Exhibit 10.318
CERTAIN MATERIAL (INDICATED BY AN
ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
SETTLEMENT AGREEMENT AND MUTUAL
RELEASE
This Settlement Agreement and Mutual
Release ( “Settlement Agreement” ) is
entered into by and between Ligand Pharmaceuticals Incorporated (
“Ligand” ) and The Rockefeller University
( “Rockefeller ”) (collectively, the
“Parties” ).
RECITALS
A. Rockefeller and Ligand entered
into a License Agreement, dated September 30, 1992 (the
“Original Agreement” ).
B. Ligand and SmithKline Beecham
Corporation (now known as GlaxoSmithKline and referred to herein as
“ GSK” ) entered into a Research,
Development and License Agreement, dated December 29, 1994, as
amended or supplemented on March 22,
1995, December 12, 1995, July 21,
1998, February 3, 2000 and February 25, 2000 (the
“GSK Agreement” ).
C. Rockefeller, as plaintiff, and
Ligand, as defendant, have asserted claims and counterclaims
against one another concerning their respective rights and
obligations under the Original Agreement in an action pending in
the United States District Court for the Southern District of New
York, captioned The Rockefeller University v. Ligand
Pharmaceuticals, Inc. , 08-Civ-02755 (PKC) (HP) (the “
Litigation ”).
D. In accordance with the provisions
of this Settlement Agreement, Ligand and Rockefeller have reached a
settlement and resolution of all disputes that have arisen between
them concerning the Original Agreement and the
Litigation.
NOW, THEREFORE, in consideration of
the various promises and undertakings set forth herein, the Parties
agree as follows:
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1.
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Financial
Provisions .
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1.1
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Initial
Payment . Ligand will pay
to Rockefeller Five Million Dollars ($5,000,000), payable by wire
transfer within [***] ([***]) business days of the Effective Date
of this Settlement Agreement.
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1.2
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Milestone
Payments. Ligand will pay
to Rockefeller Two Million Dollars ($2,000,000) in [***]
installments, [***] due on or before February 10, 2011.
Payments under this Section 1.2 will be made pursuant to
Section 1.8 of this Settlement Agreement.
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***
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Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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1.3
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Share of
Milestone Payments Received by Ligand Pursuant to the GSK
Agreement. Upon receipt
by Ligand of any milestone payment pursuant to Section 7.1 of
the GSK Agreement, for an event occurring on and after
February 11, 2009 ( “GSK Milestone
Payment” ), Ligand will pay to Rockefeller fifty
percent (50%) of any such GSK Milestone Payment. Payments
under this Section 1.3 will be made pursuant to
Section 1.8 of this Settlement Agreement.
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1.4
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Share of
Royalty Payments Received by Ligand Pursuant to the GSK
Agreement. (a) Upon
receipt by Ligand of any royalty payment pursuant to Sections 7.2,
7.3, 7.4, 7.5 and/or 7.6 of the GSK Agreement, in connection with
the worldwide annual Net Sales (as defined in the GSK Agreement) of
Eltrombopag or any other Product or Combination Product (as defined
in the GSK Agreement) ( “GSK Royalty” ),
Ligand will pay to Rockefeller as follows:
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1. On worldwide annual Net Sales of
Eltrombopag or any other Product or Combination Product (as defined
in the GSK Agreement) of up to One and One Half Billion Dollars
($1.5 billion), Ligand will pay five and eighty-eight hundreths
percent (5.88%) of any such GSK Royalty received;
and
2. On worldwide annual Net Sales of
Eltrombopag or any other Product or Combination Product (as defined
in the GSK Agreement) in excess of One and One Half Billion Dollars
($1.5 billion), Ligand will pay seven percent (7.0%) of any
such GSK Royalty received.
(b) If Ligand is
successful in securing a separate, freestanding agreement between
GSK and Rockefeller pursuant to the terms and conditions set forth
in Section 1.6, so that Rockefeller is in privity of contract
with GSK as to Rockefeller’s share of the GSK Milestone
Payment and GSK Royalty, then the amounts payable to Rockefeller
under Section 1.4(a)(1) shall be reduced to [***] percent
([***]%) and the amounts payable to Rockefeller under
Section 1.4(a)(2) shall be reduced to [***] percent ([***]%).
The royalty percentages set forth in this Section 1.4(b) will
only be used to calculate payments owed to Rockefeller on and after
the effective date of a separate, freestanding agreement between
GSK and Rockefeller.
(c) Payments under this
Section 1.4 will be made pursuant to Section 1.8 of this
Settlement Agreement.
