RESEARCH COLLABORATION AND LICENSE AGREEMENT

Exhibit 10.43

Execution Copy

Confidential

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS ([*]), HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES

AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE EXCHANGE ACT OF

1934, AS AMENDED

 

RESEARCH COLLABORATION

AND LICENSE AGREEMENT

BY AND BETWEEN

NOVARTIS INSTITUTES FOR BIOMEDICAL RESEARCH, INC.

AND

COMBINATORX, INCORPORATED

 

Execution Copy

Confidential

TABLE OF CONTENTS

 

 

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This Research Collaboration and License Agreement (this “ Agreement ”) is dated as of May 1, 2009 (the “ Effective Date ”), by and between CombinatoRx, Incorporated, a Delaware corporation with principal offices at 245 First Street, Fourth Floor, Cambridge, MA 02142 (“ CombinatoRx ”), and Novartis Institutes for BioMedical Research, Inc., a Delaware corporation with principal offices at 250 Massachusetts Avenue, Cambridge, MA 02139 (“ Novartis ”).

WITNESSETH

WHEREAS, CombinatoRx has expertise in pharmaceutical discovery and development and combination high-throughput screening;

WHEREAS, Novartis and its Affiliates (as defined below) have expertise in the discovery, characterization, development and commercialization of pharmaceuticals worldwide; and

WHEREAS, the Parties desire to enter into a Research Collaboration, in which Novartis and CombinatoRx will collaborate for the purposes of identifying possible new combination therapies and identifying novel Targets, Pathways and Mechanisms of Action for drug discovery (each of “Parties,” “Research Collaboration,” “Targets,” “Pathways” and “Mechanisms of Action” as defined below);

NOW THEREFORE, in consideration of the foregoing premises, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement, the following terms, whether used in singular or plural form, shall have the respective meanings set forth below:

1.1. “ Affiliate ” shall mean any Person who directly or indirectly controls, is controlled by or is under common control with a Party. For purposes of this definition, “control,” “controls” or “controlled” means ownership directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a

 

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corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a Party controls or has the right to control the board of directors or equivalent governing body of a corporation or other entity, or the ability to cause the direction of the management or policies of a corporation or other entity. The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence; provided that such foreign investor has the power to direct the management and policies of such entity. In the case of Novartis, “Affiliates” shall also expressly be deemed to include the Novartis Institute for Functional Genomics, Inc. (also known as the Genomics Institute of the Novartis Research Foundation and its Affiliates.

1.2. “ Bankrupt Party ” shall have the meaning set forth in Section 9.3.

1.3. “ Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in Boston, Massachusetts are authorized or required by law to remain closed.

1.4. “ Change in Control ” of a Party shall mean such Party is involved in a merger, reorganization or consolidation in which its shareholders immediately prior to such transaction would hold less than fifty percent (50%) of the securities or other ownership or voting interests representing the equity of the surviving entity immediately after such merger, reorganization or consolidation, or if there is a bona fide sale of all or substantially all of such Party’s assets or business relating to this Agreement to a Third Party. In addition, a Change in Control of CombinatoRx shall be deemed to have occurred if a Significant Pharmaceutical Company (as defined in the following sentence) acquires effective control of the management and policies of CombinatoRx. A “ Significant Pharmaceutical Company ” is a pharmaceutical company, biotechnology company, or group of such companies acting in concert, with aggregate annual sales of pharmaceutical products greater than one billion U.S. dollars ($1,000,000,000).

 

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1.5. “ Collaboration Combination ” shall mean a Patentable combination of two or more Compounds identified within the Research Collaboration. Combinations of Compounds for a particular Indication discovered by either Party outside of the Research Collaboration and set forth on Schedule B and Schedule D (by CombinatoRx and Novartis, respectively) to this Agreement prior to such combinations being screened under the Research Collaboration shall not be Collaboration Combinations.

1.6. “ Collaboration Term ” shall have the meaning set forth in Section 2.2.

1.7. “ CombinatoRx Background Intellectual Property ” shall mean all CombinatoRx Background Patents and CombinatoRx Background Know-How. For the purposes of clarity, CombinatoRx Background Intellectual Property shall exclude Project Intellectual Property and the Chalice Analyzer software.

1.8. “ CombinatoRx Background Know-How ” shall mean all Know-How Controlled by CombinatoRx or its Affiliates used in the Research Collaboration or otherwise necessary or useful for the discovery, research, evaluation, development or commercialization of a CombinatoRx Compound, Collaboration Combination, Target, Pathway, Mechanism of Action or drug product under this Agreement and existing as of the Effective Date or which arises during the Collaboration Term outside of the Research Collaboration. CombinatoRx Background Know-How shall exclude all Know-How that becomes Controlled by CombinatoRx or its Affiliates as a result of a Change in Control of CombinatoRx or such Affiliate.

1.9. “ CombinatoRx Background Patents ” shall mean all Patents Controlled by CombinatoRx or its Affiliates relating to the Research Collaboration, CombinatoRx Compounds, Collaboration Combinations, Targets, Pathways, Mechanisms of Action or drug products and existing as of the Effective Date or which arise during the Collaboration Term outside of the Research Collaboration.

 

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CombinatoRx Background Patents shall exclude all Patents set forth on Schedule B hereto, and all Patents that become Controlled by CombinatoRx or its Affiliates as a result of a Change in Control of CombinatoRx or such Affiliate.

