EXHIBIT 2
[*] indicates that a confidential portion of the text of this agreement has been
omitted
AMENDED AND RESTATED
COLLABORATION AGREEMENT
THIS AMENDED AND RESTATED COLLABORATION AGREEMENT (this "Agreement") is made as
of this 31st day of March 2003 (the "Restatement Date") and is effective as of
April 22, 1996 (the "Effective Date") by and between XOMA (US) LLC, a Delaware
limited liability company having its principal place of business at 0000 Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 ("XOMA"), and Genentech, Inc., a Delaware
corporation having its principal place of business at 0 XXX Xxx, Xxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 ("Genentech"), each on behalf of itself and its
Affiliates. XOMA and Genentech are sometimes referred to herein individually as
a "Party" and collectively as the "Parties," and references to "XOMA" and
"Genentech" shall include their respective Affiliates.
RECITALS
1. Genentech licensed a monoclonal antibody (then known as MHM-24) to the
CD11a cell integrin on the surface of leucocytes under the terms of an
Evaluation and License Agreement dated July 1, 1991 among Genentech, The
Chancellor Masters and Scholars of the University of Oxford, Xxxxxx X. XxXxxxxxx
and Xxxxx X.X. Xxxxxxxx (the "Oxford Agreement"). Genentech humanized such
antibody and began its preclinical development including the development of a
pilot process for producing the antibody.
2. Genentech and XOMA's predecessor in interest entered into that certain
Collaboration Agreement effective as of April 22, 1996 as amended by the
Amendment thereto dated as of April 14, 1999 (the "Original Agreement").
3. In 1998, XOMA earned and Genentech paid the milestone payment set forth
in Section 7.3 of the Original Agreement.
4. Genentech and XOMA wish to amend and restate the Original Agreement on
the terms set forth below and to continue development of and market Anti-CD11a
in a collaborative fashion so that the resources and expertise of each are put
to good use.
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings as used in this
Agreement:
1.1 "Administration Costs" shall have the meaning defined in Exhibit A
which is attached hereto and incorporated herein.
1.2 "Affiliate" means an entity that, directly or indirectly, through one
or more intermediaries, is controlled by XOMA or Genentech. As used herein, the
term "control" will
mean the direct or indirect ownership of fifty percent (50%) or more of the
stock having the right to vote for directors thereof or the ability to otherwise
control the management of the corporation or other business entity.
1.3 "Allocable Overhead" shall have the meaning defined in Exhibit A.
1.4 "Anti-CD11a" means that certain monoclonal antibody, and other
constructs with minor modifications thereto resulting from changes to the
manufacturing process occurring after the transfer thereof from XOMA to
Genentech which is now known as Efalizumab, and which recognizes the CD11a cell
adhesion molecule on leucocytes, the full length sequences of the light and
heavy chains of which are set forth in Exhibit B attached hereto and
incorporated herein.
1.5 "Competing Product" means any of the following molecules whose primary
mechanism of action is initiated by interaction with the CD11a molecule on
leucocytes, and which is developed or acquired by either Party: (i) any
monoclonal antibody (other than Anti-CD11a), (ii) any antibody fragment (e.g.
Fab, Fab' F(ab')2), and/or (iii) any immunoadhesin.
1.6 "Commercially Reasonable and Diligent Efforts" means those efforts
consistent with the exercise of prudent scientific and business judgment, as
applied to other pharmaceutical products of similar potential and market size by
the Party in question.
1.7 "Control" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
or other arrangement with any Third Party.
1.8 "Co-Promote" means to promote jointly Licensed Products under a single
trademark in the Co-Promotion Territory.
1.9 "Co-Promotion Territory" means the United States.
1.10 "Cost of Goods Sold" in the Co-Promotion Territory shall have the
meaning defined in Exhibit A.
1.11 "Development Costs" shall have the meaning defined in Exhibit A.
1.12 "Development Plan" means the comprehensive plan approved by the Joint
Steering Committee for the development of Anti-CD11a, designed to generate the
preclinical, process development/manufacturing scale-up, clinical and regulatory
information required for filing Drug Approval Applications in the Co-Promotion
Territory. The Development Plan will be modified by the Joint Core Team to
address Future Indications as they arise and at least annually for each Initial
Indication and Future Indication being developed. Development shall refer to all
activities related to preclinical testing, toxicology, formulation, process
development, manufacturing scale-up, quality assurance/quality control, clinical
studies and regulatory affairs for Licensed Products in connection with
obtaining Regulatory Approvals of such Licensed Products.
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1.13 "Distribution Costs" shall have the meaning defined in Exhibit A.
1.14 "Drug Approval Application" means an application for Regulatory
Approval required for commercial sale or use of a Licensed Product as a drug in
the Field in a regulatory jurisdiction.
1.15 "Ex-U.S. Development Costs" shall have the meaning defined in Exhibit
A.
1.16 "Ex-U.S. Genentech Partner" means an entity which has contractual
rights pursuant to an agreement with Genentech, to develop and commercialize
Licensed Product in the Field in the Genentech Territory or any portion thereof.
1.17 "Field" means the use of Licensed Product for the treatment or
prevention of any human condition, disorder or disease.
1.18 "Finance Committee" means that committee established pursuant to
Section 3.3.
1.19 "Future Indications" means use of Licensed Product for the treatment
of any illness, sickness, interruption, cessation or disorder of a particular
bodily function, system or organ except psoriasis and the treatment or
prevention of organ transplant rejection. A separate Future Indication will not
exist solely on the basis of the severity of the ailment, the frequency or route
of any treatment or the demographics of the patient class. For purposes of
clarity, rheumatoid arthritis and psoriatic arthritis are each separate Future
Indications.
1.20 "Genentech Know-How" means Information which (i) Genentech discloses
to XOMA under this Agreement and (ii) is within the Control of Genentech.
1.21 "Genentech Patents" means Patents and patent applications issued by or
filed with the United States Patent Office owned by or Controlled by Genentech
in whole or in part that are necessary to make, use, sell, offer for sale or
import a Licensed Product in the Field, including Patents owned jointly by the
Parties as provided hereunder. Notwithstanding the foregoing, Genentech Patents
shall not include any of the following: (i) the Itakura/Xxxxx Patents (which
term is defined on Exhibit C, which is attached hereto and incorporated herein),
which patents Genentech represents are not required in connection with any
manufacture or use of Anti-CD11a or Licensed Product made in mammalian cells
under this Agreement; (ii) the Cabilly Coexpression Patents (which term is
defined on Exhibit C, which is attached hereto and incorporated herein; and
(iii) the Cabilly Chimera Patents (which term is defined on Exhibit C, which is
attached hereto and incorporated herein). [*]
1.22 "Genentech Territory" means worldwide (except for the United States).
1.23 "Global Development Costs" shall have the meaning defined in Exhibit
A.
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1.24 "Global Development Project Team" or "GDPT" means that project team
established pursuant to Section 3.4.
1.25 "Gross Sales" shall have the meaning defined in Exhibit A.
1.26 "Information" means techniques and data relating to the Licensed
Products, including, but not limited to, biological materials, inventions,
practices, methods, knowledge, know-how, skill, experience, test data including
pharmacological, toxicological and clinical test data, analytical and quality
control data, marketing, pricing, distribution, cost, sales, manufacturing,
patent data or descriptions.
1.27 "Indication" means any Initial Indication (which includes the Organ
Transplant Indication) or any Future Indication as the context provides
1.28 "Initial Indications" means the use of Licensed Product for the
treatment of psoriasis and the Organ Transplant Indication. For purposes of this
Agreement, psoriasis is a single indication regardless of whether the psoriasis
is mild, moderate or severe. Separate Initial Indications will not result based
on the severity of the psoriasis or organ transplant rejection, the onset period
of organ transplant rejection, or the demographics of the patient class.
1.29 "Joint Core Team" or "JCT" means that body established pursuant to
Section 3.2.
1.30 "Joint Development Indications" means those Indications which the
Parties are jointly developing under this Agreement.
1.31 "Joint Steering Committee" or "JSC" means that committee established
pursuant to Section 3.1.
1.32 "Licensed Product" or "Licensed Products" means a formulation for use
in the Field containing Anti-CD11a or any molecule derived from Anti-CD11a that
is substituted as the subject of this collaboration, except as otherwise set
forth in Section 2.2.
1.33 "Marketing Costs" shall have the meaning defined in Exhibit A.
1.34 "Net Sales" shall have the meaning defined in Exhibit A.
1.35 "Non-Anti-CD18 Anti-LFA1 Protein Product" shall mean an antibody or
other protein that binds to LFA1, provided it is not an antibody that binds to
CD18.
1.36 "Note Agreements" mean the Amended and Restated Convertible Secured
Note Agreement - Development Loan entered into by the Parties on March 31, 2003
and the Secured Note Agreement - Commercial Launch Loan entered into by the
Parties on March 31, 2003.
1.37 "Opt-Out" shall have the meaning set forth in Section 5.1.
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1.38 "Operating Profit or Loss" shall have the meaning defined in Exhibit
A.
1.39 "Organ Transplant Indication" means the treatment or prevention of the
rejection of any organ transplant with separate Organ Transplant Indications
existing for each particular organ. By way of example, the treatment of renal
transplant rejection, cardiac transplant rejection and the rejection of any
other transplanted organ are each separate Organ Transplant Indications.
However, separate Organ Transplant Indications will not result based on the
severity of the rejection, the onset period of such rejection or the
demographics of the patient class.
1.40 "Patent" means (i) valid and enforceable letters patent, including any
extension, registration, confirmation, reissue, continuation, division,
continuation-in-part, re-examination or renewal thereof, and (ii) pending
applications for letters patent.
1.41 "Patent Costs" shall have the meaning defined in Exhibit A.
1.42 "Permitted Indications" means an Initial Indication or Future
Indication which Genentech has Opted-Out of (as defined in Section 5.1), and has
not prohibited development of by exercising its rights under Section 5.2,
regardless of whether Genentech has additional opt-in rights hereunder.
1.43 "Phase II Clinical Trial" means such studies in humans of the safety,
dose ranging and efficacy of a Licensed Product which have generated sufficient
data to decide whether to commence Phase III Clinical Trials. 1.44 "Phase III
Clinical Trial" means a controlled study in humans of the efficacy and safety of
a Licensed Product which is prospectively designed to demonstrate statistically
whether the Licensed Product is effective for use in a particular indication in
a manner sufficient to obtain regulatory approval to market that Licensed
Product and which the Joint Core Team designates as a Phase III Clinical Trial.
1.45 "Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity necessary for the manufacture and sale of Licensed Products
in a regulatory jurisdiction.
1.46 "Right of Prohibition" shall have the meaning set forth in Section
5.2.
1.47 "Royalty-Bearing Sales" shall have the meaning set forth in Exhibit A
for Net Sales.
1.48 "Run" means a single fermentation lot taken through Licensed Product
quality release.
1.49 "Sales Costs" shall have the meaning defined in Exhibit A.
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1.50 "Sales Representative" means an employee of either Party or its
Affiliates (i) who is responsible for contacting customers and others who can
buy or influence the buying decision on the applicable Licensed Product in the
Co-Promotion Territory, and (ii) whose success at such activities is a
significant factor in the ongoing employment of the individual, and shall
exclude an employee of either Party or an Affiliate engaged in telemarketing,
professional education and similar indirect activities in support of direct
selling.
1.51 "Third Party" means any entity other than XOMA or Genentech.
1.52 "Third Party Royalties" means royalties payable to a Third Party in
connection with Licensed Products.
1.53 "U.S. Commercialization Costs" shall have the meaning defined in
Exhibit A.
1.54 "U.S. Specific Development Costs" shall have the meaning defined in
Exhibit A.
1.55 "Valid Claim" means a claim of an issued or granted and unexpired
Patent which has not lapsed, been revoked or abandoned or held permanently
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.
1.56 "XOMA Know-How" means Information which (i) XOMA discloses to
Genentech under this Agreement and (ii) is within the Control of XOMA.
1.57 "XOMA Patents" means any and all Patents owned or Controlled in whole
or in part by XOMA that are necessary to make, use, sell, import, or offer for
sale a Licensed Product in the Field including its interest in any Patents owned
jointly by the Parties as provided hereunder.
ARTICLE 2
SCOPE OF COLLABORATION
2.1 Initial Development. The Parties will focus their initial efforts on
the development of Licensed Products to treat psoriasis. In addition, the
Parties shall develop Licensed Products for Organ Transplant Indications as
follows: (i) XOMA and Genentech each have the right to opt-in or opt-out of each
Organ Transplant Indication on an Indication by Indication basis in accordance
with the provisions set forth in Section 5.1; (ii) Genentech shall have a right
to opt-in to an Organ Transplant Indication on an Indication by Indication basis
as set forth in Sections 5.4(a) and 5.4(d) provided however that Genentech shall
not be obligated to pay an opt-in fee and (iii) with respect to the renal Organ
Transplant Indication, the Parties acknowledge that subsequent to the Effective
Date and prior to the Restatement Date the Parties mutually agreed to
discontinue present development efforts and that in the event that either Party
proposes to resume
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development of the renal Organ Transplant Indication, the rights and obligations
of the Parties shall be governed by Article 5.
2.2 Option to Include Competing Products. Neither Party shall, alone or
with any Third Party, conduct any human clinical trial of any Competing Product
without first giving the other Party (the "Electing Party") advance written
notice. The Electing Party shall have 120 days from the date the first Party
delivers such notice to elect to include such Competing Product as a Licensed
Product. The terms and conditions governing the development and
commercialization of Competing Products shall be similar to the terms and
conditions set forth in this Agreement for the development and commercialization
of Anti-CD11a, taking into account the relative commercial value of the
Competing Product compared to Anti-CD11a. If the Parties cannot, after good
faith negotiations, reach agreement on terms for the development and
commercialization of such Competing Product, then either (a) the Electing Party
shall have a license to the Competing Product solely in the Co-Promotion
Territory and the terms of this Agreement shall govern the Competing Product in
all respects except as follows: (i) Genentech shall have no obligation to loan
XOMA funds with respect to the Competing Product under Section 8.1 or any other
provision, (ii) all payments made to obtain Control of the Competing Product in
the Co-Promotion Territory from a Third Party shall be allocated [*] to XOMA and
[*] to Genentech; or (b) either Party may invoke the dispute resolution
provisions of this Agreement. If the Electing Party does not notify the first
Party of its election to so include a Competing Product within such 120-day
period, the first Party shall be free to proceed with the development and
commercialization of such Competing Product without any obligation hereunder to
the Electing Party.
ARTICLE 3
MANAGEMENT OF THE COLLABORATION
3.1 Joint Steering Committee.
(a) A Joint Steering Committee will oversee and manage the collaboration in
the Co-Promotion Territory with respect to Joint Development Indications. The
JSC will be composed of two representatives appointed and replaced at XOMA's
discretion and two representatives appointed and replaced at Genentech's
discretion. Such representatives will be senior officers and/or managers of
their respective companies. Any member of the JSC may designate a substitute to
attend and perform the functions of that member at any meeting of the JSC. A
quorum of the JSC will be established when there is at least one member from
each Party present at the JSC. The JSC will meet at least once each calendar
quarter, or at any frequency agreed by the JSC, and to the extent Genentech does
not expressly have sole decision making authority pursuant to this Agreement,
the JSC will operate by consensus of the Parties. Consensus shall mean that
XOMA's JSC members will collectively have one vote and Genentech's JSC members
will collectively have one vote with decisions to be made only by unanimous
vote. The areas where Genentech has sole decision making authority include but
are not limited to the following:
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(i) in areas where it is the "implementing party" as referred to in
Section 3.2(b);
(ii) subject to Sections 4.2(b)(i) and 4.3, with respect to regulatory
submissions;
(iii) as set forth in Sections 5.1 through 5.3 and in Section 6.1(c);
(iv) with respect to all matters relating to the development,
manufacture and sale of Licensed Product in the Genentech Territory; and
(v) as set forth in Sections 4.4, 7.3(b)(i) through (v), 13.7 and
16.2(b)(i) and Article 9.
(b) The JSC shall perform the following functions with respect to the
Co-Promotion Territory for the Joint Development Indications:
(i) monitor collaboration activities in the manner contemplated by
this Agreement;
(ii) approve development and commercialization strategies which are
formulated by the JCT;
(iii) approve Development Plans and commercialization plans;
(iv) approve annual budgets on collaboration projects and any
subsequent increases greater than [*] percent ([*]%) of such budgets;
(v) vote on whether to pursue a Future Indication or an Organ
Transplant Indication; provided, however, that such vote will only be
binding upon the Parties in accordance with Article 5; and
(vi) perform such other functions as appropriate to further the
purposes of this Agreement as determined by the Parties.
(c) Except as set forth in Section 3.4 below, and unless otherwise provided
by this Agreement, the JSC shall settle disputes or disagreements that are
unresolved by the JCT; provided, however, that if the JSC is unable to resolve a
dispute regarding any issue properly presented to it, such dispute shall be
resolved in accordance with Article 18.
(d) The JSC will cease operations and have no further function and no
authority to authorize expenditures after the later of (i) the date on which the
Parties are no longer developing Licensed Product in the Co-Promotion Territory
or (ii) the date on which the Parties are no longer obligated to share Operating
Profit or Loss with respect to any Licensed Product in the Co-Promotion
Territory in accordance with this Agreement.
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3.2 Joint Core Team.
(a) With respect to the Joint Development Indications, a Joint Core Team
will coordinate and formulate strategies for development and commercialization
of Anti-CD11a in the Co-Promotion Territory, in the Field, including preclinical
research, clinical research, manufacturing, regulatory filings and post-approval
development studies. With respect to Joint Development Indications, the JCT's
responsibilities with respect to the Co-Promotion Territory will include the
following:
(i) formulate strategy and plans for shared development and
commercialization including but not limited to the annual marketing plan,
broad product positioning, pricing, managed care contract strategies and
Phase IV clinical support strategies;
(ii) designate the Party who will implement such strategy and plans in
accordance with this Agreement; provided, however, that the implementing
Party need not obtain review or approval of the means or methods it uses to
implement such strategies and plans;
(iii) formulate annual budgets, including annual marketing and sales
budgets, for the Parties' collaboration activities and present to the JSC
any subsequent increases greater than [*] percent ([*]%) of such budgets
and modify the Development Plan accordingly;
(iv) prepare annual marketing and sales budgets, annual forecasts of
sales and production requirements;
(v) select trademarks for Licensed Products;
(vi) provide progress updates to other team members with respect to
development and commercialization activities and strategies; and
(vii) review and vote on project proposals for Future Indications and
Organ Transplant Indications and if appropriate refine such proposals for
JSC review if there is a decision to proceed.
(b) The Party designated by the JCT as an implementing Party of JSC
approved strategies and plans shall have broad discretion without prior review
and approval to implement such strategies and plans. Strategies requiring JSC
approval include but are not limited to: defining study objectives, study
end-points and success criteria for clinical and non-clinical studies sponsored
by the Parties or studies for which the Parties are obligated to share
Development Costs pursuant to this Agreement, branding, communications
strategies with analysts and other Third Parties regarding project expectations,
revenue forecasts and/or development milestones and regulatory approval
strategies for new indications. Implementation methods and approaches which are
not subject to approval of the JSC or JCT include but are not limited to:
promotional campaigns, design and implementation of clinical and non-clinical
studies sponsored by a Party or the Parties, investigator-sponsored trials,
IND/BLA annual updates, handling of adverse events and reports regarding the
same and the text of package
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inserts. Notwithstanding the foregoing, the implementing Party shall keep the
other Party informed of its activities at regular intervals.
