STRATEGIC ALLIANCE AGREEMENT

Exhibit 10.44

 

STRATEGIC ALLIANCE AGREEMENT

 

by and between

 

ZymoGenetics, Inc.

 

and

 

Serono S.A.

 

Effective Date: October 12, 2004

 

“[ * ]” = omitted, confidential material, which material has been separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

CONTENTS

 

 

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LIST OF EXHIBITS

 

 

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STRATEGIC ALLIANCE AGREEMENT

 

This Strategic Alliance Agreement is made as of the Effective Date, October 12, 2004, by and between ZymoGenetics, Inc., a Washington corporation ( “ZGEN” ), and Serono S.A., a Swiss corporation ( “Serono” ).

 

RECITALS

 

A. Each party has an interest in the development of potential therapies for human diseases.

 

B. ZGEN has certain rights to the Genes and the Genes have potential therapeutic value.

 

C. ZGEN wishes to grant Serono, and Serono wishes to receive, the right, on the terms set forth herein:

 

(i) to evaluate the therapeutic value of proteins expressed by the Genes by performing research in pursuit of a Medical Hypothesis;

 

(ii) to perform research relating to a Gene for which a Medical Hypothesis is formed to gather information to support the designation of a Lead or Target related to the Gene, which research may be conducted in collaboration with ZGEN or by Serono on its own; and

 

(iii) to acquire rights for the development and commercialization of a Lead or Target for which Serono performed research.

 

AGREEMENT

 

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:

 

ARTICLE ONE

Definitions and Terminology

 

1.1 Definitions

 

In addition to other terms defined elsewhere in this Agreement, words and phrases with initial capitals shall have the meanings stated in Exhibit A.

 

1.2 Terminology

 

Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words “including,” “includes” and “such as” are used in a non-limiting sense and have the same meaning as “including without limitation” and “including, but not limited to.” References to Articles, Sections, Subsections and paragraphs are to the same with all their subparts as they

 

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appear in this Agreement. “Herein” means anywhere in this Agreement. “Hereunder” and “hereto” mean under or pursuant to any provision of this Agreement. The Article and Section headings contained herein are for reference only and shall not be considered a part of this Agreement, nor shall they in any way affect the interpretation hereof. All references to dollars or $ are to the currency of the U.S.A. All references to time are to the time in Seattle, Washington, U.S.A.

 

ARTICLE TWO

Coordination of the Alliance

 

2.1 Steering Committee

 

2.1.1 Formation of Steering Committee

 

(a) The parties’ collaboration shall be governed by a steering committee (the “ Steering Committee ”). Each party shall appoint its representatives on the initial Steering Committee within thirty (30) days following the Effective Date and shall promptly thereafter notify the other party of such appointment.

 

(b) The Steering Committee shall have a total of six (6) members. ZGEN and Serono shall each appoint three (3) members. If at any time a vacancy occurs for any reason, the party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party of any substitution of another person as its appointee on the Steering Committee.

 

2.1.2 Roles and Responsibilities

 

The Steering Committee shall be responsible for:

 

(a) Review and approval of a Medical Hypothesis for a Gene.

 

(b) Review and approval of the Research Plan and Budget for a Gene.

 

(c) Monitoring the use of a Third Party’s intellectual property under Section 2.3 .

 

(d) Designation of Leads and Targets and facilitating the exercise of Option Rights pursuant to Section 5.2 , including determining whether a Lead or Target [ * ] licensed Lead or Target.

 

(e) Resolution of disputes occurring at the Research Team level or between the parties’ respective Patent Contacts.

 

The Steering Committee may, on its own initiative and at any time, act or reverse action, within the scope of the Research Team’s or Patent Contacts’ responsibilities.

 

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2.1.3 Meetings and Communications

 

The Steering Committee shall meet at least semi-annually at mutually agreed upon times and locations. Unless otherwise agreed, the location of such meetings will alternate between the parties’ headquarters. Meetings shall take place in person, by videoconference or by telephone conference, as mutually agreed by the parties. There shall be an agenda for each meeting of the Steering Committee, and written minutes of each meeting shall be taken and shall include the issues discussed and action items, if any, arising from such meeting. Meeting minutes shall be submitted to the members of the Steering Committee. Each face-to-face meeting of the Steering Committee shall include a review and approval (or amendment) of minutes from the prior meeting and of all actions taken through interim communications.

