COLLABORATION, RESEARCH AND LICENSE AGREEMENT

Exhibit No. 10.1

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

C OLLABORATION , R ESEARCH A ND L ICENSE A GREEMENT

 

BY AND BETWEEN

 

P ROCTER  & G AMBLE C OMPANY

 

AND

 

C URIS , I NC .

 

September 18, 2005

 

CONFIDENTIAL

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COLLABORATION, RESEARCH AND LICENSE AGREEMENT

 

T HIS C OLLABORATION , R ESEARCH AND L ICENSE A GREEMENT (the “Agreement” ) is made and entered into as of September 18, 2005 (the “Effective Date” ), by and between P ROCTER  & G AMBLE C OMPANY , an Ohio corporation, and its Affiliates (collectively, “P&G” ), with a place of business at Health Care Research Center, 8700 Mason-Montgomery Road, Mason, Ohio 45040, and C URIS , I NC . , a Delaware corporation ( “Curis” ), with a place of business at 61 Moulton Street, Cambridge, Massachusetts 02138.

 

WITNESSETH:

 

W HEREAS , Curis possesses scientific and proprietary technology and data and resources relating to the Hedgehog Pathway (as defined below); and

 

W HEREAS , P&G possesses scientific and technical resources relating to the development and commercialization of pharmaceutical products for the treatment of skin diseases and/or disorders or for the promotion of hair growth in humans, and desires to obtain a license to Curis’ proprietary technology to further develop and commercialize such products.

 

N OW , T HEREFORE , in consideration of the premises and of the mutual covenants herein contained, the parties hereto mutually agree as follows:

 

1.	DEFINITIONS.

 

1.1 “Additional Compound” shall mean any small molecule compound coming within the Control of Curis after the Effective Date and before the first anniversary of the Effective Date as a result of reversion to Curis of rights to such compound [**].

 

1.2 “Affiliate” shall mean any corporation, partnership or other entity that controls, is controlled by, or is under common control with the party, person or entity specified. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns, directly or indirectly, at least 50% of the voting or equity rights of the other corporation or entity authorized to cast votes in any election of directors or, in the case of a non-corporate entity, with the power to direct the management and policies of such non-corporate entity.

 

1.3 “Allocable Overhead” shall mean, for any particular cost item, P&G’s internal allocation, based on direct project headcount or other generally accepted activity-based accounting methods, of indirect overhead costs incurred by P&G, its Affiliates or any of their respective operating units to support and carry out activities pursuant to the then-current Development Plan and Budget for a Selected Compound or Product as to which Curis has exercised its co-funding option under Section 4.2, which indirect costs may include but are not limited to: indirect labor costs; occupancy costs; repair and maintenance costs; office supplies and service costs; equipment costs; insurance costs; and outside professional and other service costs.

 

1.4 “Claim” shall have the meaning provided in Section 13.5(b)(i) hereto.

 

1.5 “Co-Development Expense” shall mean, with respect to any Selected Compound or Product as to which Curis has exercised its co-funding option under Section 4.2, the expenses incurred by P&G or for its account that are attributable to the clinical development of such Selected Compound or Product in the United States from filing of an IND through the completion of Phase 2 Trial(s) in accordance with the Development Plan and Budget for such Selected Compound or Product, calculated on a fully-burdened basis ( i.e. , including Allocable Overhead specifically attributable thereto). Without limiting the generality of the foregoing, “Co-Development Expense” will include [**] incurred by P&G and its Affiliates, and amounts paid by P&G to Third Parties, in connection with [**], intended to support Product development in the United States (including but not limited to [**], in each case to the extent such costs and amounts are incurred or paid in accordance with

 

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the then-current Development Plan and Budget therefor and that such costs and amounts are [**]. Co-Development Expense will exclude, without limitation, expenses incurred [**] or any other development activity with respect to [**] the then-current Development Plan and Budget, expenses that are attributable to the development [**] with respect to which Curis [**], and expenses of clinical development activities [**]. No cost or expense item included in Co-Development Expense shall [**]. Without limiting the generality of the foregoing, [**], the parties agree that Co-Development Expense for any activity [**] shall be calculated in the same manner [**] “Co-Development Steering Committee” or “CDSC” shall mean the committee formed pursuant to Section 4.3(b) below.

 

1.6 “Commercially Reasonable and Diligent Efforts” shall mean, with respect to the research, development and commercialization of any product, compound or process, the level of efforts and resources commonly used in the pharmaceutical industry for a product, compound or process at a similar stage of research, development or commercialization, and having similar market potential. Commercially Reasonable and Diligent Efforts shall be determined by taking into account the characteristics of the product, compound or process, stage of research, development or commercialization of the product, compound or process, the cost effectiveness of efforts or resources applied toward such product, compound or process, the competitiveness of alternative products, compounds or processes that are or are expected to be in the relevant marketplace, the proprietary position of the product, compound or process, the regulatory and business environment, the likelihood of regulatory approval and product reimbursement, the profitability of the product, compound or process, the existence of alternative products, compounds or processes that may also be developed jointly by the parties, and all other relevant factors. Commercially Reasonable and Diligent Efforts shall be determined on a product, compound or process, indication, and market basis, and it is anticipated that the level of efforts and resources will change over time reflecting changes in the status of the product, compound or process, indication, and the market involved. Notwithstanding the foregoing, Commercially Reasonable and Diligent Efforts shall not include stopping all work on a program for any period of time during the first year of the Research Plan, or for any period of time exceeding six (6) months after the first year of the Research Plan, unless warranted by scientific examination of data or processes (i.e., “shelving” a project without scientific or development reasons shall not be considered Commercially Reasonable and Diligent Efforts).

 

1.7 “Confidential Information” shall have the meaning provided in Section 9.1 hereto.

 

1.8 “Contract Year” shall mean each successive one (1) year period during the Research Term wherein the first such one (1) year period begins on the Effective Date.

 

1.9 “Control” shall mean, with respect to any Information, Patent or other intellectual property right, possession by a party of the ability (whether by ownership, license or otherwise) to grant access, a license or a sublicense to such Information, Patent or intellectual property right without violating the terms of any agreement or other arrangement with any Third Party at the time such party would be first required hereunder to grant the other party such access, license or sublicense.