1.10. “ CombinatoRx Combination ” shall mean a Collaboration Combination containing zero Novartis Compounds and at least one CombinatoRx Compound.

1.11. “ CombinatoRx Compound ” shall mean those Compounds contributed to the Library by CombinatoRx as of the Effective Date and during the Collaboration Term. CombinatoRx Compounds contributed to the Library shall be set forth on Schedule A to this Agreement, as updated from time to time. The composition and representation of CombinatoRx Compounds contributed to the Library shall be at CombinatoRx’s sole discretion.

1.12. “ CombinatoRx Compound Project Intellectual Property ” shall mean all Project Intellectual Property arising out of the Research Collaboration associated with a CombinatoRx Combination.

1.13. “ Commencement Date ” shall have the meaning set forth in Section 2.1(a).

1.14. “ Compound ” shall mean a compound, including esters, salts, acids, bases, isomers, enantiomers, prodrugs, metabolites, hydrates, solvates, polymorphs, degredants, derivatives, analogs, crystal forms or other noncovalent derivatives thereof.

1.15. “ Controlled ” shall mean the legal authority or right of a Party hereto to grant a license or sublicense of intellectual property rights to another Party hereto, or to otherwise disclose or grant access rights to proprietary or trade secret information to such other Party, without breaching the terms of any agreement with a Third Party or misappropriating the proprietary or trade secret information of a Third Party, other than as a result of any license granted under this Agreement.

 

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1.16. “ CPI ” shall mean the prior 12-month average, seasonally adjusted All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average, as published by the U.S. Department of Labor, Bureau of Labor Statistics. If the CPI-U is no longer published, “CPI” shall mean a substantially similar replacement index as regularly published by the Bureau of Labor Statistics.

1.17. “ Disclosing Party ” shall have the meaning set forth in Section 8.1(a).

1.18. “ Drug Product ” shall mean a finished dosage form containing a Novartis Combination as its active ingredient either alone or in combination with one or more active or inactive ingredients and which is ready for human or animal administration as a pharmaceutical.

1.19. “ Effective Date ” shall have the meaning set forth in the preamble to this Agreement.

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

1.21. “ Event of Bankruptcy ” shall have the meaning set forth in Section 9.3.

1.22. “ Exclusive License ” shall have the meaning set forth in Section 3.5(a).

1.23. “ FDA ” shall mean the United States Food and Drug Administration or any successor agency thereto.

1.24. “ Field ” shall mean the diagnosis, prophylaxis, palliation, treatment or prevention of any disease or condition in humans or animals.

1.25. “ First Commercial Sale ” shall mean the first sale of a Drug Product by or under the authority of Novartis or an Affiliate or sublicensee of Novartis to a Third Party in a country in the Territory following Regulatory Approval of such Drug Product in that country or, if no such Regulatory Approval or similar marketing approval is required, the date upon which such Drug Product is first commercially launched in such country; provided that First Commercial Sale shall not include any distribution or other sale solely for so-called treatment IND sales, named patient sales, compassionate or emergency use sales and pre-license sales.

 

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1.26. “ First Patient First Visit ” shall mean the administration of the first dose of a Compound, Collaboration Combination or Drug Product to the first patient at his or her first visit in a Phase I Clinical Trial or Phase III Clinical Trial, as applicable.

1.27. “ FTE ” shall mean the equivalent of the work of one (1) CombinatoRx scientist (including members of CombinatoRx’s technology platform team), full time for one year, which equates to [*] of work on or directly related to the Research Collaboration. Overtime and work on weekends, holidays and the like shall not be counted with any multiplier (i.e., time-and-a-half or double time) toward the number of hours that are used to calculate the number of FTEs under this Agreement. There shall be, at all times, no more than [*] FTEs for [*] FTE assigned to the Research Collaboration. CombinatoRx shall ensure that each FTE assigned to the Research Collaboration has the appropriate level of expertise, experience, training and, where applicable, licenses, necessary to perform the Research Collaboration. For the avoidance of doubt, FTE activities shall exclude managerial activities and shall be restricted to the performance and oversight of scientific work related directly to the Research Collaboration.

1.28. “ IND ” shall mean an Investigational New Drug application filed with the FDA or the corresponding application for the investigation of a Drug Product in any other country or group of countries, as defined in the applicable laws and regulations and filed with the Regulatory Authority of such country or group of countries.

1.29. “ In-Licensed Program ” shall have the meaning set forth in Section 4.2.

1.30. “ Indemnified Party ” shall have the meaning set forth in Section 10.3(a).

1.31. “ Indemnifying Party ” shall have the meaning set forth in Section 10.3(a).

 

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1.32. “ Indication ” shall mean a recognized disease or condition, sign or symptom of a disease or condition, or symptom associated with a disease or syndrome for which use of a drug is approved, or may be approved, as would be identified for example in the drug’s label under applicable governmental or agency regulations or equivalent thereof.

1.33. “ Initial Term ” shall have the meaning set forth in Section 2.2.

1.34. “ Invoice ” shall mean an invoice delivered by CombinatoRx to Novartis in accordance with the terms of this Agreement, which invoice shall be in the form set forth on Schedule I .

1.35. “ Joint Research Committee ” shall have the meaning set forth in Section 2.4(a).

1.36. “ Know-How ” shall mean all intellectual property, proprietary material and information including but not limited to clinical and non-clinical data, technical information, know-how, experience, inventions, discoveries, trade secrets, compositions of matter and methods, whether currently existing as of the Effective Date or developed or obtained during the Collaboration Term and whether or not patentable or confidential, that are now or in the future become Controlled by CombinatoRx, Novartis or their respective Affiliates.