 

2.1.4 Decision Making; Formalities

 

(a) All official actions, decisions or rulings of the Steering Committee under this Agreement must receive the approval of four (4) members either in writing (including by email or facsimile) or by vote at a meeting of the Steering Committee, and all significant actions, decisions or rulings shall subsequently be entered into the minutes of meetings of the Steering Committee.

 

(b) The parties intend that, to the maximum extent practicable, they shall reach decisions hereunder cooperatively through the deliberations of the Steering Committee. If a decision cannot be made in accordance with this Section 2.1.4 , either of the parties may institute the procedure described in Article Fifteen .

 

2.2 Research Leaders and Research Team

 

2.2.1 Research Leaders; Appointment; Role and Responsibilities

 

(a) Each party shall appoint its initial research leader to be responsible for the day to day coordination of the parties’ efforts under this Agreement (each a “ Research Leader ”) within thirty (30) days following the Effective Date and shall promptly thereafter notify the other party of such appointment. If at any time a vacancy occurs for any reason, the party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each party shall promptly notify the other party of any substitution of another person as its Research Leader.

 

(b) Subject to the Guiding Principles, the Research Leaders shall coordinate the parties’ efforts under this Agreement, including the performance of the parties’ respective Research Tasks. In particular the Research Leaders shall review and, subject to Sections 2.3 and 9.4 , approve any proposed use of a Third Party’s products, materials or services in a Research Project, and the related costs and expenses as Research Costs, whether under an existing or a proposed new Third Party Agreement. The Research Leaders shall communicate with each other as often and by such media as they deem appropriate but in no case less than quarterly.

 

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2.2.2 Formation of Research Team

 

(a) The Research Leaders shall form the initial research team to manage the research to be conducted hereunder (the “ Research Team ”) by the thirtieth (30 ^th ) day following their appointment as the Research Leaders.

 

(b) Those serving on the Research Team must be approved by the Steering Committee. The Research Team may have any number of members as may be approved by the Steering Committee. While the parties need not be equally represented in number of members on the Research Team, the Research Team will be co-led by the two (2) Research Leaders.

 

(c) The Research Leaders may form additional Research Teams for distinct Genes; provided that the individuals serving on the Research Team for a Gene may serve on the Research Team for one or more different Genes.

 

2.2.3 Roles and Responsibilities

 

(a) The Research Team shall coordinate the exchange of information pursuant to Section 3.1.3 .

 

(b) The Research Team shall coordinate any interactions between the parties with respect to evaluation of Genes prior to Medical Hypothesis.

 

(c) Within ninety (90) days after a Collaboration Election, the Research Team shall prepare and submit to the Steering Committee for approval an initial Research Plan and Budget directed at gathering information relating to the Gene to support the designation of a Lead or Target. The initial Research Plan and Budget shall cover the remainder of the then current calendar year and the whole of the immediately following calendar year. As appropriate from time to time and not less often than annually, the Research Team shall prepare and submit to the Steering Committee for approval proposed updates and amendments to the Research Plan and Budget; provided that an update or amendment may not extend the Research Term for the Gene.

 

(d) Subject to the Guiding Principles, the Research Team shall under the direction of the Research Leaders plan the Research Tasks of the parties, establish and monitor timetables for the conduct of the Research Tasks, select entities or individuals, including Serono, ZGEN or Third Party contractors, to perform Research Tasks, and otherwise monitor compliance with the Research Plan and Budget.

 

(e) The Research Team shall periodically review the information gathered relating to a Gene to assess whether a Lead or Target may be designated and make recommendations to the Steering Committee promptly after the Research Team considers that a Lead or Target may be designated.