 

1.10 “CPI” shall mean the Consumer Price Index for All Urban Consumers (CPI-U)—All Items, as published by the Bureau of Labor Statistics of the U.S. Department of Labor from time to time.

 

1.11 “Curis Field” shall mean the local administration of Excluded Compounds for:

 

(a) the treatment or prevention of: (i) cardiovascular diseases and disorders in humans, including but not limited to the use of an Excluded Compound coated on a cardiovascular stent and ex vivo use of Excluded Compounds for the preparation of cells to be used in cell therapy applications; and/or (ii) any other indication in humans (excluding any indication within the P&G Field) to which Curis obtains rights [**] after the Effective Date; and/or

 

(b) subject to Section 5.4 hereof, the Veterinary Field.

 

1.12 “Curis Indemnified Party” shall have the meaning set forth in Section 12.1.

 

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1.13 “Curis Information” shall mean, to the extent necessary or useful for the development, manufacture, use or sale of any Licensed Compound, Preclinical Compound, Selected Compound or Product in the P&G Field, Information not included in the Curis Patent Rights or Joint Patent Rights that Curis Controls on the Effective Date or during the Term, including, without limitation, all such Information that is conceived or developed by Curis or any of its Affiliates in the course and as part of the Research Program.

 

1.14 “Curis Patent Rights” shall mean, to the extent necessary or useful for the development, manufacture, use or sale of any Licensed Compound, Preclinical Compound, Selected Compound or Product in the P&G Field, all Patent Rights that Curis Controls as of the Effective Date or during the Term, but excluding the Joint Patent Rights. All patent applications and patents known to be existing as of the Effective Date and included within the Curis Patent Rights are identified in Exhibit A attached hereto.

 

1.15 “Curis Staffing Level” shall have the meaning provided in Section 3.4.

 

1.16 “Curis Technology” shall mean Curis Information and Curis Patent Rights.

 

1.17 “Defaulting Party” shall have the meaning provided in Section 11.3.

 

1.18 “Development Committee” shall mean the committee formed pursuant to Section 4.3(a) below.

 

1.19 “Development Plan and Budget” shall have the meaning set forth in Section 4.2.

 

1.20 “EMEA” shall mean the European Medicines Agency or any successor agency thereof.

 

1.21 “Europe” shall mean the member countries of the European Union and the member countries of the European Economic Area.

 

1.22 “[**]” shall mean [**].

 

1.23 “Excluded Compound” shall have the meaning provided in Section 3.9.

 

1.24 “FDA” shall mean the Food and Drug Administration of the United States Department of Health and Human Services or any successor agency thereof.

 

1.25 “First Commercial Sale” shall mean, with respect to any Product, the first sale by P&G, its Affiliates or Sublicensees (other than Curis) to a Third Party, of such Product in a country after all required marketing and pricing or reimbursement approvals have been granted by the applicable regulatory authority for such country.

 

1.26 “First Preclinical Milestone Payment” shall have the meaning set forth in Section 6.4.

 

1.27 “Fiscal Year” shall have the meaning of the time interval between July 1 in any calendar year and June 30 in the following calendar year.

 

1.28 “FTE Rate” shall mean the amount per year that P&G will pay to Curis during the Research Term to support each FTE Scientist dedicated by Curis to the Research Program. The FTE Rate will initially be $[**] per FTE Scientist per year, which amount shall be adjusted on each anniversary of the Effective Date during the Research Term to reflect increases in the CPI between the Effective Date and such anniversary of the Effective Date, provided that in no event shall such amount be increased by more than [**]% per year.

 

1.29 “FTE Scientist” shall mean a full time equivalent scientific person year, consisting of a total of [**] hours per year of scientific work on or directly related to the Research Program. Such output must come from a scientific person holding a Bachelor of Science or graduate-level scientific degree (or such other person who regularly performs duties for a party similar to those performed by persons holding such degrees) whose work is

 

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dedicated entirely to the Research Program. Scientific work on or directly related to the Research Program can include, but is not limited to, experimental laboratory work, recording and writing up results, reviewing literature and references, holding scientific discussions, managing and leading scientific staff, carrying out management duties related to the Research Program, writing up results for publications or presentations and attending or presenting appropriate education programs, seminars and symposia.

 

1.30 “Hatch-Waxman Act” shall mean the United States Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. Law 98-471), and the rules and regulations promulgated thereunder (or any successor thereto) and any equivalent legal requirements in other countries, as in effect from time to time during the term of this Agreement.

 

1.31 “Hedgehog Pathway” shall mean the biological signaling cascade which stimulates the transcription of various genes that mediate Hedgehog-dependent phenotypic cellular changes, as evidenced by the upregulation of transcription of Gli.

 

1.32 “IND” shall mean an Investigational New Drug Application covering a Selected Compound or Product, filed with the FDA pursuant to 21 CFR 312.20 or an equivalent filing in any other Major Market required for the clinical testing in humans of a pharmaceutical product.

 

1.33 “Indication” shall mean either a Skin-Related Indication or a Hair Growth Indication, each as defined in the definition of P&G Field.

 

1.34 “Information” shall mean all tangible and intangible (a) techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, 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.

 

1.35 “Initial Compound” shall mean any of the small molecule compounds identified in Exhibit B hereto.

 

1.36 “Insolvent Party” shall have the meaning provided in Section 11.5.

 

1.37 “Inventions” shall mean all inventions, discoveries and improvements (whether or not patentable), which are conceived or first reduced to practice by one or more individuals who are employees, agents, consultants or subcontractors of one of the parties in the conduct of the Research Program or other activities conducted pursuant to this Agreement.

 

1.38 “Joint Inventions” shall mean all Inventions for which it is determined, in accordance with United States patent law, that both: (a) one or more employees, agents, consultants or subcontractors of Curis or any other persons obliged to assign such Invention to Curis; and (b) one or more employees, agents, consultants or subcontractors of P&G or any other persons obliged to assign such Invention to P&G, are joint inventors of such Invention.

