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omitted and Filed Separately
CONFIDENTIAL TREATMENT REQUESTED
Under C.F.R. §§200.80(b)(4) and 240.24b-2
DEVELOPMENT
AND COMMERCIALIZATION LICENSE AGREEMENT
This Development and
Commercialization License Agreement (the
“Agreement” ), is entered into as of
April 27, 2009 (the “Signing Date” )
by and between Ardea
Biosciences, Inc. , a Delaware corporation, having an
address of 4939 Directors Place, San Diego, California 92121, USA (
“Ardea” ), and Bayer Schering Pharma AG
, a corporation
organized under the laws of Germany, having an address of
Müllerstrasse 178, 13353 Berlin, Germany (
“Bayer” ).
Whereas, Ardea
has acquired and developed expertise and proprietary rights related
to compounds that inhibit the biological target known as MEK (as
defined below);
Whereas, Bayer
is engaged in the research, development and commercialization of
pharmaceutical products; and
Whereas, Bayer
desires to obtain from Ardea, and Ardea desires to grant to Bayer,
an exclusive, worldwide license under the Ardea Technology to
develop and commercialize Products (as defined below).
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 hereby agree as follows:
1.1 “Affiliate” shall mean any entity directly
or indirectly controlled by, controlling or under common control
with, a party to this Agreement. For purposes of this definition,
“control” (including, with correlative meanings,
“controlled by”, “controlling” and
“under common control with”) means (a) beneficial
ownership of more than 50% of the voting securities or other
ownership interest of an entity, or (b) possession of the
power to direct the management and policies of an
entity.
1.2 “Ardea Know-How” shall mean all Information
that is: (a) either (i) Controlled by Ardea on the
Effective Date, or (ii) made or generated by Ardea in the
course and as a result of performing its obligations under
Sections 4.1(d), 4.1(e) and 4.1(j); and (b) necessary for
the development, manufacture, use or sale of Products in the Field.
For the avoidance of doubt, Information Controlled by Ardea that is
not directed to any Licensed Compound is excluded from the Ardea
Know-How.
1.3 “Ardea Patents” shall mean all Patents
Controlled by Ardea during the Term that claim Ardea Know-How. The
Ardea Patents as of the Effective Date are set forth on
Exhibit A . For the avoidance of doubt:
(a) to the extent that any claim of a Patent described in the
preceding sentence is not directed to any Licensed Compound, such
claims are excluded from the Ardea Patents; and (b) any Patent
Controlled by Ardea that does not claim the manufacture, use or
sale of Licensed Compounds in the Field is excluded from the Ardea
Patents.
1.4 “Ardea Technology” shall mean the Ardea
Patents and Ardea Know-How.
1.5 “Business Day” shall mean a day that is not
a Saturday, Sunday or other day on which banks are required or
authorized by law to be closed in San Diego, California or Berlin,
Germany.
1.6 “Change of Control” shall mean with respect
to any party (the “ Acquired Entity ”)
(a) any sale, exchange, transfer, or issuance to or
acquisition by one or more Third Parties of shares representing
more than 50% of the aggregate ordinary voting power entitled to
vote for the election of directors represented by the issued and
outstanding stock of the Acquired Entity or any Affiliate that
directly or indirectly controls the Acquired Entity (whether by
sale or merger, but excluding the issuance of shares in financing
transactions), whether such sale, exchange, transfer, issuance or
acquisition is made directly or indirectly, beneficially or of
record or in one transaction or a series of related transactions;
(ii) a merger or consolidation under applicable law of the
Acquired Entity with a Third Party in which the shareholders of the
Acquired Entity or any Affiliate that directly or indirectly
controls the Acquired Entity immediately prior to such merger or
consolidation do not continue to hold immediately following the
closing of such merger or consolidation at least 50% of the
aggregate ordinary voting power entitled to vote for the election
of directors represented by the issued and outstanding stock of the
entity surviving or resulting from such consolidation; or
(iii) a sale or other disposition of all or substantially all
of the assets of the Acquired Entity to one or more Third Parties
in one transaction or a series of related transactions.
1.7 “Co-Development Term” shall mean the period
beginning on the Effective Date and, unless this Agreement is
earlier terminated in accordance with Article 10, ending upon
fulfillment by Ardea of its obligations under Sections 4.1(d)
and 4.1(e) and disclosure to Bayer of the results
thereof.