 

(f) Following a Collaboration Election with respect to a Gene, the Research Team shall submit to the Steering Committee a full written status report with respect to such Gene on a semi-annual basis during the Research Term. A status report shall cover the then-current status, the results achieved, the problems encountered and other pertinent material information relating to the designation of a Lead or Target related to such Gene.

 

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2.2.4 Meetings and Communications

 

The Research Team shall meet as often as is deemed necessary by the Research Leaders but in no case less than quarterly. Meetings shall take place in person, by videoconference or by telephone conference, as mutually agreed by the Research Leaders. There shall be an agenda for each meeting of the Research Team, and written minutes of each meeting shall be taken and shall include the issues discussed and action items, if any, arising from such meeting. Meeting minutes shall be submitted to the members of the Research Team and the Steering Committee.

 

2.2.5 Decision Making; Formalities

 

All official actions, decisions or rulings of the Research Team under this Agreement must receive the approval of the two (2) Research Leaders, either in writing (including by email or facsimile) or by vote at a meeting of the Research Team, and all significant actions, decisions or rulings shall subsequently be entered into the minutes of meetings of the Research Team. In the absence of such mutual approval, either Research Leader may by formal written notice to the Steering Committee declare the existence of a dispute at the Research Team level and thereby request that such dispute be resolved by the Steering Committee.

 

2.3 Use of Third Party Intellectual Property; Reach Through Royalties

 

Neither party shall knowingly incur a financial obligation to a Third Party payable in connection with the subsequent development or sale of a therapeutic product related to a Gene whether by using the intellectual property of a Third Party in the evaluation of the protein expressed by the Gene or as part of the Research Project or otherwise without providing the Steering Committee with prior written notice. Unless the Steering Committee decides the costs and expenses are Research Costs, all costs and expenses shall be borne by the party incurring the obligation. If a party becomes aware of a financial obligation described in this Section 2.3 as to which no notice was provided to the Steering Committee, it shall notify the Steering Committee of the event promptly after it becomes aware thereof.

 

ARTICLE THREE

Evaluation of Genes and Selection for Collaborative Research

 

3.1 Evaluation prior to Medical Hypothesis

 

3.1.1 Parties’ Rights to Independently Evaluate

 

(a) During the Evaluation Term, each party may, in accordance with this Agreement and at its own cost and expense, evaluate the therapeutic utility of the proteins expressed by each Non-Core Gene using any research methods or tools that it deems appropriate. Subject to Section 3.1.2, only ZGEN may evaluate the ZGEN Core Genes.

 

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(b) Subject to Section 3.2 , the parties shall have no obligation to collaborate regarding the evaluation of the therapeutic utility of the protein expressed by any Gene.

 

(c) At least on a semi-annual basis via a meeting of the Research Leaders, each party shall keep the other apprised as to the status of its evaluation of the therapeutic utility of the proteins expressed by each Gene, in particular reporting any material results achieved, problems encountered and other pertinent material information. Such meetings shall take place by such means (in person, by videoconference or by telephone conference) and at such times and locations as mutually agreed by the Research Leaders. Written minutes of each meeting shall be taken and shall include the issues discussed and action items, if any, arising from such meeting. In calendar year 2006, one such semi-annual meeting will occur during the third quarter.

 

3.1.2 ZGEN Core Genes

 

(a) ZGEN anticipates advancing the ZGEN Core Genes to Medical Hypothesis, at its sole cost and expense. Therefore, except as set forth in Subsection (b) , Serono shall not evaluate the therapeutic utility of the proteins expressed by a ZGEN Core Gene during the Evaluation Term. [ * ] .

 

(b) ZGEN may by written notice to Serono remove a Gene’s designation as a ZGEN Core Gene and allow Serono to evaluate the therapeutic utility of the proteins it expresses during the Evaluation Term.

 

3.1.3 Initial Transfer

 

Promptly following the Effective Date, the Research Team shall develop a plan whereby the parties shall disclose to each other ZGEN Enabling Technology and Serono Enabling Technology, respectively.