 

1.39 “Joint Patent Rights” shall mean all Patent Rights that claim or disclose a Joint Invention.

 

1.40 “Liability” shall have the meaning set forth in Section 12.1.

 

1.41 “Licensed Compound” shall mean any Initial Compound or Additional Compound, together with all enantiomers, polymorphs, salt forms, racemates and stereoisomers of such Initial Compound or Additional Compound.

 

1.42 “Major Market” shall mean any of the United States of America, Japan or any one of the following countries of Europe: United Kingdom, France, Spain, Italy or Germany or the European Union as a whole.

 

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1.43 “Materials” shall have the meaning provided in Section 3.8.

 

1.44 “NDA” shall mean a New Drug Application (as more fully defined in 21 C.F.R. 314.5 et seq.) or an equivalent application filed with the FDA, or the equivalent application filed with the regulatory authorities in any Major Market country or regulatory jurisdiction which includes a Major Market country.

 

1.45 “Net Sales” shall mean the gross invoiced sales price for all Products sold by P&G or its Affiliates or Sublicensees to Third Parties (excluding sales to Sublicensees) throughout the Territory during each Fiscal Year quarter, less the following amounts to the extent actually paid by P&G or its Affiliates or Sublicensees during such Fiscal Year quarter with respect to sales of Products:

 

(i) trade, cash and quantity discounts or rebates actually allowed or taken, including discounts or rebates to governmental or managed care organizations (including Medicare, Medicaid and similar types of discounts or rebates);

 

(ii) credits or allowances actually given or made for rejection of, and for return of, previously sold Products;

 

(iii) credits for free product vouchers provided to patients and physicians in lieu of samples, where such credits are for amounts previously paid for the Products to which such credits relate;

 

(iv) shipping, freight, and delivery charges; and

 

(v) taxes (excluding taxes on the selling entity’s income but including without limitation value added taxes) and duties.

 

For purposes of determining when a sale of any Product occurs under this Agreement, the sale shall be deemed to occur on the date the Product is shipped to the Third Party purchaser of the Product by P&G, its Affiliate or Sublicensee. For the avoidance of doubt, sales among P&G, its Affiliates and Sublicensees of Product for resale to Third Parties shall not be counted for purposes of determining Net Sales, but such resales to Third Parties shall be counted for purposes of determining Net Sales.

 

In the event any Product is sold as a component of a combination of active pharmaceutical components, the Net Sales for the purposes of determining royalty payments on such combination shall be determined by multiplying the Net Sales of the combination (as determined without reference to this paragraph) by the fraction A/(A+B) where A is the average sale price of the Product portion of the combination when sold separately in finished form during the applicable royalty reporting period and in the country in which the sale was made and B is the aggregate average selling price of the other pharmaceutically active components of the combination sold separately during the applicable royalty reporting period and in the country where the sale was made. In the event that no separate sale of either such above-designated Product or such above-designated other active pharmaceutical components of the combination is made during the applicable royalty reporting period and in the country in which the sale was made, Net Sales shall be determined by multiplying the Net Sales of the combination (as determined without reference to this paragraph) by the fraction C/(C+D) where C is the fair market value of the Product portion of such combination and D is the fair market value of the other active pharmaceutical components (such fair market values to be determined by mutual agreement of the parties or, in the absence of such mutual agreement, by a neutral Third Party mutually designated by the parties and whose decision shall be binding on the parties.

 

1.46 “Non Defaulting Party” shall have the meaning provided in Section 11.3.

 

1.47 “Patent Rights” shall mean (a) all patents, certificates of invention, applications for certificates of invention, and patent applications, including, without limitation, patent applications under the Patent Cooperation Treaty and the European Patent Convention, and abandoned patent applications throughout the world, together with (b) any renewal, division, continuation (in whole or in part), or continued prosecution applications of any of such patents, certificates of invention and patent applications, any and all patents or certificates of invention

 

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issuing thereon, and any and all reissues, reexaminations, extensions, divisions, renewals, substitutions, confirmations, registrations, revalidations, revisions, and additions of or to any of the foregoing, and any foreign counterparts of any of the foregoing and any other patents and patent applications claiming priority back to any of the foregoing.

 

1.48 “P&G Field” shall mean the Topical Application of a Selected Compound or Product for (a) the promotion of hair growth in humans ( “Hair Growth Indication(s)” ); and/or (b) any other indication in which Topical Application is used in humans (each, a “Skin-Related Indication” ).

 

1.49 “P&G Indemnified Party” shall have the meaning set forth in Section 12.2.

 

1.50 “P&G Information” shall mean, to the extent necessary or useful for the development, manufacture, use or sale of any Licensed Compound, Preclinical Compound, Selected Compound or Product in the P&G Field, Information not included in the P&G Patent Rights or Joint Patent Rights that P&G Controls on the Effective Date or during the Term, including, without limitation, all such Information that is conceived or developed by Curis or any of its Affiliates in the course and as part of the Research Program.

 

1.51 “P&G Patent Rights” shall mean, to the extent necessary or useful for the development, manufacture, use or sale of any Licensed Compound, Preclinical Compound, Selected Compound or Product in the P&G Field, all Patent Rights that P&G Controls as of the Effective Date or during the Term, but excluding the Joint Patent Rights.

 

1.52 “P&G Technology” shall mean P&G Information and P&G Patent Rights.

 

1.53 “Phase 1 Trial” shall mean a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(a).

 

1.54 “Phase 2 Trial” shall mean a human clinical trial in any country that would satisfy the requirements of 21 CFR 312.21(b).

 

1.55 “Phase 2B Trial” shall mean that portion of a Phase 2 Trial constituting confirmation of the dose and regimen established in the first Phase 2 Trial, and exploration of efficacy.

 

1.56 “Phase 2/3 Trial” shall mean a human clinical trial in any country that is designed to generate additional data related to dosing and the effect of the relevant pharmaceutical product on the target patient population sufficient to serve as one of the pivotal trials to enable filing of an NDA.