1.8 “Commercially Reasonable Efforts” shall
mean, with respect to Bayer’s obligations under this
Agreement, efforts and resources that are comparable to those
generally used by Bayer in the exercise of its reasonable business
judgment relating to other prescription pharmaceutical products
owned or licensed by it or to which it has exclusive rights, which
have a market potential and are at a stage of development or
product life similar to a Product, as applicable, taking into
account issues of patent coverage, measures of relative safety and
efficacy, Product profile, the competitiveness of the marketplace,
the proprietary position of the Product, the regulatory structure
involved, the relative profitability of the Product, and other
relevant factors, including, without limitation, comparative
technical, legal, scientific, and/or medical factors.
1.9 “Confidential Information” shall have the
meaning provided in Section 9.1.
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1.10 “Control” or
“Controlled” shall mean, with respect to any
Information, Patents or other intellectual property rights,
possession by an entity of the ability (whether by ownership,
license or otherwise) to grant access to, to grant use of, or to
grant a license or a sublicense of or under such Information,
Patents or intellectual property rights without violating the terms
of any agreement or other arrangement with any Third
Party.
1.11 “Effective Date” shall have the meaning
provided in Section 10.1.
1.12 “EMEA” shall mean the European Agency for
the Evaluation of Medicinal Products, or any successor agency
thereto having the administrative authority to regulate the
marketing of human pharmaceutical products or biological
therapeutic products, delivery systems and devices in the European
Union.
1.13 “FDA” shall mean the United States Food and
Drug Administration, or any successor agency thereto having the
administrative authority to regulate the marketing of human
pharmaceutical products or biological therapeutic products,
delivery systems and devices in the United States of
America.
1.14 “Field” shall mean the prevention,
treatment and/or diagnosis of any disease or disorder.
1.15 “First Commercial Sale” shall mean, with
respect to any Product, the first sale to a Third Party for end use
or consumption of such Product in a country after the Regulatory
Authority of such country has granted Regulatory Approval. Sale to
an Affiliate or sublicensee shall not constitute a First Commercial
Sale. Additionally, sales of Product for compassionate use, named
patient use, clinical trial purposes or other similar uses will not
constitute a First Commercial Sale.
1.16 “Generic Product” shall mean, with respect
to a Product in any country, a product that contains the same
active pharmaceutical ingredient, including, without limitation,
any prodrug, ester, salt, hydrate, solvate, polymorph, isomer or
enantiomer thereof, as such Product regardless of the dosage and
formulation of such product.
1.17 “ GMP ” shall mean Good
Manufacturing Regulations as specified in 21 CFR §§210
and 211, and 21 CFR §312 (or its successor
regulations).
1.18 “HSR Act” shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
1.19 “IND” shall mean an Investigational New
Drug Application filed with the FDA, or the equivalent application
or filing filed with any equivalent Regulatory Authority outside
the United States of America (including any supra-national agency,
such as in the European Union) necessary to commence human clinical
trials in such jurisdiction.
1.20 “Indication” shall mean the prevention,
treatment and/or diagnosis of any disease or disorder.
1.21 “Information” shall mean all tangible and
intangible (a) techniques, technology, practices, trade
secrets, inventions (whether patentable or not), methods,
knowledge, know-how,
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test data
and results (including pharmacological, toxicological and clinical
test data and results), analytical and quality control data,
results or descriptions, software and algorithms and
(b) compositions of matter, cells, cell lines, assays, animal
models and physical, biological or chemical material.
1.22 “Inventions” shall have the meaning
provided in Section 7.1.
1.23 “JDC” shall have the meaning provided in
Section 2.1.
1.24 “Joint Invention” shall mean any Invention
made jointly by one or more employees, officers, directors,
consultants or contractors of Ardea and one or more employees,
officers, directors, consultants or contractors of
Bayer.
1.25 “Joint Patents” shall mean Patents claiming
any Joint Invention.
1.26 “Licensed Compound” shall mean
Ardea’s proprietary compounds known as RDEA119 and RDEA436
and any small molecule compounds that are Controlled by Ardea as of
the Effective Date and during the Term, the primary mechanism of
action of which is selective and specific inhibition of MEK,
including, without limitation, any prodrug, ester, salt, hydrate,
solvate, polymorph, isomer or enantiomer thereof.