 

3.2 Selection for Collaborative Research at Medical Hypothesis

 

3.2.1 Notice of Medical Hypothesis to the Other Party and Novo

 

(a) Each party’s Research Leader shall provide prompt written notice to the other Research Leader when the party he or she represents has formed a Medical Hypothesis for a Gene. The notice shall summarize in writing the information relating to the Medical Hypothesis set forth in Exhibit B . The Research Leaders shall submit the notice to the Steering Committee for approval within [ * ] of receipt, and the Steering Committee shall consider the Medical Hypothesis within [ * ] thereafter and approve or give reasons for withholding approval of the Medical Hypothesis for the Gene.

 

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(b) If ZGEN considers that a Medical Hypothesis exists for a Gene, ZGEN shall be free to [ * ] . If a Medical Hypothesis is acceptable [ * ] approved by the Steering Committee.

 

(c) ZGEN shall be responsible for all communications with Novo relating to [ * ] . Simultaneous with its communication to Novo, ZGEN will report to Serono all material information that is communicated by ZGEN to Novo relating to [ * ] disclosed in accordance with the Novo Agreement, as well as each Definitive Response or Extension Response [ * ] and notice of any extension of the option period under Section 4.3.3 of the Novo Agreement.

 

3.2.2 Collaboration Election; Procedure

 

(a) By the [ * ] after the later of the day on which:

 

(i) the Steering Committee approves a Medical Hypothesis for a Gene; and

 

(ii) ZGEN gives Serono notice of a Definitive Response for such Gene;

 

Serono shall indicate in writing whether it wishes to perform research relating to the Gene to gather information to support the designation of a related Lead or Target. [ * ] after receipt of a notice from Serono indicating a wish to perform research, ZGEN shall indicate in writing whether it wishes to collaborate in such research.

 

(b) All research relating to a Gene for which a Collaboration Election is made shall be conducted in accordance with Article Four .

 

3.2.3 No Collaboration Election Because ZGEN Does Not Wish to Perform Research

 

(a) If Serono (but not ZGEN) wishes to perform research relating to a Gene for which a Medical Hypothesis is approved to support the designation of a related Lead or Target, it may do so at its sole cost and expense during the Research Term. Serono shall submit to ZGEN a written status report on a semi-annual basis during the Research Term. A status report shall cover the then-current status, the results achieved, the problems encountered and other pertinent material information relating to the designation of a Lead or Target related to the Gene. Serono shall [ * ] to gather information relating to the Gene in order to support the designation of a related Lead or Target, [ * ] . During the Research Term, ZGEN will provide to Serono full and prompt disclosure of any new ZGEN Enabling Technology described in paragraph 76(a)(i) or to be transferred pursuant to paragraph 76(a)(iii) of Exhibit A , including any invention disclosures submitted to its patent department which disclose such new ZGEN Enabling Technology.

 

(b) If Serono subsequently exercises its Option Rights as to a Lead or Target related to a Gene for which it performed research without ZGEN under Subsection (a) , the parties shall

 

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enter into an Exclusive License Agreement with respect to such Lead or Target, i.e., ZGEN shall have no right to enter into a Co-Development/Co-Promotion and License Agreement with respect to such Lead or Target.

 

(c) Serono may terminate research relating to a Gene for which it performs research without ZGEN under Subsection (a) at any time before a Lead or Target related to the Gene is designated by giving ZGEN written notice, which shall be effective immediately upon receipt by ZGEN. On the effective date of Serono’s termination of research with respect to such Gene, the parties shall have the Wind Down Rights and Obligations with respect to such Gene.

 

(d) If ZGEN believes that Serono has failed [ * ] with respect to the performance of research relating to a Gene as required by Subsection (a) , ZGEN shall deliver a written notice to Serono stating that Serono has failed [ * ] and ZGEN’s reasons for such belief. Unless Serono earlier provides written notice disputing ZGEN’s assertion, effective on the [ * ] following Serono’s receipt of ZGEN’s notice, the parties shall have the Wind Down Rights and Obligations with respect to such Gene. If Serono timely provides notice of a dispute, then notwithstanding Section 15.4 , such dispute shall be resolved in accordance with Sections 15.1 through 15.3 , and, if such dispute is finally resolved in ZGEN’s favor, the parties shall have the Wind Down Rights and Obligations with respect to such Gene. If such dispute is finally resolved in Serono’s favor, Serono shall retain all its rights and obligations hereunder with respect to such Gene.

