similar size customer ordering a similar volume of Product (or MDX-1379) under similar but unbundled terms and conditions in such country in such Quarter (and if

 

25

 

no such reference is then available, then based on the average discount for the Product (or MDX-1379) when not included in a bundle in such country in such Quarter);

 

1.128.2  credits or allowances accrued for claims, damaged goods, rejections or returns of such Product (or MDX-1379), including Product (or MDX-1379) returns in connection with recalls or withdrawals;

 

1.128.3  freight out, postage, shipping and insurance charges for delivery of Product (or MDX-1379), to the extent that such items are included in the gross amount billed;

 

1.128.4  taxes or duties levied on, absorbed or otherwise imposed on sale of such Product (or MDX-1379), including value-added taxes, or other governmental charges otherwise imposed upon the billed amount, as adjusted for rebates and refunds, to the extent not paid by the Third Party or otherwise reimbursed; and

 

1.128.5  amounts accrued on account of repayment, crediting, writing off by reason of uncollectible debt and, with respect to Italy, Egypt and such other non-Major Market Countries as such Party shall have notified to the other from time to time, amounts written off on account of factoring of receivables, on the sales of Product or MDX-1379 to the extent consistent with the relevant Party’s business practices for the majority of its pharmaceutical products and as determined on a country-by-country basis.

 

It is understood that any accruals are periodically trued up by BMS consistent with its customary practices and in accordance with GAAP.

 

If a Party should, in a given country during a given accounting period, sell a Product (or MDX-1379) that contains one or more active ingredients in addition to the Antibody (which may be either combined in a single formulation or bundled with separate formulations but sold as one product), Net Sales for such combination product will be calculated by multiplying actual Net Sales of such combination product by the fraction A/(A+B) where A is the average selling price of the product containing the Antibody if sold separately (for the same dosage strength) in such period, and B is the total invoice price of such other active ingredient or ingredients in the product, if sold separately (for the same dosage strength) in such period. If, on a country-by-country basis, such other active ingredient or ingredients in the product are not sold separately in said country, Net Sales for the purpose of determining royalties of the Product shall be determined by the JEC in good faith and in a manner consistent with the intent of the Agreement, provided that any disputes with respect thereto shall be ultimately resolved, at the election of either Party following compliance with Sections 2.7.3(c) and 16.1.1, by an Expert as set forth in Section 16.2.

 

Notwithstanding the immediately preceding paragraph, it is agreed that Excipients shall not be deemed to be “active ingredients”, the presence of which in a Product (or MDX-1379) would be deemed to create a combination product subject to the terms of the preceding paragraph.

 

Net Sales shall be determined by a Party in a manner consistent with GAAP.  For clarity, (i) Net Sales shall not include any amounts or other consideration received by a Party or its Affiliates from permitted sublicensees, whether or not in consideration of the grant of a

 

26

 

sublicense to such sublicensee and (ii) sales to a Third Party distributor, wholesaler, group purchasing organization, PBM, or retail chain customer who is not a licensee or sublicensee of the rights licensed to one Party by the other Party under this Agreement are considered sales to a Third Party; provided that Net Sales by a Party to a Third Party consignee are not recognized as Net Sales by such Party until the Third Party consignee sells the Product (or MDX-1379); [*****] ^† and if the JFC does not agree as to whether or not some portion of such additional amount should be included in Net Sales, such dispute shall be escalated to the JEC for resolution and, if not resolved by the JEC, shall be decided by an Expert pursuant to Section 16.2 following compliance with Sections 2.7.3(c) and 16.1.1.  For clarity, the Parties acknowledge and agree that Oncology Therapeutic Network, Inc. (“ OTN ”) is, as of the Execution Date, an Affiliate of BMS, and as such shall not be considered a Third Party distributor, unless and until it is no longer an Affiliate of BMS.

 

1.129                  “Non-Antibody Competing Product” means any Competing Product comprised in whole or in part of a Non-Antibody Substance, but not an Antibody.

 

1.130                  “Non-Antibody Substance” means any compound, biologic or other composition of matter (including any protein, peptide, oligonucleotide or low molecular weight molecule), other than an Antibody, that (a) has been developed or otherwise optimized to bind specifically and directly to the Target (whether exclusively or in addition to any other target such compound or biologic or other composition of matter may modulate), and (b) once bound to the Target, has antagonistic activity against or otherwise blocks the immunosuppressive signaling of the Target (in addition to any other target such compound or biologic or other composition of matter may modulate).  For the avoidance of doubt, those fusion proteins known as [*****] and [*****] shall not be considered Non-Antibody Substances for purposes of this Agreement.

 

1.131                  “Non-Collaboration Know-How” means the Medarex Non-Collaboration Know-How or the BMS Non-Collaboration Know-How, as applicable.

 

1.132                  “Non-Collaboration Patents” means the Medarex Non-Collaboration Patents or the BMS Non-Collaboration Patents, as applicable.

 

1.133                  “Non-Collaboration Technology” means the Medarex Non-Collaboration Technology or the BMS Non-Collaboration Technology, as applicable.

 

1.134                  “Non-Co-Promoted Product” means any Product that is (a) not a Co-Promotion Product (including any such product that has ceased to be a Co-Promotion Product pursuant to Article 5) and (b) for which Medarex no longer has a Co-Promote Option pursuant to Section 5.3.1.  For clarity, if Medarex does not exercise its Co-Promotion Option with respect to the Lead Product, or no longer has a Co-Promote Option with respect to the Lead Product pursuant to Article 5, references herein to the Non-Co-Promoted Product shall include MDX-1379.

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

27

 

1.135                  “Opt-Out Trigger Date” means, with respect to the Development of an Additional Indication for a Product, the later of (a) the date that the JDC and, if applicable, the JEC or the Expert, approves the protocol, Decision Points and Success Criteria for the first pivotal Phase III Clinical Trial for such Product for such Indication that is intended to support Initial Regulatory Approval of the Product in the United States, wherever conducted, for use for such Indication (a “ Pivotal Trial ”), and (b) the date that is [*****] ^† prior to the anticipated date of the DP 5 Decision Point; provided , however , that, if, after the later of the date described in clause (a) or (b) above (as applicable), but prior to the commencement of such Pivotal Trial, BMS materially reduces the size or scope of such Pivotal Trial or otherwise materially reduces the costs associated with such trial, including by pursuing a Compendia Listing in lieu of an Approval, BMS shall provide Medarex with written notice thereof and the Opt-Out Trigger Date shall be the later of the date that the JDC and, if applicable, the JEC or the Expert, approves the protocol, Decision Points and Success Criteria for such revised Pivotal Trial and the date of the DP 5 Decision Point with respect to such revised Development program; and provided further that in the event that BMS does not commence such Pivotal Trial, then the Opt-Out Trigger Point shall be reset, in accordance with the foregoing procedures, with respect to the next Pivotal Trial, if any, for such Product with respect to such Indication.

 

1.136                  “Other Existing Agreements and Studies” means all material transfer agreements and clinical trial agreements relating to the Product and MDX-1379 that exist as of October 1, 2004 as have been Previously Disclosed and such other material transfer agreements, clinical trial agreements and other study arrangements with academic, non-profit or governmental entities, that are entered into by Medarex in the ordinary course of its business prior to the Effective Date.

 

1.137                  “Overrun” means Development Overrun or Commercialization Overrun, as applicable.

 

1.138                  “Partially Co-Funded Indication” means, with respect to a Product, those Additional Indications for which Medarex exercised its right to Opt-Out pursuant to Section 3.8.2 from and after the Opt-Out Exercise Date for any such Additional Indication until such date, if any, that such Indication ceases to be a Partially Co-Funded Indication pursuant to Section 3.8.5; provided , however , that if prior to the commencement of such Pivotal Trial, BMS materially reduces the size or scope of the first Pivotal Trial for such Indication or otherwise materially reduces the costs associated with such trial, including by pursuing a Compendia Listing in lieu of an Approval, such Indication shall cease to be a Partially Co-Funded Indication pursuant to Section 3.8.4 unless and until Medarex again exercises its rights to Opt-Out pursuant to Section 3.8.2.

 

1.139                  “Patents” means (a) all national, regional and international patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part (other

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

28

 

than with respect to new subject matter that would not otherwise be covered in this Agreement), provisionals, converted provisionals, and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention, (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)), (e) any similar rights, including so-called pipeline protection, or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any such foregoing patent applications and patents, and (f) any data or market exclusivity periods, including any such periods listed in the FDA’s Orange Book or periods under national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83, and all international equivalents (“ Data Exclusivity ”).

 

1.140                  “Patent Costs” means, subject to Sections 11.2.4, 11.3.4, 11.4.5 and 15.2.1, the FTE Costs of in-house legal counsel and related personnel (charged in accordance with Section 3.7.2) and direct out-of-pocket costs (including the reasonable fees and expenses paid to outside counsel and other Third Parties, and filing and maintenance fees paid to governmental authorities) recorded as an expense by a Party or any of its Affiliates in accordance with GAAP after the Execution Date, during the term of and pursuant to this Agreement, (a) in connection with the prosecution and maintenance of rights, including costs of patent interference, opposition, reissue, or re-examination proceedings and filing and registration fees with respect to the Joint Collaboration Patents, in each case to the extent that they claim the composition of matter, article of manufacture, method of use or method of manufacture of a Co-Promotion Product in the United States and (b) the costs of litigation (enforcement or defense) or other proceedings, under the BMS Pre-Existing Patents, Medarex Pre-Existing Patents, Non-Collaboration Patents or Collaboration Patents, in each case only to the extent related to a Co-Promotion Product in the United States and not reimbursed by a Third Party.

 

1.141                  “PDE” or “Primary Detail Equivalent” means a primary Detail equivalent where (a) a Primary Position Detail has a value of 1.0 PDE, (b) a Secondary Position Detail has the value of 0.5 PDE, and (c) a Tertiary Position Detail has the value of 0.1 PDE.  The procedures for determining PDEs in a group presentation are as Previously Disclosed.

 

1.142                  “PDE Rate” means the fully-burdened cost of providing an oncology PDE in the United States, which shall be the same rate for both Parties, and shall be the [*****] ^† of such fully-burdened costs of both Parties, and, as of the Execution Date, is as Previously Disclosed.  The PDE Rate may be adjusted from time to time by the JFC as provided in Section 5.5.6(a).

 

1.143                  “Pfizer Agreements” means the License Agreement by and between Medarex and Pfizer, Inc., dated as of September 15, 2004, and the Cross-License Agreement by and between Medarex and Pfizer, Inc., dated as of September 15, 2004.

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

29

 

1.144                  “Phase I Clinical Trial” means a human clinical trial of a Product, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients or a similar clinical study prescribed by the Regulatory Authorities in a foreign country.

 

1.145                  “Phase II Clinical Trial” means a human clinical trial of a Product, the principal purpose of which is a determination of safety and efficacy in the target patient population or a similar clinical study prescribed by the Regulatory Authorities in a foreign country.  For clarity, a Phase II Clinical Trial shall not include a Phase I/II Clinical Trial.

 

1.146                  “Phase I/II Clinical Trial” means a human clinical trial of a Product on a limited number of subjects that is intended to establish that a pharmaceutical product is safe and to demonstrate initial indications of efficacy for its intended use.

 

1.147                  “Phase III Clinical Trial” means a human clinical trial of a Product on a sufficient number of subjects that is designed to establish that a pharmaceutical product is safe and efficacious for its intended use, and to determine warnings, precautions, and adverse reactions that are associated with such pharmaceutical product in the dosage range to be prescribed, which trial is intended to support Approval of a Product for use in a particular Indication or in combination with an Agent.  A Phase III Clinical Trial shall be deemed to have commenced when the first patient in such study has been dosed.  For clarity, the term “Phase III Clinical Trials” include early access and compassionate use programs.

 

1.148                  “Phase IIIB Clinical Trial” means (a) a product support human clinical trial of a Product ( i.e. , a clinical trial that is not required for receipt of Initial Regulatory Approval for an Indication for a country but which may be useful in providing additional drug profile data in support of such Initial Regulatory Approval for such Indication) set forth in the Global Development Plan and Budget that is commenced before receipt of Initial Regulatory Approval for the Indication in the country for which such trial is conducted or (b) a Clinical Trial that is required or advised by a Regulatory Authority as a condition of or in connection with obtaining or maintaining an Initial Regulatory Approval for an Indication (whether commenced prior to or after receipt of such Initial Regulatory Approval).

 

1.149                  “Phase IV Costs” means the FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs recorded as an expense in accordance with GAAP by or on behalf of a Party or any of its Affiliates after the Execution Date, during the term of and pursuant to this Agreement, that are specifically identifiable or reasonably allocable to Phase IV Studies, wherever conducted, of a Product in support of Commercialization of such Product in the United States.  Subject to the foregoing, Phase IV Costs shall include (a) costs in connection with the preparation for, or conduct of, Phase IV Studies, data collection and analysis and report writing, and clinical laboratory work, (b) Regulatory Expenses, (c) Manufacturing Costs and (d) Losses incurred in connection with Third Party Claims described in Section 15.2.2 to the extent such Losses are to be included in Phase IV Costs in Section 15.2.2.

 

1.150                  “Phase IV Study” means a human clinical trial, or other test or study, of a Product commenced after receipt of Initial Regulatory Approval for an Indication in the country for which such trial is being conducted and that is (a) conducted within the parameters of the labeling approved for the Product, other than Phase IIIB Clinical Trials or (b) conducted outside

 

30

 

the scope of the labeling approved for the Product, other than Clinical Trials that are set forth in, or otherwise within the scope of, a Global Development Plan and Budget.  Phase IV Studies may include clinical trials, or other tests and studies, conducted in support of pricing/reimbursement for an Initial Approval, epidemiological studies, modeling and pharmacoeconomic studies, post-marketing surveillance studies, investigator sponsored clinical trials of a Product that are not set forth in a Global Development Plan and Budget, and health economics studies.

 

1.151                  “PHS License Agreement” means the non-exclusive license granted by the United States Public Health Service to Medarex with respect to MDX-1379, dated May 6, 2003.

 

1.152                  “Pre-Clinical Activities” means, with respect to a Product or MDX-1379, those pre-clinical and other research and development activities that are non-clinical.

 

1.153                  “Pre-Existing Patents” means the Medarex Pre-Existing Patents or the BMS Pre-Existing Patents, as applicable.

 

1.154                  “Previously Disclosed” means information set forth in the Disclosure Letter and specifically designated as information “Previously Disclosed” pursuant to this Agreement.  For the avoidance of doubt, references to any Approved Plan or document as Previously Disclosed shall mean such Approved Plan or document as it exists as of the Execution Date.

 

1.155                  “Primary Position Detail” means a Detail in which no more than [*****] ^† products are presented, in which key Product attributes are verbally presented consistent with the terms of this Agreement and with Applicable Law, and where such Product receives [*****] percent ([*****]%) or more of the total call time and is given primary emphasis ( i.e. , an emphasis that is more important than the emphasis given to any other product presented).

 

1.156                  “Product” means the Lead Product or each Additional Product, as applicable.

 

1.157                  “Product Trademarks” means the Trademarks primarily related to the Commercialization of the Product, but not including any Corporate Names.

 

1.158                  “Profit or Loss” means, subject to Section 2.10.2, Net Sales of a Co-Promotion Product in the United States, less Allowable Expenses in the United States.  For sake of clarity, Profit and Loss shall be determined prior to application of any income taxes, and if such terms are used individually, “Profit” shall mean a positive Profit or Loss, and “Loss” shall mean a negative Profit or Loss.

 

1.159                  “QA” means quality assurance activities conducted in accordance with Good Manufacturing Practices.

 

1.160                  “QC” means quality control activities conducted in accordance with Good Manufacturing Practices.

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

31

 

1.161                  “Quarter” means each of the three (3) month periods ending on March 31, June 30, September 30 and December 31, provided that the first Quarter during the term of this Agreement shall commence on the Effective Date and end on December 31, 2004.

 

1.162                  “Region” means each of (a) Canada, (b) Europe, (c) Japan, (d) the United States, and (e) the Royalty Territory (other than Canada, Europe and Japan), as applicable.

 

1.163                  “Regulatory Authority” means any supra-national, federal, national, regional, state, provincial or local regulatory agency, department, bureau, commission, council or other government entity, including FDA and EMEA, regulating or otherwise exercising authority with respect to the Development, manufacture or Commercialization (including the determination of pricing/reimbursement) of a Product in any country in the Territory.

 

1.164                  “Regulatory Expenses” means, subject to Sections 3.4.8, 3.7.4, 15.1 and 15.2.1, those FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs (including filing, user, maintenance and other fees paid to Regulatory Authorities) recorded as an expense in accordance with GAAP by or on behalf of (a) Medarex or any of its Affiliates prior to the Execution Date to the extent reasonably allocable to the preparation of regulatory submissions for, and the obtaining and maintenance of Approval of, the Melanoma Trial for the Lead Product and to the extent such expenses, if any, have been Previously Disclosed and (b) a Party or any of its Affiliates after the Execution Date, during the term of and pursuant to this Agreement, that are specifically identifiable or reasonably allocable to the preparation of regulatory submissions for, and the obtaining and maintenance of Approval of, any Product in the United States, including compliance with Approvals and requirements of such Regulatory Authorities, adverse event recordation and reporting, regulatory affairs activities, and recalls and withdrawals of any Product, in each case in the United States.

 

1.165                  “Restricted Collaboration Patent” means any Collaboration Patent that claims or covers an invention conceived or made in connection with the Development of a Product for a particular Indication, for use alone or together or in combination with a particular Agent.

 

1.166                  “Restricted Collaboration Patent Period” means, with respect to any Restricted Collaboration Patent, the period (a) commencing on the earliest date on which any invention claimed or covered in such Patent is conceived or made in connection with the Development of a Product for a particular Indication, for use alone or together or in combination with a particular Agent, and (b) ending on the [*****] ^† of the Launch of the first Product for such Indication, for use alone or together or in combination with such Agent.

 

1.167                  “Royalty Territory” means the world, excluding the United States.

 

1.168                  “Sales and Marketing Costs” means, subject to Sections 5.5.6(b), 5.5.6(d), 5.6, 5.10.2 and 15.2.2, those FTE Costs (charged in accordance with Section 3.7.2) and direct out-of-pocket costs, including costs for independent contractors engaged as permitted under this

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

32

 

Agreement, recorded as an expense by a Party or any of its Affiliates in accordance with GAAP, after the Execution Date and during the term of and pursuant to this Agreement that are specifically identifiable or reasonably allocable to the sales and marketing of a Co-Promotion Product in the United States during the Co-Promotion Term for such Co-Promotion Product.  Sales and Marketing Costs shall include amounts paid by a Party to Third Parties that are specifically identifiable to the Commercialization of a Co-Promotion Product by such Third Party in the United States during the applicable Co-Promotion Term as permitted by this Agreement, but excluding any Third Party Payments.  Subject to the foregoing, Sales and Marketing Costs include costs incurred in connection with the following activities (but in each case only to the extent specifically identifiable or reasonably allocable to the sales and marketing of a Co-Promotion Product in the United States during the Co-Promotion Term for such Co-Promotion Product):

 

1.168.1  activities directed to the advertising and marketing of a Co-Promotion Product, including the use of a Party’s global marketing personnel or marketing personnel specifically allocated to the United States;

 

1.168.2  Launch meetings;

 

1.168.3  advertising and public relations agencies, including development and distribution of selling and advertising and promotional materials relating to the use of a Co-Promotion Product, field literature, direct-to-consumer advertising campaigns, media/journal advertising, distribution of such advertising and promotional materials by a Party to its sales force personnel, exhibiting at seminars and conventions, convention costs, and promotional premiums;

 

1.168.4  peer-to-peer activities such as lunch and dinner meetings;

 

1.168.5  speakers programs, including training of such speakers;

 

1.168.6  developing, obtaining, and providing training packages for a Co-Promotion Product, promotional literature, promotional materials, and other selling materials, including shipment costs of the same to a Party’s central distribution facility and from a Party’s central distribution facility to its sales force personnel;

 

1.168.7  providing the training contemplated by Section 5.6.2, including transporting, housing and maintaining Sales Representatives for training and the costs of all training materials used for such purpose;

 

1.168.8  developing and performing market research;

 

1.168.9  developing reimbursement programs;

 

1.168.10  developing information and data specifically intended for national accounts, managed care organizations, governmental agencies ( e.g ., federal, state and local), and other group purchasing organizations, including pull-through activities;

 

33

 

1.168.11  Losses incurred in connection with Third Party Claims described in Section 15.2.2, to the extent such Loss is to be included in Sales and Marketing Costs pursuant to Section 15.2.2;

 

1.168.12  selling by Third Party independent contractors engaged by a Party as permitted by this Agreement;

 

1.168.13  operation and maintenance of the Sales Representatives that promote a Co-Promotion Product in the United States, sales bulletins and other communications, sales meetings, specialty sales forces, call reporting and other monitoring/tracking costs, district and regional sales management, home office personnel who support the sales force, development and copying of training, motivational and communications materials relating to the Co-Promotion Product, and other services ancillary to the foregoing (to the extent not otherwise falling within subsections 1.168.1 through 1.168.12;

 

1.168.14  Call Center set-up, maintenance and operation for personnel used in connection therewith; and

 

1.168.15  establishing and conducting one or more training facilities for potential users of the Co-Promotion Product, including trainer costs, facility costs, supplies and user costs.

 

Sales and Marketing Costs shall include costs of such activities that are incurred at any time after the Execution Date and during the term of this Agreement (including prior to Initial Approval of a Co-Promotion Product in the United States); provided, however , that except in the case of Sales and Marketing Costs incurred under subsection 1.168.11 above, such costs shall be included in “Sales and Marketing Costs” for a Product only to the extent consistent with the applicable Pre-Launch US Commercialization Plan and Budget and each applicable Annual US Commercialization Plan and Budget.

 

1.169                  “Sales Representative” of a Party means (a) an employee of such Party or an Affiliate of such Party or (b) an independent contractor engaged by such Party or Affiliate (to the extent permitted in this Agreement) or by an Affiliate of either Party, to Co-Promote a Product on behalf of such Party, in either case (i) who is responsible for meeting in person with customers and others who can buy or prescribe (or influence the buying or prescribing process and decisions regarding buying or prescribing) the applicable Co-Promotion Product in the United States, and (ii) whose success at such activities is a significant factor in the ongoing employment or engagement, and compensation, of the individual, excluding in each case (x) those employees or independent contractors of either Party or such an Affiliate that are solely engaged in telemarketing, professional education or other indirect activities in support of direct selling and (y) Medical Liaisons.

 

1.170                  “Secondary Milestone Indication” means an Indication for any human disease or condition other than Cancer or [*****]. ^†

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

34

 

1.171                  “Secondary Position Detail” means a Detail in which no more than [*****] ^† products are presented, in which key Product attributes are verbally presented consistent with the terms of this Agreement and with Applicable Law, and where such Product is given significant emphasis ( i.e. , an emphasis that is more important than the emphasis given to any other product presented (other than the product that is presented as the Primary Position Detail)).

 

1.172                  “Selected Mice-Related Patents” means those issued and published Patents set forth on Schedule 1.172 and the pending Patent applications as Previously Disclosed.

 

1.173                  “Semi-Annual Period” means any period consisting of two (2) consecutive Quarters; provided that each Semi-Annual Period shall begin on the day following the last day of a previous Semi-Annual Period.

 

1.174                  “Specifications” means the specifications for the manufacture, labeling, packaging, holding and release of a Product, as set forth in an applicable regulatory filing ( e.g. , a drug master file (as defined in the Code of Federal Regulations) or a Drug Approval Application) or Approval from time to time, and as may be amended in accordance with Section 7.5.1.

 

1.175                  “Supply Chain Management” means the planning, management and execution of internal activities and Third Party suppliers that (a) provide raw materials used in the manufacture of a Product; (b) manufacture, fill and finish, package and label any Product or any component thereof; or (c) test, assist in the release of, or hold any Product or any component thereof.  Supply Chain Management also includes management of forecasting activities.

 

1.176                  “Technology” means the Medarex Pre-Existing Technology, the BMS Pre-Existing Technology, the Medarex Non-Collaboration Technology, the BMS Non-Collaboration Technology, the Medarex Collaboration Technology, the BMS Collaboration Technology and the Joint Collaboration Technology, as applicable.

 

1.177                  “Territory” means the world.

 

1.178                  “Tertiary Position Detail” means a Detail in which no more than [*****] products are presented, in which key Product attributes are verbally presented consistent with the terms of this Agreement and with Applicable Law, and where such Product is given emphasis but not an emphasis as significant as that given to a product presented as a Primary Position Detail or Secondary Position Detail.

 

1.179                  “Third Party” means any entity other than Medarex or BMS or their respective Affiliates.