1.37. “ Library ” shall mean those CombinatoRx Compounds set forth on Schedule A , together with those Novartis Compounds set forth on Schedule C , as each may be updated from time to time, all to be utilized for purposes of the Research Collaboration as set forth in the Research Plan. The composition and representation of CombinatoRx Compounds and Novartis Compounds contributed to the Library shall be at CombinatoRx’s and Novartis’ sole discretion, respectively.

1.38. “ Liquidation ” of a Party shall mean any dissolution or liquidation of such Party for any reason or no reason, whether voluntary or involuntary.

1.39. “ Major European Country ” shall mean the United Kingdom, Germany, France, Spain, and Italy.

 

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1.40. “ Mechanism of Action ” shall mean a specific mechanism that contributes to the efficacy of a Compound.

1.41. “ MHLW ” shall mean the Japanese Ministry of Health, Labour and Welfare or any successor agency thereto.

1.42. “ Miscellaneous Project Intellectual Property ” shall mean any Project Intellectual Property which is not CombinatoRx Compound Project Intellectual Property, Novartis Protected Compound Project Intellectual Property, or Novartis Tool Compound Project Intellectual Property. For the sake of clarity Miscellaneous Project Intellectual Property does not include CombinatoRx Background Intellectual Property or Novartis Background Intellectual Property.

1.43. “ Net Sales ” shall mean with respect to any Drug Product, the gross amount invoiced by or on behalf of Novartis and any Novartis Affiliate, licensee or sublicensee for that Drug Product sold to Third Parties other than licensees or sublicensees in bona fide, arm’s-length transactions, less customary deductions, determined in accordance with Novartis’ standard accounting methods as generally and consistently applied by Novartis, to the extent included in the gross invoiced sales price of any Drug Product or otherwise directly paid or incurred by Novartis, its Affiliates or sublicensees with respect to the sale of such Drug Product, such as:

(i) free goods;

(ii) cash discounts;

(iii) direct to customer discounts;

(iv) charge-backs;

(v) Medicaid rebates;

(vi) discount card programs;

(vii) amounts repaid or credited by reasons of defects, rejection recalls, returns;

 

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(viii) tariffs, duties, excise, sales, value-added and other taxes (other than taxes based on income);

(ix) delayed ship order credits;

(x) all insurance expenses included in the invoice price;

(xi) amounts credited for uncollectible amounts on previously sold products;

(xii) deduction of two percent (2%) for distribution and warehousing expenses; and

(xiii) any other reduction or specifically identifiable amounts included in the Drug Product’s gross invoice that should be credited for reasons substantially equivalent to those listed above;

all as determined in accordance with Novartis’ usual and customary accounting methods, which are in accordance with International Financial Reporting Standards as consistently applied at Novartis. Sales from Novartis to its Affiliates shall be disregarded for purposes of calculating Net Sales. Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to Third Parties shall not be deducted from the invoice price in the calculation of Net Sales.

Further:

(a) In the case of any sale or other disposal of a Drug Product between or among Novartis and its Affiliates, licensees and sublicensees, for resale, Net Sales shall be calculated as above only on the value charged or invoiced on the first arm’s length sale thereafter to a Third Party;

(b) In the case of any sale which is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time all the revenue recognition criteria under International Financial Reporting Standards are met;

 

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(c) In the case of any sale or other disposal for value, such as barter or counter-trade, of any Drug Product, or part thereof, other than in an arm’s-length transaction exclusively for money, Net Sales shall be calculated as above on the value of the non-cash consideration received or the fair market price (if higher) of the Drug Product in the country of sale or disposal;

(d) In the event the Drug Product is sold in a finished dosage form containing a Novartis Combination as its active ingredients in combination with one or more other active ingredients (a “ Combination Product ”), the Net Sales of such Drug Product, for the purposes of determining sales milestones, shall be determined by multiplying the Net Sales (as defined above in this Section) of the Combination Product by the fraction, A/(A+B) where A is the weighted (by sales volume) average sale price in a particular country of the Drug Product when sold separately in finished form and B is the weighted average sale price in that country of the other product(s) sold separately in finished form. In the event that such average sale price cannot be determined for both the Drug Product and the other product(s) in combination, Net Sales for purposes of determining sales milestones shall be agreed by the Parties based on the relative value contributed by each component, such agreement shall not be unreasonably withheld.

1.44. “ Novartis Background Intellectual Property ” shall mean all Novartis Background Patents and Novartis Background Know-How. For the purposes of clarity, Novartis Background Intellectual Property shall exclude Project Intellectual Property.

1.45. “ Novartis Background Know-How ” shall mean all Know-How Controlled by Novartis or its Affiliates and used in the Research Collaboration or otherwise necessary or useful for the discovery, research, evaluation, development or commercialization of Novartis Compounds, Novartis Combinations, Targets, Pathways, Mechanisms of Action or drug products under this Agreement and existing as of the Effective Date or which arises during the Collaboration Term outside of the Research Collaboration.

 

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1.46. “ Novartis Background Patents ” shall mean all Patents Controlled by Novartis or its Affiliates (other than by virtue of the licenses granted to it and its Affiliates hereunder) relating to the Research Collaboration, Novartis Compounds, Novartis Combinations, Targets, Pathways, Mechanisms of Action or drug products under this Agreement and existing as of the Effective Date or which arise during the Collaboration Term outside of the Research Collaboration.