 

1.57 “Phase 3 Trial” shall mean a human clinical trial of a pharmaceutical product in any country that would satisfy the requirements of 21 CFR 312.21(c).

 

1.58 “Preclinical Compound” shall mean a Licensed Compound that is selected by the RSC for pre-clinical development.

 

1.59 “Product” shall mean any final dosage form of a pharmaceutical product containing a Selected Compound for use in the P&G Field.

 

1.60 “Regulatory Approval” shall mean any and all approvals (including price and reimbursement approvals, if required), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity that are necessary for the manufacture, use, storage, import, transport and/or sale of a Product in such jurisdiction.

 

1.61 “Research Plan” shall mean the plan for conducting a collaborative research and development program to identify Preclinical Compounds and select Selected Compounds for development and commercialization in the P&G Field, as such plan is amended from time to time by the RSC.

 

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1.62 “Research Program” shall mean a research and development program carried out by Curis and P&G during the Research Term pursuant to Articles 2 and 3 hereof, as more fully described in the Research Plan.

 

1.63 “Research Steering Committee” or “RSC” shall mean the committee formed pursuant to Section 2.1 below.

 

1.64 “Research Term” shall mean the period of time beginning on the Effective Date and, unless this Agreement is earlier terminated in accordance with Section 11.2 or 11.3 hereof, expiring on the first anniversary of the Effective Date, subject to extension in accordance with Section 3.7.

 

1.65 “Royalty Term” shall mean, in the case of any Product, in any country, the period of time commencing on the First Commercial Sale of such Product in such country and ending upon the later of (a) ten (10) years after the date of First Commercial Sale of such Product in such country, and (b) the expiration of the last to expire of a Valid Claim claiming the manufacture, use or sale of such Product in such country.

 

1.66 “Selected Compound” shall mean a Preclinical Compound that is selected by the RSC as a candidate for filing of an IND, based on criteria agreed upon by the RSC.

 

1.67 “SPC” shall have the meaning provided in Section 8.3.

 

1.68 “Subcontracting Arrangement” shall have the meaning provided in Section 5.1.

 

1.69 “Subcontractor” shall have the meaning provided in Section 5.1.

 

1.70 “Sublicense Country” shall have the meaning provided in Section 6.10(a).

 

1.71 “Sublicensee” shall mean a Third Party (other than a Subcontractor) to which P&G and/or its Affiliate licenses the right to develop and/or commercialize a Selected Compound or Product in a particular country or countries.

 

1.72 “Sublicense Revenue” shall mean all royalties, license fees, milestone payments, premiums over the fair market value (as of the date of receipt) of equity or debt securities of P&G or its Affiliates, annual or other license maintenance fees, or similar payment or consideration paid by a Sublicensee to P&G or its Affiliate(s) in consideration for the grant by P&G or its Affiliate to a Third Party of a license to develop and/or commercialize any Selected Compound or Product (excluding a license granted to a Subcontractor in connection with a Subcontracting Arrangement for the purpose of enabling such Subcontractor to perform the subcontracted services); provided, however, that any of the foregoing consideration received by P&G or its Affiliate other than in the form of cash shall be valued at its fair market value as of the date of receipt); and provided, further, that “Sublicense Revenue” shall exclude reimbursement paid to P&G or its Affiliate for reasonable, fully-loaded (direct costs plus 10% to account for indirect overhead) costs of research, development and/or marketing services actually performed by P&G or its Affiliate for such Third Party licensee.

 

1.73 “Term” shall have the meaning provided in Section 11.1.

 

1.74 “Third Party” shall mean any entity other than Curis or P&G and their respective Affiliates.

 

1.75 “Topical Application” shall mean application of any formulation of a compound directly to the skin, wherein such topical application has its therapeutic effect directly on the skin or its components where applied and has minimal or no systemic effect.

 

1.76 “Valid Claim” shall mean (a) an unexpired claim of an issued patent within the Curis Patent Rights or Joint Patent Rights (or, solely if Curis has elected to co-fund development expenses of Phase 1 and Phase 2 Trials in accordance with Section 4.2 at the Shared Level, P&G Patent Rights), which claim has not been found to be

 

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unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (b) a claim of a pending application within the Curis Patent Rights or Joint Patent Rights (or, solely if Curis has elected to co-fund development expenses of Phase 1 and Phase 2 Trials in accordance with Section 4.2 at the Shared Level, P&G Patent Rights), which application claims a first priority no more than five (5) years prior to the date upon which pendency is determined.

 

1.77 “Veterinary Field” shall mean Topical Application of a Licensed Compound for the treatment or prevention of any skin disease or disorder in animals (excluding humans).

 

1.78 “[**]” shall mean [**].

 

2.	MANAGEMENT OF THE RESEARCH PROGRAM.

 

2.1 Research Steering Committee .    Promptly after the Effective Date, the parties will form a Research Steering Committee ( “RSC” ) composed of an equal number of representatives of each of Curis and P&G, but not to exceed four representatives of each party. The RSC shall meet at least four times per year during the Research Term or at such greater frequency as the RSC agrees. Such meetings may be conducted by videoconference, teleconference or in person at alternating sites (Mason, Ohio or Cambridge, Massachusetts or such other sites as are mutually agreed upon), as agreed by the parties, and the parties shall agree upon the time of meetings. At each meeting, one member of the RSC shall be selected to act as chairperson (with such chairperson being selected alternately by Curis and P&G on a meeting-by-meeting basis). A reasonable number of additional representatives of a party may attend meetings of the RSC in a non-voting capacity. The chairperson of each RSC meeting shall keep accurate minutes of such meeting, including all proposed decisions and all actions recommended or taken. Within 10 business days after the meeting, the chairperson shall prepare and deliver to all RSC members drafts of the minutes of such meeting for their review and comment. If an RSC member has comments or objections to any draft minutes, such person shall so notify all other RSC members thereof in writing within 10 business days after receipt of such draft minutes. Draft minutes shall be edited by the chairperson of the applicable meeting and shall be issued in final form only upon execution by at least one representative of each party on the RSC. Each party shall keep the RSC fully informed about the status of the Research Program. Except as otherwise agreed in writing by the parties, the RSC shall remain in place until the earliest of (a) the filing of the first IND for a Selected Compound or Product in the P&G Field, (b) the fourth anniversary of the Effective Date, and (c) expiration or termination of this Agreement.