1.27 “MEK” shall mean mitogen-activated erk
kinase.
1.28 “NDA” shall mean a New Drug Application (as
more fully defined in 21 C.F.R. 314.5 et seq. ) and all
amendments and supplements thereto filed with the FDA, or the
equivalent application filed with any equivalent Regulatory
Authority outside the United States of America (including any
supra-national agency, such as in the European Union).
1.29 “Net Sales” shall mean, with respect to any
Product, the gross invoiced sales of such Product by Bayer or its
Affiliates or sublicensees, as applicable, to Third Parties after
the First Commercial Sale of such Product, less the following
deductions to the extent included in the gross invoiced sales price
for such Product or otherwise directly paid or incurred by Bayer or
its Affiliates or sublicensees, as applicable, with respect to the
sale of such Product and any item substantially similar in
character and/or substance to the following:
(a) normal and customary trade, quantity and cash discounts,
credits and allowances actually allowed and properly taken directly
with respect to sales of such Product;
(b) amounts repaid or credited by reason of rejections,
recalls, returns, rebates, government mandated rebates, allowances,
billing errors and damaged goods;
(c) chargebacks and other amounts paid on sale or dispensing
of such Product, including any payment in respect of sales to any
governmental authority in respect of any government-subsidized
program (including, without limitation, U.S. Medicare and Medicaid
rebates);
(d) retroactive price reductions that are actually allowed
or granted;
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(e) tariffs, duties (including, without limitation, import
duties), excise, sales, value-added or other taxes (other than
taxes based on income);
(f) cash discounts for timely payment;
(g) delayed ship order credits;
(h) discounts pursuant to patient discount
programs;
(i) freight, shipping and insurance charges, including
distribution, packing and handling charges for the Product to the
extent that they are included in the price; and
(j) charges for bad debts, which are actually allowed and
properly taken directly with respect to sales of the Product as
determined in accordance with Bayer’s usual and customary
accounting methods, which are in accordance with International
Financial Reporting Standards (“ IFRS ”)
as consistently applied at Bayer.
In
no event will Products provided at cost for clinical trials or
provided for charitable purposes or for free sampling be included
in Net Sales. In no event shall Bayer or its Affiliates or
sublicensees sell any Product with one or more other products or
services for a single price.
In
the case of any Product that is sold by or on behalf of Bayer or
its Affiliates or sublicensees which contains a Licensed Compound
in combination with one or more Therapeutically Active ingredients,
products or components (a “Combination
Product” ), Net Sales of such Product shall be
calculated by [***]. If, on a country by country basis, the
Therapeutically Active ingredient(s) (other than the Product) in
the Combination Product are not sold separately in such country,
then Net Sales for the purpose of determining royalties of the
Combination Product shall be calculated by [***]. If, on a country
by country basis, the Product in the Combination Product is not
sold separately in such country, then Net Sales for the purpose of
determining royalties of the Combination Product shall be
calculated by [***]. If neither the Product (which does not contain
the Therapeutically Active ingredient(s)) nor the Therapeutically
Active ingredient(s) (other than the Product) in the Combination
Product is sold separately in a given country, then
[***].
1.30 “Ongoing Trials” shall have the meaning
provided in Section 4.1(d).
1.31 “Patents” shall mean United States and
foreign patents and patent applications, including, without
limitation, certificates of invention and applications for
certifications of invention, registered designs and registered
design applications, industrial designs and industrial design
applications and registrations, reissues, extensions,
substitutions, confirmations, registrations, revalidations,
renewals, term restorations, additions, provisionals,
continuations, continuations-in-part and divisions
thereof.
1.32 “Phase 1 Trial” shall mean a human clinical
trial that would satisfy the requirements for a Phase 1 study as
defined in 21 CFR §312.21(a) (or its successor
regulation).
1.33 “Phase 2 Trial” shall mean a human clinical
trial that would satisfy the requirements for a Phase 2 study as
defined in 21 CFR §312.21(b) (or its successor
regulation).
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1.34 “Phase 3 Trial” shall mean a human clinical
trial that would satisfy the requirements for a Phase 3 study as
defined in 21 CFR §312.21(c) (or its successor
regulation).
1.35 “Preclinical Compound” shall mean any
Licensed Compound that is not RDEA119 or RDEA436.