1.47. “ Novartis Combination ” shall mean a Collaboration Combination containing at least one Novartis Compound, regardless of whether or not such Collaboration Combination also includes one or more CombinatoRx Compounds.

1.48. “ Novartis Compound ” shall mean those Compounds contributed to the Library by Novartis as of the Effective Date and during the Collaboration Term as set forth on Schedule C . The composition and representation of Novartis Compounds contributed to the Library shall be at Novartis’ sole discretion. For purposes of clarity, each Novartis Compound shall either be a Novartis Protected Compound or a Novartis Tool Compound.

1.49. “ Novartis Protected Compound ” shall mean a Novartis Compound that is (i) not a Novartis Tool Compound and (ii) associated with a project which is under active research, development or commercialization by Novartis or an Affiliate of Novartis at the time such Novartis Compound is contributed to the Library and entered onto Schedule C by Novartis. Novartis Protected Compounds shall be set forth on Schedule C to this Agreement, as updated from time to time by Novartis in its sole discretion. For purposes of clarity, a Novartis Protected Compound that is under “active research” is a Novartis Compound which is within a bona-fide research project with the intent of discovering and/or optimizing a Compound suitable for clinical development.

 

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1.50. “ Novartis Protected Compound Project Intellectual Property ” shall mean all Project Intellectual Property arising out of the Research Collaboration using one or more Novartis Protected Compound(s), including without limitation intellectual property that covers any Compound that modulates the same Target or has the same Mechanism of Action as such Novartis Protected Compound. For the avoidance of doubt, Project Intellectual Property that arises out of the use of one or more Novartis Protected Compounds and either or both of one or more Novartis Tool Compounds or CombinatoRx Compounds shall be considered Novartis Protected Compound Project Intellectual Property.

1.51. “ Novartis Tool Compound ” shall mean a Novartis Compound that is not under an active research, development, or commercialization program by Novartis or an Affiliate of Novartis at the time such Novartis Compound is contributed to the Library and entered onto Schedule C by Novartis. Novartis Tool Compounds shall be set forth on Schedule C to this Agreement, as updated from time to time by Novartis in its sole discretion.

1.52. “ Novartis Tool Compound Project Intellectual Property ” shall mean all Project Intellectual Property arising out of the Research Collaboration using one or more Novartis Tool Compound(s) and without the use of any Novartis Protected Compounds.

1.53. “ Option ” shall have the meaning set forth in Section 3.5(a).

1.54. “ Option Exercise Notice ” shall have the meaning set forth in Section 3.5(a).

1.55. “ Other Party ” shall have the meaning set forth in Section 9.3.

1.56. “ Out-License Notice ” shall have the meaning set forth in Section 4.2.

1.57. “ Parties ” shall mean CombinatoRx and Novartis, and each individually shall be a “ Party .”

1.58. “ Patentable ” shall mean patentable according to the laws and regulations of any of the following: the United States, any Major European Country, or Japan.

 

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1.59. “ Patents ” shall mean all patent filings and utility model filings, whether granted (issued), or pending and all foreign counterparts of any of the foregoing, including but not limited to patent applications, continuations, continuations-in-part, additions, divisionals, provisionals or any substitute applications, black box applications, registration applications, supplementary protection certificate applications, and including granted (issued) patents with respect to any of such application, including reissue patents, re-examination patents, renewal patents, extensions including supplementary protection certificates, confirmation patents or registration patents and patents of addition.

1.60. “ Pathway ” shall mean a specific biological pathway that contributes to the efficacy of a Compound.

1.61. “ Person ” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.

1.62. “ Phase I Clinical Trial ” shall mean a study in humans which provides for the first introduction in humans of a Drug Product, conducted in normal volunteers or patients to obtain information on safety, tolerability, pharmacological activity or pharmacokinetics, or otherwise meeting the requirements of 21 C.F.R. §312.21(a).

1.63. “ Phase III Clinical Trial ” shall mean, with respect to a Drug Product, a clinical study of such Drug Product in patients intended to support the Regulatory Filing for Regulatory Approval for the Drug Product in a designated Indication, or otherwise meeting the requirements of 21 C.F.R. §312.21(c).

1.64. “ Project Intellectual Property ” shall mean any and all Know-How and inventions, including Patents covering the foregoing which are made, conceived or reduced to practice alone or jointly by CombinatoRx, Affiliates of CombinatoRx, Novartis, Affiliates of Novartis, or any employee, agent or Third Party acting on its or their behalf in connection with any research, development or other work performed under or in connection with the Research Collaboration. In addition, Project Intellectual Property shall also include

 

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all Know-How and inventions, including Patents resulting therefrom, which are made, conceived or reduced to practice alone or jointly by CombinatoRx and Affiliates of CombinatoRx in anticipation of any research, development or other work performed under or in connection with the Research Collaboration from the earlier of (i) the Effective Date or (ii) the date of disclosure of a Target or Novartis Compound to CombinatoRx.

1.65. “ Proof of Concept ” shall mean efficacy as measured by a statistically significant improvement of a pharmacodynamic endpoint in an in vivo disease model.

1.66. “ Proprietary Materials ” shall have the meaning set forth in Section 6.4.

1.67. “ Prosecuting Party ” shall have the meaning set forth in Section 6.2(d).