 

2.2 Function of Research Steering Committee .    The RSC shall be responsible for the development, supervision and coordination of the Research Program, including:

 

(a) approval of the Research Plan [**] of the Effective Date (which will require mutual agreement of the parties [**];

 

(b) within [**] after the first RSC meeting, establishing criteria for determining whether [**];

 

(c) monitoring the progress achieved under the Research Program, evaluating the work performed and results obtained, and directing and reviewing the performance of the tasks under the Research Program;

 

(d) fostering the collaborative relationship between the parties;

 

(e) facilitating [**];

 

(f) reviewing and making recommendations [**];

 

(g) clearing of scientific publications and public scientific presentations relating to the Research Program (subject to review by each party’s patent attorneys), provided that the RSC may designate representatives of each Party the ability to review and approve such publications; and

 

(h) reviewing, approving and modifying the Research Plan from time to time.

 

For purposes of clarification, [**], the RSC shall be responsible for the supervision and coordination of all research [**]. [**], responsibility for the supervision and coordination of [**] shall be determined [**].

 

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2.3 Decisions of the Research Steering Committee .    Decisions of the RSC shall be made by unanimous vote, with each member having one (1) vote. No vote of the RSC may be taken unless at least two (2) of each party’s representatives on the RSC are present. If the RSC is unable to reach a unanimous vote on any matter, then the matter shall be referred to the Chief Executive Officer of Curis and the Director of Biological Sciences in Discovery and Development Technologies of Procter & Gamble Pharmaceuticals. Such officers of the parties shall meet promptly thereafter and shall negotiate in good faith to resolve such issue. If they cannot resolve such issue within 30 days of commencing such negotiations, then the resolution and/or course of conduct shall be determined by the Vice President of Discovery and Development Technologies of Procter & Gamble Pharmaceuticals, at his/her sole discretion, but he or she will provide Curis with a reasonable opportunity to present its position with respect to the matter(s) in dispute and will give good faith consideration to Curis’ position and make reasonable efforts to take Curis’ position into account in making his or her decision. Notwithstanding the foregoing, in no event shall the RSC (or P&G, through the exercise of its final decision-making authority on the RSC) have the right:

 

(a) to modify or amend the terms and conditions of this Agreement other than the Research Plan;

 

(b) to modify or amend the Research Plan in any manner that would require, Curis to devote to the Research Program a number of total FTE Scientists beyond that specified in, or agreed upon in accordance with, Section 3.4 or to incur expenses not contemplated by this Agreement;

 

(c) to require Curis to be responsible for payment of subcontractors performing Research Program activities [**];

 

(d) to determine which Curis personnel perform Research Program activities or to determine the specific means by which Curis executes the activities for which it is responsible under the Research Plan;

 

(e) to require Curis to perform tasks inconsistent with the approved Research Plan; or

 

(f) to determine any such issue in a manner that would conflict with the express terms and conditions of this Agreement.

 

2.4 Project Leaders .    Each party shall designate one of its representatives on the RSC as a “Project Leader.” Each Project Leader shall be delegated the authority to represent the respective party in carrying out such responsibilities of the RSC which require action in a more timely manner than the meetings of the RSC and such other responsibilities as either party may delegate to its designated Project Leader.

 

3.

RESEARCH PROGRAM.

 

3.1 Objectives; Responsibilities .    The parties hereby agree to establish the Research Program, to be conducted by Curis and P&G during the Research Term in accordance with the Research Plan and with the terms of this Agreement, with the goal of identifying one or more Selected Compounds or Products for development and commercialization by P&G in the P&G Field. Within 90 days after the Effective Date, the RSC shall develop and approve the Research Plan. The RSC shall review the Research Plan from time to time during the Research Term (including any extension thereof) and approve such amendments or revisions to the Research Plan as the RSC determines are appropriate. Any amendments or revisions to the Research Plan shall be in writing and shall require approval of the RSC.

 

3.2 Technology Transfer .    Commencing promptly after the Effective Date and from time to time thereafter during the Research Term, Curis shall disclose to P&G such Curis Technology as is reasonably necessary to enable P&G to perform its obligations under the Research Plan and to exercise fully the licenses granted to P&G under Article 5 hereof and shall provide P&G with reasonable technical assistance relating to the use of the Curis Technology by P&G solely to the extent permitted under the licenses granted to P&G under Article 5.

 

3.3 Performance Standards .    Each party shall use Commercially Reasonable and Diligent Efforts to perform its obligations under the Research Program according to the priorities established by the Research Plan

 

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and the RSC. Each party shall conduct its activities under the Research Program in good scientific manner, and in compliance in all material respects with the requirements of applicable laws and regulations and with applicable good laboratory practices, to attempt to achieve its objectives efficiently and expeditiously. Each party shall maintain laboratories, offices and all other facilities reasonably necessary to carry out the activities to be performed pursuant to the Research Plan. In conformity with standard pharmaceutical and biotechnology industry practices and the terms and conditions of this Agreement, each party shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data with respect to activities conducted pursuant to the Research Plan, which shall be appropriate for patent and regulatory purposes in form and substance, and, upon the other party’s written request, shall send legible copies of the aforesaid to the other party. Upon reasonable advance notice, each party agrees to make its employees and non-employee consultants reasonably available at their respective places of employment to consult with the other party on issues arising in connection with the Research Program.

