IL-1 ANTIBODY TERMINATION AGREEMENT

Exhibit 10.1

Portions of this Exhibit Have Been Omitted and Separately
Filed with the Securities and Exchange Commission with a
Request for Confidential Treatment

Table of Contents

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IL-1 ANTIBODY TERMINATION AGREEMENT

      THIS IL-1 ANTIBODY TERMINATION AGREEMENT (“ Agreement ”), made as of June 8, 2009 (the “ Effective Date ”), is by and between NOVARTIS PHARMA AG, a corporation organized under the laws of Switzerland and having a principal place of business at Lichtstrasse 35, 4056 Basel, Switzerland (“ Novartis ”), NOVARTIS PHARMACEUTICALS CORPORATION of One Health Plaza, East Hanover, New Jersey (“ NPC ”) and REGENERON PHARMACEUTICALS, INC., a corporation organized under the laws of New York and having a principal place of business at 777 Old Saw Mill River Road, Tarrytown, New York 10591 (“ Regeneron ”) (with each of Novartis and Regeneron referred to herein individually as a “ Party ” and collectively as the “ Parties ”, and with NPC being a “ Party ” to this Agreement for purposes of Section 2 only).

      WHEREAS, on March 28, 2003 the Parties and NPC (for limited provisions only) entered in to the Collaboration, License and Option Agreement (“ CLO Agreement ”) whereby (i) Novartis and Regeneron agreed to collaborate with respect to the development, manufacture and commercialization of the Trap-1 Product (as defined in the CLO Agreement); (ii) Novartis granted Regeneron the right to elect to share in the development and commercialization of the IL-1 Antibody Product (as defined in the CLO Agreement); and (iii) Regeneron granted Novartis the right to elect to share in the development and commercialization of the Trap-2 Product (as defined in the CLO Agreement);

      WHEREAS, by letter dated February 27, 2004, Novartis terminated the CLO Agreement with respect to the Trap-1 Product under Section 19.4(a) of the CLO Agreement (“ Termination Letter ”);

      WHEREAS, [***********************************];

      WHEREAS, [**********************************];

      WHEREAS, [***********************************];

      WHEREAS, the Parties wish to enter into this Agreement for the purpose of terminating the CLO Agreement, defining certain rights and obligations of the Parties with respect to the IL-1 Antibody Product and other Covered Products (as defined herein), and resolving the IL-1 Antibody Opt-In Disputes all on the terms and conditions set forth in this Agreement;

      WHEREAS, concurrent with their execution of this Agreement, the Parties will also enter into an agreement relating to certain rights and obligations of the Parties with respect to Regeneron’s development and commercialization of the Trap-2 Product and other products targeting interleukin-1 (the “ Trap-2 Termination Agreement ”); and

      WHEREAS, the Parties intend this Agreement, together with the Trap-2 Termination Agreement, to supersede and replace the CLO Agreement in its entirety.

      NOW, THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:

SECTION 1.

DEFINITIONS

      The following capitalized terms, whether used in the singular or plural, shall have the meanings set forth below:

      “ Affiliate ” shall mean, with respect to any Person, any other Person which controls, is controlled by or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this Agreement, in no event shall Novartis or any of its Affiliates be deemed Affiliates of Regeneron or any of its Affiliates nor shall Regeneron or any of its Affiliates be deemed Affiliates of Novartis or any of its Affiliates.

      “ Approval ” shall mean, with respect to each Covered Product, any approval (excluding Pricing Approvals), registration, license or authorization from any Regulatory Authority required for the manufacture, development, commercialization, sale, storage or transport of such product in any country, and shall include, without limitation, an approval, registration, license or authorization granted in connection with any Registration Filing.

      “ Bioequivalent Product ” shall mean, with respect to any Covered Product, a product which has the same (or substantially similar) amino acid sequence as such Covered Product and is authorized on the basis of a reference to a Covered Product under either (1) Article 10.1 or (2) Article 10.4 and Part II.4 of Annex I of Parliament and Council Directive 2001/83/EC as amended by Directive 2004/27/EC, in each case as amended from time to time, or successor legislation in each case, and equivalent provisions of applicable law in other jurisdictions for biosimilar, follow-on, or generic biologic products.

      “ Calendar Quarter ” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.

      “ Calendar Year ” shall mean a period of twelve (12) consecutive calendar months ending on December 31.