1.68. “ Receiving Party ” shall have the meaning set forth in Section 8.1.

1.69. “ Regulatory Approval ” with respect to a country shall mean all authorizations by the appropriate governmental entity or entities necessary for commercial sale of a Drug Product in that country including, without limitation and where applicable, approval of labeling, price, reimbursement and manufacturing.

1.70. “ Regulatory Authority ” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department bureau or other governmental entity with authority over the marketing, pricing or sale of a pharmaceutical product in a country, including the FDA, EMEA and MHLW, as applicable.

1.71. “ Regulatory Filing ” shall mean with respect to each Drug Product the submission to the relevant Regulatory Authority of any appropriate regulatory application, and shall include, without limitation, any submission to a regulatory advisory board, marketing authorization application, supplementary application or variation thereof, or any equivalent applications.

1.72. “ Renewal Term ” shall have the meaning set forth in Section 2.2.

 

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1.73. “ Research Collaboration ” shall mean all activities undertaken pursuant to this Agreement under the Research Plan.

1.74. “ Research Plan ” shall have the meaning set forth in Section 2.1(a).

1.75. “ Right of First Negotiation ” or “ ROFN ” shall have the meaning set forth in Section 4.2.

1.76. “ ROFN Period ” shall have the meaning set forth in Section 4.2.

1.77. “ Software License Agreement ” shall have the meaning set forth in Section 3.4.

1.78. “ Target ” shall mean a specific biological target that contributes to the efficacy of a Compound.

1.79. “ Territory ” shall mean the world.

1.80. “ Third Party ” shall mean any Person or entity which is not a Party or an Affiliate of any Party to this Agreement.

1.81. “ Valid Claim ” shall mean a claim of any granted, unexpired Patent that has not been revoked or held unenforceable or invalid by a decision of a competent court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, and that has not been lost through interference proceedings, opposition, revocation or nullity proceedings, or by intentional or unintentional abandonment.

ARTICLE II

RESEARCH COLLABORATION

2.1 Research Collaboration

(a) Under this Agreement, the Parties shall collaborate on the Research Collaboration. The Parties shall use good faith efforts to develop a research plan which shall outline the overall objectives of the Research Collaboration, including, but not limited to, identification of the Novartis Compounds and CombinatoRx Compounds to be included in the Library and

 

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screened under the Research Collaboration, the manner in which the Library shall be screened, the identification of cell lines to be used in such screening, general work flow, the roles and responsibilities of each Party and deliverables for each Party (the “ Research Plan ”). The Research Plan, as it may be amended pursuant to this Agreement, shall be limited to research activities in oncology. An initial outline of the Research Plan shall be attached to this Agreement as Schedule E . Within forty-five (45) calendar days following the Effective Date of this Agreement, Novartis and CombinatoRx shall develop and agree on a final initial Research Plan for approval by the Joint Research Committee. Unless otherwise mutually agreed in writing by the Parties, the later of the date upon which the final Research Plan and final list of cell lines to be used for the Research Collaboration (as set forth on Schedule F ) are approved by the Joint Research Committee shall be the “ Commencement Date ” for the Research Collaboration, provided that the Commencement Date shall in no event be more than forty-five (45) calendar days after the Effective Date. The Parties may, from time to time during the Collaboration Term, amend the Research Plan by submitting a new proposed Research Plan for approval by the Joint Research Committee. The Joint Research Committee may also review and revise the Research Plan and the list of cell lines to be used in the Research Collaboration from time to time, as necessary. Any disagreements between the Parties with respect to the Research Plan, Schedule F , or proposed changes thereto, shall be resolved in accordance with Section 2.4(e) of this Agreement, respective of the limits set forth in Section 5.1(e).

 

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(b) Immediately prior to the Effective Date, or reasonably promptly thereafter, each Party shall provide the other with its proposed Schedule A and Schedule C , respectively. The Parties shall confirm that no Novartis Compound set forth on Schedule C is redundant to any CombinatoRx Compound set forth on Schedule A . The Parties shall re-confirm that there is no redundancy between Schedule A and Schedule C each time that a Party adds a new Compound to the Library. The Parties shall facilitate this by providing the other with an updated schedule when necessary. In the event that a CombinatoRx Compound set forth on Schedule A is chemically identical to a Novartis Compound set forth on Schedule C , such compound shall be deemed to be a Novartis Compound under this agreement.

(c) Immediately prior to the Effective Date, or reasonably promptly thereafter, Novartis shall determine which cell lines are to be used to screen the Library under the Research Collaboration, set forth such cell lines on a list, and provide such list to CombinatoRx. CombinatoRx shall review Novartis’ proposed list of cell lines and advise Novartis of any reasonable objections it has to any of the cell lines on such list. Novartis shall take such objections into consideration and adjust the list of cell lines, as necessary. Such adjusted list shall be attached to this Agreement as Schedule F . For purposes of clarity, Novartis shall have sole authority to make the final determination regarding which cell lines shall be included on or excluded from Schedule F .

2.2 Collaboration Term

The Research Collaboration and the obligations of the Parties in connection with the Research Collaboration under this Article II shall expire on the second (2 ^nd ) anniversary of the Commencement Date (the “ Initial Term ”), unless earlier terminated in accordance with the provisions of this Agreement or extended pursuant to the following sentence. Novartis may, in its sole discretion, extend the

 

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Collaboration Term for three (3) additional one-year periods (each, a “ Renewal Term ”), pursuant to written notice provided to CombinatoRx, in each case, no later than [*] prior to the end of the Initial Term or current Renewal Term, as applicable. Such written notice shall include the number of FTEs to be assigned to the Research Collaboration during such Renewal Term, respective of the limits set forth in Section 5.1(b). Collectively, the Initial Term and any Renewal Term(s) shall be referred to as the “ Collaboration Term .”