 

1.180                  “Third Party Milestone Payments” means up-front fees (including any fees paid in installments) and milestones (including any royalties or other payments that are not tied to sales of a Product) payable to a Third Party in consideration for rights necessary or useful for the Development, manufacture, Commercialization or use of a Product, including amounts paid

 

^†                                          [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

35

 

by Medarex (as Previously Disclosed) prior to the Execution Date under the Genentech Agreement and the PHS License Agreement, but excluding amounts paid in the form of (a) Third Party Royalties; (b) amounts paid, at or below fair market value, for services provided by a Third Party (or its Affiliate); (c) amounts paid, at or below fair market value, for equity in a Third Party (or its Affiliate); or (d) equity issued to a Third Party in exchange for monetary consideration at or above fair market value.

 

1.181                  “Third Party Payments” means Third Party Milestone Payments and Third Party Royalties.  For sake of clarity, Third Party Payments exclude any payments due to such Third Party by Medarex based on payments or equity investments made by BMS to Medarex pursuant to Article 6 of this Agreement.

 

1.182                  “Third Party Royalties” means royalties (but excluding any royalties or other payments that are not tied to sales of a Product) payable to a Third Party in consideration for rights necessary or useful for the Development, manufacture, Commercialization or use of a Product.

 

1.183                  “Trademark” shall include any word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, service mark, service name, brand mark, trade name, brand name, logo or business symbol.

 

1.184                  “Trademark Costs” means, subject to Sections 11.9 and 15.2.1, the FTE Costs of in-house counsel and related personnel (charged in accordance with Section 3.7.2) and the direct out-of-pocket costs (including the fees and expenses paid to outside counsel and other Third Parties, and filing and maintenance fees paid to governmental authorities) incurred by a Party or any of its Affiliates in accordance with GAAP after the Execution Date, during the term of and pursuant to this Agreement, in connection with the establishment and maintenance of rights under the Product Trademarks in the United States used to Commercialize a Co-Promotion Product, including costs of actions to enforce or maintain a Trademark and other proceedings not reimbursed by Third Parties.

 

1.185                  “United States” means the United States of America (including the District of Columbia), exclusive of (a) its territories and its possessions and (b) Puerto Rico.

 

1.186                  “Valid Claim” means, with respect to a particular country, (a) a claim of an issued and unexpired Patent in such country that (i) has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken or has been taken within the time allowed for appeal; and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise in such country; or (b) a claim of a pending Patent application that was filed and is being prosecuted in good faith and has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application, provided that such prosecution has not been ongoing for more than five (5) years, or, in Japan, seven (7) years.

 

1.187                  “Year” means any period consisting of twelve (12) consecutive calendar months.

 

Additional Defined Terms .  The following additional defined terms shall have the meanings set forth in the sections of this Agreement listed below:

 

36

 

Defined Term		Section Where Defined
“ Additional Share ”		6.4.2	(a)(i)
“ Agreement ”		Preamble
“ Alliance Manager ”		2.8.1
“ Annual Commercialization Plan and Budget ”		5.2.1	(a)
“ Annual Development Plan and Budget ”		3.2.2	(a)
“ Annual Net Sales Milestone Threshold ”		6.3.2	(a)
“ Annual RT Commercialization Plan and Budget ”		4.3.2	(b)
“ Annual US Commercialization Plan and Budget ”		5.2.1	(a)
“ Antibody Data ”		3.2.1	(b)
“ Bankrupt Party ”		10.10.1
“ Benefit Plans ”		5.10.8
“ BLA ”		1.57
“ BMS ”		Preamble
“ BMS Collaboration Know-How ”		1.17
“ BMS Collaboration Patents ”		1.17
“ BMS Controlled Committee Matter ”		2.7.3	(c)(i)
“ BMS Indemnitees ”		15.1.2
“ BMS Non-Collaboration Know-How ”		1.19
“ BMS Non-Collaboration Patents ”		1.19
“ BMS Sublicense Agreements ”		14.3.7
“ Business Combination Transaction ”		1.30.2
“ Cell Genesys ”		1.28
“ Claims ”		15.1.1
“ Collaboration ”		2.1.1
“ Commercialization Overrun ”		6.4.3
“ Commercialized Agent ”		3.13.1	(b)
“ Competing Product Royalty Rate ”		6.10.1
“ Completion Notice ”		3.8.1	(c)
“ Confidential Information ”		12.1
“ Co-Promotion Option ”		5.3.1	(a)
“ Co-Promotion Term ”		6.9.2
“ Co-Promotion Termination Date ”		5.3.2
“ Courts ”		16.5.2
“ Coverage ”		15.4
“ CPR ”		16.4
“ CSOs ”		5.10.2
“ Data Exclusivity ”		1.139
“ Data Package ”		3.8.1	(b)
“ Decision Points ”		3.2.3	(a)
“ Designated Officer ”		16.1.1
“ Designated Officer Matter ”		2.7.3	(c)(iii)
“ Development Overrun ”		3.7.1	(f)
“ Divestment Period ”		10.5.3	(b)

 

37

 

Defined Term		Section Where Defined
“ Excess Sales Representatives ”		5.5.1	(a)(i)
“ Execution Date ”`		Preamble
“ Exercise Notice ”		5.3.1	(a)
“ Expert Matter ”		16.1.3
“ Financial Package ”		3.8.1	(a)
“ Good-Faith R&D Budget Estimate ”		3.8.2
“ Global Development Plan and Budget ”		3.2.1
“ Global Commercialization Plan and Budget ”		5.2.1	(a)
“ Hiring Party ”		5.10.8
“ HuMAb Mice ”		1.122
“ IDM ”		1.84
“ Indemnified Party ”		15.3.1
“ Indemnifying Party ”		15.3.1
“ Indemnitees ”		15.2.1
“ Initial Training Period ”		5.6.2	(a)
“ Joint Collaboration Know-How ”		1.92
“ Joint Collaboration Patents ”		1.92
“ Joint Commercialization Committee ” or “ JCC ”		2.1.1
“ Joint Development and Regulatory Committee ” or “ JDC ”		2.1.1
“ Joint Executive Committee ” or “ JEC ”		2.1.1
“ Joint Financial Committee ” or “ JFC ”		2.1.1
“ Joint Manufacturing Committee ” or “ JMC ”		2.1.1
“ Kirin ”		1.122
“ Kirin Agreement ”		1.122
“ Losses ”		15.1.1
“ MAA ”		1.57
“ Manufacturing Plan and Budget ”		7.2
“ Manufacturing Transition Period ”		7.3.2	(a)
“ Marketing Materials ”		5.7.1
“ Medarex ”		Preamble
“ Medarex Collaboration Know-How ”		1.111
“ Medarex Collaboration Patents ”		1.111
“ Medarex Indemnitees ”		15.1.1
“ Medarex Non-Collaboration Know-How ”		1.113
“ Medarex Non-Collaboration Patents ”		1.113
“ Medical Liaison ”		1.119.1
“ Merging Party ”		10.5.3	(b)
“ Negotiation Period ”		10.5.4	(c)
“ NHP ”		5.10.10
“ NHP Indemnitees ”		5.10.10
“ Non-Qualifying Details ”		5.5.6	(e)
“ Off-Label Net Sales ”		6.4.2	(b)
“ Opt-Out ”		3.8

 

38

 

Defined Term		Section Where Defined
“ Opt-Out Exercise Date ”		3.8.2
“ Opt-Out NP Indications ”		6.6.1	(a)(i)
“ Orphan Drug Marketing Rights ”		10.5.1	(c)(i)
“ OTN ”		1.128
“ Outstanding Common Stock ”		1.30.1
“ Outstanding Voting Securities ”		1.30.1
“ Party ” or “ Parties ”		Preamble
“ Party Implementation Matter ”		2.7.3	(b)
“ Party Vote ”		2.7.3	(a)
“ PBM ”		1.36
“ PDMA ”		5.7.2	(b)(iii)
“ Pivotal Trial ”		1.135
“ Plan Studies ”		3.7.1	(d)
“ Post-DO Party Matter ”		16.1.4
“ Pre-Launch Commercialization Plan and Budget ”		5.2.1	(a)
“ Pre-Launch RT Commercialization Plan and Budget ”		4.3.2	(a)
“ Pre-Launch US Commercialization Plan and Budget ”		5.2.1	(a)
“ Process Development Costs ”		1.51.6
“ Project Manager ”		2.7.7
“ Promotional Data ”		5.5.5
“ Proof of Concept Requirements ”		3.13.2	(a)
“ Quarterly PDE Amount ”		5.5.2
“ Regulatory Milestone Payment Date ”		6.3.1	(a)
“ Regulatory Milestone Table ”		6.3.1	(a)
“ Regulatory Working Group ” or “ RWG ”		2.3.3
“ Responsible Party ”		3.7.1	(f) 6.4.3
“ Reviewable Publications ”		12.4
“ Royalty Term ”		6.9.1	(c)
“ Safety Data Exchange Agreement ”		3.11
“[*****] Milestone Payment ”		6.3.2	(a)
“[*****] Milestone Payment Date ”		6.3.2	(a)
“[*****] Milestone Table ”		6.3.2	(a)
“ Selected   Party ”		11.5.3
“ Specified Person ”		1.30.1
“ Success Criteria ”		3.2.3	(a)
“ Success Criteria Determination ”		2.3.2	(g)
“ Target ”		Recitals
“ Title 11 ”		10.10.1
“ Trademark Infringement Claims ”		11.9.1
“ Trigger Date ”		10.5.6
“ Unresolved Committee Matter ”		2.7.3	(c)

 

[*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

39

 

Defined Term		Section Where Defined
“ Unresolved DO Matter ”		16.1.1
“ Working Group ”		2.7.5

 

[Article 2 begins on the next page]

 

40

 

ARTICLE 2

 

MANAGEMENT OF COLLABORATION

 

2.1                                General .

 

2.1.1  Role of Committees .  Subject to Section 2.1.2 and the other terms and conditions of this Agreement, the Parties shall establish (a) a joint executive committee (the “ Joint Executive Committee ” or “ JEC ”) that will oversee the Parties’ activities under this Agreement (the “ Collaboration ”) and facilitate communications between the Parties with respect to the Development, Approval, manufacturing and Commercialization of the Products hereunder, and (b) four (4) specialized joint committees consisting of one to focus on each of the following areas:  Development and Approval and other regulatory matters (such committee, the “ Joint Development and Regulatory Committee ” or “ JDC ”), Commercialization (such committee, the “ Joint Commercialization Committee ” or “ JCC ”), manufacturing (such committee, the “ Joint Manufacturing Committee ” or “ JMC ”) and financial issues (such committee, the “ Joint Financial Committee ” or “ JFC ”), respectively, arising out of the Collaboration.  Each Committee shall have the responsibilities and authority allocated to it in this Article 2 and elsewhere in this Agreement.  It is contemplated that (i) all significant matters (other than Party Implementation Matters, as defined in Section 2.7.3(b)) relating to the Development and Commercialization of Products under this Agreement will be addressed by the applicable first tier Committees ( i.e ., the JDC, the JCC, the JMC or the JFC) and, if appropriate, by the JEC, as contemplated by Section 2.7.3, regardless of whether or not Development of an Indication is being fully co-funded by the Parties, whether or not a Product is being Co-Promoted by Medarex or whether or not Medarex retains an option to Co-Promote a Product, and (ii) the Parties’ respective activities under this Agreement (including Party Implementation Matters) will be reported to the relevant Committees in a reasonable and appropriate level of detail.  The Parties intend that their respective organizations will work together to assure the success of the Collaboration.

 

2.1.2  Limitations on the Authority of Committees.   Notwithstanding the Committee structure established pursuant to Section 2.1.1 to oversee the Collaboration, each Party shall retain the rights, powers and discretion granted to it under this Agreement, and no such rights, powers, or discretion shall be delegated to or vested in a Committee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.  The Parties hereby agree that the following matters are explicitly reserved to the consent, approval or other decision-making authority of one or both Parties, as expressly provided in this Agreement, and are outside the jurisdiction and authority of the Committees:  (a) the amendment, modification or waiver of compliance with this Agreement, which shall require mutual written agreement of the Parties, (b) the exercise of Medarex’s Opt-Out rights pursuant to Section 3.8, which shall require the written consent of, or notice from, Medarex as provided in such Section, (c) the exercise of Medarex’s option to Co-Promote a Product pursuant to Section 5.3.1, which shall require the written consent of, or notice from, Medarex, as provided in such Section, (d) the Development of (i) a Product for use together, or in combination, with an Immunotherapeutic Agent, or an (ii) Immunotherapeutic Agent, for use together, or in combination, with a Product or otherwise, except for Commercialized Agents that are not controlled by a Party (or any of its Affiliates) to the extent permitted by Section 3.13, and

 

41

---

 

except as set forth in the Global Development Plan and Budget as Previously Disclosed, without the written consent of such controlling Party, (e) the exercise of BMS’ opt-out rights pursuant to Sections 10.5.6(a)(i) and 14.5, which shall require the written consent of, or notice from, BMS as provided in such Section, (f) any retroactive updates, amendments and modifications to, or waivers of provisions of, an Approved Plan, which shall require the mutual agreement of the Parties, and (g) such other matters as are reserved to the consent, approval, agreement or other decision-making authority of Medarex or both Parties in this Agreement that are not required by this Agreement to be considered by one or more Committees prior to the exercise of such consent, approval or other decision-making authority.  For clarity, a Party’s right to a Party Vote in a Committee pursuant to Article 2, in and of itself, shall not subject a matter to the preceding sentence.  Notwithstanding the foregoing, neither Party shall be restricted from bringing before any appropriate Committee for discussion any matter relating to the Collaboration that it believes warrants discussion between the Parties through the Committees, provided that the consideration of any such matter by any Committee shall not infringe or limit the exercise of a Party’s right of consent or approval or other decision-making authority granted to it by this Agreement nor shall any such consideration, as contemplated by this sentence, subject any such right of consent or approval or other decision-making authority to any dispute resolution mechanism provided for in Section 2.7.3 or Article 16 or elsewhere in this Agreement.

 

2.2                                Joint Executive Committee (JEC).

 

2.2.1  Formation and Purpose .   Medarex and BMS shall establish the JEC within forty-five (45) days after the Effective Date.  Subject to Sections 2.1.2 and 2.7.3, the JEC shall have overall responsibility for the success of the Collaboration, and its general areas of responsibility shall be:  (a) to determine the global Development, regulatory, Commercialization, and manufacturing strategy for the Collaboration, (b) to coordinate the Parties’ activities hereunder, and (c) as applicable, to review, comment on, approve, and resolve disputes with respect to, plans and budgets for, and the implementation of, the Collaboration, including the specific responsibilities of the JEC outlined below.  The JEC shall have the membership and shall operate by the procedures set forth in Section 2.7.

 

2.2.2  Specific Responsibilities of the JEC .   In addition to its overall responsibility for the Collaboration, but subject to Sections 2.1.2 and 2.7.3, the JEC shall, in particular, have the following specific responsibilities:

 

(a)                                   review and approve (i) each Global Development Plan and Budget, (ii) each Annual Development Plan and Budget, and (iii) all updates, amendments and modifications to, and waivers of provisions of, each Global Development Plan and Budget;

 

(b)                                   determine whether to pursue the Development of an Additional Product or an Additional Indication with respect to an existing Product or the conduct of other additional Development activities;

 

(c)                                   review and approve (i) each Global Commercialization Plan and Budget, (ii) each Pre-Launch US Commercialization Plan and Budget, (iii) each Annual US Commercialization Plan and Budget and (iv) all updates, amendments and modifications to, and waivers of provisions of each Global Commercialization Plan and Budget;

 

42

 

(d)                                   review and approve (i) each Manufacturing Plan and Budget for each Product and MDX-1379 for each Region (other than any portions thereof that relate specifically and solely to fill, finishing and packaging for the Royalty Territory) and (ii) all updates, amendments and modifications thereto, and waivers of provisions thereof);

 

(e)                                   provide guidance to the JDC, the JCC and the JMC with respect to any other Development, Commercialization and manufacturing plans and budgets (or portions thereof) to be approved by such Committees;

 

(f)                                     consult with the applicable Lead Regulatory Party with respect to the recall or withdrawal of any Product or MDX-1379 in the Territory;

 

(g)                                  review and approve long-term ( i.e., for the ensuing three-to-five Years) commercial strategy for (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379, in each case ((i) and (ii)) in the Territory;

 

(h)                                  review and approve strategies for obtaining Patent and Trademark protection for each Product and MDX-1379, enforcing such Patents and Trademarks, and defending Third Party claims relating to Patents and Trademarks, subject to the terms and conditions of this Agreement;

 

(i)                                     periodically as one or both of the Parties may request, evaluate the performance of the Development and Commercialization activities against goals;

 

(j)                                     coordinate the activities of the Parties hereunder, including oversight of the JDC, JCC, JMC and JFC as provided herein;

 

(k)                                 review recommendations from the JDC with respect to, and determine whether to, subject to Section 3.13.1(b), Develop any additional Immunotherapeutic Agent for use with a Product, and determine the appropriate ratio of sharing Development Costs with respect thereto pursuant to Section 3.13.1(c);

 

(l)                                     seek to resolve any disputes or disagreements within or between the JDC, JCC, JMC or JFC;

 

(m)                               review recommendations submitted by the JCC concerning, and approve, patient assistance programs; and

 

(n)                                  review any matter that falls within the responsibilities of the JDC, JCC, JMC or JFC if either Party’s members of such Committee believe that a matter should be reviewed by the JEC following review by such Committee.

 

2.3                                Joint Development and Regulatory Committee (JDC).

 

2.3.1  Formation and Purpose.   Medarex and BMS shall establish the JDC within forty-five (45) days after the Effective Date.  Subject to Sections 2.1.2 and 2.7.3, the JDC shall oversee, coordinate and expedite the Development of, and the making of regulatory filings for, each Product and Agent worldwide in order to obtain Approvals or Compendia Listings, as

 

43

 

applicable.  The JDC will also facilitate the flow of information with respect to Development activities being conducted for each Product and Agent, oversee clinical trials required to support Approvals or Compendia Listings, as applicable and, where necessary, collaborate with the JCC to oversee any Phase IIIB Clinical Trials and Phase IV Studies for Products and Agents for the Territory.  The JDC shall have the membership and shall operate by the procedures set forth in Section 2.7.

 

2.3.2  Specific Responsibilities of the JDC.   In support of its responsibility for overseeing, coordinating and expediting the Development of, and regulatory filings for, each Product and each Agent, but subject to Sections 2.1.2 and 2.7.3, the JDC shall in particular:

 

(a)                                   recommend a worldwide strategy for the Development and Approval of each Product and each Agent on an Indication-by-Indication basis for review and approval by the JEC;

 

(b)                                   make recommendations to the JEC with respect to its review and approval of each Global Development Plan and Budget, each Annual Development Plan and Budget and all updates, amendments and modifications to, and waivers of provisions of, the Global Development Plan and Budget;

 

(c)                                   review each Annual Development Plan and Budget and review and approve all updates, amendments and modifications thereto and waivers of provisions thereof;

 

(d)                                   direct the pre-clinical, clinical and regulatory program for (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379, consistent with the applicable Annual Development Plan and Budget, including determining whether to conduct, cease or suspend any Pre-Clinical Activities or Clinical Trials;

 

(e)                                   review and approve the scientific integrity of all Clinical Trials and Phase IV Studies conducted in the Territory; provided that once such scientific integrity of a Phase IV Study is approved, JDC approval shall not be required under this paragraph for a subsequent Phase IV Study that uses substantially the same protocol as that previously approved;

 

(f)                                     monitor the progress of all Clinical Trials and other Development activities concerning (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379 in the Territory, including review of the costs of all Development activities that are co-funded by BMS and Medarex against the applicable Global Development Plan and Budget and Annual Development Plan and Budget and review compliance with the Global Development Plan and Budget and each Annual Development Plan and Budget;

 

(g)                                  determine at each Decision Point whether the Development activities to which such Decision Point pertains have satisfied the corresponding Success Criteria and advise the JEC and the Parties in writing of such findings no later than thirty (30) days following the applicable Decision Point, which writing shall set forth in detail the basis for such determination (each such determination, a “ Success Criteria Determination ”);

 

(h)                                  facilitate the exchange of all Development information and data relating to all studies for each Product in the Territory;

 

44

 

(i)                                     review and approve the statistical analysis plans and protocols (and any investigator’s brochure(s) and revisions thereto) for each Clinical Trial conducted in the Territory with respect to (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379;

 

(j)                                     work together with the JCC and JMC during the Development of (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379 to assure a smooth transition from Development to Commercialization of each such Product and MDX-1379;

 

(k)                                 review and approve any significant agreements, including any agreement with an expense of more than fifty thousand dollars ($50,000), with Third Parties to be entered into by either or both Parties relating to the Development of a Product or Agent that is co-funded by BMS and Medarex;

 

(l)                                     discuss and recommend to the JEC whether it would be desirable to initiate additional Development activities, and discuss and recommend to the Parties (for approval by the Parties as contemplated by Section 2.1.2(d)), whether it would be desirable to, Develop (i) a Product for use together, or in combination, with an Immunotherapeutic Agent, or (ii) an Immunotherapeutic Agent, for use together, or in combination, with a Product or otherwise, except for Commercialized Agents that are not controlled by a Party (or any of its Affiliates), to the extent permitted by Section 3.13;

 

(m)                               consult with the JCC with respect to Product labeling;

 

(n)                                  review and approve activities of the RWG;

 

(o)                                   work with the JCC to review and make recommendations for approval by the JEC with respect to early access and compassionate use programs;

 

(p)                                   coordinate with the JCC, JMC and JFC as appropriate; and

 

(q)                                   provide updates on the JDC’s activities and achievements to the JEC no less often than each Quarter after the Effective Date and during the term of this Agreement.

 

2.3.3  Regulatory Working Group .   The JDC shall also establish a Working Group that is a subcommittee of the JDC (the “ Regulatory Working Group ” or “ RWG ”) that, subject to Sections 2.1.2 and 2.7.3 and subject to the authority and direction of the JDC, will be responsible for:

 

(a)                                   formulating and proposing for approval by the JDC, a regulatory strategy and plan for obtaining Approvals or Compendia Listings, as applicable for (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379, in each case ((i) and (ii)) in the Territory on an Indication-by-Indication basis;

 

(b)                                   overseeing and monitoring regulatory aspects of the Development of (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii)

 

45

 

MDX-1379 with respect to obtaining Approval or a Compendia Listing, as applicable, including all regulatory actions, communications and filings and submissions (including filings and submissions of supplements and amendments to Approvals) to or with the Regulatory Authorities with respect to each such Product and MDX-1379;

 

(c)                                   overseeing and making recommendations to the JDC and JCC with respect to matters pertaining to the approval of Product and MDX-1379 labeling by the Regulatory Authorities;

 

(d)                                   recommend the schedule and implementation strategy for all filings with Regulatory Authorities with respect to each Product and MDX-1379 in the Territory;

 

(e)                                   coordinating preparation for and attendance at FDA advisory committee meetings or, the foreign equivalent thereof, with respect to Products and MDX-1379 in the Territory;

 

(f)                                     coordinating responses to additional requirements and inquiries of Regulatory Authorities with respect to (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379, in each case ((i) and (ii)) in the Territory;

 

(g)                                  coordinating with the JMC with respect to the drafting and contents of the Chemistry, Manufacturing and Controls section of any Drug Approval Application for each Product and MDX-1379 in the Territory;

 

(h)                                  facilitating the exchange of all critical regulatory information and data relating to (i) each Product, whether alone or for use together, or in combination, with an Agent, and (ii) MDX-1379, in each case ((i) and (ii)) in the Territory;

 

(i)                                     facilitating the exchange of information in compliance with Section 3.11 of this Agreement in order to ensure that significant issues concerning adverse event information and safety issues are addressed consistently and in a timely manner among Regulatory Authorities in the Territory; and

 

(j)                                     providing updates on its activities and achievements to the JEC, JCC, JFC and JMC as directed by the JDC.

 

The RWG shall meet at such times and in such manner as is necessary to perform its responsibilities.  The RWG shall attend meetings of the JDC and present its proposals on any matter within its jurisdiction under this Section 2.3.3 for approval by the JDC at the meeting of the JDC following the time at which such matter arises.  All actions of the RWG shall be consistent with each applicable Global Development Plan and Budget and Annual Development Plan and Budget and the terms of this Agreement.

 

2.3.4  Available Resources .   Except as otherwise provided in Article 3, the JDC shall, in allocating responsibilities between the Parties with respect to Development activities under this Agreement:  (a) endeavor to take advantage of the respective resources, capabilities and expertise of Medarex and BMS, and (b) endeavor to (i) maintain, to the extent reasonably practical and appropriate, continuity in functions and commitments of personnel and physical

 

46

 

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 and the applicable Global Development Plan and Budget and the applicable Annual Development Plan and Budget; provided that the JDC shall allocate to BMS responsibilities for the Development of Products in the Royalty Territory and for Partially Co-Funded Indications in the United States.