1.36 “Preclinical Product” shall mean any
pharmaceutical product containing or comprising a Preclinical
Compound, whether or not as the sole active ingredient, including,
in each case, all formulations, line extensions and modes of
administration thereof.
1.37 “Product” shall mean a Preclinical Product,
a RDEA119 Product or a RDEA436 Product.
1.38 “RDEA119 Product” shall mean any
pharmaceutical product containing or comprising the Licensed
Compound referred to as RDEA119, whether or not as the sole active
ingredient, including, in each case, all formulations, line
extensions and modes of administration thereof.
1.39 “RDEA436 Product” shall mean any
pharmaceutical product containing or comprising the Licensed
Compound referred to as RDEA436, whether or not as the sole active
ingredient, including, in each case, all formulations, line
extensions and modes of administration thereof.
1.40 “Regulatory Approval” shall mean any and
all approvals (including price and reimbursement approvals, if
required to initiate marketing), licenses, registrations or
authorizations of any Regulatory Authority that are necessary for
the manufacture, use, storage, import, transport, marketing and/or
sale of a Product in such jurisdiction in accordance with
applicable laws.
1.41 “Regulatory Authority” shall mean the
governmental authority or agency having the administrative
authority to regulate the marketing of human pharmaceutical
products or biological therapeutic products, delivery systems and
devices in a particular country or jurisdiction, including, without
limitation, the FDA.
1.42 “Term” shall have the meaning provided in
Section 10.1.
1.43 “Therapeutically Active” shall mean
biologically active, but shall not include diluents, vehicles or
specific adjuvants or any other ingredient which does not have any,
or has only incidental, therapeutic properties when present
alone.
1.44 “Third Party” shall mean any entity other
than Ardea or Bayer or an Affiliate of Ardea or Bayer.
1.45 “Valeant” shall mean Valeant Research &
Development and Valeant Pharmaceuticals International, Inc.,
collectively.
1.46 “Valeant Agreement” shall mean that certain
Asset Purchase Agreement, dated December 21, 2006, by and
between Valeant and Ardea, pursuant to which Ardea purchased
certain assets that are the subject of this Agreement.
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1.47 “Valid Claim” shall mean a claim contained
in (a) an issued and unexpired patent which has not been held
unenforceable, unpatentable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through abandonment,
reissue, disclaimer or otherwise, or (b) a patent application
that has been pending for less than [***] (i) from the
Effective Date, for patent applications pending as of the Effective
Date, or (ii) from [***], for patent applications filed after
the Effective Date. If a claim or a patent application that ceased
to be a Valid Claim under clause (b) of the preceding sentence
because of the passage of time later issues as a part of a patent
within clause (a) of the preceding sentence, then it shall
again be considered a Valid Claim effective as of the issuance of
such patent.
2.
Joint Development
Committee
2.1 Formation; Composition. Promptly after the Effective
Date, the parties will form a Joint Development Committee (the
“JDC” ) composed of [***] representatives
of each of Ardea and Bayer. A representative of Bayer shall act as
the chairperson of the JDC. A reasonable number of additional
representatives of a party (including such party’s alliance
manager) may attend meetings of the JDC in a non-voting capacity.
The JDC shall remain in place until the earlier of
(a) expiration of the Co-Development Term and (b) a
Change of Control of Ardea.
2.2 Responsibilities. The responsibilities of the JDC shall
be as follows: (a) encouraging and facilitating ongoing
cooperation between the parties with respect to the development of
Products; (b) overseeing development and regulatory strategies
for Products; (c) monitoring progress of the development of
Products and the parties’ diligence in carrying out their
respective responsibilities under this Agreement with respect
thereto; and (d) carrying out the other duties and
responsibilities described for it in this Agreement. In no event
shall the JDC have any power to amend or modify this Agreement or
to determine any such matter in a manner that conflicts with the
terms of this Agreement.
2.3 Meetings; Decision Making. The JDC shall meet as deemed
necessary by the JDC members, but in any event no less than [***].
Such meetings may be conducted by videoconference, teleconference
or in person, as agreed by the parties, and the parties shall agree
upon the time of meetings. If the JDC is unable to decide or
resolve any matter properly presented to it for action, then the
matter shall be referred to the Chief Executive Officer of Ardea
and the Chief Medical Officer of Bayer for attempted resolution. In
the event the Chief Executive Officer of Ardea and the Chief
Medical Officer of Bayer are unable to resolve such dispute within
30 days of such dispute being referred to such individuals,
then the Chief Medical Officer of Bayer shall have final
decision-making authority with respect to such matter; provided,
however , that Bayer’s Chief Medical Officer shall not
have any power to amend or modify this Agreement, to obligate Ardea
to undertake any obligation or incur any expense not expressly
contemplated by this Agreement, or to determine any such matter in
a manner that conflicts with the terms of this
Agreement.