2.3 Obligations of CombinatoRx and Novartis

(a) Each Party shall use commercially reasonable efforts and good laboratory practices to fulfill its respective obligations under the Research Collaboration. CombinatoRx shall not use any Novartis Compound included in the Library other than pursuant to the Research Collaboration.

(b) At least ten (10) calendar days prior to each scheduled quarterly meeting of the Joint Research Committee, each Party shall provide a report to the Joint Research Committee detailing its progress with respect to the Research Plan and other activities hereunder, such report to include all Collaboration Combinations, Targets, Pathways, Mechanisms of Action and Project Intellectual Property identified up to the time of such report.

2.4 Joint Research Committee

(a) Upon execution of this Agreement, CombinatoRx and Novartis will establish a Joint Research Committee (“ Joint Research Committee ”), which shall consist of an equal number of representatives from each of CombinatoRx and Novartis, who may be executives or scientists as may be designated by each Party from time to time. The Joint Research Committee

 

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shall initially have a total of six (6) members, with each of Novartis and CombinatoRx having one (1) vote. The chairperson of the Joint Research Committee will be appointed by Novartis. The Joint Research Committee shall hold its first meeting within thirty (30) calendar days after the Effective Date. Thereafter, the Joint Research Committee shall meet quarterly, or with such other frequency as may be established by the Joint Research Committee, and at such times and locations as may be established by the Joint Research Committee, for the following purposes:

(i) Provide general oversight of the Research Collaboration;

(ii) Periodically review the overall goals and strategy of the Research Collaboration and review and approve changes to the Research Plan;

(iii) Periodically review and adjust the number of CombinatoRx FTEs assigned to the Research Collaboration, respective of the limits set forth in Section 5.1(b);

(iv) Periodically review and update the list of cell lines to be used in the Research Collaboration as set forth on Schedule F , respective of the limits set forth in Section 5.1(e);

(v) Periodically review and discuss issues relevant to the prosecution, maintenance and enforcement of Project Intellectual Property in accordance with Article VI;

(vi) Prioritize and approve the allocation of resources dedicated to the Research Collaboration; and

(vii) Resolve any disagreement between the Parties and discuss and resolve any other relevant issues properly submitted to it, in accordance with the dispute resolution procedure set forth in Section 2.4(e) below.

(b) Each Party shall bear all expenses incurred by its delegates in connection with their participation on the Joint Research Committee.

 

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(c) Meetings of the Joint Research Committee may be held in person, by video conference or by teleconference, as the Joint Research Committee may determine. The location for in person meetings will alternate between CombinatoRx’s offices in Cambridge, Massachusetts and Novartis’ offices in Cambridge, Massachusetts, or such other location as mutually agreed by the Parties from time to time. Each Party shall be entitled to bring visitors to participate in meetings of the Joint Research Committee; provided that (i) the other Party is notified in advance, (ii) such visitors are reasonably acceptable to the other Party, and (iii) such visitors are subject to obligations of confidentiality and non-use to the inviting Party no less burdensome than as set forth in Article VIII. A Party may call a meeting of the Joint Research Committee upon reasonable notice to the other Party, such notice requirement being deemed waived by a Party’s attendance and participation. Except where a Party fails to appoint a member or members to the Joint Research Committee or fails to participate in meetings of the Joint Research Committee pursuant to Sections 2.4(f) and 2.4(g), both Parties must be represented at a meeting of the Joint Research Committee for the Joint Research Committee to take any action hereunder. Conversations between members of the Joint Research Committee shall not be deemed to be meetings thereof absent a call for a meeting, whether mutual or unilateral, or a meeting being otherwise scheduled.

(d) The Joint Research Committee shall have the authority to create additional subcommittees as needed.

(e) The Joint Research Committee shall make all decisions unanimously. If the Joint Research Committee cannot or does not, after good faith efforts, reach agreement on an issue within the scope of authority of the Joint Research Committee, then the matter will be referred for resolution to Novartis’ or its Affiliate’s Vice President of Oncology

 

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Research (or such other individual of comparable seniority as may be designated from time to time by Novartis or its Affiliate) and CombinatoRx’s Chief Executive Officer (or such other individual of comparable seniority as may be designated from time to time by CombinatoRx), who will attempt to resolve the matter within a reasonable period of time. In the event that the Parties remain unable to reach a unanimous decision within thirty (30) calendar days of the matter having been referred to the representatives of the Parties described in the preceding sentence, Novartis shall have the deciding vote. Notwithstanding the foregoing, neither the Joint Research Committee nor any subcommittee of the Joint Research Committee shall have the authority to amend or modify the terms of this Agreement or to resolve contractual disputes between the Parties.

(f) The appointment of members to and participation in the Joint Research Committee is a right of each Party and not an obligation and shall not be a “deliverable” as defined in EITF Issue No. 00-21. Each Party shall be free to determine not to appoint members to the Joint Research Committee.

(g) The failure of a Party (“ Appointing Party ”) to appoint members of the Joint Research Committee shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such persons are appointed, the other Party may unilaterally discharge the roles of the Joint Research Committee or any subcommittee thereof for which members were not appointed by an Appointing Party.