 

2.4                                Joint Commercialization Committee (JCC).

 

2.4.1  Formation and Purpose .   Medarex and BMS shall establish the JCC within forty-five (45) days after the Effective Date, which Committee shall, subject to Sections 2.1.2 and 2.7.3, oversee the Commercialization of each Product and MDX-1379 on a worldwide basis, including the marketing, sales and distribution of each Product and MDX-1379.  The JCC shall have the membership and shall operate by the procedures set forth in Section 2.7.

 

2.4.2  Specific Responsibilities of the JCC.   In support of its responsibility for overseeing the Commercialization of the Products on a worldwide basis, the JCC shall, subject to Sections 2.1.2 and 2.7.3, perform the following activities:

 

(a)                                   establish a strategy for worldwide Commercialization of each Product and MDX-1379, including product positioning;

 

(b)                                   make recommendations to the JEC with respect to its review and approval of (i) each Global Commercialization Plan and Budget, (ii) each Pre-Launch US Commercialization Plan and Budget, (iii) each Annual US Commercialization Plan and Budget and (iv) all updates, amendments and modifications to, and waivers of provisions of, each Global Commercialization Plan and Budget;

 

(c)                                   review and approve all updates, amendments and modifications to, and waivers of provisions of, each Pre-Launch US Commercialization Plan and Budget and each Annual US Commercialization Plan and Budget; provided , however , that no amendment to an Annual US Commercialization Plan and Budget shall be made during the Year covered by such plan with respect to the number of Medarex Sales Representative FTEs or any obligations required to be performed under such plan by such Medarex Sales Representative FTEs, including PDEs, call positions and frequency of Details, without Medarex’s prior written consent;

 

(d)                                   review and approve (i) each Pre-Launch RT Commercialization Plan and Budget, (ii) each Annual RT Commercialization Plan and Budget and (iii) all updates, amendments and modifications to, and waivers of provisions of, any of the foregoing;

 

(e)                                   monitor progress under, and oversee the implementation of, each Global Commercialization Plan and Budget, each Pre-Launch US Commercialization Plan and Budget, each Pre-Launch RT Commercialization Plan and Budget, each Annual US Commercialization Plan and Budget and each Annual RT Commercialization Plan and Budget, with the progress of each Product and MDX-1379 detailed, to the extent practicable, on an Indication-by Indication basis, and monitor compliance with each such plan and budget;

 

47

 

(f)                                     monitor, review and comment on costs incurred by the Parties in connection with Commercialization activities for each Co-Promotion Product, to the extent practicable, to be detailed on an Indication-by-Indication basis;

 

(g)                                  approve, in consultation with the JDC, the labeling, and oversee the Parties’ plans for packaging designs and selecting Product Trademarks, for each Product and MDX-1379 in the Major Market Countries;

 

(h)                                  review and approve marketing and promotional strategies and marketing and promotional materials, including all Marketing Materials developed by the Parties for the Parties’ Sales Representatives, with respect to each Product and MDX-1379 in the United States,

 

(i)                                     review and make recommendations on advertising materials and strategies and promotional materials developed with respect to each Product and MDX-1379 for use in the Major Market Countries (other than the United States) in order to coordinate such activities on a worldwide basis and for compliance with this Agreement;

 

(j)                                     approve the selection of major or key marketing vendors ( e.g. public relations agencies, advertising agencies and medical education agencies) with global capabilities with respect to Commercialization of each Product and MDX-1379 in the United States;

 

(k)                                 approve reimbursement strategies to be implemented with respect to each such Product and MDX-1379 in the United States and the Major Market Countries;

 

(l)                                     review and approve, in collaboration with the JDC, Phase IV Studies for each Product and MDX-1379 and supervise the use and dissemination of such resulting data with respect to each such Product;

 

(m)                               review and approve strategies for Medical Education Activities and journal advertising for each Product and MDX-1379;

 

(n)                                  approve and assign responsibilities for implementation of market research plans and Medical Education Activities with respect to each Co-Promotion Product in the United States; provided that Medarex shall not be assigned such responsibility without its prior consent (either in writing or by the consent of its representatives on the JCC or JEC as reflected in the minutes of such Committees);

 

(o)                                   subject to Section 5.5, review and approve, assign responsibilities for, and coordinate all sales force activities including Sales Representative training, the number of Sales Representatives to be assigned to promotion, the number of PDEs to be devoted to promotion, and the territory alignment of Sales Representatives, in each case for each Co-Promotion Product in the United States and all in accordance with this Agreement, the Global Commercialization Plan and Budget, each Pre-Launch US Commercialization Plan and Budget, and each Annual US Commercialization Plan and Budget;

 

48

 

(p)                                   plan and oversee promotional programs, including speaker and peer-to-peer activity programs, and the funding of educational and professional symposia, for each Product and MDX-1379 (other than a Non-Co-Promoted Product) in the United States;

 

(q)                                   discuss and establish a range of suggested prices at which each such Product and MDX-1379 will be sold to unaffiliated Third Parties and any discount strategies for each Product in the United States and the Major Market Countries;

 

(r)                                   in conjunction with the JFC, receive and review each Party’s sales, pricing, and financial reports pertaining to Sales and Marketing Costs and other Allowable Expenses for Commercialization of each Co-Promotion Product in the United States;

 

(s)                                   work with the JDC to make recommendations to the JEC for approval of early access and compassionate use programs;

 

(t)                                     review and approve any significant agreements (including any agreement with an expense of more than fifty thousand dollars ($50,000)) with Third Parties to be entered into by either or both Parties that cover Commercialization of a Co-Promotion Product in the United States;

 

(u)                                  discuss and recommend to the JEC and the Parties whether to initiate Phase IV Studies of any Product and MDX-1379;

 

(v)                                    facilitate the flow of information with respect to the Commercialization of each Product and MDX-1379;

 

(w)                                 coordinate with the JDC, JMC and JFC as appropriate;

 

(x)                                   provide updates on the JCC’s activities and achievements to the JEC no less frequently than once each Quarter after the Effective Date and during the term of this Agreement; and

 

(y)                                   make recommendations to the JEC for approval of patient assistance programs.

 

2.4.3  Available Resources.   Except as otherwise provided in Article 5, the JCC shall, in allocating responsibilities between the Parties with respect to Commercialization activities for Co-Promotion Products under this Agreement in the United States:  (a) endeavor to take advantage of the respective resources, capabilities and expertise of Medarex and BMS, and (b) 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 and the applicable Global Commercialization Plan and Budget and the applicable Pre-Launch US Commercialization Plan and Budget or Annual US Commercialization Plan and Budget; provided that the JCC shall allocate to BMS the responsibilities for the Commercialization of each Product in the Royalty Territory, as well as any Product that is not a Co-Promotion Product in the United States.

 

49

 

2.5                                Joint Manufacturing Committee (JMC).

 

2.5.1  Formation and Purpose.   Medarex and BMS shall establish the JMC within forty-five (45) days after the Effective Date, which Committee shall, subject to Sections 2.1.2 and 2.7.3, oversee the manufacturing of each Product and MDX-1379 on a worldwide basis, including Supply Chain Management of each Product and MDX-1379.  The JMC shall have the membership and shall operate by the procedures set forth in Section 2.7.

 

2.5.2  Specific Responsibilities of the JMC.   In support of its responsibility for overseeing the manufacturing of the Product, MDX-1379 and, if applicable, other Agents, on a worldwide basis, consistent with the applicable Manufacturing Plan and Budget and subject to Sections 2.1.2 and 2.7.3, the JMC shall perform the following activities:

 

(a)                                   delineate requirements and responsibilities for development and licensure of manufacturing processes and facilities for each Product and MDX-1379 and for supply of each Product and MDX-1379 in the Territory;

 

(b)                                   develop a worldwide manufacturing and sourcing strategy in support of the Development and Commercialization of each Product and MDX-1379 to enable development and licensure of manufacturing processes and facilities, wherever located, for each such Product and MDX-1379, which strategy shall include the strategic aspects of manufacture and release, including formulations, dosage form, product characterization studies, stability studies, sourcing and manufacturing plans and forecasts;

 

(c)                                   make recommendations to the JEC with respect to its review and approval of (i) each Manufacturing Plan and Budget for each Product, MDX-1379 and, as applicable, other Agents, for each Region (other than any portions thereof that relate specifically and solely to fill, finishing and packaging for the Royalty Territory) and (ii) all updates, amendments and modifications thereto, and waivers of provisions thereof);

 

(d)                                   review and approve (i) that portion of each Manufacturing Plan and Budget for each Product and MDX-1379 for each Region that relates specifically and solely to fill, finishing and packaging for the Royalty Territory and (ii) all updates, amendments and modifications to such portion, and waivers of provisions thereof);

 

(e)                                   to the extent not provided for in the applicable Manufacturing Plan and Budget, allocate responsibilities under each such plan and budget and oversee the implementation of each Manufacturing Plan and Budget for each Product and MDX-1379 for each Region in accordance with this Agreement;

 

(f)                                     oversee and approve process development plans prior to the manufacture of registration batches of each Product and MDX-1379;

 

(g)                                  review quality assurance efforts, including those efforts with respect to the establishment of Specifications and quality standards for each Product and MDX-1379;

 

50

 

(h)                                  coordinate with the RWG the drafting and contents of the Chemistry, Manufacturing and Controls section of the Drug Approval Applications for each Product and MDX-1379;

 

(i)                                     review and approve technology transfer plans for any changes in manufacturing sites, testing sites, and responsibilities in the supply chain for each Product and MDX-1379, it being understood that, subject to Section 7.3, decisions regarding the selection of which of a Party’s own manufacturing and testing sites shall be used to manufacture any Product and MDX-1379 or whether a Party manufactures any Product and MDX-1379 pursuant to this Agreement or any related supply agreement, shall remain in the sole control of such Party;

 

(j)                                     prepare for regulatory inspections and ensure adherence to compliance standards with respect to each Product and MDX-1379;

 

(k)                                 review and monitor logistical strategies, capacity planning and inventory levels for each Product and MDX-1379 for consistency with the forecasts provided in the applicable Pre-Launch Commercialization Plan and Budget and Annual Commercialization Plan and Budget for such Product and MDX-1379, taking into account projected inventory levels;

 

(l)                                     review quality-related issues concerning each Product and MDX-1379;

 

(m)                               review and approve any significant agreements, purchase orders or amendments (including any agreement, purchase order or amendment involving an expense of more than Three Million Dollars ($3,000,000)) with Third Parties to be entered into by either or both Parties where such activity involves Product or MDX-1379 supply in the United States other than for a Non-Co-Promoted Product; provided , however , if BMS manufactures Product or MDX-1379 under this Agreement using its own manufacturing facility, subject to Section 7.3.4, approval of the JMC shall not be required for any such agreement, purchase order or amendment in connection with BMS capital investment in such manufacturing facility;

 

(n)                                  coordinate with the JCC, JDC and JFC as appropriate; and

 

(o)                                   provide updates on the JMC’s activities and achievements to the JEC no less frequently than once each Quarter after the Effective Date and during the term of this Agreement.

 

2.6                                Joint Finance Committee (JFC).

 

2.6.1  Formation and Purpose .   Medarex and BMS shall establish a joint finance committee within forty-five (45) days after the Effective Date, which Committee shall provide support to all other Committees with respect to accounting and financial matters relating to the Products.  The Joint Finance Committee shall report directly to the JEC, and shall have the membership and shall operate by the procedures set forth in Section 2.7.

 

2.6.2  Specific Responsibilities of the JFC.   In particular, and subject to Sections 2.1.2 and 2.7.3, the Joint Finance Committee shall:

 

51

 

(a)                                   work with the other Committees and the Working Group(s) to assist in financial, budgeting and planning matters as required, including assisting in the preparation of budgets and annual and long-term plans;

 

(b)                                   recommend, for approval by the Parties, procedures, formats and timelines consistent with this Agreement for reporting financial data (which recommendations shall be adopted only with the prior written consent of each Party) and assist in resolving differences that relate to the financial terms of this Agreement;

 

(c)                                   recommend, for approval by the Parties, a procedure for monitoring and reporting to the JEC and any other applicable Committee, the rate of spending compared to budget (i) for each Product and MDX-1379, under each Global Development Plan and Budget and Annual Development Plan and Budget and (ii) for each Co-Promotion Product under each Global Commercialization Plan and Budget, Pre-Launch Commercialization Plan and Budget and Annual Commercialization Plan and Budget, and in each case ((i) and (ii)) report such performance to the JEC or such other Committee as directed; provided that no Party will be required to make any changes to its internal accounting and reporting systems and standards;

 

(d)                                   review each Party’s reporting of Net Sales, Allowable Expenses and Development Costs under this Agreement, and recommend, for approval by the Parties, any changes to reporting procedures; provided that no party will be required to make any changes to its internal accounting and reporting systems and standards;

 

(e)                                   determine the number of hours of work that shall constitute an FTE, as contemplated by the definition of such term;

 

(f)                                     compute adjustments to the FTE rates in accordance with Section 6.20;

 

(g)                                  compute adjustments to the PDE Rate in accordance with Section 5.5.6(a);

 

(h)                                  recommend, for approval by the Parties, additional or alternative reporting procedures concerning financial aspects of the Collaboration including templates and timing, and develop a format for reports pursuant to Sections 3.7, 5.5, 6.4, 6.5, 6.7, 6.11, 6.19 and 7.8, including Net Sales, Allowable Expenses and Development Costs, and such other reports as are approved by the JEC for the implementation of the financial aspects of the Collaboration; provided that no Party will be required to make any changes to its internal accounting and reporting systems and standards;

 

(i)                                     review the appropriate allocation of costs and expenses under this Agreement and recommend any changes to, or additional items to be included within, Allowable Expenses or Development Costs (which recommendations shall be adopted only with the prior written consent of each Party);

 

(j)                                     make recommendations, if necessary, concerning the exchange of information between the Parties on a monthly basis with respect to Allowable Expenses and Net

 

52

 

Sales in furtherance of a Party’s obligations under this Agreement or pursuant to Applicable Law (such as SEC reporting obligations);

 

(k)                                 recommend, for approval by the Parties, a means of reconciling, one to the other, the internal reporting and accounting standards of each of the Parties where necessary and methods of charging costs and expenses of each of the Parties;

 

(l)                                     review calculations of the amount of any payments to be made by the Parties (or their respective Affiliates) hereunder, providing for the reconciliation of payments;

 

(m)                               prepare, for approval by the Parties, such reports on financial matters as are approved by the JEC for the implementation of the financial aspects of the Collaboration;

 

(n)                                  coordinate audits of data where appropriate and required or allowed by this Agreement;

 

(o)                                   coordinate with the JDC, JCC and JMC as appropriate; and

 

(p)                                   provide updates on the JFC’s activities and achievements to the JEC no less frequently than once each Quarter after the Effective Date and during the term of this Agreement.

 

2.7                                General Committee Membership and Procedures.

 

2.7.1  Membership.   Each of the Committees shall be composed of an equal number of representatives of BMS and Medarex, and, unless otherwise agreed by the Parties or the JEC, each Committee shall be composed of three (3) designees of BMS and three (3) designees of Medarex.  Each of BMS and Medarex shall designate representatives with appropriate expertise to serve as members of each Committee, and each representative may serve on more than one Committee as appropriate in view of the individual’s expertise.  Each Party may replace its Committee representatives at any time upon written notice to the other Party.  Each Committee shall have co-chairpersons.  BMS and Medarex shall each select from their representatives a co-chairperson for each of the Committees, and each Party may change its designated co-chairpersons from time to time upon written notice to the other Party.  The co-chairpersons of each Committee shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting of such Committee, and preparing and issuing minutes of each meeting within thirty (30) days thereafter; provided that a Committee co-chairperson shall call a meeting of the applicable Committee promptly upon the written request of the other co-chairperson to convene such a meeting.  The minutes of each meeting shall, among other things, summarize the results of any Pre-Clinical Activities conducted by a Party with respect to a Product, Antibody or MDX-1379 pursuant to Section 3.2.4(b), and record all matters acted upon and approved or disapproved by the Committee, and any matters the Committee failed to resolve.  Such minutes will not be finalized until both co-chairpersons review and confirm in writing the accuracy of such minutes.

 

53

 

2.7.2  Meetings.   Each Committee shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once every three (3) months.  Each Committee shall meet alternately at Medarex’s facilities in Princeton, New Jersey and BMS’ facilities in Princeton, New Jersey, or at such other locations as the Parties may agree.  The Alliance Managers shall, and other employees of each Party involved in the Development, manufacture or Commercialization of any Product may as needed, attend meetings of each Committee (as nonvoting participants unless they are members of such Committee), and consultants, representatives or advisors involved in the Development, manufacture or Commercialization of any Product may attend meetings of each Committee as nonvoting observers; provided that such Third Party representatives are under obligations of confidentiality and non-use applicable to the Confidential Information of each Party that are at least as stringent as those set forth in Article 12, and subject in the case of non-employees of a Party to the consent of the other Party, which shall not be unreasonably withheld or delayed.  Each Party shall be responsible for all of its own expenses of participating in any Committee (including in any Working Group).  Meetings of any Committee may be held by audio or video teleconference with the consent of each Party, which shall not be unreasonably withheld or delayed; provided that at least one (1) meeting per Year of such Committee shall be held in person.  No action taken at any meeting of a Committee shall be effective unless a representative of each Party is participating.

 

2.7.3  Decision-Making.

 

(a)                                   Voting on Committee Decisions.   Subject to Section 2.1.2, each Party’s designees on a Committee shall, collectively, have one vote (the “ Party Vote ”) on all matters brought before the Committee, which Party Vote shall be determined by consensus of such Party’s designees present (in person or otherwise) at the meeting.  Except as expressly provided in this Section 2.7.3 and subject to Section 2.1.2, each Committee shall operate as to matters within its jurisdiction by unanimous Party Vote.

 

(b)                                   Decision Making with respect to Certain Tactical Operational and Implementation Matters.   Subject to Sections 10.5 and 14.5, tactical operational decisions with respect to matters and functions allocated or delegated to a Party by this Agreement, by a Committee or pursuant to an Approved Plan that are not specifically reserved for approval by a Committee hereunder pursuant to Section 2.2.2, 2.3.2, 2.4.2 or 2.5.2 or Articles 3 through 17, shall be deemed to be within the decision-making authority of such Party; provided that all such decisions shall be consistent with the Approved Plans, the scope of such allocation or delegation and the terms and conditions of this Agreement.  Without limiting the foregoing, the Parties hereby agree that those tactical operational decisions as Previously Disclosed shall be illustrative of those matters subject to this Section 2.7.3(b).  Nothing contained in this Article 2 shall prevent a Party from making routine day-to-day decisions relating to the conduct of those activities for which it has a performance or other obligation hereunder, in each case in a manner consistent with the Approved Plans and the terms and conditions of this Agreement.  Each decision that is within the decision-making authority of a Party as contemplated in this Section 2.7.3(b) is referred to herein as a “ Party Implementation Matter ”.  Subject to Sections 2.1.2, 10.5 and 14.5, Party Implementation Matters may be discussed by the applicable Committees, but Party Implementation Matters shall not be subject to the Committee decision making or dispute resolution processes described in Section 2.7.3(c) or Article 16, except to the extent they involve

 

54

 

an Appealable Matter, an Arbitrable Matter, a Litigable Matter, a matter listed in Section 16.1.4 or an Expert Matter.

 

(c)                                   Disagreements on Committees.   Except for (x) matters outside the jurisdiction and authority of the Committees as provided in Section 2.1.2 and (y) any Party Implementation Matter, and in any event without limiting the other rights and obligations of the Parties under this Agreement, any disagreement between the designees of BMS and Medarex on the JDC, JCC, JMC or JFC as to matters within such Committee’s jurisdiction shall, at the election of either Party, be addressed, first, with the Alliance Managers, and, if the dispute is not resolved within ten (10) Business Days after such referral to the Alliance Managers, then it shall, upon written notice by a Party to the other, be submitted to the JEC for resolution.  If the JEC, in consultation with the Alliance Managers, does not resolve any such matter submitted to it for resolution within twenty (20) Business Days after such submission, or in the event that the JEC fails to resolve any other matter within its jurisdiction within twenty (20) Business Days after such submission (each, an “ Unresolved Committee Matter ”), then, subject to Sections 2.1.2, 3.5.6 (except to the extent that involves an Appealable Matter, Arbitrable or Litigable Matter), 3.6, 4.2, 5.1, 10.5 and 14.5:

 

(i)                                     subject to Section 2.7.3(c)(ii) below, BMS shall have final decision-making authority on the JEC with respect to the following Unresolved Committee Matters (each, a “ BMS Controlled Committee Matter ”) without any further escalation to the Designated Officers or resort to any other dispute resolution mechanism, which final decision-making authority shall be exercised only in accordance with Section 2.7.3(e):

 

(A)                                Development (or termination of Development) of Products and MDX-1379 relating solely to the Royalty Territory, including the approval of the relevant portion of any Annual Development Plan and Budget for any Additional Product or Additional Indication relating solely to Development activities conducted solely for Approval of a Product or Agent in the Royalty Territory and any update, amendment or modification thereto or waiver of the provisions thereof (but specifically excluding (1) approval of any Global Development Plan and Budget for the Lead Product for the Lead Indications or with respect to the Lead Agents as Previously Disclosed or any update, amendment or modification thereto or waiver of any of the provisions thereof, (2) the approval or any update, amendment or modification to any Annual Development Plan and Budget for the Lead Product for the Lead Indications or with respect to the Lead Agents as Previously Disclosed or waiver of any of the provisions thereof and (3) Clinical Trials or other Development activities that are intended to support Approval (or a Compendia Listing) in the United States or that otherwise are co-funded by BMS and Medarex);

 

(B)                                establishment of Decision Points and Success Criteria and the protocol design elements related to the Success Criteria set forth in any Global Development Plan and Budget or any Annual Development Plan and Budget (and any updates, amendments or modifications thereto, or waivers of the provisions thereof) for (1) Clinical Trials for any Additional Product or Additional Indication and (2) any additional Clinical Trials for the Lead Product for the Lead Indications or with respect to

 

55

 

the Lead Agents beyond those that were Previously Disclosed, in each case ((1) and (2)) conducted solely in support of Approvals in the Royalty Territory;

 

(C)                                Development (including termination of Development (but excluding labeling)) of Partially-Co-Funded Indications for the United States (for so long as an Indication remains a Partially-Co-Funded Indication), including the approval of any Annual Development Plan and Budget for any such Partially Co-Funded Indication or any update, amendment or modification thereto or waiver of any of the provisions thereof;

 

(D)                                conduct of any Phase IV Studies for (1) Products, whether alone or for use together, or in combination, with an Agent, or (2) MDX-1379, solely for the Royalty Territory, other than any dispute with respect to the scientific integrity of any such Phase IV Study;

 

(E)                                  approval of the portion of any Manufacturing Plan and Budget for any Product or Agent relating specifically and solely to fill, finishing and packaging for the Royalty Territory and all updates, amendments and modifications thereto, and waivers of provisions of such portion; and

 

(F)                                  Commercialization of Products and MDX-1379 in the Royalty Territory, including the approval of any Pre-Launch RT Commercialization Plan and Budget and any Annual RT Commercialization Plan and Budget and any update, amendment or modification thereto or waiver of any of the provisions thereof.

 

Notwithstanding the foregoing, the term “BMS Controlled Committee Matter” shall not include (1) any Appealable Matter, (2) any Litigable Matter, (3) any Arbitrable Matter, (4) any Post-DO Party Matter (as defined in Section 16.1.4) or (5) any Expert Matter (as defined in Section 16.1.3).  For the avoidance of doubt, no matter requiring the consent, approval or other decision-making authority of Medarex or the Parties under this Agreement shall be a BMS Controlled Committee Matter.  For clarity, either Party’s right to a Party Vote in a Committee pursuant to Article 2, in and of itself, shall not subject a matter to the preceding sentence.

 

(ii)                                 any Unresolved Committee Matter initially within the jurisdiction and authority of the JFC as set forth in Section 2.6.2 (except as provided in Section 2.10.1, 5.5.6(a), and 6.20) shall be finally resolved by unanimous Party Vote on the JEC without any further escalation to the Designated Officers or resort to any other dispute resolution mechanism;

 

(iii)                             subject to Section 2.7.3(d), any Unresolved Committee Matter other than a BMS Controlled Committee Matter or as set forth in clause (ii) above (each, a “ Designated Officer Matter ”) shall, at the election of either Party by written notice to the other, be submitted to the Designated Officers for resolution as provided in Article 16.