 

3.2.4 No Collaboration Election Because Serono Does Not Wish to Perform Research

 

If Serono does not wish to perform research relating to a Gene for which a Medical Hypothesis is approved to support the designation of a related Lead or Target, the parties shall have the Wind Down Rights and Obligations with respect to such Gene.

 

3.3 Expiration of the Evaluation Term

 

If, on expiration of the Evaluation Term for a Gene, a Medical Hypothesis for the Gene has not been formed, either:

 

(a) Serono may exercise its Option Rights with respect to any potential Lead or Target related to the Gene (subject to, in the case of ZGEN Core Genes, the Cap) on the financial terms outlined as if such potential Lead or Target (as appropriate) related to the Gene met the stated criteria and had been designated; or

 

(b) the parties shall have the Wind Down Rights and Obligations with respect to such Gene.

 

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ARTICLE FOUR

Collaborative Research Following a Collaboration Election

 

4.1 Guiding Principles

 

The parties intend to conduct any research relating to a Gene for which a Collaboration Election is made in accordance with the following principles ( “Guiding Principles” ): joint governance, collaboration, joint decision-making, shared access and responsibility and shared opportunity.

 

4.2 Efforts; Cooperation

 

(a) Each party shall [ * ] gather information relating to a Gene for which a Collaboration Election is made in order to support the designation of a Lead or Target based on such Gene, including performing its Research Tasks in accordance with the Research Plan and Budget for the Gene.

 

(b) Each party shall cooperate with and provide reasonable support to the other party, as requested by the other party, in connection with the performance of its Research Tasks.

 

(c) Each party shall be responsible for the selection and supervision of its personnel who are assigned any Research Tasks pursuant to this Agreement.

 

4.3 Exchange of Technology

 

During the Research Term, Serono and ZGEN will each provide to the other party full and prompt disclosure of any new Serono Enabling Technology, ZGEN Enabling Technology or Project Technology Controlled by such party, including any invention disclosures submitted to its patent department which disclose such new Serono Enabling Technology, ZGEN Enabling Technology or Project Technology.

 

4.4 Research Plan and Budget

 

The Research Plan and Budget shall describe the Research Tasks and allocate them between the parties in accordance with the Guiding Principles.

 

4.5 Shared Research Costs

 

4.5.1 Cost Sharing Ratio

 

All Research Costs incurred during the Research Term and pursuant to the Research Plan and Budget shall be funded and borne [ * ] percent ( [ * ] %) by Serono and [ * ] percent ( [ * ] %) by ZGEN, regardless of which party is allocated, performs or incurs the cost of one or more of the relevant Research Tasks. Notwithstanding the foregoing, in the event [ * ] , the amount of the Research Costs to be funded and borne by the parties pursuant to the Research Plan and Budget shall be [ * ] of the Research Costs [ * ] .

 

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4.5.2 Cap on Research Costs

 

The Research Plan and Budget for a Gene shall specify an annual maximum amount of Research Costs that may be incurred in connection with research on the Gene, subject to appropriate adjustment of such Research Plan and Budget by the Steering Committee from time to time. Neither party shall be obliged to incur or reimburse costs in excess of its cost sharing portion of such maximum amount of Research Costs.

 

4.5.3 Quarterly Accounting and Reconciliation

 

(a) Each party shall submit to the Research Leaders at least quarterly (or on such other schedule as may be determined by the Research Team) a written and itemized accounting of the expenditures, costs, and other resources actually devoted by such party to Research Tasks in accordance with the Research Plan and Budget since the last such accounting. The parties’ accountings shall be considered to be Information subject to the confidentiality restrictions of Article Eleven . The parties’ accountings will be reviewed and approved in whole or in part (and/or returned in whole or in part to a party for correction or adjustment prior to resubmission) by action of the Research Leaders within thirty (30) days of receipt. The Research Leaders will notify each party on a quarterly basis of the results of such reviews.