3.
License; Technology Transfer;
Retained Rights
3.1 License Grant. Subject to the terms and conditions of
this Agreement, Ardea hereby grants to Bayer an exclusive (even as
to Ardea, except as set forth in Section 4.1),
worldwide,
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royalty-bearing
license, including the right to sublicense through multiple tiers
of sublicense, under the Ardea Technology and Ardea’s
interest in the Joint Patents, in each case solely to develop,
make, have made, use, sell, have sold, offer for sale and import
Products in the Field during the Term.
3.2 Technology and Materials Transfer.
(a) Commencing promptly after the Effective Date and from
time to time thereafter during the Co-Development Term, Ardea shall
disclose to Bayer such Ardea Know-How as is reasonably necessary to
enable Bayer to develop and manufacture Products in the Field as
contemplated by this Agreement.
(b) In connection with the activities contemplated by this
Agreement, a party may provide to the other party certain
biological or chemical materials Controlled by such party,
including, but not limited to, samples of Licensed Compounds
(collectively, “Materials” ). Except as
otherwise provided under this Agreement, all such Materials will
remain the sole property of the providing party, will be used only
in furtherance of the activities expressly contemplated by this
Agreement, will not be used or delivered to or for the benefit of
any Third Party without the prior written consent of the providing
party, and will be used in compliance with all applicable laws,
rules and regulations. Notwithstanding anything herein to the
contrary, Bayer may provide samples of Materials to contract
manufacturers. The Materials supplied under this Agreement must be
used with prudence and appropriate caution in any experimental work
because not all of their characteristics may be known. Except as
expressly set forth herein, THE MATERIALS ARE PROVIDED “AS
IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY
WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE
ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD
PARTY.
3.3 Retained Rights. Ardea hereby expressly reserves the
right to practice, and to grant licenses under, the Ardea
Technology and Ardea’s interest in the Joint Patents for any
and all purposes other than the specific purposes related to
Licensed Compounds for which Bayer has been granted an exclusive
license under Section 3.1.
3.4 No Implied Licenses. No right or license under any
Patents or Information is granted or shall be granted by
implication. All such rights or licenses are or shall be granted
only as expressly provided in the terms of this
Agreement.
4.
Development and
Commercialization of Products
4.1 Ardea Responsibilities.
(a) Initial Documents Transfer. During the [***] period
following the Effective Date, Ardea shall provide to Bayer one
electronic copy of all documents, data and other information
relevant to the IND and IMPD Applications filed with the FDA and
EMEA.
(b) Initial Materials Transfer. Promptly after the
Effective Date, Ardea shall transfer to Bayer the existing
quantities (as of the Effective Date) of the Licensed Compounds
in
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Ardea’s
possession, except that Ardea may retain sufficient quantities of
the Licensed Compounds as is necessary for Ardea to perform its
obligations under Sections 4.1(d) and 4.1(e)).
(c) Technical Assistance. During the [***] period
following the Effective Date, Ardea shall reasonably cooperate with
Bayer to provide technical assistance without charge to
Bayer.
(d) Ongoing Clinical Trials of Licensed Compounds.
Ardea shall continue the ongoing Phase 1 Trials identified in
Exhibit B hereto (the “Ongoing
Trials” ) to completion, at Bayer’s sole
expense, and provide the results thereof to Bayer promptly
following such completion, at Bayer’s sole expense. Attached
hereto as Exhibit C is Ardea’s development
plan and budget for the Ongoing Trials, which have been mutually
agreed to by both parties. Notwithstanding anything herein to the
contrary, Bayer’s responsibilities to reimburse Ardea for its
costs and expenses related to the Ongoing Trials shall be limited
to the amounts in the budget attached hereto. Ardea shall not make
any material modifications to such Ongoing Trials (including,
without limitation, the budget therefor) without the prior written
consent of Bayer. Ardea shall consult with Bayer with respect to
all communications with the FDA and other regulatory authorities
with respect to the Ongoing Trials prior to any such communication
being sent and shall, in good faith, consider any comments made by
Bayer. Bayer shall be entitled to attend any meeting with the FDA
and other regulatory authorities with respect to the Ongoing
Trials.