 

(d)                                   Voluntary Submissions to an Expert or to Expedited Arbitration.   The Parties’ representatives on the JEC, by unanimous Party Vote, shall have the right, with respect to any matter within the jurisdiction and authority of such Committee for which disputes are ultimately subject to resolution by an Expert pursuant to Section 16.2 or

 

56

 

expedited arbitration pursuant to Section 16.4, to refer any such matter to an Expert or to expedited arbitration at any time for resolution in accordance with Section 16.2 or 16.4, respectively, without first complying with the procedures set forth in Section 16.1.1.

 

(e)                                   BMS Controlled Committee Matters; BMS Final Decision-Making Authority on the JEC.   Subject to Sections 2.1.2, 3.6, 4.2, 5.1, 10.5 and 14.5, and the other terms and provisions of this Agreement, BMS shall have final decision-making authority on the JEC with respect to each BMS Controlled Committee Matter, which final decision-making authority shall be exercised only as follows:

 

(i)                                     BMS shall make all decisions with respect to BMS Controlled Committee Matters in good faith, with due regard for the impact of such decisions on Products and Agents in the United States, and (except for a decision to amend or modify any such Approved Plan (or portion thereof) that is a BMS Controlled Committee Matter) consistent in all material respects with the applicable then-current Approved Plan and the terms of this Agreement.  No such decision by BMS shall violate or breach any term or condition of this Agreement.  BMS shall make its decision on BMS Controlled Committee Matters only after the JEC discusses such matters and the basis for BMS’ proposed decision on such matters, and only after reasonably considering Medarex’s comments (through its JEC members) on such matters and the proposed BMS decision.

 

(ii)                                 The BMS Controlled Committee Matters shall not be subject to escalation to the Designated Officers or other dispute resolution mechanisms contemplated by Article 16, except to the extent they involve Appealable Matters, Litigable Matters, Arbitrable Matters, Expert Matters or any matter listed in Section 16.1.4.  Any Appealable Matter, Litigable Matter, Arbitrable Matter, Expert Matter or any matter listed in Section 16.1.4 concerning any BMS Controlled Committee Matter, at the election of either Party by written notice to the other pursuant to Section 2.7.3(c)(iii), shall be submitted to the Designated Officers for resolution as provided in Article 16, and shall be deemed to be a Designated Officer Matter.

 

2.7.4   Meeting Agendas and Minutes .   Each Party shall disclose to the other proposed agenda items along with appropriate information at least ten (10) Business Days in advance of each meeting of the applicable Committee; provided that under exigent circumstances requiring Committee input, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as such other Party consents to such later addition of such agenda items or the absence of a specific agenda for such Committee meeting.

 

2.7.5  Working Groups .   From time to time, the JEC, JDC, JCC, JMC or JFC may establish and delegate duties to other committees, 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 applicable Committee.  Each such Working Group shall be constituted and shall operate as the JEC, JDC, JCC, JMC or JFC, as the case may be, determines; provided that each Working Group shall have equal representation from each Party.  Working Groups may be established on an ad hoc basis for purposes of a specific project, for the life of a Product, or on such other basis as the applicable

 

57

 

Committee may determine.  Each Working Group and its activities shall be subject to the oversight, review and approval of, and shall report to, the Committee that established such Working Group.  In no event shall the authority of the Working Group exceed that specified for the relevant Committee in this Article 2.  Any disagreement between the designees of BMS and Medarex on a Working Group shall be referred to the applicable Committee for resolution.

 

2.7.6  Interactions Between Committees and Internal Teams.   The Parties recognize that each Party possesses an internal structure (including various committees, teams and review boards) that will be involved in administering such Party’s activities under this Agreement.  Each Committee shall establish procedures to facilitate communications between such Committee or Working Group and the relevant internal committee, team or board of each of the Parties in order to maximize the efficiency of the Collaboration, including by requiring appropriate members of such Committee to be available at reasonable times and places and upon reasonable prior notice for making appropriate oral reports to, and responding to reasonable inquiries from, the relevant internal committee, team or board.

 

2.7.7  Project Managers .   Promptly after the Effective Date, each of the Parties shall appoint a single individual (who may, as such Party’s discretion, also serve as such Party’s Alliance Manager) to act as that Party’s project manager (each, a “ Project Manager ”), who will act as a single point of contact for its respective Party for all activities related to the Global Development Plan and Budget and any Annual Development Plans and Budgets, and timelines contained therein, including optimal execution of Development activities.  The Project Manager for each Party shall attend all JDC meetings as a non-voting participant.

 

2.8                                Alliance Managers.

 

2.8.1  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.

 

2.8.2  Responsibilities .   The Alliance Managers shall use good faith efforts to attend all Committee meetings and support the co-chairpersons 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 pursuant to Section 2.7.1.  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 Products in an effort to ensure consistency and efficiency throughout the world; (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)

 

58

 

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.

 

2.9                                Collaboration Guidelines.

 

2.9.1  General .   Each Party, in working with the other to Develop and Commercialize each Product and otherwise as set forth herein, shall assign responsibilities for the various operational aspects of the Collaboration to those portions of its organization that have the appropriate resources, expertise and responsibility for such functions and, consistent with this Agreement, treat each Product as if it were a proprietary product solely of its own organizations.  In all matters related to the Collaboration, the Parties shall strive to balance as best they can the legitimate interests and concerns of the Parties and to realize the full economic potential of each Product (taking into account the risks and costs of further Development and Commercialization).

 

2.9.2  Independence .   Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity.  The relationship between Medarex and BMS is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner.

 

2.10                         General Overview of Accounting.

 

2.10.1  Accounting Procedures.  For purposes of determining Development Costs and Allowable Expenses, any expense allocated by either Party to a particular category under Development Costs or Allowable Expenses for a particular Product shall not also be allocated to another category under Development Costs or Allowable Expenses for such Product.  Each Party shall determine Development Costs and Allowable Expenses with respect to each Product using its usual and customary accounting procedures, consistently applied, to the maximum extent practical as if each such Product were a solely-owned product of the Party.  The Parties also recognize that such procedures may change from time to time and that any such changes may affect the calculation of Development Costs or Allowable Expenses and such other expenses.  Where the change is or would be material to the other Party, the Party proposing to make the change shall provide the other Party with an explanation of the proposed change and an estimation of the effect of the change on the relevant cost or expense category.  The Parties shall use good faith efforts to negotiate any changes to this Agreement so as to preserve as closely as reasonably possible the Parties’ respective economic interests under this Agreement.  If the Parties fail to agree on whether or how to make any such change, such dispute shall be resolved by the JFC, subject to Section 2.7.3(c) and, at the election of either Party, ultimate resolution by an Expert as provided in Section 16.2 (following compliance with Sections 2.7.3(c) and 16.1.1), provided such Expert’s determination shall preserve as closely as reasonably possible the economic interests of the Parties under this Agreement.  Transfers between a Party and its Affiliates (or between such Affiliates) shall not have any effect for purposes of calculating revenues, costs, profits, royalties or other payments or expenses under this Agreement.

 

59

 

2.10.2  Affiliate Agreements.   If either Party enters into any agreement with an Affiliate for the provision of materials or services pursuant to this Agreement, all costs incurred for the provision of such materials or services that are shared by the Parties under this Agreement shall, for purposes of determining Profit and Loss with respect to the United States or Development Costs, be accounted for on the basis otherwise provided for in this Agreement ( e.g. FTEs) and not on the basis of any higher or lower transfer price in effect between such Party and such Affiliate.  If a Party enters into an agreement with a Third Party for the provision of materials or services pursuant to this Agreement, and if such Party possesses a twenty percent (20%) or more ownership interest in such Third Party, then, for purposes of determining Profit and Loss only with respect to the United States or Development Costs, all costs incurred for the provision of such materials or services by such Third Party that are shared by the Parties under this Agreement shall be accounted for on the basis of (i) the transfer price in effect under the agreement between such Party and such Third Party, if such transfer price is comparable to that which such Third Party agrees to with other Third Parties in the ordinary course of business, or (ii) otherwise, a price to be negotiated in good faith by the Parties that excludes the contracting Party’s profit interest in any amounts it may realize pursuant to such agreement with such Third Party.  Nothing in this Section 2.10.2 or elsewhere in this Agreement is intended to modify or affect, or shall be interpreted to modify or affect, the actual transfer price imposed in transactions between BMS and any of its Affiliates or any Third Party, twenty percent (20%) or more of which Third Party’s voting securities are owned by BMS, for the purchase and supply of services, materials or Products.

 

2.11                         Compliance with Law.   Each Party hereby covenants and agrees to comply with Applicable Law in performing its activities connected with the Development, manufacture and Commercialization (as applicable) of each Product.

 

ARTICLE 3

 

DEVELOPMENT AND REGULATORY

 

3.1                                Current Status of Development of Lead Product and the Lead Agents .   As of the Effective Date, (a) Medarex is conducting the Melanoma Trial and (b) the Parties plan to initiate the Clinical Trials for other Indications as set forth in the Global Development Plan and Budget as Previously Disclosed for the Lead Product and the Lead Agents.

 

3.2                                Global Development Plans and Budgets and Annual Development Plans and Budgets.

 

3.2.1  Comprehensive Development Plans and Budgets.   The Development of a Product for each Indication shall be governed by a comprehensive, multi-year, worldwide plan covering the Development of such Product for each such Indication for use in the United States, Canada, each of the Major European Countries and Europe as a whole, Japan and, broken out on a Region-by-Region or country-by-country basis only to the extent BMS does so for its own internal oncology products, the remaining countries in the Territory, and a budget relating to such Development for the United States for each such Indication, including all Clinical Trials, wherever conducted.  Each such plan and budget for an Indication for a Product (a “Global Development Plan and Budget” ) shall: (a) provide a planned Development program and budget

 

60

 

that is designed to generate the non-clinical, clinical and regulatory information required for filing Drug Approval Applications and to achieve Approvals and Compendia Listings, as applicable, for such Indication in the United States; (b) provide a planned Development program that, consistent with Section 3.6, is designed to generate the non-clinical, clinical and regulatory information required for filing Drug Approval Applications and to achieve Approvals for such Indication in the Royalty Territory, (c) indicate, for each Clinical Trial and other Development activity identified therein, whether such Clinical Trial and activities will be relied on in support of Initial Regulatory Approval (or, with respect to the United States, a Compendia Listing, as applicable) for such Indication in the United States, the EU or Japan, and, if such Clinical Trial or activity is in support of Initial Regulatory Approval (or a Compendia Listing, as applicable) for an Indication in the United States, a budget for the Clinical Costs and other Development Costs of such Clinical Trials and other activities; (d) set forth the Success Criteria and Decision Points for the Development of such Indication; and (e) set forth those obligations assigned to each Party with respect to the performance and funding of the Development activities contemplated by such Global Development Plan and Budget.

 

(a)                                   Lead Product and Lead Agents.   The Global Development Plan and Budget for the Lead Product and Lead Agents as of the Execution Date shall be as Previously Disclosed.  Any update, amendment or modification to, or waiver of, any provisions of the Global Development Plan and Budget for the Lead Product or Lead Agents shall require the approval of the JEC, provided that any dispute in the JEC with respect to the foregoing shall be resolved as provided in Section 2.7.3(c) and, if applicable, Article 16.  If any such dispute in the JEC is submitted to the Designated Officers (pursuant to Section 2.7.3(c)) but is not resolved in accordance with Section 16.1.1 or 16.1.4, then, except as otherwise provided in Section 3.2.1(b) with respect to any amendments to an existing Global Development Plan and Budget for a new Additional Indication, the applicable update, amendment or modification to, or waiver of, the Global Development Plan and Budget shall not become effective.  Any decision to pursue a Compendia Listing in lieu of an Approval, or an Approval in addition to a Compendia Listing, for a Lead Indication shall require the agreement of the Parties.

 

(b)                                   Additional Products and Additional Indications.  At any time after the Effective Date and during the term of this Agreement, either Party may propose to the JDC the Development of an Additional Product or an Additional Indication under this Agreement.  The proposing Party shall provide to the JDC such material information and materials pertaining to the proposed Additional Product or Additional Indication (i) as would be provided to, or otherwise relied upon by, such proposing Party’s management ( i.e. , for BMS, its Vice President of Oncology Clinical Development and for Medarex, its Senior Vice President of Product Development) and applicable internal senior management committees ( e.g. , for BMS, its Early Development Operating Committee and Brand Development Operating Committee, or its equivalent) in determining to proceed with the Development of such Additional Product or Additional Indication, (ii) such other information and Materials as the other Party may reasonably request and as may be reasonably available, and (iii) with respect to any new Product, a detailed description of the applicable Additional Antibody and its properties, including the amino acid sequences for CDR 1, 2 and 3 of the heavy chain variable region (the “ Antibody Data ”).  The JDC shall discuss, and the JEC shall determine, in accordance with Article 2, subject to Section 3.2.1(c) in the case of a Product based on or incorporating a new Antibody, whether to pursue the proposed Development of such Additional Product or Additional

 

61

 

Indication; provided that any disputes shall be subject to escalation to the Designated Officers of the Parties pursuant to Section 16.1.1 (following compliance with Section 2.7.3(c)); and provided further that if the JEC or the Designated Officers, as applicable, cannot resolve the matter, then BMS shall have the right to finally resolve the dispute in accordance with Section 16.1.5 (following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1).  If the Development of such Additional Product or Additional Indication is approved by the JEC (or the Designated Officers or BMS, as applicable), BMS, in consultation with Medarex, shall prepare and propose to (1) the JDC for its review, and then to the JEC for its approval, a Global Development Plan and Budget, or an amendment to an existing Global Development Plan and Budget, that meets the requirements set forth in Section 3.2.1 above and (2) the JCC for its review, and then to the JEC for its approval, a Global Commercialization Plan and Budget, or an amendment to an existing Global Commercialization Plan and Budget, that takes account, to the extent reasonably known or anticipated, of the impact of the Development of each such Additional Product or Additional Indication and any resulting Approvals or Compendia Listings, as applicable, on the Commercialization of such Product and that meets the requirements set forth in Section 5.2; provided that any disputes shall be subject to escalation to the Designated Officers of the Parties pursuant to Section 16.1.1 (following compliance with Section 2.7.3(c)); and provided further that if the JEC or the Designated Officers, as applicable, cannot resolve the dispute, then BMS shall have the right to finally resolve the dispute pursuant to Section 16.1.5 (following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1) (except with respect to any disputes as to whether to pursue for an Indication a Compendia Listing or an Approval, which shall require the agreement of the Parties and any disputes with respect to Decision Points and Success Criteria, which shall be resolved by an Expert pursuant to Section 16.2, following compliance with Sections 2.7.3(c) and 16.1.1).  Once a Global Development Plan and Budget, or an amendment to an existing Global Development Plan and Budget, as applicable, is first approved for a new Additional Product or Additional Indication, neither Party may update, amend, modify or waive any provisions of such a Global Development Plan and Budget, except with the written consent of the JEC; provided that (x) any disputes with respect to Development activities conducted to support Approval of Indications (or Compendia Listings) in the United States (other than with respect to Partially Co-Funded Indications after the commencement of the first Pivotal Trial with respect thereto for so long as such Indication remains a Partially Co-Funded Indication) shall be resolved by the Designated Officers of the Parties (following compliance with Section 2.7.3(c), and in accordance with Section 16.1.1); and provided further that if the Designated Officers cannot resolve the matter, and the Parties cannot agree (in accordance with Section 16.1.4, following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1), then such update, amendment, modification or waiver of the Global Development Plan and Budget shall not become effective, and (y) any disputes that relate to Development activities conducted solely to support Approvals (A) in the Royalty Territory or (B) for Partially Co-Funded Indications after the commencement of the first Pivotal Trial with respect thereto (and for so long as such Additional Indication remains a Partially Co-Funded Indication), in each case ((A) and (B)), shall be resolved by the Designated Officers of the Parties (following compliance with Section 2.7.3(c), and in accordance with Section 16.1.1); and provided further that if the Designated Officers cannot resolve the matter, then BMS shall finally resolve the dispute in accordance with Section 16.1.5 (following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1).

 

62

 

(c)                                   Excluded Antibodies.  In the event that, pursuant to Section 3.2.1(b), BMS proposes to research or Develop any Antibody other than the Lead Antibody, then, within thirty (30) days of BMS’ proposal to the JDC pursuant to Section 3.2.1(b), including the receipt by Medarex of all Antibody Data with respect thereto, Medarex shall inform BMS if such Antibody is an Excluded Antibody.  Neither a Party or its Affiliates shall have the right to research, develop or commercialize any Excluded Antibody, or any product that contains or incorporates an Excluded Antibody hereunder.

 

(d)                                   Medarex Performance and Funding Restriction.   Notwithstanding anything contained in this Agreement to the contrary, without its written consent, Medarex shall have no obligation to (w) perform in connection with this Agreement any Development activities in addition to those assigned to Medarex in the Global Development Plan and Budget or in an Annual Development Plan and Budget for an Indication, (x) fund any Development activities in addition to those set forth in the Global Development Plan and Budget or in an Annual Development Plan and Budget for an Indication except with respect to Development Overruns as provided in Section 3.7.1(f); (y) perform or fund any Excluded Activities; or (z) perform or fund any Development activities conducted solely to support Approval in the Royalty Territory.  Notwithstanding the preceding sentence:

 

(i)                                     Medarex will not unreasonably withhold its consent to any Annual Development Plan and Budget proposed by BMS for a Clinical Trial set forth in the applicable Global Development Plan and Budget that, as long as it is consistent with the total estimated costs for such Clinical Trial set forth in the Global Development Plan and Budget, reflects annual spends for such Clinical Trial that are different from the corresponding estimated annual spends set forth in the Global Development Plan and Budget (it being understood that the annual allocation of the Clinical Costs for a Clinical Trial set forth in the Global Development Plan and Budget will be a good faith estimate only (as distinguished from the total costs for a Clinical Trial set forth in the Global Development Plan and Budget, which are also good faith estimates, but which are binding, subject to Section 3.7.1(f), unless subsequently amended pursuant to the last sentence of Section 3.2.1(b))).

 

(ii)                                 If a Regulatory Authority advises or requires that the Parties conduct additional Clinical Trials or expand an existing planned Clinical Trial to support the Approval of an Indication in the United States, neither Party will unreasonably withhold its consent to same (and the amendment of any applicable plans and budgets to reflect same) and to the sharing of any additional Development Costs that may reasonably be incurred thereby in accordance with Section 3.7.1(a); provided, however, that this provision shall not affect each Party’s right to consent (or withhold its consent) to any shift from seeking a Compendia Listing for a particular indication to seeking an Approval for such indication, or vice versa.

 

3.2.2  Annual Development Plans and Budgets.

 

(a)                                   In General.   The Development of each Product for each Indication for a given calendar Year shall be governed by detailed and specific worldwide Development plans covering all material Development activities to be performed for such Indication for such Year, and budgets covering all Development Costs for those Development activities for such Indication conducted in support of Approvals or Compendia Listings in the United States (each

 

63

 

such plan, when approved by the JEC (or, in the event of any dispute, in accordance with Section 2.7.3(c) and, if applicable, Article 16), an “ Annual Development Plan and Budget ”).  Each Annual Development Plan and Budget shall be proposed by BMS, in consultation with Medarex, for approval by the JEC (or, in the event of any dispute, in accordance with Section 2.7.3(c) and, if applicable, Article 16).  Subject to Sections 3.2.1(d) and 3.2.3(d), each Annual Development Plan and Budget for an Indication, and any modifications thereto, shall cover, and be consistent in all material respects with, all the Development activities and budgets in the then-current Global Development Plan and Budget for such Indication that are to be performed in that particular calendar Year.

 

(b)                                   Adoption of Annual Development Plans and Budgets for the Lead Product and Lead Agents.  BMS shall, in consultation with Medarex, prepare and propose the Annual Development Plan and Budget for the Lead Product and Lead Agents for calendar Year 2005 to the JEC for its review, comment and approval promptly after the Effective Date with the goal of no later than forty-five (45) days after the Effective Date.  Thereafter, BMS shall, in consultation with Medarex, prepare and propose each Annual Development Plan and Budget for a calendar Year to the JEC for its review, comment and approval by not later than September 30 of the immediately preceding calendar Year with a goal of having the Annual Development Plan and Budget approved, and any disputes resolved, by October 31 of such immediately preceding calendar Year.

 

(c)                                   Adoption of Annual Development Plans and Budgets for Each Additional Product or Additional Indication.   Within thirty (30) days after the date on which a Global Development Plan and Budget (or an amendment to an existing Global Development Plan and Budget, as the case may be) is first approved with respect to an Additional Indication for a Product, BMS, in consultation with Medarex, shall propose to the JDC for its review and comment, for approval by the JEC, an Annual Development Plan and Budget for such Indication, covering the activities contemplated by the Global Development Plan and Budget with respect thereto for the remainder of such calendar Year and the next subsequent calendar Year.  Thereafter, BMS, in consultation with Medarex, shall prepare and submit to the JDC for review and comment, and for approval by the JEC, the Annual Development Plan and Budget for such Additional Indication(s) in accordance with the same terms and conditions set forth in Section 3.2.2(b) as apply to the Lead Product.

 

3.2.3  Decision Points and Success Criteria for Development Activities.

 

(a)                                   In General.   Subject to the terms of Section 3.2.3(b), each Global Development Plan and Budget shall include decision points (the “ Decision Points ”) and success criteria (the “ Success Criteria ”) against which the Parties shall measure the overall success of the Development program for a particular Product for an Indication in the Territory, and by which the Parties shall determine whether results and achievements with respect to such Indication justify the continued Development of such Product for such Indication.

 

(b)                                   Adoption of Decision Points and Success Criteria.   Any and all Decision Points and Success Criteria for each Product for each Indication shall be set forth in the Global Development Plan and Budget for such Product for such Indication.  Once the Success Criteria and Decision Points have been approved for a given Indication by the JEC (as provided

 

64

 

in Article 2) or, in the event of a dispute, an Expert in accordance with Section 16.2 (following compliance with Sections 2.7.3(c) and 16.1.1), they need not be re-approved with respect to any subsequent Global Development Plan and Budget, and shall not be subject to change or supplementation except as the Parties may mutually agree in the Global Development Plan and Budget or otherwise.  The Decision Points and Success Criteria for the Lead Product for the Lead Indications and with respect to the Lead Agents are as Previously Disclosed.  Any and all Decision Points and Success Criteria for any Additional Indications shall be set forth in the first Global Development Plan and Budget, or the first amendment to an existing Global Development Plan and Budget, as applicable, for such Additional Indication.

 

(c)                                   Satisfaction of Success Criteria.   If, at an applicable Decision Point, the JDC (or the JEC (in accordance with Article 2) or an Expert in accordance with Section 16.2 (following compliance with Sections 2.7.3(c) and 16.1.1)), determines that the Development activities required to be performed pursuant to a Global Development Plan and Budget have satisfied the applicable Success Criteria, neither Party shall have the right to discontinue performing the Development activities required under the Global Development Plan and Budget or the applicable Annual Development Plan and Budget with respect to such Indication(s) that are triggered by such satisfaction of such Success Criteria, unless the Parties mutually agree in writing to discontinue such Development activities; provided, however, that BMS shall have the right, in consultation with Medarex through the JEC, to discontinue performing (i) Development activities conducted solely in support Approvals in the Royalty Territory for an Additional Indication for a Product, and (ii) Excluded Activities.

 

(d)                                   Consequences of Failure to Satisfy Success Criteria.   If, at an applicable Decision Point, the JDC (or the JEC (in accordance with Article 2) or an Expert in accordance with Section 16.2 (following compliance with Sections 2.7.3(c) and 16.1.1)), determines that the Development activities required to be performed pursuant to a Global Development Plan and Budget have not satisfied the applicable Success Criteria, neither Party shall have the right or obligation to continue performing the Development activities required under the Global Development Plan and Budget or the applicable Annual Development Plan and Budget with respect to such Indication(s) that are conditioned on the satisfaction of such Success Criteria, unless the Parties mutually agree in writing (or through the applicable Committee) to continue such Development activities.  If the Parties do not mutually agree to continue the Development activities with respect to which such Success Criteria are not met, then, notwithstanding any language to the contrary that may be contained in the applicable Global Development Plan and Budget or any applicable Annual Development Plan and Budget: (i) such Development activities shall terminate immediately (consistent with an appropriate phase-out of any ongoing studies not yet completed); (ii) neither Party shall have any further obligation to continue funding such Development activities (other than payment of costs previously incurred and not yet paid or required for any phase-out); and (iii) all costs allocated in such Global Development Plan and Budget or such Annual Development Plan and Budget for further Development of such Product for such Indication shall not be available to the Parties to spend on the Development of other Products or Indications, unless the Parties otherwise mutually agree in writing.