      “ CLO Agreement ” has the meaning set forth in the recitals.

      “ Covered Product ” shall mean

      [****************************************************************************].

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      “ Derivative ” means: (a) any functional antibody which primarily and specifically binds to interleukin-1 beta and has [***********************************] or (b) any functional fragment of an antibody which specifically binds to interleukin-1 beta and has [************************************************.]

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

      “ Executive Officers ” shall mean the Chief Executive Officer of Regeneron and the Chief Executive Officer of Novartis, or their respective designees.

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

      “ First Commercial Sale ” shall mean, with respect to a Covered Product in a country, the first sale of such product by Novartis or one of its Affiliates or a Product Licensee/Assignee to a Third Party (other than a Product Licensee/Assignee) following Approval of such product in accordance with the applicable Laws of such country on arm’s length commercial terms. Sales for clinical trial purposes shall not constitute a First Commercial Sale.

      “ Governmental Authority ” shall mean any court, agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member.

      “ IL-1 Antibody ” shall mean the Novartis antibody known as ACZ885 as at the Effective Date.

      “ IL-1 Antibody Product ” shall mean one or more pharmaceutical products for human and/or animal use which include the IL-1 Antibody (whether as a protein, a nucleic acid encoding a protein, or a cell line expressing a protein) or any Derivative thereof, including fusions comprising any such antibody or Derivative and any composition, formulation or device that incorporates or includes any such antibody or Derivative as an active ingredient, alone or in combination with one or more other active ingredients, for all indications.

      “ Law ” or “ Laws ” shall mean all laws, statutes, rules, regulations, orders, judgments, injunctions and/or ordinances of any Governmental Authority in the applicable country.

      “ Major Market Country ” shall mean [*****************************].  

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      “ Net Sales ” shall mean, with respect to each Covered Product, the gross invoiced sales price of such Covered Product billed by or on behalf of Novartis or its Affiliates or any Product Licensee/Assignee for that product to Third Parties (other than Product Licensees/Assignees) in bona fide, arms-length transactions, less the following deductions (to the extent included in the gross invoiced sales price), determined in accordance with Novartis’ (or its Affiliate’s or Product Licensee’s/Assignee’s, as the case may be) standard accounting methods, which are in accordance with generally accepted accounting principles as applicable in the United States (that is, US GAAP) or International Financial Reporting Standards (IFRS), as applicable, as consistently applied at Novartis, its Affiliates or Product Licensees/Assignees, as the case may be:

(a) normal and customary trade and quantity discounts actually allowed and properly taken directly with respect to sales of such Covered Product;

(b) free goods;

(c) amounts repaid or credited by reason of defects, rejections, recalls, returns, rebates and allowances;

(d) chargebacks and other amounts paid on sale or dispensing of such Covered Product;

(e) Third Party cash rebates and chargebacks related to sales of the finished Covered Product, to the extent allowed;

(f) Medicaid rebates;

(g) retroactive price reductions that are actually allowed or granted;

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

(i) cash discounts for timely payment;

(j) delayed ship order credits;

(k) discounts pursuant to indigent patient programs and patient discount programs, including, without limitation, “Together Rx, ” “Novartis Care Program,” and coupon discounts;

(l) insurance expenses included as a separately billed item in the invoice amount;

(m) [******************************************************]; and

(n) any other specifically identifiable costs or charges included in the gross invoiced sales price of such Covered Product falling within categories substantially equivalent to those listed above.

Sales from Novartis to its Affiliates or Product Licensees/Assignees 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.

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Further:

      (i) In the case of any sale or other disposal of Covered Product between or among Novartis and its Affiliates and Product Licensees/Assignees, 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;

      (ii) In the case of any sale which is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time all revenue recognition criteria under GAAP or IFRS, as the case may be, are met;

      (iii) In the case of any sale or other disposal for value, such as barter or counter-trade, of any 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 product in the country of sale or disposal;

      (iv) In the event the Covered Product is sold in a finished dosage form in combination with one or more other active ingredients (a “Combination Product”), the Net Sales of the product, for the purposes of determining royalty payments, 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 Covered 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 Covered Product and the other product(s) in combination, Net Sales for purposes of determining royalty payments shall be agreed by the Parties based on the relative value contributed by each component, such agreement shall not be unreasonably withheld; and

      (v) In the case of deductions for bad debt, any amounts subsequently paid to Novartis, its Affiliates or Product Licensees/Assignees for sales previously treated as “bad debt” shall be captured as Net Sales in the ensuing quarterly royalty calculation pursuant to Section 5.