 

3.4 Research Commitment .    Subject to P&G’s compliance with its funding obligations under Section 6.2 hereof, Curis initially will devote to the Research Program at least [**] FTE Scientists and may devote such additional number of FTE Scientists as may be agreed by the RSC. During the initial 12-month period the Agreement may not be terminated, except in the case of failure of all, or all but one, of the Licensed Compounds to demonstrate [**] specified in the Research Plan, as determined reasonably and in good faith by the RSC in accordance with objective criteria established by the RSC. In the event of such failure, P&G may terminate the Agreement and related research obligations, with 45 days prior written notice. After the initial 12-month period, at three (3) month intervals during the Research Term, the RSC or the CDSC, as applicable, shall review the staffing needs to accomplish the objectives of the Research Program during the following three (3) months and may approve an increase or decrease to the number of FTE Scientists to be devoted to the Research Program by Curis (the “Curis Staffing Level” ). P&G shall be obligated to fund that number of FTE Scientists of Curis required by the then-current Curis Staffing Level in accordance with Section 6.2 hereof; provided, however, that in no event shall P&G provide funding for fewer than [**] FTE Scientists during any Contract Year of the Research Term.

 

3.5 Research Reports . Each party shall keep the other party fully informed as to all discoveries and technical developments (including, without limitation, any Inventions) made in the course of performing activities under the Research Program. In particular, each party shall prepare, and distribute to all members of the RSC no later than 10 days prior to the next RSC meeting, a reasonably detailed written summary report, in such form and format and setting forth such information regarding the results and progress of performance of the Research Program as determined from time to time by the RSC. Nothing herein shall require a party to disclose information received from or generated for a Third Party that remains subject to bona fide confidentiality obligations to such Third Party.

 

3.6 Subcontracting.

 

(a) Generally .    Each party may perform some of its obligations under the Research Plan through one or more Third Party subcontractors, provided that, unless otherwise agreed by the parties in writing, (a) none of the rights of either party hereunder are diminished or otherwise adversely affected as a result of such subcontracting, (b) the subcontractor undertakes in writing obligations of confidentiality and non-use regarding Confidential Information which are substantially the same as those undertaken by the parties pursuant to Section 9 hereof; and (c) the subcontractor agrees in writing to assign to the subcontracting party any and all inventions made by such subcontractor in the course of performing the subcontracted activities. P&G shall be responsible for payment of subcontractors, including [**], performing Research Program activities, unless otherwise agreed by the RSC. In the event that a party performs any of its obligations under the Research Plan through a subcontractor, then such party will at all times be responsible for the compliance of such subcontractor with all applicable terms and conditions of this Agreement.

 

(b) [**] . The parties acknowledge that [**]. The parties agree that [**], provided that Curis shall [**] such Research Program activities that occur [**]. Curis will [**].

 

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3.7 Research Term .    During the initial 12-month period the Agreement may not be terminated, except in the case of failure of all, or all but one, of the Licensed Compounds to demonstrate [**] specified in the Research Plan, as determined by the RSC in accordance with objective criteria established by the RSC. In the event of such failure, P&G may terminate the Agreement and related research obligations, with 45 days prior written notice. P&G shall have the right to extend the Research Term beyond the first anniversary of the Effective Date for an additional period of one (1) year by giving Curis written notice no later than 90 days prior to the first anniversary of the Effective Date. Thereafter, P&G shall have the right to further extend the Research Term for up to two (2) additional one (1) year periods by giving Curis written notice no later than six (6) months prior to the expiration of the then-current year of the Research Term. In the event the Research Term is extended, FTE support for the work performed under such Research Plan will continue in such amounts as are described further in Section 3.4.

 

3.8 Materials Transfer .    In order to facilitate the Research Program, either party shall provide to the other party certain biological materials or chemical compounds Controlled by and available to the supplying party, including, but not limited to, [**] materials (including, without limitation, Licensed Compounds, Preclinical Compounds and Selected Compounds) that are necessary or useful to conduct the Research Program (collectively, “Materials” ) for use by the other party in furtherance of the Research Program. Except as otherwise provided under this Agreement, all such Materials delivered to the other party will remain the sole property of the supplying party, will be used only in furtherance of the Research Program in accordance with this Agreement, will not be used or delivered to or for the benefit of any Third Party without the prior written consent of the supplying party, and will be used in compliance with all applicable laws, rules and regulations. 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. THE MATERIALS ARE PROVIDED “AS IS” AND, EXCEPT AS EXPRESSLY PROVIDED OTHERWISE IN ARTICLE 10 HEREOF, ARE PROVIDED 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.

 

3.9 Excluded Compounds .    On at least a quarterly basis during the Research Term, the RSC will review the then-available data regarding each of the Licensed Compounds and determine in good faith whether such Licensed Compound remains a scientifically and commercially viable candidate for continued research and development in the P&G Field as part of the Research Program. In the event that the RSC determines that there is an insufficient scientific or commercial rationale for pursuing continued research and development of a Licensed Compound under the Research Program, then, effective upon such determination (which shall be noted in the minutes of the applicable RSC meeting), the applicable Licensed Compound shall be deemed an “Excluded Compound” for purposes of this Agreement and shall be excluded from the license granted to P&G under Section 5.1.

 

4.

DEVELOPMENT AND COMMERCIALIZATION.

 

4.1 Development of Selected Compounds and Products; Diligence .    Subject to the terms and conditions of this Agreement (including, without limitation, Sections 4.2, 4.3 and 4.4), on a Product-by-Product basis, commencing as of the filing of an IND with respect to a Selected Compound or Product, P&G shall control, and be solely responsible for the costs associated with, the worldwide development and commercialization of such Selected Compound or Product, including, but not limited to, all Product formulation activities and the worldwide supply of such Selected Compound or Product for use in development and commercialization activities.

 

4.2 Co-Development Option.

 

(a) Concurrently with the decision to prepare for filing with the FDA of the first IND for a Selected Compound or Product, P&G will provide Curis with a projected plan and budget for clinical development of

 

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such Selected Compound or Product for the United States through the end of Phase 2B Trials (the “Development Plan and Budget” ). Curis may, in its sole discretion and upon written notice to P&G within 90 days after receipt of the Development Plan and Budget elect to co-fund Co-Development Expense with a participation level of either 20% of such costs (a “Lower Level” ) or 50% of such costs (a “Shared Level” ). If Curis elects to co-fund development costs for such Selected Compound or Product, either at the Lower Level or the Shared Level, then the First Phase 1 Milestone Payment and the First Phase 2B Milestone Payment shall not be payable by P&G with respect to such Selected Compound or Product. P&G shall calculate Co-Development Expense in accordance with U.S. generally accepted accounting principles, consistently applied, and consistent with generally accepted methods for activity-based project costing for similar products in the pharmaceutical industry. P&G shall invoice Curis on a quarterly basis for Curis’ portion of Co-Development Expense based upon the level that Curis has chosen to fund. Each such invoice shall be itemized and shall be due within 30 days of receipt by Curis.