 

(b) To the extent that both parties’ accountings for prior expenditures, costs and other resources for the Research Plan and Budget are approved by the Research Leaders, the Research Leaders will direct by a quarterly invoice (with copies to both parties) that the party that has borne less than its share of the aggregate Research Costs shall reconcile the disparity by paying to the other party an amount sufficient to bring the respective amounts borne by each party, as of the end of the period covered by the accountings, back to the ratio set forth in Section 4.5.1 . Any such invoice shall be payable by Serono or ZGEN, as the case may be, to the other party in accordance with Article Eight and within thirty (30) days after receipt of the invoice.

 

(c) The Research Costs shall be accounted for by each party in accordance with the cost accounting principles described in Exhibit C.

 

4.6 Third Party Research Fees

 

No Third Party Research Fees shall be allowable as part of the Research Costs borne by a party hereto except to the extent that the same are:

 

(a) payable by Serono under Section 9.4 (whether or not Subsection (b) of this Section 4.6 applies); or

 

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(b) within the Research Plan and Budget and allowed by the Steering Committee under Section 2.3 or the Research Leaders under Section 2.2.1 . All other Third Party Research Fees, if any, shall be borne solely by the party hereto (or its Affiliate) that is party to the applicable Third Party Agreement.

 

4.7 Serono’s Right to Opt Out of Collaborative Research

 

Serono may opt out of research relating to a Gene for which a Collaboration Election was made at any time before a Lead or Target related to the Gene is designated by giving ZGEN written notice, which shall be effective [ * ] after receipt by ZGEN. On the effective date of Serono’s opt out with respect to such Gene:

 

(a) Serono’s obligation to contribute to future Research Costs shall cease. However, Serono shall continue to be responsible for its pro rata share of Research Costs incurred during the [ * ] period prior to the effective date of its opt out in accordance with the Research Plan and Budget in effect on the date the opt out notice was given.

 

(b) The parties shall have the Wind Down Rights and Obligations.

 

4.8 ZGEN’s Right to Opt Out of Collaborative Research

 

ZGEN may opt out of research relating to a Gene for which a Collaboration Election was made at any time before a Lead or Target related to the Gene is designated by giving Serono written notice, which shall be effective [ * ] after receipt by Serono. On the effective date of ZGEN’s opt out with respect to such Gene:

 

(a) ZGEN’s obligation to contribute to future Research Costs shall cease. However, ZGEN shall continue to be responsible for its pro rata share of Research Costs incurred during the [ * ] period prior to the effective date of its opt out in accordance with the Research Plan and Budget in effect on the date the opt out notice was given.

 

(b) If Serono subsequently exercises its Option Rights as to the Lead or Target related to such Gene, the parties shall enter into an Exclusive License Agreement with respect to such Lead or Target, i.e., ZGEN shall have no right to enter into a Co-Development/Co-Promotion and License Agreement with respect to such Lead or Target.

 

4.9 Expiration of the Research Term

 

If, on expiration of the Research Term for a Gene, a Lead or Target related to the Gene has not been designated, either:

 

(a) Serono may exercise its Option Rights with respect to any potential Lead or Target related to the Gene (subject to, in the case of ZGEN Core Genes, the Cap) on the financial terms outlined as if such potential Lead or Target (as appropriate) related to the Gene met the stated criteria and had been designated; or

 

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(b) the parties shall have the Wind Down Rights and Obligations with respect to such Gene.

 

ARTICLE FIVE

Option Rights

 

5.1 Option Rights

 

Subject to:

 

(a) the terms of this Agreement, including, in the case of ZGEN Core Genes, the Cap; and

 

(b) the rights of Novo under the Novo Agreement and License Agreements entered into pursuant thereto in accordance with Section 5.4 ,

 

Serono shall have exclusive rights (“ Option Rights ”) to acquire rights and licenses to any Lead or Target that has been designated during the Research Term or any potential Lead or Target described in Sections 3.3 or 4.9 . ZGEN will not grant any rights or licenses under the ZGEN IP to any such Lead or Target unless Serono has not exercised its Option Rights with respect to such Lead or Target and such Option Rights have expired. The procedure for the exercise of these Option Rights is set forth in Section 5.2 below.