      “ Novartis Company Information ” shall mean information or materials provided by Novartis in the Sales & Royalty Reports (and all information contained therein) and any audits thereof pursuant to Section 5.5.

      “ Patent Application ” shall mean any application for a Patent.

      “ Patent Rights ” shall mean unexpired Patents and Patent Applications.

      “ Patents ” shall mean patents and all substitutions, divisions, continuations, continuations-in-part, reissues, reexaminations and extensions thereof and supplemental protection certificates relating thereto, and all counterparts thereof in any country.

      “ Person ” shall mean and include an individual, partnership, joint venture, limited liability company, a corporation, a firm, a trust, an unincorporated organization and a government or other department or agency thereof.

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           “ Pricing Approval ” shall mean such approval, agreement, determination or governmental decision establishing prices for a Covered Product that can be charged to consumers and will be reimbursed by Governmental Authorities in countries where governmental authorities or Regulatory Authorities of such country approve or determine pricing for pharmaceutical products for reimbursement or otherwise.

           “Product Licensee/Assignee” shall mean any Third Party that licenses, or, under Section 9.11, is assigned, rights to any particular Covered Product (or any particular indication for any particular Covered Product) in a particular country by Novartis or any of its Affiliates where the licensed or assigned rights include the right to book sales of such Covered Product in such country. For the avoidance or doubt, “Product Licensee/Assignee” shall not include any Third Party engaged by Novartis or its applicable Affiliate to provide particular services related to the development, manufacture or commercialization of a Covered Product, including, without limitation, research, development, contract manufacturing, supply, distribution, commercialization, or co-commercialization services, unless such Third Party also books sales of the applicable Covered Product in the applicable country.

           “ Regeneron Patents ” shall mean those Patent Rights which are owned by or licensed (with the right of sublicense) to Regeneron or any of its Affiliates, as at the Effective Date or at any time during the Royalty Term, which include at least one claim which would be infringed by the manufacture, use, sale, offer for sale or import of the IL-1 Antibody or the IL-1 Antibody Product as it exists and is manufactured, used, sold, offered for sale, or imported from time to time. Patent Rights covering general recombinant protein expression technology, cell culture and fermentation, protein purification and formulation technologies shall be excluded from this definition.

           “ 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 and/or sale of any Covered Product in any country, including, without limitation, FDA in the United States and EMEA in Europe.

           “ Royalty Term ” shall have the meaning set forth in Section 4.1(b).

           “ Sales & Royalty Report ” means a written report or reports showing each of: (a) the Net Sales of each Covered Product during the reporting period by Novartis, its Affiliates, and Product Licensees/Assignees, which information shall be provided on a country-by-country basis in United States Dollars; and (b) the royalties payable, in United States Dollars, which shall have accrued hereunder with respect to such Net Sales.

           [*************************************************************].

           “ Seventh Anniversary Date ” shall mean the seventh anniversary of the Effective Date.

           “Termination Letter ” has the meaning set forth in the recitals.

           “ Third Party ” shall mean any Person other than Novartis or Regeneron or any Affiliate of either Party.

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           “ Trap-1 ” shall have the meaning set forth in the CLO Agreement.

           “ Trap-2 ” shall have the meaning set forth in the CLO Agreement.

           “ Trap-2 Termination Agreement ” has the meaning set forth in the recitals.

           “ US GAAP ” shall mean generally accepted accounting principles in the United States.

SECTION 2.

WAIVER, TERMINATION AND RELEASE

      2.1 Waiver . Regeneron hereby waives any and all rights it may have with respect to the IL-1 Antibody, and any IL-1 Antibody Product, pursuant to the CLO Agreement or any other agreement (other than this Agreement) between any of the Parties existing as of the Effective Date relating to the IL-1 Antibody or any IL-1 Antibody Product.

      2.2 Purpose and Effect of this Agreement; Termination of the CLO Agreement .

           (a) With effect from the Effective Date, this Agreement, together with the Trap-2 Termination Agreement, is intended to supersede and replace the CLO Agreement and to represent the whole of the Parties’ agreement with respect