 

3.2.4  Clinical Trials Outside Plans and Budgets .   Except as permitted under this Section 3.2.4 or in Section 3.13, and without limitation of anything contained in Section 10.5

 

65

 

or 14.5, after the Execution Date and during the term of this Agreement neither a Party nor any of its Affiliates shall, directly or through any Third Party, sponsor, conduct or cause to be conducted, otherwise assist in, supply any Product for use in connection with, or otherwise fund, any clinical trial or clinical study of any Product outside of the Global Development Plan and Budget or any Annual Development Plan and Budget, without the prior written consent of the other Party, except that approval of the other Party shall not be required for the following:

 

(a)                                   Medarex may conduct, or assist with, a clinical trial for any product containing an Antibody, or supply to Third Parties Antibody in connection with clinical trials, in each case solely in accordance with the Existing Out-License Agreements, as such agreements exist as of the Execution Date and the Other Existing Agreements and Studies, including Protocol Nos. MDX-010-10, MDX-010-016 and MDX-010-012.  To the extent not set forth in a Global Development Plan and Budget now or in the future, the costs associated with the conduct of the clinical trials, tests, studies or other activities that Medarex may conduct in accordance with (i) the Existing Out-License Agreements, and (ii) the Other Existing Agreements and Studies to the extent that they do not relate to the Global Development Plan and Budget as Previously Disclosed, shall be excluded from Development Costs or Allowable Expenses and, as between the Parties, shall be borne solely by Medarex, and Medarex shall, as between BMS and Medarex, be solely responsible for any liability or cost arising out of the conduct of such activities, provided that if, at any time, the efficacy data from any such activities is used in support of an Approval (or Compendia Listing) for a Product or MDX-1379 (for clarity, efficacy data shall not be deemed to be used in support of an Approval if it is reported to a Regulatory Authority solely to comply with a requirement to report worldwide clinical studies to such Regulatory Authority and is not otherwise relied on in support of such Approval), then any Third Party liabilities (except to the extent that such liabilities result from the negligence of Medarex or a Claim that Medarex was obligated, but failed, to disclose pursuant to the proviso at the end of this sentence) with respect to such activities shall be shared by the Parties hereunder to the same extent as if such activities were conducted under a Global Development Plan and Budget; and provided further that if BMS wishes to use efficacy data from any such activity in support of an Approval (or Compendia Listing) for a Product or MDX-1379, Medarex shall, upon BMS’ written request, provide BMS with any information regarding any material Claim arising in connection with, or relating to, such activities that had been filed or threatened in writing prior to the date of such request;

 

(b)                                   Each Party shall be entitled to conduct at its own expense and in its discretion any Pre-Clinical Activities with respect to a Product, Antibody and MDX-1379 that are not required to be submitted in order to obtain or maintain Approval (or a Compendia Listing) of a Product or MDX-1379, and shall share any results obtained with the other Party quarterly, provided that any Information or inventions made in the conduct of such activities shall be Collaboration Technology; provided , however , any Information or inventions made in the conduct of such activities that relate solely and specifically to an Immunotherapeutic Agent (other than MDX-1379) that is controlled by a Party at the time such activities are conducted, shall be Non-Collaboration Technology;

 

(c)                                   BMS may conduct Phase IV Studies for Co-Promotion Products in the Royalty Territory or for Non-Co-Promoted Products anywhere in the world; provided that the

 

66

 

JDC (or a Working Group designated by the JDC) shall have approved the study design for scientific integrity; and

 

(d)                                   Each Party may at its own expense conduct Clinical Trials for the development of any other product controlled by it (and that does not contain or use an Antibody or Non-Antibody Substance) in which a Product (i) is used as a comparator within the labeling approved for it by the Regulatory Authority for the country in which the Clinical Trial is conducted, and (ii) is one that the applicable Regulatory Authority for such country requires or advises be used as a comparator product for the product being studied; provided , however , neither Party may use Collaboration Know-How relating to a Product unless it is in the public domain, or reference any Drug Approval Applications, Approvals or other regulatory filings for a Product, in support of any filings with the Regulatory Authorities for such other product and neither Party has a right of reference to any Product Approvals.

 

3.2.5  MDX-1379 .   MDX-1379 shall be Developed on the same terms as the Lead Antibody for purposes of this Article 3, provided that any Development with respect to MDX-1379 beyond that which is set forth in the Global Development Plan and Budget for the Lead Product and MDX-1379 as Previously Disclosed must be approved as provided in Article 2 and, as applicable, Article 16.

 

3.3                                Lead Development Party and Lead Regulatory Party.

 

3.3.1  In General.   Under the direction and supervision of the JDC and the RWG, and subject in each case to the applicable Global Development Plan and Budget and the applicable Annual Development Plans and Budgets, and except as otherwise provided elsewhere in this Agreement, (a) the Lead Development Party shall have primary responsibility for the day-to-day implementation of the Development activities required to obtain and maintain Approval of each Product for an Indication in a country, or one or more Clinical Trials for an Indication, wherever conducted, including the performance of clinical Development activities with respect thereto, and (b) the Lead Regulatory Party shall have primary responsibility for the day-to-day implementation of the regulatory activities required to obtain and maintain Approval of each Product for all Indications in a country.  Subject to the terms of this Agreement, the Lead Regulatory Party for a given Product in a country shall take the lead with respect to communications with the Regulatory Authorities in such country, shall designate a representative to serve as the designated regulatory official for such Product in such country or regulatory jurisdiction, and shall be the primary contact/interface with such Regulatory Authorities.

 

3.3.2  Designation of Lead Development Party and Lead Regulatory Party .   Subject to Sections 10.5 and 14.5 and the other terms of this Agreement, as between the Parties:

 

(a)                                   BMS shall be (i) the Lead Development Party for each Clinical Trial that is intended solely to support Approval of (A) a Product and, if applicable, MDX-1379 in the Royalty Territory or (B) a Product and MDX-1379 for a Partially Co-Funded Indication and (ii) the Lead Regulatory Party for each Product in the Royalty Territory.

 

(b)                                   The JDC shall designate in each Global Development Plan and Budget which Party shall be (x) the Lead Development Party for each Clinical Trial that is

 

67

 

intended to support Approval of a Product or MDX-1379 in the United States (other than with respect to Clinical Trials that are intended solely to support Approval of a Product and MDX-1379 for a Partially Co-Funded Indication), which designation shall be made by the JDC based upon the best interests of the Collaboration and (y) the Lead Regulatory Party for each Product and MDX-1379 in the United States.

 

(i)                                     It is anticipated as of the Effective Date that the JDC generally will designate BMS as the Lead Development Party for the Clinical Trials that are intended to support Approval of Products and MDX-1379 in the United States for the Lead Indications; provided , however , that Medarex shall be the Lead Development Party for the Melanoma Trial.  Unless the JDC agrees otherwise, BMS shall be the Lead Regulatory Party for the Lead Product and MDX-1379 in the United States.

 

(ii)                                 With respect to the Development of Additional Products and Additional Indications for each Product, in each case, to the extent consistent with the terms and conditions of this Agreement, the JDC shall determine which Party shall be (A) the Lead Development Party for each such Indication in the United States and each Clinical Trial that is intended to support Approval of such Product or Indication in the United States (in accordance with the principles set forth in the first sentence of this Section 3.3.2(b)) and (B) the Lead Regulatory Party for each Additional Product in the United States, with any dispute with respect to any of the foregoing ((A) or (B)) to be resolved by an Expert as set forth in Section 16.2 following compliance with Sections 2.7.3(c) and 16.1.1.

 

3.4                                Clinical and Regulatory Matters in the United States; Recalls and Withdrawals .   With respect to Products in the United States and subject in all respects to Sections 10.5 and 14.5:

 

3.4.1  Ownership of Regulatory Filings and Approvals.

 

(a)                                   Lead Product and MDX-1379.  As promptly as practicable after the Effective Date (but no later than ninety (90) days after the Effective Date, unless the Parties agree otherwise) and in accordance with the Global Development Plan and Budget for the Lead Product and MDX-1379 and the terms of this Agreement, (i) BMS, as the Lead Regulatory Party, shall assume, as between the Parties, sole ownership, control of and responsibility for all Approvals and other regulatory filings for the Lead Product and MDX-1379 for the Lead Indication and any subsequent Additional Indications in the United States, and (ii) Medarex shall cooperate with BMS in connection with such filings as reasonably requested by BMS, including by Medarex’s assigning to BMS any regulatory filings owned by Medarex or any of its Affiliates within such ninety (90)-day period (or such longer period as the Parties agree otherwise); provided , however , unless otherwise agreed by the Parties, Medarex shall retain all INDs relating to studies that are not included in the Global Development Plan and Budget as Previously Disclosed.  Each Party shall bear its own personnel costs in connection with the initial transfer of such responsibilities to BMS (but BMS shall reimburse Medarex for any direct out-of-pocket costs incurred by Medarex in connection with such initial transfer after the Effective Date), and any such costs incurred by each Party in connection with such transfer shall be excluded from Development Costs.

 

68

 

(b)                                   Additional Products.   All Approvals and other regulatory filings within the United States relating to any Additional Product Developed hereunder for any Indication shall be the sole property of the applicable Lead Regulatory Party and held in the name of the Lead Regulatory Party or its designated Affiliate(s), regardless of whether the other Party is the Lead Development Party with respect to such Product for a given Indication.

 

3.4.2  Preparation of Regulatory Submissions .   Through their members on the JDC, Medarex and BMS shall cooperate in the drafting and review of all submissions (including any supplements or modifications thereto, but excluding routine adverse event filings ( i.e., not relating to serious adverse events as defined by Applicable Law)) to the FDA (including the preparation of an electronic submission of a BLA to the FDA, with the applicable Lead Regulatory Party having primary responsibility for preparing the electronic dossier for each Indication).  Each Party shall promptly provide the other with copies of all written or electronic communications received by it from, or sent by it to, the FDA with respect to obtaining and maintaining, Approvals for an Indication for a Product in the United States (it being understood that routine adverse event filings ( i.e., not relating to serious adverse events as defined by Applicable Law)) shall not fall within the meaning of maintenance) and copies of all contact reports produced by such Party.

 

3.4.3  Notice of Regulatory Filing Requirements.   The Lead Development Party and the Lead Regulatory Party each shall provide to the other Party, within two (2) Business Days of discovery by such lead Party, notice of any event with respect to any Product or Agent that triggers any FDA filing requirement that is subject to a deadline imposed by the Act of less than twenty-one (21) days after the discovery of such an event.  The co-chairpersons of the JDC shall discuss in good faith and on a timely basis determine the most effective and expeditious means of responding to such FDA filing requirement.

 

3.4.4  Notice of Changed Regulatory Requirements.   The Lead Regulatory Party shall provide notice to the other Party of any additional requirements which the FDA may impose with respect to obtaining or maintaining Approval for a Product for an Indication (including additional Clinical Trials), and of all FDA inquiries with respect to a Product or Agent requiring a response within two (2) Business Days of receipt thereof by such lead Party.

 

3.4.5  Regulatory Meetings.   The Lead Regulatory Party shall provide the other Party with notice of all meetings, conferences, and discussions (including FDA advisory committee meetings and any other meeting of experts convened by the FDA concerning any topic relevant to a Product, an Indication or Agent, as well as Product labeling and post-Approval Product labeling discussions with the FDA) scheduled with the FDA concerning any pending Drug Approval Application or any material regulatory matters relating to a Product or Agent within two (2) Business Days after such lead Party receives notice of the scheduling of such meeting, conference, or discussion (or within such shorter period as may be necessary in order to give the other Party a reasonable opportunity to participate in such meetings, conferences and discussions).  The other Party shall be entitled to have reasonable representation present at, and to participate in, all such meetings, conferences or discussions.  Medarex’s and BMS’ respective members of the JDC shall use reasonable efforts to agree in advance on the scheduling of such meetings and on the objectives to be accomplished at such meetings, conferences, and discussions and the agenda for the meetings, conferences, and discussions with

 

69

 

the FDA.  The Lead Regulatory Party shall use good faith efforts to include the other Party, to the extent practical, in any unscheduled, ad-hoc meetings, conferences and discussions with the FDA concerning any pending IND, Drug Approval Application or any material regulatory matters relating to a Product or Agent.

 

3.4.6  Regulatory Data .   Each Party shall provide to the other Party on a timely basis copies of all material pre-clinical and clinical data compiled in support of a Drug Approval Application or other regulatory filings in the United States with respect to (a) each Product, alone or for use together, or in combination, with an Agent and (b) MDX-1379 (via electronic copies of such data in a form that may be analyzed and manipulated by the other Party).

 

3.4.7  Regulatory Submissions .   Each Party shall have a right to review and approve (through its members of the appropriate Committee), the content and subject matter of, and strategy for, each BLA to be filed in the United States, all correspondence submitted to the FDA related to clinical trial design, all proposed Product labeling (including the final FDA-approved labeling) and post-Approval labeling changes.

 

3.4.8  Recalls .   Any decision to initiate a recall or withdrawal of a Product or MDX-1379 in the United States shall be made by the applicable Lead Regulatory Party, after consultation with the JEC, provided that if, as a result of patient safety concerns, there is not sufficient time for the JEC to meet, and in any event before the applicable Lead Regulatory Party 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.  The costs of any such recall or withdrawal relating to (a) the Development of a Product or MDX-1379 for an Indication prior to the Initial Regulatory Approval (or Compendia Listing) for such Indication (other than with respect to a recall related to a Partially Co-Funded Indication) or the Commercialization of a Co-Promotion Product, each shall be Regulatory Expenses, and (b) the Development of a Product or MDX-1379 for a Partially Co-Funded Indication or the Commercialization of a Non-Co-Promoted Product, each shall be borne solely by BMS and shall be excluded from Development Costs and Allowable Expenses, except, in each case ((a) and (b)), to the extent that any such recall or withdrawal is attributable to (x) the negligence of a Party, in which event such Party shall bear such costs or (y) the negligence of both Parties, in which event each Party shall bear such costs to the extent of its respective responsibility; and in either case ((x) or (y)), such costs shall be excluded from Development Costs and Allowable Expenses.  Under no circumstances shall either Party unreasonably object to a recall or withdrawal requested by the other Party, and with respect to Co-Promotion Products, neither Party shall have any right to object to a recall or withdrawal requested by the other Party for failure of a Product to meet the Specifications, for material safety concerns, for the manufacture of such Product in a manner that does not comply with the Act or as requested by Regulatory Authorities.  In the event of any recall or withdrawal, the Lead Regulatory Party shall take any and all necessary action to implement such recall or withdrawal in accordance with Applicable Law, with assistance from the other Party as reasonably requested.

 

3.4.9  Common Efficacy Database.   If deemed appropriate by the JDC, the Parties will establish a common database for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of efficacy data arising from Clinical Trials for Products.  The Parties shall agree upon guidelines and procedures for such common

 

70

 

database that shall be in accordance with, and enable the Parties and their Affiliates to fulfill their reporting obligations under Applicable Law.  Furthermore, such guidelines and procedures shall be consistent with relevant International Council for Harmonisation (ICH) guidelines.  The Parties’ costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging such efficacy data shall be included as an element of Development Costs or as Allowable Expenses (to the extent specifically identifiable to or reasonably allocable to the Development or Commercialization of Products for the United States), calculated on a FTE Cost and direct out-of-pocket cost basis.

 

3.4.10  Pricing and Reimbursement Approvals.   In the event pricing and reimbursement approvals become part of the regulatory process in the United States, the Lead Marketing Party shall take the lead in all pricing and reimbursement approval proceedings relating to each Product and MDX-1379 in the United States; provided that the other Party shall have the right to attend and participate in all meetings with Regulatory Authorities relating to pricing and reimbursement approvals for Products and MDX-1379.  The Lead Marketing Party shall provide the other Party with reasonable advance notice of all such meetings and advance copies of all related documents (including documents to be submitted in connection with pricing and reimbursement approvals) and other relevant information relating to such meetings.  The Parties’ costs incurred in connection with obtaining and maintaining pricing and reimbursement approvals for Co-Promotion Products shall be included as an element of Allowable Expenses, calculated on a FTE Cost and direct out-of-pocket cost basis.

 

3.4.11   Labeling.   Any decisions with respect to labeling for a Product in the United States shall be made by the JCC in consultation with the JDC pursuant to Section 2.4.2; provided that any dispute with respect to the foregoing shall be resolved in accordance with Section 2.7.3(c) and Article 16, if applicable.

 

3.4.12  Drug Naming Approvals.   The Lead Regulatory Party shall take the lead in drug naming approval proceedings with the Regulatory Authorities relating to each Product and MDX-1379 in the United States (both generic and with respect to the Product Trademark); provided that the other Party shall have the right to attend and participate in all meetings with Regulatory Authorities relating to drug naming approvals for Products and MDX-1379.  The Lead Regulatory Party shall provide the other Party with reasonable advance notice of all such meetings and advance copies of all related documents (including documents to be submitted in connection with drug naming approvals) and other relevant information relating to such meetings.  The Parties’ costs incurred in connection with obtaining and maintaining drug naming approvals for Co-Promotion Products shall be included as an element of Allowable Expenses, calculated on a FTE Cost and direct out-of-pocket cost basis.

 

3.4.13  Rights of Reference .   Each Party shall have the right to cross reference, file or incorporate by reference any regulatory submission or drug master file (as defined in the Code of Federal Regulations) (and any data contained therein) for any Product, or any component thereof, made in any country in the Territory (including all Approvals) in order to support regulatory submissions that such Party is permitted to make under this Agreement for any Product in the United States and to enable either Party to fulfill its obligations under this Agreement to Develop or manufacture (anywhere in the world) any such Product for use in the United States or Commercialize any such Product in the United States.  Each Party shall support

 

71

 

the other, as may be reasonably necessary, in obtaining Approvals for each Product in the United States, including providing necessary documents, or other materials required by Applicable Law to obtain Approvals, in each case in accordance with the terms and conditions of this Agreement and the applicable Approved Plans.

 

3.5                                Clinical and Regulatory Matters in the Royalty Territory; Recalls and Withdrawals .   With respect to Products in the Royalty Territory and subject in all respects to Sections 10.5 and 14.5:

 

3.5.1  Ownership of Regulatory Filings and Approvals.

 

(a)                                   Lead Product and MDX-1379.  As promptly as practicable after the Effective Date (but in no event later than ninety (90) days after the Effective Date, unless the Parties agree otherwise) and in accordance with the Global Development Plan and Budget (and subject to Section 3.5.6 below), (i) BMS, as the Lead Regulatory Party, shall assume, as between the Parties, sole ownership, control of and responsibility for all regulatory filings for the Lead Product and MDX-1379 for all Indications (whether such Indications are set forth in the initial Global Development Plan and Budget or are subsequently Developed) in the Royalty Territory, and (ii) Medarex shall cooperate with BMS in connection with such filings as reasonably requested by BMS, including by Medarex’s assigning to BMS such regulatory filings owned by Medarex or any of its Affiliates (to the extent related to the Lead Product and MDX-1379) within ninety (90) days after the Effective Date, unless the Parties agree otherwise; provided , however , unless otherwise agreed by the Parties, Medarex shall retain all INDs relating to studies that are not included in the Global Development Plan and Budget as Previously Disclosed.  Each Party shall bear its own personnel costs in connection with the initial transfer of such responsibilities to BMS (but BMS shall reimburse Medarex for any direct out-of-pocket costs incurred by Medarex in connection with such initial transfer after the Effective Date), and any such costs incurred by each Party in connection with such initial transfer within such ninety (90)-day period (or such longer period as the Parties agree otherwise) shall be excluded from Development Costs

 

(b)                                   Ownership of Approvals for Additional Products.   All Approvals and related regulatory filings in each country in the Royalty Territory relating to any Additional Product Developed hereunder for any Indication shall be the sole property of the Lead Regulatory Party in such country and held in the name of such Lead Regulatory Party or its designated Affiliate(s).

 

3.5.2  Preparation of Regulatory Submissions .   The Lead Regulatory Party in a country shall prepare and draft all submissions (including any supplements or modifications thereto and including the preparation of any electronic submission of a Drug Approval Application) to Regulatory Authorities in such country.  Through the Parties’ members on the JDC, the Lead Regulatory Party shall keep the other Party informed with respect to, and shall promptly provide to such other Party copies of, all material written or electronic communications received by it from, or sent by it to, (a) a Regulatory Authority in a Major Market Country or for the EU, and (b) a Regulatory Authority outside the Major Market Countries to the extent that the substance of such communications (i) vary materially from what the Lead Regulatory Party has already disclosed to such other Party with respect to a Major Market Country under this Section 3.5.2 and (ii) are material to the Collaboration.

 

72

 

3.5.3  Regulatory Meetings; Submissions and Other Communications .   The applicable Lead Regulatory Party shall provide the other Party with reasonable advance notice of all meetings, conferences or discussions (whether face-to-face or teleconference, and including any meeting of experts convened by Regulatory Authorities concerning any topic relevant to any Product, MDX-1379, or the use of an Agent with a Product) scheduled with Regulatory Authorities in any Major Market Country or for the EU concerning any material regulatory matters relating to a Product within two (2) Business Days after the scheduling of such meeting (or, to the extent practicable, within such shorter period as may be necessary in order to give the other Party a reasonable opportunity to participate in such meeting), and advance copies of all related documents and other relevant information relating to such meetings or other contacts.  Such other Party shall be entitled to have reasonable representation present at all such meetings and to participate in such meetings, conferences and discussions.  In addition, with respect to clinical and regulatory matters in the Royalty Territory, the Lead Regulatory Party shall promptly provide the other Party electronic copies of (in a form that may be analyzed and manipulated by such other Party) (a) all pre-clinical and clinical data compiled in support of regulatory filings in any Major Market Country or for the EU; (b) copies of all regulatory correspondence to or from any Regulatory Authority in any Major Market Country or for the EU; (c) advance copies of material, non-recurring submissions matters ( e.g. , filings related to new indications and proposed labeling, etc., but not routine adverse event report submissions ( i.e. , not relating to serious adverse events (as defined by Applicable Law)) to any Regulatory Authority in any Major Market Country or for the EU and the same opportunity to comment in advance on such submissions (and to have its comments considered in good faith by the Lead Regulatory Party) as the non-Lead Regulatory Party is provided with respect to the submissions to FDA under Section 3.4; (d) notices of any revocations of Approvals and any Product or Agent recalls or withdrawals in the Royalty Territory; and (e) reasonable responses to reasonable inquiries by non-Lead Regulatory Party regarding the Approval of the Products and Agents in the Royalty Territory, including reasonable access to the Lead Regulatory Party’s personnel in connection with such inquiries with respect to any Major Market Country or for the EU.  The Lead Regulatory Party shall promptly provide the other Party with copies of all other material documents and material correspondence pertaining to each Indication after they have been submitted to, or received from, Regulatory Authorities in the Major Market Countries or for the EU, and the Lead Regulatory Party shall provide the other Party with any English translations of such documents and correspondence that the Lead Regulatory Party has produced for its own use.  The Lead Regulatory Party shall use reasonable efforts to implement procedures reasonably designed to avoid failure to provide any material required to be provided to the other Party under this Section 3.5.3 and to cure any such failure promptly after its discovery.

 

3.5.4  Pricing and Reimbursement Approvals.   The Lead Marketing Party and its Affiliates shall take the lead in all pricing and reimbursement approval proceedings relating to each Product and MDX-1379 in the Royalty Territory, and the other Party shall have the right to attend all meetings with Regulatory Authorities relating to pricing and reimbursement approvals for Products and MDX-1379 in the Major Market Countries or the EU and to participate in material strategy sessions of the Lead Marketing Party or its Affiliates in preparation for any such proceedings; provided that if a meeting with a Regulatory Authority is one where the Lead Marketing Party reasonably believes the other Party’s attendance would be inadvisable for cultural reasons, the Lead Marketing Party shall discuss same first with the other Party through the JCC and such other Party shall not have the right to attend such meetings.  The Lead

 

73

 

Marketing Party shall provide the other Party with reasonable advance notice of all such meetings and advance copies of all related documents (including documents to be submitted in connection with pricing and reimbursement approvals) and other relevant information relating to such meetings, and shall provide reasonable responses to reasonable inquiries by the other Party regarding the pricing and reimbursement approvals (and any related meetings with Regulatory Authorities) in the Royalty Territory.