(e) Manufacturing Activities. Ardea shall be
responsible, at Bayer’s sole expense, for manufacturing
RDEA119 and RDEA436 until the date that Bayer shall notify Ardea
that it is able to take over that responsibility, which Bayer shall
use Commercially Reasonable Efforts to do so.
(f) Audits. Ardea shall permit Bayer to conduct audits
on past, present and future clinical development and GMP
manufacture of RDEA119 and RDEA436 at its facilities. Ardea shall
undertake reasonable efforts to support Bayer audits of GMP
manufacturing of RDEA119 and RDEA436 at Third Party service
providers.
(g) Documentation of Third Party Manufacturers. Ardea
shall undertake reasonable efforts to obtain documentation of all
development activities and manufacturing that has been conducted at
Third Party service providers and shall make all such
documentation, together with documentation of manufacturing that
has been conducted by Ardea, available to Bayer.
(h) Compliance with Law. Ardea shall perform its
obligations under this Section 4.1 in compliance in all
material respects with all applicable laws, rules and regulations,
including GMP.
(i) At Bayer’s option, Ardea shall assign in whole or
in part to Bayer, to the extent assignable, any contracts with
Third Parties with respect to Ardea’s obligations pursuant to
Sections 4.1(d) and 4.1(e). From and after the Effective Date,
Ardea shall obtain Bayer’s prior written consent, which
consent shall not be unreasonably withheld, prior to entering into
any new contracts with Third Parties with respect to Ardea’s
obligations pursuant to Sections 4.1(d) and 4.1(e).
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(j) Without limiting the generality of Sections 4.1 and
4.6, within [***] of the Effective Date, Ardea will provide Bayer
with all material information and data relating to the Licensed
Compounds, the Products and the Ongoing Trials (including, without
limitation, all information regarding efficacy, side effects,
injury, toxicity, reactions and adverse events, but excluding
attorney-client privileged documents) associated with any clinical
use, studies, investigations or tests with the Licensed Compounds,
and will not withhold any information that would make any
information provided by Ardea misleading in any material
respect.
(k) Ardea shall promptly notify Bayer in the event that
Ardea or any employee of Ardea, or any subcontractor of Ardea or
employee of a subcontractor performing services with respect to
Ardea’s obligations pursuant to Sections 4.1(d) and
4.1(e), is debarred by the FDA pursuant to its authority under
Sections 306(a) and (b) of the U.S. Food, Drug and Cosmetic
Act (21 U.S.C. § 335(a) (“ FDC Act
”) or becomes the subject of any investigation or proceeding
which may result in debarment by the FDA.
4.2 Bayer Responsibilities. Except as expressly set forth in
Section 4.1, during the Term, Bayer shall be responsible for
and control, and be solely responsible for the costs associated
with, the development, manufacture, registration, marketing and
commercialization of Products worldwide, including all formulation
development, commercial manufacturing process development and
worldwide supply of all Products in the Field. Without limiting the
generality of the foregoing, Bayer shall be responsible for the
clinical development of all Products in the Field, including the
clinical development strategy, the clinical project plan and the
execution of the clinical development plan. Bayer shall perform its
obligations hereunder in compliance in all material respects with
all applicable laws, rules and regulations, including
GMP.
4.3 Regulatory. Promptly after the Effective Date, Ardea
shall take such actions and execute such documents as are necessary
to transfer to Bayer all existing regulatory filings and approvals,
including all marketing authorizations, with respect to Products,
except that the INDs for the Ongoing Trials shall remain in
Ardea’s name until such time as such Ongoing Trials are
completed. Except for the INDs for the Ongoing Trials, during the
Term, Bayer shall be solely responsible for obtaining and
maintaining Regulatory Approvals, including all marketing
authorizations, for Products, at Bayer’s sole expense, and
all such Regulatory Approvals shall be in Bayer’s
name.
4.4 Diligence. Bayer shall use Commercially Reasonable
Efforts to develop and commercialize [***] as soon as practicable
and to maximize sales thereof. Without limiting the foregoing,
Bayer shall use Commercially Reasonable Efforts to develop and
commercialize [***], Bayer shall use Commercially Reasonable
Efforts to do so.