 

(b) On a Selected Compound-by-Selected Compound or Product-by-Product basis, Curis shall have the right to terminate its obligation to share Co-Development Expense at the Lower Level or the Shared Level, as applicable, for a Selected Compound or Product at any time. Curis’ decision to terminate such sharing of Co-Development Expense with respect to a Selected Compound or Product will have no effect on Curis’ right to share Co-Development Expense (or continue to share Co-Development Expense) with respect to any other Selected Compound or Product. Effective upon P&G’s receipt of written notice from Curis that Curis has elected to terminate sharing of Co-Development Expense with respect to a Selected Compound or Product, Curis’ obligation to share Co-Development Expense with respect thereto shall cease, and P&G’s milestone and royalty payment obligations under Sections 6.4, 6.5 and/or 6.6, as applicable, shall be applicable 90 days from the date of such termination of co-development activities. For purposes of clarification, no milestone payments under Section 6.4 will be due for milestones that occurred prior to 90 days from the termination of co-development activities, but milestone and royalty payments shall be payable on a going-forward basis after such termination.

 

4.3 Development Oversight.

 

(a) Upon electing to initiate development work for filing the first IND for the first Selected Compound or Product, P&G shall form a committee to manage the clinical development of Selected Compounds and Products (the “Development Committee” ). Curis may, in its sole discretion, participate in the meetings of the Development Committee, in which event Curis shall have one (1) vote in such meetings; provided, however, that the P&G representatives on the Development Committee shall have the deciding vote of such committee.

 

(b) In addition, if Curis has elected to co-fund development pursuant to Section 4.2, either at the Lower Level or the Shared Level, the parties shall form a Co-Development Steering Committee (the “CDSC” ) composed of a proportionate number of representatives of P&G and Curis based upon the level that Curis has elected to co-fund. The CDSC shall be responsible for managing activities under the Development Plan and Budget and for creating a finance subcommittee with individuals with expertise in the areas of accounting financial planning, financing reporting, cost allocations and financial audits. Decisions of the CDSC shall be made by majority vote if Curis has elected to co-fund at the lower level and by unanimous vote if Curis has elected to co-fund at the Shared Level, with each member having one (1) vote. No vote of the CDSC may be taken unless at least two (2) of each party’s representatives on the CDSC vote. If Curis has elected to co-fund at the Shared Level and if the CDSC is unable to reach a unanimous vote on any matter, then the matter shall be referred to the Chief Executive Officer of Curis and the Vice President of Development and Commercialization of Procter & Gamble Pharmaceuticals. Such officers of the parties shall meet promptly thereafter and shall negotiate in good faith to resolve such issue. If they cannot resolve such issue within 30 days of commencing such negotiations, then the resolution and/or course of conduct shall be determined by the Vice President of World Wide Strategic Planning and New Business Development of Global Pharmaceuticals of P&G, at his/her sole discretion, but he or she will provide Curis with a reasonable opportunity to present its position with respect to the matter(s) in dispute and will give

 

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good faith consideration to Curis’ position and make reasonable efforts to take Curis’ position into account in making his or her decision. Notwithstanding the foregoing, in no event shall the CDSC (or P&G, through the exercise of its final decision-making authority on the CDSC) have the right:

 

(i) to modify or amend the terms and conditions of this Agreement;

 

(ii) to modify or amend the Development Plan and Budget in any manner that would increase by more than [**]% the costs that Curis is required to bear under the initial Development Plan and Budget delivered to Curis pursuant to Section 4.2, or otherwise to require Curis to bear development expenses in excess of [**]% of the amount determined by multiplying Curis’ chosen participation level by the budget set forth in such initial Development Plan and Budget; provided, however, that the foregoing limitation shall not apply to the extent that a modification or amendment to the Development Plan and Budget is specifically requested or required by the FDA; or

 

(iii) to determine any such issue in a manner that would conflict with the express terms and conditions of this Agreement.

 

4.4 Diligence.     P&G shall use its Commercially Reasonable and Diligent Efforts to clinically develop, and to obtain Regulatory Approval for, at least one Product in the Major Markets and, thereafter, to commercialize such Product in those Major Markets for which P&G has received Regulatory Approval for such Product. In the event that (a) P&G’s development and commercialization efforts with respect to Selected Compounds and Products substantially cease for a period of six (6) consecutive months or more, or (b) P&G makes a determination to discontinue its development and commercialization efforts with respect to Selected Compounds and Products, then P&G shall provide Curis with prompt written notice thereof. In addition, if Curis in good faith believes that P&G is not meeting its diligence obligations under this Section 4.4, then Curis may provide P&G with written notice thereof, in which event P&G shall have 60 days from the date of such notice in which to reasonably demonstrate to Curis that P&G is meeting such obligations. If the parties still do not agree on whether or not P&G is being diligent, then the dispute will be resolved subject to Section 13.5, Dispute Resolution.

 

4.5 Reports.     During the Term, P&G shall keep Curis regularly and fully informed (whether through the Development Committee, the CDSC or otherwise) regarding the worldwide development and commercialization of Selected Compounds and Products by P&G, its Affiliates and their respective Sublicensees. Without limiting the generality of the foregoing, and in addition to any other reports due under this Agreement, P&G shall prepare and deliver to Curis, annual (except as specified below) written reports of its activities performed under Section 4.1, which reports shall update the prior report filed hereunder, including (a) a summary of P&G development activities performed to date, (b) the progress of the testing of Products in human clinical trials and the then-current schedule for conducting clinical trials and for filing applications for Regulatory Approvals for each Major Market, and (c) the receipt (or anticipated receipt) of Regulatory Approvals. The first such annual report shall be delivered twelve months following the filing of the first IND in connection with this Agreement.