 

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2.5 Exchange of Information; Use of Technology

(a) CombinatoRx, Novartis and their respective Affiliates will share information with the Joint Research Committee necessary to facilitate mutual understanding of the status of the Research Collaboration and decision-making in connection therewith.

(b) To facilitate the collaborative efforts of each Party, CombinatoRx shall provide regular electronic updates regarding the results of its screening efforts under the Research Collaboration with respect to Collaboration Combinations using the Chalice Analyzer software.

(c) Neither Party nor any of its Affiliates shall use information disclosed by the other Party or its Affiliates (excluding information which is no longer subject to confidentiality restrictions under Article VIII by reason of the exceptions set forth in Sections 8.2(a), (b), (c), (d) and (e)) for any purpose without the disclosing Party’s written consent, other than for carrying out the objectives of the Research Collaboration or discharging its rights and responsibilities under this Agreement.

(d) Except as otherwise set forth in this Agreement, neither Party shall be entitled to information from the other Party concerning know-how, information or technology discovered or developed by that Party outside of such Party’s obligations under this Agreement or in connection with the development of drug products containing Collaboration Combinations; except that each Party must disclose to the Joint Research Committee as soon as practicable any and all Project Intellectual Property.

(e) Neither Party nor any of their respective Affiliates will apply its rights in any information or technology or the use thereof (and will use commercially reasonable efforts to prevent its licensees, if any, from applying similar rights acquired by license) to block or impede the use of such information or technology as permitted hereunder by the other Party or its assignees or licensees.

 

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2.6 Primary Data Access

CombinatoRx shall grant to Novartis and its Affiliates access to all data (including, without limitation, all primary data and data contained in laboratory notebooks (which laboratory notebooks shall be used solely in connection with the performance of this Agreement and shall be maintained in accordance with Novartis’ procedures as described below)) that relates to the Research Collaboration and/or is generated in the course of performing CombinatoRx’s obligations under this Agreement. CombinatoRx shall comply with Novartis’ standard procedures for maintaining laboratory notebooks and associated accessory records in accordance with Novartis’ Global Laboratory Notebook Guidelines, a copy of which is attached hereto as Schedule G . Such original notebooks shall be the property of Novartis, and CombinatoRx shall provide all original notebooks (both completed and uncompleted) to Novartis at Novartis’ request and expense. Prior to providing such original notebooks to Novartis, CombinatoRx shall make and retain at least one true and complete copy of each such notebook (one such copy to be at Novartis’ expense), and shall thereafter be entitled on reasonable request to receive from Novartis additional copies at CombinatoRx’s expense. Novartis and its Affiliates shall also have the right, at reasonable intervals, upon reasonable notice to CombinatoRx, to have authenticated copies of such data and notebooks made to use and transfer as permitted hereunder. Any data not otherwise contained in laboratory notebooks shall be provided to Novartis in the format mutually agreed by the Parties. CombinatoRx may retain for itself copies of all data provided to Novartis for all purposes permitted under this Agreement.

 

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ARTICLE III

LICENSES, OPTIONS AND EXCLUSIVITY

3.1 Research Use Only Licenses

(a) Novartis hereby grants to CombinatoRx a non-exclusive, worldwide, royalty free, non-fee-bearing, non-sublicensable, research use only license to practice any Novartis Background Intellectual Property and Novartis’ interest in Project Intellectual Property required by CombinatoRx to meet CombinatoRx’s obligations under the Research Collaboration solely during the Collaboration Term.

(b) CombinatoRx hereby grants to Novartis and its Affiliates a non-exclusive, worldwide, royalty free, non-fee-bearing, sub-licensable, research use only license to practice any CombinatoRx Background Intellectual Property and CombinatoRx’s interest in Project Intellectual Property required by Novartis and its Affiliates to meet Novartis’ obligations under the Research Collaboration solely during the Collaboration Term.

3.2 License Grants to Novartis

(a) CombinatoRx hereby grants to Novartis and its Affiliates an exclusive (even with regard to CombinatoRx), worldwide, royalty free, perpetual, sub-licensable license to use and exploit CombinatoRx’s interest in the Project Intellectual Property necessary or useful to (i) research, develop and/or commercialize any Novartis Protected Compound and any drug product containing such Novartis Protected Compound and (ii) use and exploit the Novartis Protected Compound Project Intellectual Property.

(b) CombinatoRx hereby grants to Novartis and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit all CombinatoRx Background Intellectual Property necessary or useful to use and exploit the Novartis Protected Compound Project Intellectual Property.

 

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(c) CombinatoRx hereby grants to Novartis and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit CombinatoRx’s interest in the Novartis Tool Compound Project Intellectual Property for any purpose.

(d) CombinatoRx hereby grants to Novartis and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit all CombinatoRx Background Intellectual Property necessary or useful to research, develop and/or commercialize any Compound or drug product which uses or exploits Novartis Tool Compound Project Intellectual Property.

(e) CombinatoRx hereby grants to Novartis and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit CombinatoRx’s interest in the Miscellaneous Project Intellectual Property for any purpose.

3.3 License Grants to CombinatoRx

(a) Novartis hereby grants to CombinatoRx and its Affiliates an exclusive (even with regard to Novartis), worldwide, royalty free, perpetual, sub-licensable license to use and exploit Novartis’ interest in the Project Intellectual Property necessary or useful to research, develop and commercialize any CombinatoRx Combination and any CombinatoRx Compound that is not part of a Novartis Combination.