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1.5
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LGD-4665 Net Sales
. Within [***] ([***]) days after
receipt by Ligand of a payment to Ligand by GSK and/or a third
party, Ligand will pay Rockefeller one and one-half percent
(1.5%) of worldwide net sales as defined in the
December 17, 2008 License Agreement between Ligand and GSK for
LGD-4665 (“ LGD - 4665 Agreement
”). If sales are by Ligand or one of its Affiliates, within
[***] ([***]) days after the reporting of financial results to the
SEC by Ligand or one of its Affiliates for each calendar quarter,
Ligand will pay Rockefeller one and one-half percent (1.5%) of
world-wide net sales as defined in the LGD-4665 Agreement. In the
event that sales are by Ligand or one of its Affiliates and Ligand
or one of
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Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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2
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its Affiliates does not have any
reporting obligations to the SEC, payment under this
Section 1.5 will be made within [***] days after the close of
any calendar quarter in which world-wide net sales occur. “
Affiliate ” shall have the same meaning as set
forth in the LGD-4665 Agreement. Payment will be made under this
Section 1.5 pursuant to Section 1.8 of this Settlement
Agreement.
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1.6
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Separate
Agreement Between GSK and Rockefeller . (a) Ligand will take responsibility and
use diligent efforts, with the participation of Rockefeller as
needed, to secure a separate, freestanding agreement between GSK
and Rockefeller which requires payment of Rockefeller’s share
of GSK Milestones Payments and GSK Royalties and GSK’s
royalties on LGD-4665, described in Sections 1.3, 1.4(a) and 1.5 of
this Settlement Agreement directly from GSK to Rockefeller.
Ligand’s designation of a Rockefeller account under
Section 9.2 of the GSK Agreement for payment by GSK directly
to Rockefeller does not satisfy the requirements of this
Section 1.6. Such separate, freestanding agreement shall
include payment terms consistent with and no less favorable than
the payment terms described in Sections 1.3, 1.4 and 1.5 of this
Agreement.
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(b) Ligand represents and warrants
that the GSK Agreement, including the amendments and letters
produced by Ligand to Rockefeller in February 2009 relating
thereto, and the LGD-4665 Agreement produced in the Litigation are
true, complete and accurate copies of those agreements, and reflect
all agreements between GSK and Ligand relating to Eltrombopag or
any other Product or Combination Product (as defined in the GSK
Agreement), all agreements between and among Ligand and GSK
(including those also involving in addition to Ligand and GSK any
other party) relating to LGD-4665, and all amendments to all such
agreements as of the Effective Date of this Agreement. More
specifically, Ligand represents that Section 7 of the GSK
Agreement reflects all of the financial provisions currently in
effect as of the Effective Date of this Agreement and that such
financial provisions have not been amended or changed by any other
document or amendment. Ligand agrees that it will not amend, alter
or otherwise change or enter into an agreement to amend any of the
agreements referenced in this Section 1.6 in any way adversely
affects or diminishes any payments owed to Rockefeller under
Sections 1.3, 1.4 and 1.5 of this Agreement. If Ligand amends or
enters into an agreement to amend any of the agreements referenced
in this Section 1.6 or enters into any new agreement or
transaction which in any way affects payments owed to Ligand, then
Ligand guarantees that Ligand shall nonetheless continue to make
the payments due to Rockefeller hereunder in the amounts that would
have been due absent any such amendment or agreement. For avoidance
of doubt, other than rights assigned to Rockefeller under
Section 1.6(c), nothing herein limits Ligand’s ability
or right to enter into one or more transactions with any third
party relating to Ligand’s rights under the GSK Agreement
and/or the LGD-4665 Agreement.
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***
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Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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(c) Ligand hereby assigns to
Rockefeller all of its rights, title and interests in and to
Rockefeller’s share of the GSK Milestone Payments under
Section 1.3, Rockefeller’s share of the GSK Royalty
under Section 1.4 and GSK’s royalty on LGD-4665 provided
under Section 1.5. Ligand agrees to hold any and all of these
amounts received by Ligand in trust for Rockefeller, agrees to pay
such amounts to Rockefeller as set out in the respective Sections
1.3, 1.4 and 1.5, and guarantees the amount and payment of such
payments until such time as a separate, freestanding agreement may
be entered into in accordance with Section 1.6(a).
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1.7
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Quarterly
Royalty Reports . Within
[***] ([***]) days after receiving a royalty or other report from
GSK related to sales of Eltrombopag, other Products or Combination
Products under the GSK Agreement, or LGD-4665, Ligand will send
Rockefeller a copy of any such written report or reports, covering
the reporting period, which is the calendar quarter then ended
along with copies of any bank wire receipts evidencing payments
from GSK to Ligand under the agreements mentioned in
Section 1.6 above.
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1.8
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Mode of
Payment . All payments
made by Ligand to Rockefeller pursuant to this Settlement Agreement
shall be made in U.S. Dollars by wire transfer to an account
designated by Rockefeller, which account Rockefeller may change on
[***] ([***]) days’ prior written notice to Ligand. As to
payments to Rockefeller under Sections 1.3 and 1.4, Ligand will
send a notice to GSK within [***] ([***]) business days after the
Effective Date of this Agreement, designating a Rockefeller account
under Section 9.2 of the GSK Agreement, so that
Rockefeller’s share of the GSK Milestone Payments and GSK
Royalties pursuant to Sections 1.3 and 1.4 will be paid by GSK
directly into the designated Rockefeller account for so long as
there is no separate, freestanding agreement between GSK and
Rockefeller as described in Section 1.4(b).