 

3.5.5  Recalls .   Any decision to initiate a recall or withdrawal of a Product or MDX-1379 in the Royalty Territory shall be made by the applicable Lead Regulatory Party, in consultation with the JEC, provided that if, as a result of patient safety concerns, there is not sufficient time for the JEC to meet, and in any event before the applicable Lead Regulatory Party 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.  Under no circumstances shall either Party unreasonably object to a recall or withdrawal requested by the other Party, and the non-Lead Regulatory Party shall have no right to object to a recall or withdrawal requested by the Lead Regulatory Party for failure of a Product to meet the Specifications, for material safety concerns, for the manufacture of such Product in a manner that does not comply with the Act or as requested by Regulatory Authorities.  In the event of any recall or withdrawal, the Lead Regulatory Party shall take any and all necessary action to implement such recall or withdrawal in accordance with Applicable Law, with assistance from the non-lead Party as reasonably requested by the Lead Regulatory Party.  The costs of any such recall or withdrawal in the Royalty Territory shall be borne solely by BMS, except to the extent that the recall or withdrawal is attributable to (x) the negligence of Medarex, in which event Medarex shall bear such costs or (y) the negligence of both Parties, in which event each Party shall bear such costs to the extent of its respective responsibility, and in either case ((x) or (y)), such costs shall be excluded from Development Costs and Allowable Expenses.  Except with respect to the negligence of Medarex as provided in the preceding sentence, BMS shall reimburse Medarex pursuant to Section 6.8 on an FTE cost and direct out-of-pocket cost basis for any assistance Medarex provides under this Section 3.5.5.

 

3.5.6  Labeling.   Any decisions with respect to labeling for a Product in the Royalty Territory shall be made by the JCC in consultation with the JDC pursuant to Section 2.4.2; provided that any disputes with respect to the foregoing shall be subject to escalation to the JEC pursuant to Section 2.7.3(c), provided that any disputes in the JEC shall be resolved by the applicable Lead Marketing Party.

 

3.5.7  Rights of Reference.   Each Party shall have the right to cross reference, file or incorporate by reference any regulatory submission or drug master file (as defined in the Code of Federal Regulations) (and any data contained therein) for any Product made in any country in the Territory (including all Approvals) in order to support regulatory submissions that such Party is permitted to make under this Agreement for any such Product in the Royalty Territory and to enable either Party to fulfill its obligations under this Agreement to Develop, manufacture (anywhere in the world), or Commercialize any such Product for use in the Royalty Territory.  Each Party shall support the other, as may be reasonably necessary, in obtaining Approvals for each Product in the Royalty Territory, including providing necessary documents, or other materials required by Applicable Law to obtain Approvals, in each case in accordance with the terms and conditions of this Agreement and the applicable Approved Plans.

 

74

 

3.6                                Development Diligence.   Subject to Sections 3.2.1 and 3.2.3 and the limitations set forth on Exhibit I of the Disclosure Letter as Previously Disclosed, Medarex and BMS shall each use Diligent Efforts to Develop (a) the Lead Product, alone or together or in combination with an Agent, and (b) MDX-1379, in each case ((a) and (b)) for the Lead Indications, and BMS shall use Diligent Efforts to obtain and maintain Approval in the United States for the Lead Indications and to Develop (a) the Lead Product, alone or together or in combination with an Agent, and (b) MDX-1379, and obtain and maintain Approval for the Lead Indications in each of the Major Market Countries and in the rest of the Royalty Territory as a whole.  Each Party shall have the same diligence obligations with respect to each Additional Product or Additional Indication for a Product Developed pursuant to Section 3.2.1(b), as such Party has under this Section 3.6 with respect to the Lead Product for the Lead Indications; provided that if Medarex Opts-Out with respect to an Additional Product or Additional Indication, then, subject to BMS’ rights to not proceed after an Opt-Out by Medarex pursuant to Section 3.8.2, to discontinue its Development in its entirety pursuant to Section 3.8.3(a), or to amend the applicable Approved Plans pursuant to Article 2 and, if applicable, Article 16, BMS shall have such diligence obligations with respect to such Additional Product or Additional Indication, as the case may be, but Medarex shall not have any such diligence obligations with respect to, and shall not otherwise have any obligation to perform, participate in, fund or otherwise support, any Excluded Activities.

 

3.7                                Costs of Development.

 

3.7.1  Development Cost Sharing .

 

(a)                                   Allocation of Development Costs.   Subject to this Section 3.7 and Sections 7.3.4 and 7.8.2 and the other terms and conditions of this Agreement, the Development Costs incurred by either Party after the Execution Date, in accordance with the applicable Global Development Plan and Budget and Annual Development Plan and Budget, or by Medarex prior to the Execution Date as Previously Disclosed, with respect to each Product for an Indication shall be borne by the Parties such that:

 

(i)                                     if intended, at the time such activities commence, to support Initial Regulatory Approval for such Indication in the United States and an Initial Regulatory Approval for such Indication in the EU, BMS bears sixty-five percent (65%) of such costs and Medarex bears thirty-five percent (35%) of such costs.  If the results of any such Development activities are subsequently used by BMS to support the Approval in other countries of such Product for such Indication, there shall be no further adjustment to the cost-sharing ratio by the Parties for such Development Activities.

 

(ii)                                 if intended, at the time such activities commence, to support a Compendia Listing for such Indication in the United States and an Initial Regulatory Approval for such Indication in the EU, (A) with respect to those Development activities that are sufficient to obtain such Compendia Listing, BMS bears sixty-five percent (65%) of such costs and Medarex bears thirty-five percent (35%) of such costs, and (B) with respect to all other Development activities for such Indication, BMS bears one hundred percent (100%) of such costs, provided that if both Parties subsequently agree to use the efficacy data from any such Development activities set forth in clause (B) to support an application for an Approval in the

 

75

 

United States, BMS will bear sixty-five percent (65%) and Medarex will bear thirty-five percent (35%) of such costs for such Development activities (and Medarex shall make reconciling payments as needed to reflect such split if previous cost sharing had not reflected same).

 

(iii)                             if intended, at the time such activities commence, solely to support an Initial Regulatory Approval or a Compendia Listing for such Indication in the United States, BMS and Medarex each bears fifty percent (50%) of such costs; provided that if BMS subsequently decides to use the efficacy data from any Clinical Trial included in such Development activities (A) to support an Approval in the EU, BMS will bear sixty-five percent (65%) and Medarex will bear thirty-five percent (35%) of such costs for such Clinical Trial (and BMS shall make reconciling payments as needed to Medarex to reflect such split if previous cost sharing had not reflected same); provided further that if the results of any such Development activities are subsequently used by BMS to support the Approval in other countries of such Product for such Indication, there shall be no further adjustment to the cost-sharing ratio by the Parties for such Development activities; (B) to support an Approval in Japan (if not also used to support an Approval in Europe), the Parties shall determine (and if they cannot agree, an Expert will determine pursuant to Section 16.2, following compliance with Sections 2.7.3(c) and 16.1.1) the amount for which BMS shall reimburse Medarex (which reimbursement shall be based on [*****]† ( e.g. , if BMS proposed to use data resulting from a Clinical Trial conducted for the United States to support Approval in Japan, and [*****] of [*****], then BMS shall pay [*****] of the Development Costs for such Clinical Trial, and the Parties shall share[*****]  the remaining [*****] of the Development Costs for such Clinical Trial)), and BMS shall make reconciling payments to Medarex as needed to reflect such revised split; and provided further that if the results of any such Development activities are subsequently used by BMS to support Approval of such Product for such Indication (1) in Europe, then Medarex shall be entitled to reimbursement under either clause (A) or (B) above, whichever is greater, but not both, and (2) in other countries, there shall be no further adjustment to the cost-sharing ratio by the Parties for such Development Activities; and (C) to support Approval in a country other than Japan or Europe, such use shall be without charge to BMS.

 

(iv)                                if intended, at the time such activities commence, to support an Initial Regulatory Approval for such Indication in one or more countries other than the United States, BMS bears one hundred percent (100%) of such costs; provided that if both Parties subsequently agree to use the efficacy data from any Clinical Trial included in such Development activities:

 

(A)                                originally conducted to support an Initial Regulatory Approval for such Indication in the EU, in order to support an application for an Approval or a Compendia Listing for such Indication in the United States, BMS will bear sixty-five percent (65%) and Medarex will bear thirty-five percent (35%) of such costs for such Clinical Trial (and Medarex shall make reconciling payments as needed to reflect such split if previous cost sharing had not reflected same);

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

76

 

(B)                                originally conducted to support Initial Regulatory Approval for such Indication in Japan, in order to support an application for Approval or a Compendia Listing for such Indication in the United States, the Parties shall determine (and if they cannot agree, an Expert will determine pursuant to Section 16.2, following compliance with Sections 2.7.3(c) and 16.1.1) the amount for which Medarex shall reimburse BMS (which reimbursement shall be based on the [*****]† (for example, if the Parties determine to use a Clinical Trial conducted by BMS for Japan to support the Parties’ application for Approval of such Indication in the United States and Europe, and [*****], then, as to such Clinical Trial, BMS will pay [*****] of [*****] of the Development Cost for such Clinical Trial that was conducted for Japan, and with respect to an Approval or a Compendia Listing in the United States, BMS will bear [*****] and Medarex will bear [*****] of such costs for such Clinical Trial of the remaining [*****] of the Development Costs for such Clinical Trial)), and Medarex shall make reconciling payments as needed to retroactively reflect such split if previous cost sharing had not reflected same; and

 

(C)                                originally conducted to support an application for Approval in a country other than Japan or one in the EU in order to support an application for Approval or a Compendia Listing in the United States, such use for a United States Approval or Compendia Listing shall be without charge to Medarex.

 

(b)                                   Mandatory Reporting Requirements.  For the avoidance of doubt, the inclusion of Clinical Trial information in a filing for a Product made in a country with respect to a Clinical Trial conducted solely for the purpose of seeking an Approval in one or more other countries, where such inclusion is made solely to comply with a requirement to report worldwide clinical studies to Regulatory Authorities in such first country, shall not cause the costs associated with such Clinical Trial to be considered Clinical Costs in such first country eligible for cost-sharing pursuant to Section 3.7.1(a) or for inclusion as Development Costs hereunder.

 

(c)                                   Partially Co-Funded Indications.  Notwithstanding Sections 3.7.1(a) and (d), Development Costs relating to Development activities with respect to a Product for a Partially Co-Funded Indication shall be borne [*****] by BMS from and after the applicable Opt-Out Exercise Date with respect to such Indication (for so long as such Indication remains a Partially Co-Funded Indication).

 

(d)                                   Maintenance of Approvals.   From and after the Initial Regulatory Approval in the United States of a Product or MDX-1379 (other than a Co-Promotion Product) for an Indication, the costs of maintaining such Approval for such Indication in the United States or obtaining or maintaining Approvals for such Indication outside the United States, including any Clinical Costs and Regulatory Expenses for such Indication (other than with respect to Phase IIIB Clinical Trials in support of obtaining Initial Regulatory Approval in the United States (if applicable) for such Indication that were (i) set forth in the Global Development Plan and Budget and were commenced prior to such Initial Regulatory Approval in the United States or (ii)

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

77

 

required or advised by the FDA as a condition of obtaining such Initial Regulatory Approval), shall cease to be Development Costs; provided that if, with respect to the United States, the FDA requires or advises that additional Clinical Trials (other than Phase IV Studies) be performed to maintain such Initial Regulatory Approval, then the Clinical Costs and Regulatory Expenses that are incurred in connection with such Clinical Trials shall be deemed to be Development Costs until the third (3rd) anniversary of the date that such Initial Regulatory Approval was received for such Product for such Indication, whereupon such Clinical Costs and Regulatory Expenses shall once again cease to be Development Costs.  For clarity, the cost of any Phase IV Studies, including all investigator sponsored studies that are not Plan Studies, shall not be included in Development Costs and (i) with respect to Co-Promotion Products in the United States, shall be deemed to be Allowable Expenses and included in the calculation of Profits and Losses to be shared by the Parties, and (ii) with respect to Non-Co-Promoted Products in the United States and all Products in the Royalty Territory, shall be borne one hundred percent (100%) by BMS.  For further clarity, investigator sponsored studies for a Product that are conducted outside the Approval shall be included in Development Costs and shared by the Parties as provided in Section 3.7.1(a) only to the extent that efficacy data from such investigator sponsored studies is intended to be used in support of an Initial Regulatory Approval or a Compendia Listing in the United States for a Product for a new Indication and such studies are identified in, or otherwise within the scope of, the applicable Annual Development Plan and Budget (“ Plan Studies ”).  From and after the Initial Regulatory Approval in a country in the Royalty Territory of a Product for an Indication, all costs of maintaining such Approval for such Indication in such country shall be borne one-hundred percent (100%) by BMS, except for those costs incurred in connection with Phase IIIB Clinical Trials in support of obtaining an Initial Regulatory Approval for such Indication in such country that were set forth in the applicable Global Development Plan and Budget and commenced before receipt of such Initial Regulatory Approval or that were required or advised by a Regulatory Authority in such country as a condition of obtaining such Initial Regulatory Approval.  For clarity any Clinical Trials conducted to obtain a pediatric exclusivity extension in the United States in accordance with an Approved Plan shall not be excluded from Development Costs by operation of this Section.

 

(e)                                   Other Development Costs.   Except as otherwise expressly provided in this Agreement or agreed to by the Parties in writing, each Party shall be responsible for all costs (other than Development Costs shared by the Parties pursuant to the other provisions of this Section 3.7.1) incurred by it in connection with the research and Development of Products or MDX-1379 under this Agreement; provided, however, that, except as otherwise expressly provided in this Agreement, BMS shall reimburse Medarex for any such reasonable and verifiable costs incurred by Medarex or its Affiliates for activities that are requested by BMS or required as an obligation of Medarex by this Agreement in connection with the Development of Products or MDX-1379 solely for use in the Royalty Territory (other than Development Costs shared by the Parties pursuant to the other provisions of this Section 3.7.1) or the Development of Products for Partially Co-Funded Indications in the Territory and, subject to Medarex’s obligation to share certain costs with respect to the maintenance of Initial Regulatory Approvals as set forth in Section 3.7.1(d), the Development of Non-Co-Promoted Products for an Indication other than in support of obtaining either the Initial Regulatory Approval or, if applicable, the initial Compendia Listing, for such Indication in the United States.

 

78

 

(f)                                     Overruns.   If the Development Costs for (i) any single Major Activity exceed the amount budgeted for such activity in the applicable Global Development Plan and Budget by more than [*****]† (calculated for all such costs incurred over the course of performing the activity) or (ii) all other activities that are not Major Activities exceed the amount budgeted for such activities in the aggregate in the applicable Annual Development Plan and Budget by more than [*****] (calculated on an annual basis for all such other activities) in a calendar Year, then, in each case (i) and (ii), such excess Development Costs (each a “ Development Overrun ”) shall be borne by the Party responsible for performing or causing to be performed such activities (for purposes of this Section 3.7.1(f), the “ Responsible Party ”) and shall be excluded from “Development Costs” hereunder; provided , however , that in the event and to the extent that such Development Overrun was outside the reasonable control of the Responsible Party and not attributable to a failure by such Responsible Party to use commercially reasonable efforts or did not result from the failure of such Responsible Party to adequately supervise a Third Party performing such activities or from other negligence on the part of such Responsible Party with respect to such activities, then such Development Overrun shall be included in Development Costs and shared by the Parties pursuant to Section 3.7.1(a).  If there is a dispute at the JDC level as to whether a Development Overrun is attributable to a Responsible Party, or with respect to the appropriate methodology for the allocation of the applicable [*****] threshold or the Development Overrun, as applicable, between the Parties if both Parties are Responsible Parties, as provided above, then at the election of either Party, such dispute shall be resolved by an Expert as set forth in Section 16.2 following compliance with Sections 2.7.3(c) and 16.1.1.

 

(g)                                  Process Development Costs.   Medarex shall not be responsible for any Process Development Costs for a Product or MDX-1379 (other than Co-Promotion Products) from and after the first Initial Regulatory Approval for such Product or MDX-1379 in the United States.

 

3.7.2  FTE Records and Calculations .   Each Party shall record and account for its FTE effort for the Development of each Product and MDX-1379 to the extent that such FTE efforts are included in 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 on a Quarterly basis, in each case in a manner that allocates such FTE effort to the extent practicable to each applicable Indication, and to activities in support of obtaining and maintaining Approval in the United States.  FTEs allocable to Development Costs shall be charged to Development Costs for a given personnel category as Previously Disclosed.  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, unless instructed by the JFC to employ other procedures, in which case such other procedures shall be applied equally to both Parties.  The JFC shall facilitate any reporting hereunder.

 

3.7.3  Reports .   Each Party shall report to the other Party, within thirty (30) days after the end of each Quarter, for each Indication for a Product, those Development Costs

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

79

 

incurred by such Party during such Quarter that are, or may in the future be, shared under this Agreement.  Such report shall specify in reasonable detail all amounts included in such Development Costs with respect to each such Product during such Quarter (broken down, to the extent possible using the reports and reporting systems customarily used by a Party, by Indication and country) and shall be accompanied by invoices or other appropriate supporting documentation for any payments made by such Party to Third Parties that individually exceed fifty thousand dollars ($50,000) or as may be determined by the JFC.  Within forty-five (45) days after the end of each Quarter or, for the last Quarter in a calendar Year, within sixty (60) days after the end of such Year, the Party that has paid less than its share of such Development Costs set forth in Section 3.7.1 shall make a reconciling payment to the other Party to achieve the appropriate allocation of Development Costs provided in this Section 3.7.  Each such report shall enable the receiving Party to compare the reported costs against the Global Development Plan and Budget and Annual Development Plan and Budget, on both a monthly basis and a cumulative basis for each activity.  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.  BMS shall also report the Development Costs incurred by it for Development activities conducted solely to support Approvals for Indications for Products in the Royalty Territory, but shall report such Development Costs only on an annual basis on a Region-by-Region basis and, collectively, for all such Indications in each such Region.  Each Party shall have the right to audit the other Party’s records as provided in Section 9.2 to confirm the accuracy of the other Party’s costs and reports with respect to Development Costs that are, or may in the future be, shared under this Agreement.

 

3.7.4  Regulatory Expenses.   Regulatory filing fees (including user fees and similar expenses paid to Regulatory Authorities) incurred with respect to any Products or MDX-1379 in the United States shall be considered Regulatory Expenses.  Regulatory filing fees (including user fees and similar expenses paid to Regulatory Authorities) incurred by BMS or any of its Affiliates with respect to any Products or MDX-1379 in the Royalty Territory shall be borne one-hundred percent (100%) by BMS, shall be excluded from Development Costs and Allowable Expenses, and shall not otherwise be reimbursable by Medarex hereunder.

 

3.8                                Medarex Right to Opt-Out.  Medarex shall have the right to opt-out (each such election, an “ Opt-Out ”) of certain Development activities with respect to each Additional Indication for a Product as follows:

 

3.8.1  Financial and Data Packages.

 

(a)                                   Within five (5) days after the Opt-Out Trigger Date for such Indication, BMS shall provide to Medarex (to the extent not previously provided or disclosed) the applicable then-current Global Development Plan and Budget and Annual Development Plan and Budget, any proposed amendments to the then-current Global Development Plan and Budget or Annual Development Plan and Budget, and a good faith estimate, broken down on a calendar Year basis, of the Development Costs expected to be incurred in connection with the continued Development of such Product to support Approval of such Indication in the United States (collectively, the “ Financial Package ”).

 

80

 

(b)                                   Upon review of the Financial Package, if Medarex has a good faith belief that it has the right to Opt-Out with respect to the Development of a Product for an Additional Indication pursuant to Section 3.8.2, Medarex may request, within ten (10) days after the receipt of the complete Financial Package, and BMS shall, within fourteen (14) days after such request, provide to Medarex (to the extent not previously provided or disclosed): (i) electronic copies (in a form that may be analyzed and manipulated by Medarex) of all data compiled by or on behalf of BMS (including electronic or other reasonable access to all case report forms then received) and any regulatory submissions made to the FDA or any other Regulatory Authority in the Major Market Countries by or on behalf of BMS with respect to such Indication for such Product, (ii) protocols for the Pivotal Trial and, if applicable, protocols or proposed designs for other anticipated Clinical Trials with respect to such Indication for such Product, (iii) any proposed amendment to the Global Commercialization Plan and Budget that takes account of the impact of the Approval of such Indication on the Commercialization of such Product, and (iv) such other information and materials pertaining to such Product or Indication that were provided to, or otherwise relied on by, BMS management ( i.e. , its Vice President of Oncology Clinical Development) and BMS’ applicable internal senior management committees ( e.g. , its Early Development Operating Committee and Brand Development Operating Committee, or its equivalent) in determining to proceed with such Pivotal Trial and the further Development of such Product for such Indication (collectively, the “ Data Package ”).

 

(c)                                   BMS shall notify Medarex in writing when it has provided Medarex with each complete Financial Package or Data Package.  Within ten (10) days after receipt by Medarex of such notice with respect to a Data Package for a Product for an Indication (the “ Completion Notice ”), Medarex shall have the right to request in writing, and, upon such request, BMS shall provide to Medarex, such other information and Materials as Medarex may reasonably request and as may be reasonably available at such time.  Further, BMS shall continue to provide Medarex with reasonable access to the data, forms and submissions of the types set forth in Section 3.8.1(b)(i) until the Opt-Out Exercise Date.

 

3.8.2  Right to Opt-Out.   If Medarex’s share (calculated in accordance with Section 3.7) of the projected Development Costs for (a) the Development of such Product for such Indication as set forth in the proposed Global Development Plan and Budget, or any proposed amendment to an existing Global Development Plan and Budget with respect to such Product for such Indication, together with (b) all of the projected Development Costs for the Development of such Product for other Indications and other Products as set forth in all then-current Global Development Plans and Budgets, in the aggregate, for any given calendar Year, exceeds (i) for calendar Years through the Year ending December 31, 2010, the greater of (A) [*****]† of the total consolidated projected research and development budget of Medarex and its Affiliates for such Year (calculated in a manner reasonably consistent with the methodology by which such expenses would be recorded in Medarex’s audited financial statements), and (B) [*****], and (ii) for calendar Years after the Year ending December 31, 2010, [*****] of the total consolidated projected research and development budget of Medarex and its Affiliates for such Year (calculated in a manner reasonably consistent with the methodology by which such

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

81

 

expenses would be recorded in Medarex’s audited financial statements), then Medarex shall have the right to Opt-Out with respect to such Indication by delivering to BMS written notice of such Opt-Out together with a copy of the total consolidated projected research and development budget of Medarex and its Affiliates for the current Year and, if available, the next Year, as approved by Medarex’s Board of Directors as part of its annual budget process and a good faith estimate of Medarex’s projected research and development for any subsequent Year(s) (including any forecasts, if any have been approved by Medarex’s Board of Directors) to the extent relied on by Medarex to support such Opt-Out (a “ Good-Faith R&D Budget Estimate ”) (the date of delivery of such notice by Medarex to BMS, the “ Opt-Out Exercise Date ”), no later than the date that is the later of (1) thirty (30) days after the first date on which Medarex has received from BMS the entire Data Package (or the applicable Completion Notice, whichever is later), provided that if Medarex requests additional information or Materials pursuant to Section 3.8.1(c), and BMS does not deliver such information or Materials as required therein within ten (10) days after such request, such thirty (30)-day period shall be extended by a day for each day that such delivery is delayed and (2) five (5) Business Days prior to the anticipated DP 5 Decision Point.  BMS shall promptly provide Medarex with written notice as to the anticipated date of the DP5 Decision Point and any changes in such date.  If Medarex Opts-Out with respect to any such Indication, such Indication shall be deemed to be a Partially Co-Funded Indication as of the Opt-Out Exercise Date until the date, if any, that such Indication ceases to be a Partially Co-Funded Indication pursuant to Section 3.8.4 or 3.8.5, and all related Development activities shall be deemed to be Excluded Activities, and BMS shall thereafter have the right, but not the obligation, subject to Section 3.8.4 and the other terms of this Agreement, to conduct such Excluded Activities.  BMS shall notify Medarex in writing if it elects to conduct such Excluded Activities.  In the event that BMS elects pursuant to this Section 3.8.2 to conduct any Excluded Activities, BMS shall use Diligent Efforts to conduct or cause to be conducted such Excluded Activities in accordance with the applicable then-current Global Development Plan and Budget and Annual Development Plan and Budgets ( provided that any amendments to such Approved Plans prior to the commencement of the first Pivotal Trial shall be subject to Section 3.8.4) and this Agreement, provided that BMS shall have the right to discontinue such Excluded Activities in their entirety at any time pursuant to Section 3.8.3(a).

 

3.8.3  Effect of Opt-Out.   Subject to Section 3.8.4, if Medarex Opts-Out with respect to an Indication for a Product:

 

(a)                                   BMS shall bear [*****]† of any and all Development Costs specifically identifiable or reasonably allocable to the Partially Co-Funded Indication from and after the Opt-Out Exercise Date (for so long as such Indication remains a Partially Co-Funded Indication); provided , however , that after such Opt-Out Exercise Date, BMS shall have the right, after consultation with Medarex in the JDC, to discontinue its Development of such Partially Co-Funded Indication in its entirety hereunder;

 

(b)                                   Medarex shall have no obligation to conduct or otherwise participate in any such Excluded Activities;

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

82

 

(c)                                   Medarex shall remain entitled and obligated to Co-Promote such Partially Co-Funded Indication if it is already Co-Promoting the applicable Product or upon exercise of its Co-Promotion Option for such Product; and

 

(d)                                   if the Product is a Non-Co-Promoted Product, Medarex shall, with respect to such Partially Co-Funded Indication, receive the applicable royalty on Net Sales of such Product for such Partially Co-Funded Indication under Section 6.6 and if the Product is a Co-Promotion Product, Medarex shall, with respect to such Partially Co-Funded Indication, (i) receive/bear such share of the Profit/Loss under Section 6.4 from such Indication in the United States and (ii) receive the applicable royalty on Net Sales of such Product for such Partially Co-Funded Indication under Section 6.6 in the Royalty Territory, provided that, in each case, the reduction pursuant to Section 6.4.2 (except as otherwise provided therein with respect to Allowable Expenses) and the provisos in Section 6.6.1(a) shall apply only if and when the Partially Co-Funded Indication receives Initial Approval or, if expressly provided for in Global Development Plan and Budget in effect as of the commencement of the applicable Pivotal Trial for such Partially Co-Funded Indication, a Compendia Listing, and only for so long as such Approval or Compendia Listing is maintained.

 

3.8.4  Material Changes Prior to the Commencement of a Pivotal Trial.   If Medarex Opts-Out of a Partially Co-Funded Indication pursuant to Section 3.8.2, and BMS thereafter materially reduces the scope or funding commitments for the Development of such Indication prior to the commencement of the first Pivotal Trial for such Indication, from what was set forth in the Financial Package or Data Package provided to Medarex pursuant to Section 3.8.1, then (a) BMS shall provide Medarex with written notice thereof, together with an updated Financial Package and Data Package and such other information and Materials as Medarex may reasonably request pursuant to Section 3.8.1(c), (b) such Indication shall cease to be a Partially Co-Funded Indication and (c) Medarex shall again have the right to Opt-Out of such Indication pursuant to Section 3.8.2.

 

3.8.5  Forced Opt-In .   If Medarex relied on a Good-Faith R&D Budget Estimate for a particular calendar Year to Opt-Out of an Indication and its actual research and development budget for such calendar Year exceeds the amount projected for such Year in such Good-Faith R&D Budget Estimate by an amount that would not have permitted Medarex to Opt-Out of such Indication had it been reported in such Good-Faith Budget Estimate for such Year, and it is subsequently finally and conclusively determined that such Good-Faith Budget Estimate for such Year was provided in bad faith, then, at BMS’ election on written notice to Medarex within thirty (30) days after such determination, such Indication shall cease to be a Partially Co-Funded Indication and Medarex shall be required to pay to [*****]† of the Development Costs incurred by BMS from the Opt-Out Exercise Date that would have been allocated to Medarex pursuant to Section 3.7 had Medarex not Opted-Out with respect to such Indication.  Medarex shall make such payment in four (4) equal installments, payable within thirty (30) days after receipt of such written notice and thereafter, on or before the end of each of the three (3) succeeding Quarters, with interest accruing and paid with each such quarterly payment, in the

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

83

 

amount provided in Section 6.12 from the date of such notice.  Notwithstanding the foregoing, if the Parties dispute as to whether Medarex’s Good-Faith R&D Budget was provided in bad faith, such dispute shall be resolved pursuant to expedited arbitration as set forth in Section 16.4, and BMS’ right to require Medarex to Opt-In with respect to such Indication as set forth in this Section 3.8.5 shall be tolled for so long as any such dispute resolution procedures are being pursued by a Party in good faith and if it is finally and conclusively determined that Medarex provided the Good-Faith R&D Budget in bad faith, then BMS shall have the right to require Medarex to Opt-In with respect to such indication within thirty (30) days after such determination.

 

3.9                                Regulatory Exclusivity.   Except as provided in Section 11.2.6, the JDC shall oversee the process of applying for and securing exclusivity rights that may be available under the Applicable Law of countries in the Territory, including any data or market exclusivity periods such as those periods listed in the FDA’s Orange Book or periods under national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83, and all international equivalents.  Each Party shall use Diligent Efforts consistent with its obligations under Applicable Law to cooperate with the other to take such reasonable actions to assist the other Party in obtaining such exclusivity rights in each country, as directed by the JDC, and any disputes with respect to such actions shall be resolved pursuant to Section 2.7.3(c) and, if applicable, Article 16.

 

3.10                         Coordination of Clinical Strategy.   The JDC shall discuss the clinical strategy for Developing Products in the Territory at each meeting of the JDC to determine whether BMS’ plans for Developing any Product in the Royalty Territory, including with respect to one or more Clinical Trials or with respect to one or more Indications could have a material adverse effect on the Development and Commercialization of such Product or any other Product in the United States, and whether the Global Development Plan and Budget for Developing any Product in the United States could have a material adverse effect on BMS’ plans for Developing and Commercializing such Product or any other Product in the Royalty Territory.  BMS shall not adopt a clinical strategy for any Product in the Royalty Territory that would be reasonably likely to have a material adverse effect on the Development and Commercialization of a Product in the United States without Medarex’s consent, and the Parties shall endeavor not to adopt a clinical strategy for a Product in the United States that would be reasonably likely to have a material adverse effect on BMS’ plans for Developing and Commercializing any such Product in the Royalty Territory without BMS’ consent.  If such a material adverse effect would be reasonably likely to occur, then the Parties, or BMS, as applicable, shall seek to minimize any such material adverse effect in a manner consistent with the terms of this Agreement, with priority given to minimizing the effect on those countries that have the most significant commercial potential.

 

3.11                         Pharmacovigilance Responsibilities.   Subject to the terms of this Agreement, and within three (3) months after the Effective Date of this Agreement, BMS and Medarex (under the guidance of their respective Pharmacovigilance Departments, or equivalent thereof) shall define and finalize the responsibilities the Parties shall employ to protect patients and promote their well-being.  These responsibilities shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of adverse event reports, pregnancy reports, and any other information concerning the safety of any Product, as well as the Lead Agents.  Such guidelines and

 

84

 

procedures shall be in accordance with, and enable the Parties and their Affiliates to fulfill, local and international regulatory reporting obligations to government authorities. Furthermore, such agreed procedures shall be consistent with relevant International Council for Harmonisation (ICH) guidelines, except where said guidelines may conflict with existing local regulatory safety reporting requirements, in which case local reporting requirements shall prevail.

 

Until such guidelines and procedures are set forth in an agreement between the Parties, (hereafter referred to as the “ Safety Data Exchange Agreement ”), the terms of subsections 3.11.1 - 3.11.4 shall apply.  Following the execution of the Safety Data Exchange Agreement, subsections 3.11.1 - 3.11.4 shall have no further force or effect.

 

3.11.1  Each Party shall notify the other Party as soon as practicable, but not later than one (1) Business Day after it receives information about the initiation of any investigation, review or inquiry by any Regulatory Authority concerning the safety of a Product or a Lead Agent.

 

3.11.2  Individual Case Safety Reports (ICSRs) and pregnancy reports which come to the attention of either Party shall be notified to the other Party, in English, in accordance with the time frames, formats, and method listed below.  No source documents shall be exchanged.  Each report shall be transmitted to the appropriate reporting contact as found in Section 3.11.4 below.

 

Report Type		Timeframe		Format		Method
Attributable* (related) fatal or life-threatening ICSRs		Four (4) calendar days		CIOMS I		FAX
All other serious attributable* (related) ICSRs and pregnancies		Seven (7) calendar days		CIOMS I		FAX
Serious non-attributable (not related) ICSRs		Monthly		CIOMS I		FAX
Non-serious attributable* (related) and non-attributable (not related) ICSRs		Not applicable

 

*   Attributable ( i . e ., suspected causal relationship to Product) by either the investigator or a Party.

 

3.11.3  Each Party is responsible for complying with all applicable investigational and postmarketing safety reporting regulations with respect to the use of the Product and the Lead Agents in the territory in which they promote the Product and the Lead Agents, as subject to the terms of this Agreement.  This includes the submission of expedited and periodic reports to the appropriate Regulatory Authority(s).

 

85

 

3.11.4  All information to be reported to a Party under this Section shall be sent as follows (or to such other address, contact person, telephone number, facsimile number or e-mail address as may be specified in writing to the other Party):

 

(i)	To BMS, at:
	Bristol-Myers Squibb Company
	Adverse Event Processing
	311 Pennington-Rocky Hill Road HW 19 1.01
	Pennington, NJ 08534
	USA
	Facsimile: 1-609-818-3804
	Email: worldwide.safety@bms.com
(ii)	To Medarex, at:
	Medarex, Inc.
	Clinical Science
	519 Route 173 West
	Bloomsbury, NJ 08804
	Attention:	Safety Officer
	Facsimile:	908-479-2408
	Email:	drugsafety@medarex.com

 

The Parties’ costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging Adverse Events and “Other Reportable Information” shall be included as an element of Development Costs or as Allowable Expenses (to the extent specifically identifiable to or reasonably allocable to the Development or Commercialization of Co-Promotion Products for the United States), calculated on a FTE Cost and direct out-of-pocket cost basis.

 

3.12                         Notice of Investigation or Inquiry.  If any Regulatory Authority (a) with respect to Medarex, in the United States and (b) with respect to BMS, in a Major Market Country or any other country in Europe, (1) contacts such Party with respect to the improper Development, use, distribution, manufacture or Commercialization of any Product, MDX-1379 or any other Agent’s use in connection with a Product, (2) conducts, or gives notice of its intent to conduct, an inspection at such Party’s facilities or (3) takes, or gives notice of its intent to take, any other regulatory action with respect to any activity of such Party that could reasonably be expected to adversely affect any Development or Commercialization activities with respect to any Product, MDX-1379 or any other Agent’s use in connection with a Product under this Agreement, then such Party shall promptly notify the other Party of such contact or notice.  Such other Party shall have the right to be present at and to participate in any such inspection or regulatory action with respect to the Products or MDX-1379.  The inspected Party shall provide such other Party with copies of all pertinent information and documentation issued by any such Regulatory Authority within two (2) Business Days of receipt (or sooner if necessary to permit such other Party to be present at such visit) and the JDC shall have the right to review and approve in advance any

 

86

 

responses that pertain to the Products, MDX-1379 or any other Agent’s use in connection with a Product.

 

3.13                         Additional Agent Selection, Development and Commercialization; Third Party Royalties.

 

3.13.1  Identification and Selection of Agents; General Rule.

 

(a)                                   In General.  The Parties acknowledge that they may wish to Develop a Product for use together, or in combination, with one or more Agents for one or more Indications in addition to those Lead Agents and Lead Indications set forth in the Global Development Plan and Budget as Previously Disclosed.  The Parties shall, in selecting Additional Agents for future Development of a Product, seek to select those Additional Agents that have the highest potential for (x) expanding Approvals or Compendia Listings for such Product, such as, for example, for use in new tumor types or for improved lines of therapy for existing tumor types and (y) maximizing the value of the Product (without regard to any potential increase in sales of the Additional Agent engendered by a successful Development program), while recognizing that the costs and risks associated with the development and, if applicable, the acquisition, licensing and commercialization of such Agent must also be taken into account.  The Parties shall work collaboratively to identify and select Additional Agents and neither Party shall (i) acquire from a Third Party, whether by license or otherwise, rights to an Immunotherapeutic Agent with the primary intent to develop such agent for use with an Antibody, or (ii) otherwise develop or commercialize any Immunotherapeutic Agent for use with an Antibody or a Non-Antibody Substance, in each case, without first complying with this Section 3.13.

 

(b)                                   Separate Written Agreement; Exceptions.   If the Parties agree to pursue the Development of a Product for use together, or in combination, with an Additional Agent, or the development or commercialization of such an Agent, whether for use with a Product or otherwise, subject to the requirements set forth in Section 3.13.2, the Parties shall enter into a separate written agreement with respect to, or shall amend this Agreement to include, such activities for such Additional Agent; provided , however , no separate agreement or amendment shall be required if (i) the proposed Additional Agent has received Approval as a monotherapy in the United States, (ii) the proposed Additional Agent is currently being marketed in the United States and (iii) the Parties are able to Develop a Product for use with such proposed Additional Agent without entering into any separate agreement with the Third Party or Party that controls such agent (each, a “ Commercialized Agent ”), in which event the JEC shall decide whether to Develop a Product for use together, or in combination, with such proposed Commercialized Agent under the Collaboration, and any disputes shall be subject to escalation to the JEC pursuant to Section 2.7.3(c) and the Designated Officers of the Parties pursuant to Section 16.1.1; and provided further that if the JDC, JEC or the Designated Officers, as applicable, cannot resolve the matter, then BMS shall resolve the dispute pursuant to Section 16.1.5 (following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1).  The Parties shall use good faith efforts (x) to enter into agreements with Third Parties, if and as necessary, to Develop the Lead Product for use together, or in combination, with the Lead Agents (other than MDX-1379) as contemplated by the Global Development Plan and Budget as Previously Disclosed, and (y) to enter into agreements with Third Parties, if and as necessary, to

 

87

 

Develop Products for use with Additional Agents, which agreements ((x) and (y)), wherever possible, shall be between both Parties and such Third Party and, with respect to Agents that are not Commercialized Agents, shall provide the Parties, as nearly as possible, with rights substantially similar to those provided under this Agreement with respect to MDX-1379 (other than under Section 6.3.2(a)).  Subject to Section 3.13.2, neither Party shall enter into an agreement with a Third Party with respect to a Lead Agent or, once designated as such, an Additional Agent for use together, or in combination, with an Antibody or a Non-Antibody Substance, without the written consent of the other Party, not to be unreasonably withheld or delayed.  Notwithstanding anything in this Agreement to the contrary, except as set forth in the Global Development Plan and Budget as Previously Disclosed, no Product shall be Developed for use together, or in combination, with an Immunotherapeutic Agent that is controlled by a Party (other than with respect to an agreement entered into pursuant to this Section 3.13.1(b)), and no such Immunotherapeutic Agent shall otherwise be included in the Collaboration, without the written consent of the Party controlling such Agent, and the mutual agreement of the Parties as to the Global Development Plan and Budget, including any Decision Points and Success Criteria, and, if applicable, the Global Commercialization Plan and Budget for the Development of a Product for use with such Agent or, if applicable, the Development of such Agent, as well as any update, amendment, modification or waiver to any of the foregoing.

 

(c)                                   Cost and Profit Sharing.   If the Parties agree to Develop a Product for use together, or in combination, with a Commercialized Agent that is controlled by a Party (other than as provided in Section 3.13.2(b)), such Party shall (i) remain responsible for the development and commercialization of such Agent, including using commercially reasonable efforts to obtain and maintain authorizations from the Regulatory Authorities to market and sell such Agent for use with such Product (it being understood that such Party need not maintain any such authorizations if it intends to withdraw such Agent from the market), (ii) bear all of the costs of such development and commercialization, including any Third Party royalties or milestones applicable to the manufacture, use or sale of such Agent, and (iii) retain all revenues and profits from the sale of such Agent.  Except as provided in Section 3.13.2, nothing in this Agreement shall limit or affect a Party’s ability to sell its rights to, grant licenses with respect to, or otherwise dispose of its rights to, an Immunotherapeutic Agent controlled by it on such terms as it may determine.  The Parties shall share in the Development Costs and, solely with respect to Co-Promotion Products in the United States, the Allowable Expenses and Profit or Loss incurred in the Development and Commercialization of the Product for use with such Commercialized Agent as provided herein; provided that the Party controlling such Agent shall bear a higher, mutually agreed, percentage of the Development Costs for any Indications involving such Additional Agent and its use together, or in combination, with a Product.  For clarity, if a Party has granted an exclusive license to a Third Party to develop and commercialize such Commercialized Agent for all uses in the Field, such Party shall not be deemed to control such Agent for purposes of the foregoing sentence.  Such higher percentage shall reflect, among other things, what a Third Party would otherwise have contributed to the Development of such Agent had such Agent been controlled by a Third Party and such Third Party had jointly conducted such Development with the Collaboration.  Notwithstanding the changes in cost allocation with respect to Development, the Parties’ rights to share in Profits and Losses and Medarex’s rights to receive royalties, as applicable, with respect to Products under this Agreement shall be as otherwise set forth in this Agreement and shall not be modified as a result of such cost allocations provided for in this Section.

 

88

 

3.13.2  Agent Exclusivity.   Except with respect to Additional Agents as provided herein, neither a Party (or its Affiliates or (sub)licensees of rights with respect to Immunotherapeutic Agents) shall, prior to the Exclusivity End Date, without the written consent of the other Party, (x) either itself, or with or through any Third Party, engage, directly or indirectly, in the clinical development or commercialization of an Immunotherapeutic Agent, or collaborate with any Third Party with respect to the clinical development or commercialization of an Immunotherapeutic Agent, in each case for use together, or in combination, with an Antibody or a Non-Antibody Substance in the Territory, or (y) grant any right or license to any Third Party, by contract or otherwise, to clinically develop or commercialize an Immunotherapeutic Agent (including an Agent) for use together, or in combination, with an Antibody in the Territory or an Agent for use together, or in combination, with a Non-Antibody Substance in the Territory ( provided that if a Party has granted to a Third Party a license to develop and commercialize an Immunotherapeutic Agent for all uses in the Field, this Section 3.13.2 shall not apply to such Third Party’s use of such Immunotherapeutic Agent), except as follows:

 

(a)                                   Within twelve (12) months after the Effective Date, the JDC shall establish certain requirements for proof of concept that must be met for a Party to have the right to offer an Immunotherapeutic Agent to the Collaboration pursuant to this Section 3.13.2 (the “ Proof of Concept Requirements ”), which minimum requirements shall apply to all Immunotherapeutic Agents irrespective of the Party that proposes a particular Immunotherapeutic Agent.  Any dispute in the JDC with respect to Proof of Concept Requirements, or as to whether a Party has satisfied the Proof of Concept Requirements with respect to a particular Immunotherapeutic Agent that are not resolved by the JEC, shall be resolved by an Expert pursuant to Section 16.2, following compliance with Sections 2.7.3(c) and 16.1.1.

 

(b)                                   If a Party presents an Immunotherapeutic Agent that has met the Proof of Concept Requirements, together with any information in support thereof and any other material information with respect to such agent in its possession or control, to the other Party pursuant to Section 3.13.1 and the other Party delivers written notice to the first Party that such other Party is not interested in pursuing the Development of a Product for use together, or in combination, with such Immunotherapeutic Agent, whether through an applicable Committee or otherwise, the Party proposing such agent shall be free to develop and commercialize such agent for use with Antibodies, including Products, and, subject to Section 10.5, Non-Antibody Substances outside the Collaboration, provided that in no event shall such Party (or its Affiliates or sublicensees of rights with respect to such Immunotherapeutic Agents) have the right, without agreement of the other Party to conduct Pivotal Trials for or commercialize such agent for use with a Product until the earlier of the Exclusivity End Date and the first date, if any, that one or more Third Parties have commenced Pivotal Trials or obtained approval from the FDA to market two or more Immunotherapeutic Agents for use together, or in combination, with such Product, in the United States.  For clarity, subject to Section 3.13.1(a), neither Party shall be obligated to offer an Immunotherapeutic Agent controlled by it to the Collaboration, unless it wishes to develop or commercialize such agent for use with Antibodies or Non-Antibody Substances.  For further clarity, without the prior written consent of the other Party, neither Party (or its Affiliates or sublicensees of rights with respect to such Immunotherapeutic Agents) shall have the right under this Section 3.13.2 to develop or commercialize an Immunotherapeutic Agent that has not

 

89

 

met the Proof of Concept Requirements for use together, or in combination, with an Antibody or a Non-Antibody Substance outside the Collaboration, except as provided in Section 3.13.2(h).

 

(c)                                   If the Parties agree to pursue the Development of a Product for use together or in combination with a proposed Additional Agent that was, at the time it was first proposed pursuant to Section 3.13.1, controlled by a Party, including, if necessary, the development or commercialization of such agent, for use with a Product, but are unable to agree (i) on the terms on which it would be included in the Collaboration or (ii) on a Global Development Plan and Budget or, if applicable, a Global Commercialization Plan and Budget, then the Party that controls such agent shall provide in writing to the other Party its last offer with respect to such agent and if such offer is not accepted by the other Party, the controlling Party shall then have the right to develop and commercialize such agent, whether alone or together with a Third Party (including by granting a Third Party a right or license to do so)) for use with Antibodies, including Products, and, subject to Section 10.5, Non-Antibody Substances outside the Collaboration; provided, however, that such Party shall not (nor shall its Affiliates or sublicensees of rights with respect to such agent) enter into an agreement with, or grant any right or license to, a Third Party with respect to such agent on terms that are equal to or more favorable to such Third Party than those set forth in such Party’s last offer pursuant to this Section 3.13.2(c); and provided further that in no event shall such Party (or its Affiliates or sublicensees of rights with respect to such agent) have the right to conduct Pivotal Trials for or commercialize such agent for use with a Product until the earlier of the Exclusivity End Date and the first date, if any, that one or more Third Parties have commenced Pivotal Trials or obtained approval from the FDA to market two or more Immunotherapeutic Agents for use together or in combination such Product in the United States.  In the event of any dispute between the Parties with respect to whether the terms and conditions of the agreement into which a Party proposes to enter with a Third Party in accordance with this Section 3.13.2(c) are equal to, or more favorable, when considered as a whole, to such Third Party than the terms and conditions set forth in such last offer to such other Party, such dispute shall be resolved at the election of either Party by an Expert as set forth in Section 16.2, following compliance with Sections 2.7.3(c) and 16.1.1.

 

(d)                                   If the Parties agree to pursue the Development of a Product for use together, or in combination, with an Agent, including, if necessary, the development or commercialization of such Agent, whether for use with a Product or otherwise, in each case, for one or more Indications as set forth in a Global Development Plan and Budget, and (i) such Product or Agent fails to satisfy the applicable Success Criteria at a Decision Point for each such Indication, and the Parties do not agree to continue such development and commercialization for at least one such Indication or (ii) the Parties otherwise agree to terminate such development and commercialization for each such Indication, and, in each case ((i) and (ii)), the Parties do not otherwise agree to pursue the development of new Indication(s) for such Agent, then the Parties shall be free to develop and commercialize such Agent for use with Antibodies (other than Products) and, subject to Section 10.5, Non-Antibody Substances outside the Collaboration.

 

(e)                                   If the Parties agree to pursue the Development of a Product for use together, or in combination, with a Commercialized Agent and such Product is Approved in the United States for use together or in combination with such Commercialized Agent for an Indication, each Party shall have the right from and after (i) the date of such Approval to clinically develop such Commercialized Agent for use with Antibodies (other than the Lead

 

90

 

Antibody, any Additional Antibodies or any Products) that are being developed (other than where a Party retains the right to commercialize such Antibody) or commercialized by one or more Third Parties for any indication and (ii) the [*****]† anniversary of such Approval to commercialize such Commercialized Agent for use with Antibodies (other than the Lead Antibody, any Additional Antibodies or any Products) that are being developed (other than where a Party retains the right to commercialize such Antibody) or commercialized by one or more Third Parties for any indication, provided that such clinical development and commercialization shall not commence unless and until such Commercialized Agent and each such other Antibody is approved by the applicable Regulatory Authorities, and lawfully marketed, as a monotherapy in the United States.  Notwithstanding anything in this Agreement to the contrary, such controlling Party shall not Detail any such Commercialized Agent that has been approved for use together, or in combination, with such Product using the same sales force that Details a Product without the consent of the other Party, not to be unreasonably withheld or delayed.

 

(f)                                     If the Parties agree to pursue the Development of a Product for use together, or in combination, with an Agent, either Party shall have the right, subject to Section 10.5, to clinically develop such Agent for use with Non-Antibody Substances, provided that neither Party (or its Affiliates or sublicensees of rights with respect to such Agent) shall have the right to commercialize such Agent for use with Non-Antibody Substances until the [*****] anniversary of the date that such Product is approved for use together, or in combination, with such Agent, unless the Parties cease the Development of a Product for use together, or in combination with such Agent, in which case Section 3.13.2(d) shall apply.

 

(g)                                  For the avoidance of doubt, the rights set forth in clauses (a) through (f) above, do not permit the proposing Party or the controlling Party, as applicable, to (i) use Collaboration Know-How relating to (A) a Product or (B) the use of such Commercialized Agent with an Antibody, in each case ((A) and (B)), unless it is in the public domain, or (ii) reference any Drug Approval Applications, Approvals or other regulatory filings for a Product (or such Commercialized Agent for use with a Product), in support of any filings with the Regulatory Authorities for the use of such Commercialized Agent with such other Antibodies and Non-Antibody Substances and such proposing or controlling Party shall not have a right of reference to any Product Approvals.