 

5.2 Procedure

 

(a) Once sufficient information with respect to a Gene has been generated to support the designation of a Lead or Target, the Research Team or, if Serono is performing research on the Gene alone under Section 3.2.3 , Serono will summarize in writing all available information relating to a putative Lead or Target and submit it to the Steering Committee for approval, and the Steering Committee shall consider the designation of the Lead or Target within [ * ] thereafter and approve or give reasons for withholding the designation. A notice relating to a Lead shall summarize in writing the information set forth in Exhibit H and a notice relating to a Target shall summarize in writing the information set forth in Exhibit I .

 

(b) To exercise its Option Rights with respect to a Lead and/or Target, Serono must provide written notice to ZGEN by the [ * ] after the later of the day on which:

 

(i) the Steering Committee designates such Lead or Target; and

 

(ii) ZGEN gives Serono notice of a Definitive Response relating to the Gene.

 

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Notwithstanding the foregoing, if [ * ] Definitive Response extends the period [ * ] , then (A) ZGEN shall, pursuant to [ * ] at Serono’s request and subject to Serono’s agreement to exercise its Option Rights [ * ] determine whether it wishes to obtain a license for the Gene, and (B) the period for Serono’s exercise of its Option Rights shall be extended until the [ * ] after the day on which ZGEN gives Serono notice of a further Definitive Response with respect to such Gene.

 

(c) If Novo decides to exercise its right to license a Gene under the Novo Agreement, then Serono may exercise its Option Rights with respect to a Lead or a Target based on such Gene, but the territory for any resulting Co-Development/Co-Promotion and License Agreement or Exclusive License Agreement shall be restricted to the U.S.A. and the EX-U.S.A. If Novo does not exercise its right to license a Gene under the Novo Agreement, then Serono may exercise its Option Rights with respect to a Lead or a Target based on such Gene, but the territory for any resulting Co-Development/Co-Promotion and License Agreement or Exclusive License Agreement shall be worldwide.

 

(d) Serono may exercise its Option Rights with respect to any Gene by indicating that it wishes to exercise such rights for a Lead based on such Gene or a Target based on such Gene, or both. If Serono exercises such rights for both a Target and a Lead based on the same Gene, then ZGEN and Serono (or its designated Affiliate) will enter into two separate agreements, but the [ * ] under the agreement for the Target shall [ * ] against the [ * ] under the agreement for the Lead. If ZGEN and Serono (or its designated Affiliate) enter into an agreement with respect to a Target and subsequently enter into one or more agreements with respect to a Lead or a Target directed at developing licensed products that bind to or inhibit the activity of the Target that was the subject of the first agreement, then the [ * ] under all such agreements shall be deemed to be satisfied by the [ * ] any one of such agreements.

 

(e) Subject to Section 3.2.3 and Section 4.8 , [ * ] after receipt of Serono’s notice exercising its Option Rights, ZGEN will notify Serono whether ZGEN and Serono (or its designated Affiliate) will enter into a Co-Development/Co-Promotion and License Agreement or an Exclusive License Agreement. Within [ * ] after receipt of Serono’s notice exercising its Option Rights, ZGEN shall provide Serono with a draft Co-Development/Co-Promotion and License Agreement or Exclusive License Agreement in the form set forth in Exhibit J or Exhibit K hereto, as applicable and incorporating the financial terms set forth in Subsection (f) below. ZGEN and Serono (or its designated Affiliate) shall negotiate, to the extent applicable, and execute and deliver such agreement within [ * ] of its receipt by Serono.

 

(f) Depending on whether the Gene is a Non-Core Gene or a ZGEN Core Gene, the financial terms for the draft Co-Development/Co-Promotion and License Agreement or Exclusive License Agreement described in Subsection (e) shall be the financial terms set forth in Exhibits D , F , E or G as indicated below: