TERMINATION AND LICENSE AGREEMENT

Exhibit 10.201

 

Portions of this exhibit marked [*] are omitted and

are requested to be treated confidentially.

 

TERMINATION AND LICENSE AGREEMENT

 

THIS TERMINATION AND LICENSE AGREEMENT (“Agreement”), effective as of December 18, 2003 (“Effective Date”), is made by and among Eli Lilly and Company, a corporation organized under the laws of the State of Indiana, having its principal place of business at Lilly Corporate Center, Indianapolis, Indiana, 46285 (hereinafter “Lilly”), Pharmaceutical Product Development, Inc., a corporation organized under the laws of the State of North Carolina (hereinafter “PPD”), GenuPro, Inc., a wholly-owned subsidiary of PPD, and a corporation organized under the laws of North Carolina (hereinafter “GenuPro”) and APBI Holdings, LLC, a wholly-owned subsidiary of PPD, and a limited liability company organized under the laws of North Carolina (hereinafter “APBI Holdings”). (Each party to this Agreement is hereinafter referred to as a “Party”, or collectively, the “Parties.” All references to a Party shall be deemed to include that Party’s Affiliates).

 

Recitals

 

A. Lilly, PPD and GenuPro are parties to a Development and License Agreement effective as of May 22, 1998 (as amended to date, the “Development Agreement”).

 

B. Pursuant to the Development Agreement, Lilly has granted GenuPro certain intellectual property licenses related to, among other things, a pharmaceutical composition known as Dapoxetine.

 

C. As permitted by the Development Agreement, GenuPro has sublicensed to Alza, Corporation (“Alza”) certain rights to develop and market Dapoxetine in exchange for which GenuPro is entitled to receive certain milestone, royalty and other payments from Alza. Pursuant to the Development Agreement, Lilly is entitled to receive from GenuPro a portion of the payments received by GenuPro from Alza.

 

D. The parties now desire to, among other things, (i) terminate the Development Agreement, (ii) transfer to APBI Holdings ownership of certain Lilly patents licensed to GenuPro pursuant to the Development Agreement and (iii) provide for an up-front cash payment to Lilly by APBI Holdings and a royalty based on Net Sales of Dapoxetine (as defined herein below), all in accordance with the terms and conditions of this Agreement.

 

In consideration of the Recitals and the mutual covenants and promises contained herein, the Parties, intending to be legally bound, hereby agree as follows:

 

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Article 1

 

Definitions

 

As used herein, the following terms shall have the meaning indicated:

 

1.1 “Affiliate” means, with respect to a Party, any Person directly or indirectly controlling, controlled by, or under common control with, such Party. For purposes of this definition, the term “controlled” (including the terms “controlled by” and “under common control with”) means the direct or indirect ability or power to direct or cause the direction of management policies of a person or otherwise direct the affairs of such person, whether through ownership of equity, voting securities, beneficial interest, by contract or otherwise.

 

1.2 “Applicable Laws” means all applicable laws, ordinances, rules and regulations of any kind whatsoever of any governmental (including international, foreign, federal, state and local) or regulatory authority, including, without limitation, all laws, ordinances, rules and regulations promulgated by the U.S. Food and Drug Administration (“FDA”).

 

1.3 “Calendar Quarter” means the three (3) month period ending on March 31, June 30, September 30 or December 31.

 

1.4 “Calendar Year” means the twelve (12) month period ending on December 31.

 

1.5 “Compounds” means those compounds other than Dapoxetine covered by a Valid Claim within the scope of the Licensed Patents.

 

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1.6 “Confidential Information” means information received (whether disclosed in writing, electronically, orally or by observation) by one Party (the “Receiving Party”) from the other Party (the “Disclosing Party”) that the Disclosing Party reasonably considers proprietary and confidential unless in each case such information, as shown by competent evidence:

 

(a) was known to the Receiving Party or to the public prior to the Disclosing Party’s disclosure, as demonstrated by contemporaneous written records;

 

(b) became known to the public, after the Disclosing Party’s disclosure hereunder, other than through a breach of the confidentiality provisions of this Agreement by the Receiving Party or any Person to whom such Receiving Party disclosed such information;

 

(c) was subsequently disclosed to the Receiving Party by a Person having a legal right to disclose, without any restrictions, such information or data; or

 

(d) was developed by the Receiving Party independent of the Disclosing Party’s Confidential Information.

 

1.7 “Damages” means any and all costs, losses, claims, demands for payment, government enforcement actions, liabilities, fines, penalties, expenses, court costs and

 

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reasonable fees and disbursements of counsel, consultants and expert witnesses incurred by a Party hereto (including any court-imposed interest in connection therewith).

 

1.8 “Dapoxetine” [*]

 

1.9 “ Data Exclusivity Period” means the period during which the FDA (or, in countries other than the United States, an equivalent regulatory agency) prohibits reference, without the consent of the owner, to the clinical and other data that is contained in any application for marketing or regulatory approval.

 

1.10 “Effective Date” shall have the meaning set forth in the first paragraph hereof.

 

1.11 “GAAP” means U.S. generally accepted accounting principles, consistently applied.

 

1.12 “GenuPro Field ” shall mean all therapeutic indications for use in humans (i.e. specifically excluding use in animals) within the urogenital area, including primary urinary incontinence, urge, stress and mixed incontinence, urinary urgency, interstitial cystitis, neurogenic bladder, bladder sphincter dyssynergia and irritative symptoms of benign prostate hypertrophy, hypoactive sexual desire, hyperactive sexual desire, impotence, retarded ejaculation, premature ejaculation, delayed orgasm and anorgasmia.

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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1.13 “GenuPro Improvements” means any inventions, patentable or not, information and/or data relating to Compound and/or Dapoxetine, including clinical trial information, processes, formulations, modes of delivery and/or other data that are owned or controlled by GenuPro (i) in the case of Dapoxetine, during the term of this Agreement and (ii) in the case of Compounds, as of the Effective Date.

 

1.14 “GenuPro Know-How” means any unpatented or unpatentable inventions, information, data, drawings, plans, specifications and designs relating to Dapoxetine or Compounds that is owned or controlled by GenuPro (i) in the case of Dapoxetine, during the term of this Agreement and (ii) in the case of Compounds, as of the Effective Date including, in particular, any preclinical, clinical, toxicology, and/or ADME information or data. GenuPro Know-How shall not include GenuPro Manufacturing Know-How or computer software.

 

1.15 “GenuPro Manufacturing Know-How” shall mean any unpatented or unpatentable information and/or data relating to Dapoxetine and/or Compounds necessary for one skilled in the art of large scale synthetic molecule synthesis to synthesize and manufacture Dapoxetine and/or Compounds, including processes therefore, that is owned or controlled by GenuPro (i) in the case of Dapoxetine, during the term of this Agreement and (ii) in the case of Compounds, as of the Effective Date.

 

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1.16 “Licensed Patents” means those patents and patent applications listed in Exhibit A attached hereto and any resulting issued patents arising out of or that may claim priority to such patents and patent applications and that arise from inventions disclosed therein and all national stage applications, divisionals, continuations and continuations in part that may arise out of or may claim priority to these patents and applications and any reissues, reexaminations, extensions and supplemental protection certificates arising from such patents.

 

1.17 “Lilly Improvements” means any inventions, patentable or not, information and/or data relating to Dapoxetine including, without limitation, processes, formulations, modes of delivery and/or other data, that are owned or controlled by Lilly during the term of this Agreement.

 

1.18 “Lilly Manufacturing Know-How” shall mean any unpatented or unpatentable information and/or data relating to Dapoxetine necessary for one skilled in the art of large scale synthetic molecule synthesis to synthesize and manufacture Dapoxetine, including processes therefore, that is owned or controlled by Lilly, during the term of this Agreement.

 

1.19 “Lilly Know-How” means any unpatented or unpatentable inventions, information, data, drawings, plans, specifications and designs relating to Dapoxetine owned or controlled by Lilly during the term of this Agreement including, in particular,

 

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any preclinical, clinical, toxicology and/or ADME information or data. Lilly Know-How shall not include Lilly Manufacturing Know-How or computer software.

 

1.20 “Lilly Field” shall mean all uses except for the GenuPro Field.

 

1.21 “Net Sales” means, with respect to Product, the total amount billed or invoiced by any Permitted Seller to unrelated Third Persons for sales of Product in the Territory less the following deductions calculated in accordance with GAAP, consistently applied:

 

(i) trade, cash and quantity discounts actually taken on such;

 

(ii) taxes on sales (such as sales or use taxes) to the extent added to the sale price and set forth separately as such in the total amount invoiced;

 

(iii) freight, insurance and other transportation charges to the extent added to the sale price and set forth separately as such in the total amount invoiced; and

 

(iv) reserves for amounts to be repaid or credited by reason of rejections, defects, recalls or returns or because of retroactive price reductions, chargebacks, rebates or commissions, made in accordance with generally accepted accounting principles and Permitted Seller’s accounting policies.

 

Sales between GenuPro and its Affiliates and licensees and Permitted Sellers and their Affiliates and licensees shall not be treated as Net Sales hereunder.

 

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In the event the Product is sold by the Permitted Seller as part of 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) of the combination product by the fraction A/(A+B), where A is Permitted Seller’s published sales price of the Product when sold separately in finished form and B is Permitted Seller’s published sales price of the other product(s) sold separately in finished form. In the event that such published sales price cannot be determined for both the Product and the other product(s) in combination, Net Sales for purposes of determining royalty payments shall be mutually agreed by the parties based on the relative value contributed by each component, and such agreement shall not be unreasonably withheld.

 

Such Net Sales shall be determined from the books and records of the Permitted Seller, maintained in accordance with GAAP, consistently applied. For purposes of this definition Net Sales shall be deemed to have occurred upon invoicing of such Product or if not invoiced, then when delivered, shipped, or paid for, whichever comes first. Further, in determining such amounts, the Permitted Seller will use its then current standard procedures and methodology. The translation of foreign currency sales into U.S. Dollars will be based on the exchange rates published in the Wall Street Journal on the last business day of the applicable Calendar Quarter. For purposes of calculating Net Sales, in the case of a sale or other disposal of Product for value other than in an arm’s-length transaction exclusively for money, such as barter or counter-trade, the amount of such sale shall be calculated using the fair market value of such Product (if higher than the stated sales price) in the country of disposition.

 

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1.22 “Permitted Seller” means APBI Holdings, GenuPro and any assignee, licensee or sublicensee having the right to sell Product, including without limitation, Alza and any permitted assignee, licensee or sublicensee of Alza, but excluding Lilly.

 

1.23 “Person” means a natural person, a corporation, a partnership, a trust, a joint venture, a limited liability company, any governmental authority, or any other entity or organization.

 

1.24 “Product” means any human pharmaceutical composition or preparation, in any dosage strength or size, for any mode of administration, containing Dapoxetine.

 

1.25 “Royalty Term” means, with respect to each country in which the Product is sold, on a Product by Product basis, that time period beginning on the first sale of Product in such country and expiring, on a country-by-country basis, on the later of the following:

 

(a) the [*] anniversary of the date of first commercial sale of Product in such country;

 

(b) the expiration in such country of the last-to-expire Licensed Patent with a Valid Claim; or

 

(c) the expiration of any applicable Data Exclusivity Period in such country.

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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1.26 “Termination Date” means the date on which Lilly receives the payment provided for in Section 3.1(a).

 

1.27 “Territory” means all countries of the world.

 

1.28 “Third Person” means Persons other than the Parties.

 

1.29 “Valid Claim” means a claim of an issued and unexpired Licensed Patent in a country which: (i) but for this Agreement, would be infringed by the manufacture, importation, use, offer for sale or sale or other disposition of Product by or on behalf of GenuPro, APBI Holdings or another Permitted Seller, (ii) has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and (iii) has not been abandoned, disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

 

Article 2

 

Termination and Assignment

 

2.1 Termination of Development Agreement . Lilly, PPD and GenuPro hereby terminate the Development Agreement effective as of the Termination Date. As of the Termination Date, the Development Agreement shall have no further force or

 

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effect and no party thereto shall have any further right or obligation thereunder except that:

 

a. Termination of the Development Agreement shall not release or discharge any party from the performance of any obligation, the payment of any debt or responsibility for any liability which may have accrued prior to the Termination Date and remains to be performed, paid or discharged, as of the Termination Date. However, following the Termination Date, no further obligations under the Development Agreement shall by incurred by any party, except as specifically provided in subparagraphs b and c below.

 

b. The obligations of confidentiality set forth in Section 10.1 and 10.2 of the Development Agreement shall continue in effect for the period stated therein.

 

c. The obligations to indemnify set forth in Sections 14.03(a) of the Development Agreement shall continue in effect indefinitely, but only with respect to any cause of action arising prior to the Termination Date.

 

Without limiting the generality of the foregoing, following the Termination Date, Lilly shall have no further obligation to provide any assistance of any type to PPD or GenuPro in connection with the research, development, manufacturing or sale of Dapoxetine, Product or any other product.

 

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2.2 Assignment of Licensed Patents . Concurrently with the execution of this Agreement, Lilly shall execute a Patent Assignment Agreement in the form attached hereto as Exhibit B transferring to APBI Holdings ownership of the Licensed Patents effective as of the Termination Date.

 

Article 3

 

Consideration

 

3.1 Payments from APBI Holdings to Lilly . Subject to and upon the terms and conditions of this Agreement, APBI Holdings shall make the following payments to Lilly:

 

(a) Upfront Payment to Lilly . Concurrently with the execution of this Agreement, APBI Holdings shall transfer to Lilly by Federal Reserve wire transfer to an account designated by Lilly the sum of sixty-five million U.S. dollars ($65,000,000) in immediately available funds.

 

(b) Royalty Payments from APBI Holdings to Lilly . APBI Holdings shall pay to Lilly a royalty of five percent (5%) on Net Sales of Product in excess of $800 million in annual Net Sales for any Calendar Year during the Royalty Term. Net Sales of all presentations and forms of Product shall be aggregated for purposes of determining annual

 

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Net Sales. APBI Holdings shall pay royalties due hereunder concurrently with the remittance of the royalty report required by Section 3.2

 

(c) Third Party Payments. APBI Holdings shall pay when due any and all milestone, royalty and other similar obligations Lilly might be obligated to pay to a Third Party pursuant to an agreement between Lilly and such Third Party covering rights relating to any Product in accordance with the terms and conditions set forth in such agreement between Lilly and such Third Party. Lilly hereby represents and warrants to APBI Holdings that to the best of its knowledge, no agreements imposing such Third Party obligations exist as of the Effective Date.

 

(d) Form of Payment . All amounts payable to Lilly under Section 3.1 shall be paid in U.S. dollars by Federal Reserve electronic wire transfer in immediately available funds to an account designated in writing by Lilly (unless otherwise instructed by Lilly in writing).

 

3.2 Record Retention, Royalty Reports, and Royalty Payment Schedule . APBI Holdings shall keep (and shall require Permitted Sellers to keep) complete and accurate books and records that are necessary to ascertain and verify royalty payments owed to Lilly. Such records shall be kept in accordance with GAAP and APBI Holdings’ or its Permitted Sellers usual internal practices and procedures, consistently applied. GenuPro shall furnish Lilly with a quarterly report on Net Sales within sixty (60) days of the end of the first three Calendar Quarters in each Calendar Year and within seventy-five (75) days of the end of the last Calendar Quarter of each Calendar Year. Such report shall include a written report detailing: (i) the Net Sales for the previous Calendar

 

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Quarter, broken down by country and between APBI Holdings, GenuPro and any Permitted Sellers, (ii) the royalty payment that is due and payable under Section 3.01(b) hereof if any, and (iii) the basis for calculating such Royalty Payment. APBI Holdings will mail such report to the attention of: Eli Lilly and Company, Lilly Royalty Administration in Finance, Lilly Corporate Center, Indianapolis, Indiana, 46285. The amount of royalty payment due to Lilly shall be paid by APBI Holdings concurrently with the remittance of each royalty report.

 

3.3 Audits. APBI Holdings will keep full and accurate books and records relating to the performance required of it under this Agreement. Lilly will have the right, during regular business hours and upon reasonable advance notice, to have such books and records of APBI Holdings audited no more than one (1) time per Calendar Year so as to verify the accuracy of the information previously reported to Lilly. Lilly will, for purposes of such audit, utilize the services of an independent certified public accounting firm reasonably acceptable to APBI Holdings (which need not be APBI Holdings then current independent auditing firm.) Such audit may cover the two (2) calendar years preceding the date of the request for such audit. Such accountants will keep confidential any information obtained during such audit and will report to Lilly only their conclusions. The cost of such audit will be borne by Lilly; however, if the result of such audit shows that the amount owed to Lilly is [*] percent [*] or more greater than the amount paid, the cost of the audit will be borne by APBI Holdings. Within thirty (30) days after Lilly and APBI Holdings have received a copy of an audit report, APBI Holdings or Lilly, as

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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appropriate, will compensate the other Party for payment errors or omissions revealed by the audit. APBI Holdings will include in all future licenses of Licensed Patents, and any other agreements enabling a Third Person to be a Permitted Seller, an audit provision substantially similar to the foregoing requiring such Permitted Seller to keep full and accurate books and records relating to the Product and granting APBI Holdings the right to have an independent public accounting firm audit the accuracy of the information reported by the licensee in connection therewith. At Lilly’s request, APBI Holdings shall invoke any rights it may have to audit a Permitted Seller and make the results of such audit available to Lilly promptly.

 

3.4 Taxes And Currency. Any and all taxes levied on any payments under this Agreement shall be the liability of and paid by Lilly. If laws or regulations require the withholding of such taxes, the taxes will be deducted by APBI Holdings from the payment and remitted by APBI Holdings to the proper tax authority, provided that APBI Holdings will furnish Lilly with a copy of the official tax receipt on such withholdings as soon as practicable after such withholding, and give Lilly such assistance as may be reasonably necessary to enable or assist Lilly to claim exemption or take credit therefrom, provided that Lilly reimburses APBI Holdings for any out of pocket expenses incurred by it in providing such assistance. Proof of payment shall be provided to Lilly within sixty (60) days after payment. APBI Holdings will reasonably cooperate with Lilly in pursuing tax refunds, if such refund is appropriate in Lilly’s determination, provided that Lilly reimburses APBI Holdings for any out of pocket expenses incurred by it in providing such assistance.

 

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3.5 Late Payment. Any amounts not paid APBI Holdings when due under this Agreement will be subject to interest from and including the date payment is due through and including the date upon which Lilly has collected the funds in accordance herewith at a rate equal to the lesser of (i) the sum of [*] percent [*] plus the prime rate of interest quoted in the Money Rates (or equivalent) section of the Wall Street Journal , calculated daily on the basis of a three hundred sixty (360) day year, or (ii) the maximum interest rate allowed by law.

 

3.6 Guarantee of Payment . PPD hereby unconditionally guarantees the obligations of APBI Holdings to make payment to Lilly as provided herein. Such guarantee shall survive any transfer of ownership of APBI Holdings or any of its assets or the assignment by APBI Holdings of any of its obligations under this Agreement.

 

Article 4

 

Licenses

 

4.1 License Grants to Lilly. APBI Holdings and GenuPro, as applicable, hereby grants to Lilly:

 

(a) A perpetual, non-cancelable, fully paid-up, royalty free, exclusive (even as to APBI Holdings) license, with right to sublicense, under the GenuPro Know-How, GenuPro Improvements, GenuPro Manufacturing Know-How, and Licensed

 

[*]	Confidential treatment requested; certain information omitted and filed separately with the SEC.

 

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Patents to make, have made, use, sell, offer for sale, and import Dapoxetine and Product in the Territory solely for use in the Lilly Field.

 

(b) A perpetual, non-cancelable, fully paid-up, royalty free, non-exclusive license to use GenuPro Know-How, GenuPro Improvements, GenuPro Manufacturing Know-How and Licensed Patents for internal research purposes (which shall include the right to use with Lilly research partners) in the GenuPro Field.

 

(c) A perpetual, non-cancelable, fully paid-up, royalty free, exclusive (even as to APBI Holdings) license, with right to sublicense, under the GenuPro Know-How, GenuPro Improvements, GenuPro Manufacturing Know-How and Licensed Patents to make, have made, use, sell, offer for sale, and import Compounds in the Territory for use in the GenuPro Field and the Lilly Field.

 

4.2 License Grants to GenuPro . Lilly hereby grants to GenuPro and APBI Holdings an exclusive (even as to Lilly) license, with right to sublicense, under the Lilly Know-How, Lilly Manufacturing Know-How and Lilly Improvements to make, have made, use, sell, offer for sale, and import Dapoxetine and Products in the Territory solely for use in the GenuPro Field.

 

4.3 Notification of Sublicenses . In the event either APBI Holdings, GenuPro or Lilly sublicenses any of the license rights granted hereunder other than to an Affiliate, it shall promptly advise the others in writing of the identity of the sublicensee.

 

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Article 5

 

Intellectual Property Matters

 

5.1 Intellectual Property Maintenance. Licensed Patents shall be filed, prosecuted and maintained worldwide by APBI Holdings or a Third Person patent counsel designated by APBI Holdings . Lilly will waive any conflict of interest that may arise as a result of such counsel representing the interests of both licensee and licensor. APBI Holdings shall have the ultimate responsibility for and control over such matters and shall bear all expenses incurred in filing, prosecuting and maintaining Licensed Patents. APBI Holdings or its designee shall keep Lilly reasonably informed of the filing, prosecution and maintenance of Licensed Patents, and shall furnish to Lilly copies of substantive documents (e.g., office actions, responses, etc.) relevant to any such efforts in advance with ten (10) working days for Lilly to review and provide comments on such documents, and shall use its reasonable efforts to incorporate the comments and suggestions of Lilly, if any. If APBI Holdings decides to allow any Licensed Patent to lapse without entry of the national phase in one or more countries designated in such application, or if APBI Holdings wishes to abandon or allow to lapse any Licensed Patent, APBI Holdings shall notify Lilly in writing not less than thirty (30) days prior to taking such action, and if Lilly so requests, APBI Holdings shall transfer and assign to Lilly its rights under the patent or patent application in the country or countries so affected and Lilly may assume control of the same at Lilly’s sole expense. In the event that APBI Holdings receives a restriction requirement from a patent office for a Licensed Patent that restricts out patent claims related only to Compounds, APBI Holdings shall

 

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inform Lilly in a timely manner to enable Lilly to pursue such patent claims independently of APBI Holdings, in which Lilly shall be solely responsible fo