 

(h)                                  Notwithstanding anything in this Agreement to the contrary, the exclusivity provisions in this Section 3.13 shall terminate on the Exclusivity End Date with respect to the first Product and each Party shall have the right to develop and commercialize Immunotherapeutic Agents (other than Agents that are being Developed or Commercialized through the Collaboration or Immunotherapeutic Agents to the extent controlled by the other Party) for use with Antibodies and Non-Antibody Substances, and neither Party shall have any rights under the grants set forth in Sections 10.1.3 and 10.2.2, including the right to reference any Approvals or other regulatory filings for a Product, for such purpose until after the Exclusivity End Date.  For clarity, the restrictions set forth in this Section shall continue to apply to Lead

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

91

 

Agents and Additional Agents after the Exclusivity End Date except as expressly provided in clauses (c) through (f) above and, in no event, shall a Party have the right to use any Collaboration Patents and Collaboration Know-How that is Confidential Information of a Party to develop or commercialize an Agent for use together or in combination with an Antibody Competing Product.

 

ARTICLE 4

 

COMMERCIALIZATION IN ROYALTY TERRITORY

 

4.1                                Lead Marketing Party.   Subject to Sections 10.5 and 14.5, BMS shall be the Lead Marketing Party for each Product and MDX-1379 in the Royalty Territory and shall have sole responsibility for Commercializing each such Product and MDX-1379 in the Royalty Territory; provided that BMS shall keep Medarex reasonably informed of BMS’ Commercialization activities in the Royalty Territory with respect to each such Product and MDX-1379 through the JCC.

 

4.2                                Diligence for Commercialization of Products in Royalty Territory.

 

4.2.1  Diligent Efforts.   BMS shall use Diligent Efforts to Commercialize each Product and MDX-1379 for each Indication for which such Product or MDX-1379 is Approved in the Royalty Territory.  Without limiting the foregoing, BMS shall conduct all such Commercialization activities for each Product and MDX-1379 in the Royalty Territory in accordance with the terms of this Agreement and in a manner consistent with (a) the applicable Pre-Launch RT Commercialization Plan and Budget then in effect and (b) each applicable Annual RT Commercialization Plan and Budget then in effect; provided that, subject to Sections 10.5 and 14.5, BMS may, without seeking JCC approval to amend the then-current applicable Pre-Launch RT Commercialization Plan and Budget or the then-current applicable Annual RT Commercialization Plan and Budget (i) expand its activities or increase its financial commitments (but not Medarex’s obligations) beyond those set forth in the applicable Approved Plan or (ii) decrease its total spending or selling effort for a given Year by not more than [*****]† (but by not more than [*****] if BMS is then Commercializing a Competing Product in the applicable Region) beyond what is then budgeted in, and approved for, the then-current applicable Pre-Launch RT Commercialization Plan and Budget or the then-current applicable Annual RT Commercialization Plan and Budget for each of (A) Japan, (B) all countries in Europe (allocated across the countries in Europe as determined by BMS), and (C) all remaining countries of the Royalty Territory other than Japan and those in Europe (allocated across such remaining countries as determined by BMS).  BMS shall use its Diligent Efforts to Launch each Product and MDX-1379, as the case may be, for each Indication in a country in the Royalty Territory promptly after Approval is obtained in such country.  For avoidance of doubt, the Parties agree that BMS’ Diligent Efforts obligations permit BMS to take into account the reimbursement or pricing received in a country relative to the business risks and costs associated with Commercialization in such country to the extent it would do so were such Product a BMS

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

92

 

solely-owned product (it being further understood that, before making any such decision not to Launch a Product in any such country for any such reason, BMS shall fully discuss the decision with Medarex through the JCC).

 

4.2.2  Appointment of Distributors and Co-Promoters .   Medarex agrees that BMS shall have the right to appoint distributor(s) and co-promoter(s) under this Agreement in the Royalty Territory; provided that BMS notifies Medarex in writing in advance of each such appointment in any Major Market Country (other than Commercial Distributor arrangements) and BMS remains fully responsible for the compliance by its co-promoters with the obligations of BMS under this Agreement delegated to them, but BMS shall not be responsible for the acts or omissions of its distributors (except to the extent that BMS was negligent in retaining, or managing its relationship with, such distributors), other than a distributor to whom BMS expressly licenses any of its rights and obligations under this Agreement in a country.  This Section 4.2.2 is not intended and shall not be construed to limit BMS’ obligations under Article 15 to indemnify Medarex for any Losses arising out of any Claims resulting directly or indirectly from the activities of such distributors in accordance with Article 15.

 

4.3                                Royalty Territory Commercialization Plans and Budgets.

 

4.3.1  Global Commercialization Plans and Budgets.   The Commercialization strategies of each Product and, if applicable, MDX-1379 in the Royalty Territory shall be set forth in the Global Commercialization Plan and Budget for such Product and MDX-1379.  The Parties shall adopt the Global Commercialization Plan and Budget for the Lead Product and MDX-1379 in accordance with Section 5.2.2(b) and the Global Commercialization Plan and Budget for each Additional Product in accordance with Section 5.2.2(c); provided , however , the Global Commercialization Plan and Budget shall include, with respect to the Royalty Territory (other than the Major Market Countries), only such detail regarding Commercialization activities and spending in the aggregate and on a Region-by-Region basis as is included in internal plans and budgets customarily prepared by BMS for its own oncology products.

 

4.3.2  Pre-Launch RT Commercialization Plans and Budgets and Annual RT Commercialization Plans and Budgets.

 

(a)                                   Adoption of Pre-Launch RT Commercialization Plan and Budget for the Lead Product and MDX-1379.   Within one hundred and eighty (180) days after the Effective Date, and consistent in form and substance with those internal plans and budgets customarily prepared by BMS for its own oncology products, BMS shall prepare and propose to the JCC for its review, comment and approval a pre-Launch Commercialization plan and budget (a “ Pre-Launch RT Commercialization Plan and Budget ”) for the Lead Product and MDX-1379 for each Region (aggregated for all countries in such Region) and each Major Market Country in the Royalty Territory, covering the period from January 1, 2005 through the end of the twenty-fourth (24 ^th ) month following Launch of the Lead Product and MDX-1379 in each such Region; provided that once an Annual RT Commercialization Plan and Budget is adopted for a Region or Major Market Country in the Royalty Territory for a given Product (or MDX-1379) for a Year, any Pre-Launch RT Commercialization Plan and Budget for such Product (or MDX-1379) for such Region or Major Market Country that covers the same calendar Year as the Annual RT Commercialization Plan and Budget shall have no further effect for such overlapping

 

93

 

calendar Year.  Each Pre-Launch RT Commercialization Plan and Budget shall be consistent in all material respects with the then-current Global Commercialization Plan and Budget for the Lead Product and MDX-1379, as applicable.  BMS shall be solely responsible for performing and funding any and all Commercialization activities pursuant to any Pre-Launch RT Commercialization Plan and Budget, and Medarex shall have no obligation to perform or fund any such activities thereunder.

 

(b)                                   Adoption of Annual RT Commercialization Plan and Budget for the Lead Product and MDX-1379.   Prior to the Launch of the Lead Product or MDX-1379 in a Region in the Royalty Territory, and consistent in form and substance with those internal plans and budgets customarily prepared by BMS for its own oncology products, BMS shall prepare and propose to the JCC for its review, comment and approval a Commercialization plan and budget covering all Commercialization activities to be performed for the Lead Product and MDX-1379 in the Royalty Territory for the calendar Year following the calendar Year in which such Launch occurs (an “ Annual RT Commercialization Plan and Budget ”), and for each calendar Year thereafter, according to a schedule, and using a process, that will enable the JCC to review, comment on and approve (or fail to reach approval) on same by no later than October 31 of the preceding Year; provided that, if Launch occurs after September 30 and on or before December 31 in the calendar Year of Launch, the first Annual RT Commercialization Plan and Budget that shall be prepared shall be for the second calendar Year that follows the Year in which Launch occurred. Each Annual RT Commercialization Plan and Budget shall be consistent in all material respects with the then-current Global Commercialization Plan and Budget.  BMS shall be solely responsible for performing and funding any and all Commercialization activities under any Annual RT Commercialization Plan and Budget, and Medarex shall have no obligation to perform or fund any such activities thereunder.

 

Notwithstanding the foregoing, each Annual RT Commercialization Plan and Budget for each Product and MDX-1379 shall describe the plan for Commercialization of same for each Major Market Country and for each Region (which Regional plans and budgets shall be aggregated for all countries in a Region and not broken out on a country-by-country basis) in the Royalty Territory broken down, where customarily done by BMS for its own similar products, on an Indication-by-Indication basis and Quarterly basis, including, as applicable:

 

(i)                                     general strategies for the promoting, detailing and marketing of such Product and MDX-1379;

 

(ii)                                 the selling effort that BMS plans to deliver for such Product and MDX-1379 for each Year;

 

(iii)                             market, unit sales, and Net Sales forecasts of such Product and MDX-1379;

 

(iv)                                total advertising and promotional spend; and

 

(v)                                    projected spending for Phase IV Studies.  BMS will also provide to Medarex, upon reasonable request, from time to time, a list of the Phase IV Studies

 

94

 

then being conducted or, to the extent known, contemplated, in each Major Market Country in the Royalty Territory.

 

(c)                                   Adoption of Pre-Launch RT Commercialization Plans and Budgets and Annual RT Commercialization Plans and Budgets for Each Additional Product or Additional Indication.   In the event that, after the Execution Date and during the term of this Agreement, the Parties mutually agree in writing pursuant to Section 3.2.1(b) to Develop an Additional Product or an Additional Indication for a Product then being Developed or Commercialized, then within one hundred eighty (180) days of the date on which the JEC adopts a Global Commercialization Plan and Budget with respect to such Additional Product or an amendment to an existing Global Commercialization Plan and Budget with respect to any such Additional Indication, BMS shall, consistent with its obligations under Section 4.3.2(a) above for the Lead Product, prepare and propose to the JCC for its review, comment and approval a Pre-Launch RT Commercialization Plan and Budget for each such Additional Product, or an amendment to the existing Pre-Launch RT Commercialization Plan and Budget with respect to an Additional Indication, as applicable, in each case for each Region and Major Market Country for the period until the Launch of the Additional Product or the Launch of the Product for the Additional Indication, as applicable, in the Royalty Territory.  Thereafter, an Annual RT Commercialization Plan and Budget for each such Product shall be prepared in the same manner as for the Lead Product under Section 4.3.2(b).

 

4.4                                Sales and Distribution in Royalty Territory .   BMS shall be solely responsible for invoicing and booking sales, establishing all terms of sale (including pricing and discounts), and warehousing and distributing all Products and MDX-1379, and shall perform all related services, in each case in a manner consistent with the terms and conditions of this Agreement.  BMS shall also be solely responsible for handling all returns, recalls or withdrawals in accordance with Section 3.5, order processing, invoicing and collection, distribution, and inventory and receivables in the Royalty Territory.  If Medarex receives any orders for any such Product or MDX-1379 for the Royalty Territory, it shall refer such orders to BMS.

 

4.5                                Coordination of Commercialization Strategy .   The JCC shall discuss the Commercialization strategy for each Product and MDX-1379 at a Party’s request at any meeting of the JCC, to determine whether BMS’ plans for Commercializing any Product or MDX-1379 in the Royalty Territory would be reasonably likely to have a material adverse effect on the Commercialization of a Product or MDX-1379 in the United States, and whether the Global Commercialization Plan and Budget for Commercializing a Product or MDX-1379 in the United States would be reasonably likely to have a material adverse effect on BMS’ plans for Commercializing a Product or MDX-1379 in the Royalty Territory.  BMS shall not adopt a Commercialization strategy for a Product or MDX-1379 in the Royalty Territory that would be reasonably likely to have a material adverse effect on the Development or Commercialization of a Product or MDX-1379 in the United States without Medarex’s consent, and the Parties shall endeavor not to adopt a Commercialization strategy for a Product or MDX-1379 in the United States that would be reasonably likely to have a material adverse effect on BMS’ plans for Developing or Commercializing a Product or MDX-1379 in the Royalty Territory.  If either Party determines that such a material adverse effect is reasonably likely to occur, then the Parties or BMS, as applicable, shall seek to minimize any such adverse effect in a manner consistent

 

95

 

with the terms of this Agreement, with priority given to minimizing the effect on the United States, and thereafter, those countries that have the most significant commercial potential.

 

ARTICLE 5

 

COMMERCIALIZATION IN THE UNITED STATES

 

5.1                                General Principles of Commercialization of Products in the United States; Diligence .

 

5.1.1  G eneral Principles .  Subject to the terms of this Agreement and to the performance by Medarex of its obligations under this Agreement where Medarex has exercised its option to Co-Promote a Product pursuant to the terms of this Agreement, BMS shall be responsible for the Commercialization of each Product and, if applicable, of MDX-1379 for each Indication in the United States.

 

5.1.2  Diligence .  For each Co-Promotion Product, a Party shall have the diligence obligations set forth in Section 5.4.  BMS shall have the same Diligent Efforts obligations for each Product and MDX-1379 (other than Co-Promotion Products) in the United States as BMS has for a Co-Promotion Product in the United States.

 

5.2                                Commercialization Plans and Budgets; Pre-Launch US Commercialization Plan and Budget .

 

5.2.1   Commercialization Plans and Budgets .

 

(a)                                   In General.   Except in the limited case of certain Additional Products as provided in Section 5.2.2(c), the Commercialization of each Product and MDX-1379 shall be governed by a comprehensive, multi-year, worldwide Commercialization plan and budget for such Product and MDX-1379 covering both the United States and the Royalty Territory (the “ Global Commercialization Plan and Budget ”), and by detailed Commercialization plans and budgets covering the Commercialization activities to be performed for a particular calendar Year for each Co-Promotion Product in the United States (each, an “ Annual US Commercialization Plan and Budget ,” and, together with the applicable Annual RT Commercialization Plan and Budget, an “ Annual Commercialization Plan and Budget ”).  In addition, the Commercialization of each such Co-Promotion Product shall be governed by a pre-Launch Commercialization plan for the United States covering the period from the date such plan is adopted by the JEC (generally, upon commencement of the first Phase III Clinical Trials for such Co-Promotion Product) through the end of the second (2 ^nd ) full calendar Year following Launch of such Co-Promotion Product in the United States (the “ Pre-Launch US Commercialization Plan and Budget ,” and, together with the applicable Pre-Launch RT Commercialization Plan and Budget, a “ Pre-Launch Commercialization Plan and Budget ”); provided that once an Annual US Commercialization Plan and Budget is adopted for a given Co-Promotion Product for a Year, any Pre-Launch US Commercialization Plan and Budget for such Co-Promotion Product that covers the same calendar Year as the Annual US Commercialization Plan and Budget shall have no further effect for such overlapping calendar Year.

 

96

 

(b)                                   Limitations.   Notwithstanding anything contained in this Agreement or any plan or budget adopted hereunder to the contrary (including any Global Commercialization Plan and Budget, Annual US Commercialization Plan and Budget, or Pre-Launch US Commercialization Plan and Budget), unless otherwise agreed to in writing by Medarex, Medarex shall have no obligation (i) to perform in connection with any Product or MDX-1379 under this Agreement (A) any Commercialization activities other than those assigned to Medarex in an applicable Global Commercialization Plan and Budget for such Product or MDX-1379 (it being agreed that, other than as provided in Sections 3.4, 3.9, 3.11, 3.12, 5.5, 5.7, 5.8, 5.9, 5.10 and in compliance with Applicable Laws, Medarex shall not be obligated to perform any Commercialization activities other than the performance of PDEs using its sales force, without its prior written consent), (B) any Commercialization activities other than those assigned to Medarex in an applicable Pre-Launch US Commercialization Plan and Budget and Annual US Commercialization Plan and Budget for such Product or MDX-1379 (and only to the extent that that any such Plan and Budget has been prepared consistent with the Global Commercialization Plan and Budget and the terms of this Agreement), or (C) any Commercialization activities with respect to such Product or MDX-1379 prior to the date (if any) on which Medarex exercises the Co-Promotion Option with respect to such Product or MDX-1379 (subject to Section 6.4.1), and after the effective date of termination (if any) of Medarex’s right to Co-Promote such Product or MDX-1379, or (ii) to perform or fund in connection with any Product or MDX-1379 under this Agreement: (A) any Commercialization activities with respect to such Product or MDX-1379 directed toward or supporting its Commercialization in the Royalty Territory, or (B) any Commercialization (or other) activities under any Global Commercialization Plan and Budget to the extent relating to the Royalty Territory, and, unless and until it shall have exercised the Co-Promotion Option with respect to such Product or MDX-1379, the United States (and only thereafter with respect to the period that it is engaged in the Co-Promotion of such Product or MDX-1379).

 

5.2.2  Global Commercialization Plan and Budget .

 

(a)                                   In General.   The Global Commercialization Plan and Budget for each Product and MDX-1379 shall set forth the performance and funding obligations for the Commercialization of each Indication, and shall be consistent in form and substance with those long-term commercialization plans and budgets customarily prepared by BMS for its other oncology products, but which shall include in any event for each Co-Promotion Product (i) subject to Sections 5.2.2(d), 5.4 and 5.5, the maximum and minimum number of Sales Representatives required of Medarex and the minimum number of Sales Representatives required of BMS for the Commercialization of all Indications for each Co-Promotion Product in the United States for each of the first [*****] ^† (with the first [*****] being the [*****] in which Launch occurs) following initial Launch of such Co-Promotion Product in the United States, (ii) where customarily prepared by BMS for its own products, a non-binding good faith estimate of PDEs and call positions for each Co-Promotion Product in the United States in the Years covered by such Approved Plan, and (iii) where customarily prepared by BMS for its own products, any additional information that would otherwise be included in the Pre-Launch US

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

97

 

Commercialization Plan and Budget for each Product and MDX-1379 (other than a Non-Co-Promoted Product).  Following the adoption of the initial Global Commercialization Plans and Budgets for the Lead Product and for MDX-1379 and for each Additional Product thereafter, BMS shall thereafter prepare and propose on a rolling [*****] ^† basis, according to a schedule, and using a process, that will enable the JCC to review, comment on and approve (or fail to reach approval) by September 30 of a Year, and submit to the JEC for review, comment and approval by no later than October 31 of a Year, an updated Global Commercialization Plan and Budget for each Product and MDX-1379 for the next [*****]; provided that in the event of any dispute by the JEC concerning such plan and budget, other than Arbitrable Matters, Litigable Matters and Expert Matters, and subject to Section 5.2.2(d) and the other terms and conditions of this Agreement, the matter shall be resolved by BMS pursuant to Section 16.1.5, following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1; provided , however , that, except as provided in Section 5.2.2(d)(ii)(B)(iv), no change shall be made with respect to (x) the minimum number of Sales Representatives required for Medarex or BMS for the [*****] after Launch or (y) the maximum number of Sales Representatives required for Medarex for the [*****] after Launch, in each case ((x) and (y)), without the mutual agreement of the Parties through their representatives on the applicable Committees or as a Post-DO Party Matter in accordance with Section 16.1.4, following compliance with Section 2.7.3(c) and subject to the other provisions of Section 16.1.

 

(b)                                   Global Commercialization Plan and Budget for Lead Product and MDX-1379.   The Global Commercialization Plan and Budget for the Lead Product and MDX-1379 as of the Execution Date is as Previously Disclosed.

 

(c)                                   Adoption of Global Commercialization Plan and Budget for an Additional Co-Promotion Product or an Additional Indication.  In the event that the Parties mutually agree in writing pursuant to Section 3.2.1(b) to Develop any Additional Product or to Develop Additional Indications for an existing Product (or MDX-1379, as applicable), then, at the time such Additional Product first begins a Phase III Clinical Trial or such Additional Indication for an existing Product begins a Phase III Clinical Trial, BMS shall prior to the applicable Opt-Out Trigger Date, prepare and propose a Global Commercialization Plan and Budget for such Additional Product or an amendment to the existing Global Commercialization Plan and Budget for any such Additional Indication for an existing Product (or MDX-1379, as applicable), as the case may be, for review and approval by the JCC and JEC, with such plan and budget to be subject to all the terms and conditions that apply to each other Global Commercialization Plan and Budget hereunder.

 

(d)                                   Limitations on Changes to Sales Representatives in Global Commercialization Plan.

 

(i)                                     With respect to a Co-Promotion Product, the total number of such Sales Representatives required of Medarex in any applicable Global Commercialization Plan and Budget shall not, subject to Section 5.2.2(d)(iv), for the [*****] of each such plan:

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

98

 

(A)                                exceed the number of Sales Representative FTEs that were set forth for such Year in the Global Commercialization Plan and Budget for such Co-Promotion Product that had been adopted in the previous calendar Year by more than the greater of (1) [*****] ^† FTEs or (2) [*****] of the number of Sales Representative FTEs; provided that in no event may the number of Sales Representative FTEs set forth in the Global Commercialization Plan and Budget exceed in any month during the first [*****] after the Launch of such Co-Promotion Product for its first Indication the maximum number of such Medarex Sales Representative FTEs that had been set forth for any such month in the first Global Commercialization Plan and Budget that was adopted for [*****].  By way of example, if the initial Global Commercialization Plan and Budget adopted for [*****] for the Lead Product shows that Medarex will need to provide, for [*****] Sales Representative FTEs, then the Global Commercialization Plan and Budget for such Product that is adopted for [*****] may not provide, without Medarex’s prior written consent, for an increase in the number of Medarex Sales Representative FTEs for [*****] from what was provided for [*****] in the previous Global Commercialization Plan and Budget by more than [*****] FTEs ( i.e ., the greater of [*****] FTEs or [*****] FTEs ([*****] FTEs));

 

(B)                                be less than the number of Sales Representative FTEs that were set forth for such Year in the Global Commercialization Plan and Budget for such Co-Promotion Product that had been adopted for the previous [*****], in the case of Sales Representative FTEs, by more than the greater of (1) [*****] FTEs or (2) [*****] of the number of Sales Representative FTEs; provided that in no event may the minimum number of Sales Representative FTEs set forth in the Global Commercialization Plan and Budget be less in any month during the first [*****] after the Launch of a Co-Promotion Product for its first Indication than the minimum number of such Medarex Sales Representative FTEs that had been set forth for such month in the first Global Commercialization Plan and Budget that was adopted for [*****].  By way of example, if the Global Commercialization Plan and Budget adopted for [*****] for the Lead Product shows that Medarex will need to provide, for [*****] Sales Representative FTEs, then the Global Commercialization Plan and Budget for such Product that is adopted for [*****] may not provide, without Medarex’s prior written consent, for a decrease in the number of Medarex Sales Representative FTEs for [*****] from what was provided for [*****] in the previous Global Commercialization Plan and Budget by more than [*****] FTEs ( i.e ., the greater of [*****] FTEs or [*****] FTEs [*****] FTEs)).

 

(ii)                                 With respect to a Co-Promotion Product, the total number of such Sales Representatives required of Medarex in any Global Commercialization Plan and Budget shall not, subject to Section 5.2.2(d)(iv), for the [*****] of each such plan:

 

(A)                                exceed the number of Sales Representative FTEs that were set forth for such Year in the Global Commercialization Plan and Budget for such Co-Promotion Product that had been adopted for the previous calendar Year by more than the greater of (1) [*****] FTEs or (2) [*****] of the number of Sales Representative FTEs; provided that in no event may the number of Sales Representative FTEs set forth in the Global

 

^†                                             [*****] REPRESENTS CONFIDENTIAL PORTION WHICH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

99

 

Commercialization Plan and Budget exceed in any month during the first [*****] ^† after the Launch of a Co-Promotion Product for its first Indication the maximum number of such Medarex Sales Representative FTEs that had been set forth for any such month in the first Global Commercialization Plan and Budget that was adopted for [*****].  By way of example, if the initial Global Commercialization Plan and Budget adopted for [*****] for the Lead Product shows that Medarex will need to provide, for [*****], [*****] Sales Representative FTEs, then the Global Commercialization Plan and Budget for such Product that is adopted for [*****] may not provide, without Medarex’s prior written consent, for an increase in the number of Medarex Sales Representative FTEs for [*****] from what was provided for [*****] in the previous Global Commercialization Plan and Budget by more [*****] FTEs ( i.e ., the greater of [*****] FTEs or [*****] FTEs [*****] FTEs));

 

(B)                                be less than the number of Sales Representative FTEs and total PDEs that were set forth for such Year in the Global Commercialization Plan and Budget for such Co-Promotion Product that had been adopted for the previous calendar Year, in the case of Sales Representative FTEs, by more than the greater of (1) [*****] FTEs or (2) [*****] of the number of Sales Representative FTEs; provided that in no event may the minimum number of Sales Representative FTEs set forth in the Global