4.5 Disclosure Regarding Bayer Efforts. During the Term,
Bayer shall keep Ardea reasonably informed regarding Bayer’s
worldwide Product development and commercialization activities as
follows:
(a) During the Co-Development Term, each party shall
prepare, and distribute to all members of the JDC no later than
[***] prior to each JDC meeting, a reasonably detailed written
summary report, in such form and format and setting forth such
information regarding the results and progress of such
party’s development and other activities with respect to
Products;
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(b) After expiration of the Co-Development Term and prior to
First Commercial Sale of the first Product in the U.S., Bayer shall
provide [***] written reports to Ardea in [***] of each year
summarizing the status of the development efforts of Bayer and its
Affiliates and sublicensees with respect to Products, including
significant development, manufacturing, clinical trial, regulatory
and commercialization plans, activities and results with respect to
Products;
(c) After expiration of the Co-Development Term, the parties
shall meet on [***] basis (or with such frequency as is otherwise
mutually agreed by the parties) to review and discuss the status of
the development of the Products. Bayer shall, in good faith,
consider any input from Ardea; provided that Bayer shall retain
complete decision-making authority and control over the development
of the Products; and
(d) From and after First Commercial Sale of the first
Product in the U.S., Bayer shall provide [***] written reports to
Ardea in [***] of each year summarizing the status of the
development, regulatory and commercialization efforts of Bayer and
its Affiliates and sublicensees with respect to Products, including
significant development, manufacturing, clinical trial, regulatory
and commercialization plans, activities and results with respect to
Products.
4.6 Adverse Events. Ardea shall provide Bayer with all
legacy serious adverse event and other relevant safety information
for the Licensed Compound. Except for regulatory reporting
obligations with respect to adverse events occurring in the Ongoing
Trials (which shall be Ardea’s sole responsibility, provided
that Ardea shall consult with Bayer to the extent permissible and
practicable under the circumstances), Bayer shall be solely
responsible for all reporting to Regulatory Authorities of adverse
events associated with the use of Products. For so long as Ardea
conducts Ongoing Trials, each party shall promptly notify the other
party of any serious adverse events associated with the use of any
Product of which it becomes aware, and shall report all information
in its possession regarding such event as soon as practicable after
becoming aware of such information. The parties shall enter into a
Pharmacovigilance Agreement that details such information exchange
within [***] following the Signing Date. After the conclusion of
the Ongoing Trials, pharmacovigilance activities for the Product
will be the sole responsibility of Bayer.
5.1 Upfront License Fee. As consideration for the license
granted to Bayer as set forth in Section 3.1, Bayer shall pay
to Ardea a non-refundable, non-creditable upfront license fee of
US$35,000,000 within [***] of receipt of an invoice from Ardea
after the Effective Date. Payment is conditioned upon Ardea
providing Bayer the ability to download documents included in
Ardea’s electronic data room as in existence as of the
Signing Date together with a list of the Licensed Compounds
existing as of the Signing Date.
5.2 Development and Non-Sales-Based Milestone Payments.
Bayer will notify Ardea within 10 days after the first achievement
of each of the following milestones by a Product. Bayer shall pay
to Ardea the non-refundable, non-creditable milestone payments set
forth in the tables below within 30 days of receipt of an
invoice from Ardea. Further, each of the milestone payments set
forth in the tables below shall be payable only one time, for the
first Product to achieve such milestone, regardless of how many
times the corresponding milestone is achieved.
***Confidential
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Milestone
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Development
and Non-Sales-Based Milestones
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Payment (US$)
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Milestones
for first Indication for which a Product is
developed
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[***]
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[***]
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[***]
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Milestones
for second Indication for which a Product is
developed
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[***]
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[***]
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[***]
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†
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Regardless of
the Indication for which [***].
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Notwithstanding
the foregoing, in the event that a milestone payment is payable to
Ardea with respect to a RDEA436 Product pursuant to this
Section 5.2, the next unpaid milestone payable pursuant to
this Section 5.2 with respect to such RDEA436 Product shall be
[***] and, provided further, that in the event that a milestone
payment is payable to Ardea with respect to a Preclinical Product
pursuant to this Section 5.2, any such milestone shall be
[***].