 

4.6 Regulatory Submissions.     P&G, its Affiliates and Sublicensees, as the case may be, shall own all data generated by P&G and all INDs, NDAs, Regulatory Approvals and other regulatory submissions for Products. P&G shall use Commercially Reasonable and Diligent Efforts to renew or otherwise maintain all Regulatory Approvals in effect during the Royalty Term for each Product and in each Major Market in which it obtains a Regulatory Approval.

 

5.

LICENSES; RETAINED RIGHTS; NEGATIVE COVENANTS.

 

5.1 License Grants to P&G .    Subject to the terms and conditions of this Agreement, Curis hereby grants to P&G:

 

(a) during the Research Term, a non-exclusive, worldwide, royalty-free license, without the right to sublicense, under the Curis Technology solely to perform P&G’s obligations under the Research Plan; and

 

(b) an exclusive, worldwide, royalty-bearing license, including the right to sublicense, under the Curis Technology and Curis’ interest in the Joint Patent Rights, to develop, make, have made, use, sell, have sold,

 

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offer for sale and import Selected Compounds and Products solely in the P&G Field. Each sublicense granted by P&G under this Section 5.1(b) shall be set forth in a written agreement containing obligations with respect to confidentiality, indemnity, reporting and access to data and information substantially similar to those set forth herein. P&G shall be fully responsible for the compliance of its Affiliates and Sublicensees with the terms and conditions of this Agreement, and no sublicense shall relieve P&G of any of its obligations hereunder. The license granted under this Section 2.1(b) shall continue on a Product-by-Product and country-by-country basis for the duration of the Royalty Term. Upon expiration of the Royalty Term in each country for each Product, the license granted to P&G under this Section 5.1(b) for such Product in such country shall thereafter be a non exclusive, fully paid-up, perpetual, irrevocable, royalty-free license.

 

P&G’s right to grant sublicenses under Section 5.1(b) shall be subject to the following limitations:

 

(i) P&G shall not sublicense its rights hereunder prior to dosing of the first patient in the first Phase 1 Trial of the first Selected Compound or Product;

 

(ii) if Curis elects to co-fund Co-Development Expense (whether at the Lower Level or the Shared Level), P&G shall not sublicense its rights hereunder in the United States prior to completion of Phase 2 Trials of the first Selected Compound or Product; and

 

(iii) in the event that P&G proposes to sublicense its rights hereunder in the United States to any Third Party, P&G shall first provide Curis with written notice thereof and hereby grants Curis the right of first negotiation with respect to such sublicense in accordance with this paragraph. Curis shall within 30 days after receipt of such notice notify P&G in writing if Curis is interested in negotiating for such rights. If Curis notifies P&G prior to the end of such 30-day period that Curis desires to negotiate for such rights, the parties shall negotiate in good faith for up to 90 days from such notification regarding the commercially reasonable terms pursuant to which P&G would grant such rights. If Curis waives or otherwise fails to exercise its right of first negotiation under this paragraph, or if the parties fail to agree within such 90-day negotiation period, then P&G shall be free to sublicense its rights hereunder in the United States to a Third Party, except that P&G shall not grant such sublicense to any Third Party on terms more favorable to such Third Party than those previously offered by Curis without first offering such sublicense to Curis on such more favorable terms for a period of at least 30 days.

 

For purposes of clarification, the foregoing restrictions shall not apply to any Third Party distribution arrangement, contract sales force arrangement, contract manufacturing arrangement or other comparable Third Party contracting arrangement (each, a “Subcontracting Arrangement” ) in which P&G or its Affiliate subcontracts specific activities in a particular country to a Third Party service provider (a “Subcontractor” ) but retains material Product development and/or commercialization rights in such country for itself.

 

5.2 License Grant to Curis .    Subject to the terms and conditions of this Agreement, P&G hereby grants to Curis during the Research Term, a non-exclusive, worldwide license, without the right to sublicense, under the P&G Technology solely to perform Curis’ obligations under the Research Plan.

 

5.3 Curis Retained Rights .    Notwithstanding the exclusive license granted to P&G in Section 2.1(b) above or any other provision of this Agreement to the contrary, Curis shall at all times retain the following rights:

 

(a) the right to practice and grant licenses under Curis Technology and Joint Patent Rights solely to the extent necessary (i) to perform Curis’ obligations under the Research Plan, (ii) to develop, make, have made, use, sell, have sold, offer for sale and import Excluded Compounds in the Curis Field; and/or (iii) subject to Section 5.4, to develop, make, have made, use, sell, have sold, offer for sale and import Licensed Compounds in the Veterinary Field; and

 

(b) the right to use Licensed Compounds, excluding Preclinical Compounds, Selected Compounds and Products, in each case in the Curis Field, (i) for internal pre-clinical research and discovery, and/or (ii) for sponsored research conducted on Curis’ behalf by Third Party contract research organizations, provided that any and all inventions made by such Third Party contract research organizations in the course of such sponsored research that relate to any Licensed Compound are assigned to Curis.

 

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In addition, notwithstanding any other provision of this Agreement to the contrary, Curis expressly reserves the exclusive right to practice, and to grant licenses under, the Curis Technology and Curis’ rights in the Joint Patent Rights, to develop, make, have made, use, sell, have sold, offer for sale and import selective antagonists of the Hedgehog Pathway.

 

5.4 P&G Option to Negotiate for Veterinary Product Rights .    If Curis develops any Licensed Compound for use in the Veterinary Field and, at any time during the Term, either (a) in its sole discretion, decides to establish a collaborative, licensing or distribution arrangement with a Third Party with respect to such Licensed Compound for use in the Veterinary Field, or (b) in good faith anticipates filing an application for Regulatory Approval of such Licensed Compound for use in the Veterinary Field within the ensuing six (6) months, Curis shall promptly notify P&G in writing thereof, which notice (each, a “Veterinary Compound Notice” ) shall identify the applicable Licensed Compound and include a brie