(b) Novartis hereby grants to CombinatoRx and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit all Novartis Background Intellectual Property necessary or useful to use and exploit the CombinatoRx Compound Project Intellectual Property.

 

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(c) Novartis hereby grants to CombinatoRx and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit Novartis’ interest in the Novartis Tool Compound Project Intellectual Property for any purpose.

(d) Novartis hereby grants to CombinatoRx and its Affiliates a non-exclusive, worldwide, royalty free, perpetual, sub-licensable license to use and exploit Novartis’ interest in the Miscellaneous Project Intellectual Property for any purpose.

3.4 Chalice Analyzer Software License

Concurrently with the execution of this Agreement, the Parties shall execute the software license agreement for Chalice Analyzer software in the form attached to this Agreement as Schedule SL (the “ Software License Agreement ”). The signatures of each Party to this Agreement shall not be effective until the Parties have also signed the Software License Agreement, and the signatures of each Party to the Software License Agreement shall not be effective until the Parties have also signed this Agreement. However, termination or expiration of this Agreement shall not terminate, constitute a breach of, or otherwise affect the Software License Agreement.

3.5 Option and Exclusivity

(a) CombinatoRx hereby grants to Novartis an exclusive option (the “ Option ”), to acquire an exclusive (even with regard to CombinatoRx), worldwide, transferable, perpetual, sub-licensable, royalty free, fully paid up license for Novartis and its Affiliates to CombinatoRx’s interest in Novartis Tool Compound Project Intellectual Property necessary or useful to research, develop and/or commercialize any Compound or drug product which uses or exploits Novartis Tool Compound Project Intellectual Property (the “ Exclusive License ”). The Option may be exercised by Novartis once per twelve month period, beginning on the Commencement Date, at any time during the Collaboration Term, so long as there

 

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are at least [*] patentable inventions within Novartis Tool Compound Project Intellectual Property for which Patents have been filed during such [*] period. Novartis may exercise the Option by delivering to CombinatoRx written notice of exercise (the “ Option Exercise Notice ”) specifying the Novartis Tool Compound Project Intellectual Property with respect to which the Option is being exercised. Upon delivery of the Option Exercise Notice to CombinatoRx, the license to CombinatoRx’s interest in such Novartis Tool Compound Project Intellectual Property pursuant to Section 3.2(c) shall immediately and automatically become the Exclusive License. CombinatoRx shall, and shall cause its Affiliates, to provide reasonable assistance to Novartis to effectuate the Exclusive License, and shall execute, and cause its Affiliates to execute, all documents reasonably necessary to effectuate such Exclusive License.

(b) During the Collaboration Term, CombinatoRx shall not license or sublicense any CombinatoRx Background Intellectual Property or its interest in any Novartis Tool Compound Project Intellectual Property to any Third Party unless and until CombinatoRx has demonstrated Proof of Concept of such CombinatoRx Background Intellectual Property or such Novartis Tool Compound Project Intellectual Property pursuant to a bona-fide research program exploiting such CombinatoRx Background Intellectual Property or such Novartis Tool Compound Project Intellectual Property.

3.6 No Implied Licenses

Except as set forth elsewhere in this Agreement, neither Party shall acquire any license or other intellectual property interest, by implication, estoppel or otherwise, in any information or materials provided to it under this Agreement or under any Patents Controlled by the other Party or its Affiliates.

 

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ARTICLE IV

DEVELOPMENT AND RIGHT OF FIRST NEGOTIATION

4.1 Control over Development

(a) Novartis and its Affiliates shall be responsible for and have sole discretion concerning all aspects of the development and commercialization of all Novartis Compounds, Novartis Combinations and drug products containing a Novartis Compound, including without limitation, selecting such Novartis Compounds, Novartis Combinations and drug products for pre-clinical and clinical development, development and implementation of a regulatory strategy; determination of the Indications for drug product development; formulation, packaging and labeling of such drug products; and manufacture, marketing, pricing, promotion, sale and distribution of such drug products.

(b) Subject to Section 4.2 below, CombinatoRx shall be responsible for and have sole discretion concerning all aspects of the development and commercialization of all CombinatoRx Compounds and CombinatoRx Combinations, including without limitation, selecting such CombinatoRx Compounds and CombinatoRx Combinations for pre-clinical and clinical development, development and implementation of a regulatory strategy; determination of the Indications for development; formulation, packaging and labeling; and manufacture, marketing, pricing, promotion, sale and distribution of such CombinatoRx Compounds and CombinatoRx Combinations.

4.2 Right of First Negotiation

Novartis shall have a right of first negotiation with respect to each CombinatoRx Combination arising from and each CombinatoRx Compound contributed to the Research Collaboration (each, a “ Right of First Negotiation ” or “ ROFN ”) until [*] after [*] for such CombinatoRx Combination or CombinatoRx Compound (each, a “ ROFN Period ”). During the ROFN Period for each CombinatoRx Combination and CombinatoRx Compound, CombinatoRx shall notify Novartis in writing of its intent to out-license or

 

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the receipt of a bona-fide offer to out-license such CombinatoRx Combination or CombinatoRx Compound (each, an “ Out-License Notice ”). Novartis may exercise the Right of First Negotiation regarding such CombinatoRx Combination or CombinatoRx Compound within [*] calendar days of Novartis’ receipt of the