5.3 Sales-Based Milestone Payments. Within [***] after the
end of the calendar year in which each of the following milestones
is achieved, Bayer shall pay to Ardea the non-refundable,
non-creditable milestone payments set forth in the tables below.
Further, each of the milestone payments set forth in the tables
below shall be payable only once, regardless of how many times the
corresponding milestone is achieved, and no milestone payment shall
be paid for a milestone that is not achieved.
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Milestone
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Sales-Based
Milestones
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Payment (US$)
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[***]
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[***]
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[***]
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Notwithstanding
the foregoing, in the event that a milestone payment is payable to
Ardea solely with respect to a Preclinical Product pursuant to this
Section 5.3, any such milestone shall be [***].
5.4 Royalties. Bayer shall make [***] royalty payments to
Ardea on aggregate worldwide annual Net Sales of all Products (for
all Indications) by Bayer, its Affiliates and sublicensees at the
applicable rate(s) set forth below:
(a) [***] of that portion of aggregate worldwide
annual Net Sales of such Product that is less than or equal to
US$[***];
(b) [***] of that portion of aggregate worldwide
annual Net Sales of such Product that is greater than US$[***] and
less than or equal to US$[***];
***Confidential
Treatment Requested
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(c) [***] of that portion of aggregate worldwide
annual Net Sales of such Product that is greater than US$[***] and
less than or equal to US$[***]; and
(d) [***] of that portion of aggregate worldwide
annual Net Sales of such Product that is greater than
US$[***].
Notwithstanding
anything herein to the contrary: (a) royalties payable to
Ardea attributable to Net Sales of a Preclinical Product pursuant
to this Section 5.4 shall be [***], and (b) during any
portion of the royalty term described in Section 5.5 for a
particular Product in a particular country, when there is no Valid
Claim claiming or covering such Product (or the Licensed Compound
contained therein) in such country, the royalty rate applicable to
Net Sales of such Product in such country pursuant to this
Section 5.4 shall be [***].
5.5 Royalty Term. Royalties under Section 5.4 shall be
payable on a Product-by-Product and country-by-country basis until
the later of (a) the [***] or (b) the [***] anniversary
of the First Commercial Sale of such Product in such
country.
5.6 Generic Product. Notwithstanding anything herein to the
contrary, during the period in which a Third Party that is not a
licensee or sublicensee of Bayer or its Affiliates sells a Generic
Product in any country, then the royalties payable to Ardea on Net
Sales of the equivalent Product in such country under
Section 5.4 shall be [***].
5.7 Third Party Licenses. In the event that Bayer is
required to obtain one or more licenses under Patents of Third
Parties that, in the absence of such license(s), would be infringed
by the use or sale of a Licensed Compound contained in a Product
(hereinafter “Third Party Patent
Licenses” ), [***] the royalty payments due Ardea by
Bayer with respect to the sale of such Product in such country
under Section 5.4; provided, however, that in no event
shall the royalties owed by Bayer to Ardea with respect to Net
Sales of such Product for such calendar quarter in such country be
[***].
6.
Payment; Records;
Audits
6.1 Royalty Payment; Reports. Royalties shall be calculated
and reported for each calendar quarter and shall be paid within
[***] after the end of each calendar quarter (March 31,
June 30, September 30 and December 31), beginning in
the first calendar quarter in which the First Commercial Sale of
the first Product occurs. Each royalty shall be accompanied by a
report of Net Sales of each Product by Bayer and its Affiliates and
sublicensees, as applicable, each in sufficient detail to permit
confirmation of the accuracy of the payment made, including,
without limitation and on a country-by-country basis, the number of
units of such Product sold, the gross invoiced sales and Net Sales
of such Product, the royalties payable, the method used to
calculate the royalties, and the exchange rates used.
6.2 Exchange Rate; Manner and Place of Payment. All payments
made under this Agreement will be payable in U.S. dollars
regardless of the countries in which sales are made. Net Sales made
in currencies other than U.S. dollars, for calculation of royalty
payments and milestone thresholds, will be converted into U.S.
dollars using the average Exchange Reference Rates published by the
European Central Bank Frankfurt / Main, Germany, for the applicable
calendar quarter or calendar year, as the case may be. These Euro
Foreign Exchange Rates are, as of
***Confidential
Treatment Requested
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the Signing
Date, published on Reuters screen <ECB37>. If no Euro Foreign
Exchange References Rate is determined for the relevant currency,
Bayer will use the s
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