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1.9
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Financial
Records . Ligand shall
keep accurate records, including, information provided by GSK under
the agreements referenced herein and royalty and milestone payments
to Rockefeller (“ Financial Records ”),
in accordance with Ligand’s internal accounting procedures
and U.S. generally accepted accounting practices, and in sufficient
detail to enable the amounts due under this Settlement Agreement to
be determined and verified by Rockefeller. In no event shall these
Financial Records include less than the information reasonably
necessary to verify the accuracy of the quarterly royalty reports
provided to Rockefeller under Section 1.7 and the calculations
therein.
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***
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Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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4
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a)
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Ligand shall
make reasonable efforts to confirm the accuracy of the milestone
and royalty reports it receives from GSK in connection with sales
of Eltrombopag, other Products or Combination Products under the
GSK Agreement, and LGD-4665 [***]. To the extent that any
underpayments by GSK are found as a result of Ligand’s
review, [***] Ligand shall pay Rockefeller its share of the
underpayments, calculated pursuant to Sections 1.3, 1.4 and 1.5 of
this Settlement Agreement.
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b)
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Ligand shall
maintain for not less than [***] ([***]) years from the date of
creation, complete and accurate Financial Records and information
relating to sales of Eltrombopag, other Products or Combination
Products under the GSK Agreement, and LGD-4665. Upon written
request by Rockefeller, not more than once in a calendar year and
at Rockefeller’s expense, Rockefeller shall be entitled and
Ligand shall permit an independent certified accountant selected by
Rockefeller and reasonably acceptable to Ligand to have access
during normal business hours to those Financial Records and such
other information that the auditor determines may be reasonably
necessary to verify the accuracy of the quarterly royalty reports
provided to Rockefeller under Section 1.7 and the calculations
therein, provided that such access shall be limited to prevent the
disclosure of any third party confidential information. Ligand will
use diligent efforts to confirm with GSK that any of its relevant
confidential information can be provided to Rockefeller and its
independent certified accountant. The independent certified
accountant shall disclose to Rockefeller whether the quarterly
royalty reports are correct or not and specify whether the amounts
paid to Rockefeller pursuant thereto were correct or, if incorrect,
the amount of any discrepancy.
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If the independent certified
accountant’s report shows any underpayment, Ligand shall pay
the amount of the underpayment to Rockefeller within 30 days after
Rockefeller delivers to Ligand its independent certified
accountant’s written report indicating the underpayment. If
such underpayment exceeds [***] percent ([***]%) of the total
amount owed for the calendar year then being audited, Ligand will
pay for the reasonable and necessary fees and expenses of such
independent certified accountant performing the audit, subject to
reasonable substantiation thereof.
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1.11
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Interest
Due . In case of any
delay in payment by Ligand to Rockefeller (including any
underpayment determined by an independent certified
accountant’s report), interest on the overdue payment shall
accrue at the prime rate, as determined for each month on the last
business day of that month, and assessed from the date that payment
was due. The foregoing interest shall be due from Ligand without
any special notice.
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***
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Certain
information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
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5
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2
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No
Additional Payments; Covenant Not to Sue .
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2.1
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Original
Agreement Termination .
Ligand and Rockefeller agree that the Original Agreement is hereby
terminated as of the Effective Date. Sections 6, 7, 9, 10, and 14
of the Original Agreement shall survive termination.
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2.2
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No
Additional Payments and Covenants Not to Sue - GSK
. So long as this Settlement
Agreement is in effect and Rockefeller is receiving timely and full
payments hereunder, (a) Rockefeller acknowledges that no
payments other than the payments described in this Settlement
Agreement shall be due to Rockefeller from Ligand or from GSK for
any past, present or future conduct that was subject to the
Original Agreement or that would otherwise be due to Rockefeller in
connection with Eltrombopag, other Products or Combination Products
under the GSK Agreement, or in connection with LGD-4665 under the
LGD-4665 Agreement; (b) Rockefeller covenants not to sue GSK
for exercising its rights, or fulfilling its obligations, under the
GSK Agreement or the LGD-4665 Agreement, in the past, present or
future; and (c) Rockefeller will not grant to any third party
any licenses under the Licensed Patent Rights or Technical
Information as defined in the Original Agreement, except to
not-for-profit institutions for research under material transfer
agreements, and provided, however, that Rockefeller shall have no
obligation to maintain or keep in force any patent or patent
application within the definition of Licensed Patent Rights of the
Original Agreement. Subject only to the Cure Period set forth in
Section 2.4, the covenants under this Section 2.2, and
Section 2.3 below, shall terminate immediately upon a breach
of any payment obligations under this Agreement.
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2.3
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Covenant Not
to Sue –Sublicensees of Ligand Other Than GSK
. So long as this Settlement
Agreement is in effect and Rockefeller is receiving timely and full
payments hereunder, (a) Rockefeller covenants not to sue
Ligand for any past, present or future uses of the Licensed Patent
Rights or Technical Information as defined in the Original
Agreement, where such uses were
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