(c) The JCT will be composed of a total of six representatives with three
representatives (or any other number as agreed to by the Parties) appointed and
replaced by XOMA and three representatives (or any other number as agreed to by
the Parties) appointed and replaced by Genentech. A quorum of the JCT will be
established when there is at least one member from each Party present at the
JCT. Except where Genentech has sole authority as provided herein, the JCT will
operate by consensus of the Parties. Consensus shall mean that XOMA's JCT
members will collectively have one vote and Genentech's JCT members will
collectively have one vote with decisions made by unanimous vote. Areas where
Genentech has sole decision making authority include but are not limited to
those which are set forth in Section 3.1(a). JCT representatives will include
individuals with expertise and responsibilities in the areas of preclinical
development, clinical development, process sciences, manufacturing, regulatory
affairs, product development and/or marketing. Either Party may replace any or
all of its representatives at any time upon written notice to the other Party.
Any member of the JCT may designate a substitute to attend and perform the
functions of that member at any meeting of the JCT. The JCT will meet at least
once each calendar quarter, or as agreed to by the JCT.
(d) Unless otherwise provided under this Agreement, the JCT will seek to
resolve disputes of matters before it. If the JCT is unable to resolve a dispute
within thirty (30) days of notice of the dispute, it will refer such dispute to
the JSC.
(e) The JCT will cease operations and have no further function hereunder on
the later of (i) the date on which the Parties are no longer developing any
Licensed Product in the Co-Promotion Territory, or (ii) the date on which the
Parties are no longer obligated to share Operating Profit or Loss with respect
to any Licensed Product in the Co-Promotion Territory in accordance with this
Agreement.
3.3 Finance Committee.
(a) The Parties will establish a Finance Committee to be composed of two
representatives appointed and replaced by XOMA and two representatives appointed
and replaced by Genentech. Such representatives will include individuals with
expertise and responsibilities in the areas of accounting, cost allocation,
budgeting and financial reporting. Any member of the Finance Committee may
designate a substitute to attend and perform the functions of that member at any
meeting of the Finance Committee. The Finance Committee will operate by
consensus of the Parties with each Party having a single vote regardless of the
number of its representatives on the Finance Committee. If the Finance Committee
is unable to resolve a dispute regarding any issue presented to it, within
thirty (30) days of notice of a dispute, such dispute shall be referred to the
JSC.
(b) The Finance Committee shall operate under the direction of the Joint
Steering Committee to provide services to and consult with the Joint Core Team
in order to address financial, budgetary and accounting issues including those
which arise in connection with
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the Development Plan and commercialization plans for the Co-Promotion Territory
and updates thereto and/or those which relate to the Note Agreements or that
certain Common Stock and Convertible Note Purchase Agreement (the "Purchase
Agreement") entered into by the Parties on April 22, 1996. Notwithstanding the
foregoing the Note Agreements and Purchase Agreement may only be amended with
the written agreement of the Parties which amendments either Party may reject in
its sole discretion.
(c) The Finance Committee shall have no control over or input into the
development and commercialization of Licensed Products in the Genentech
Territory, which shall be the sole responsibility of Genentech, subject to the
terms and conditions of this Agreement. Notwithstanding the foregoing, the
Finance Committee shall address financial issues related to Global Development
Costs.
(d) The Finance Committee will cease operating and have no further function
hereunder on the final day of the calendar quarter following the calendar year
during which the Parties are no longer obligated to share Operating Profit or
Loss with respect to any Licensed Product in the Co-Promotion Territory in
accordance with this Agreement.
3.4 Global Development Project Team.
(a) Within forty-five (45) days of the later of the Restatement Date and
the execution of an agreement with an Ex-U.S. Genentech Partner, the Parties
shall form a Global Development Project Team which will operate in addition to
the JSC and the JCT. Except as set forth in Section 3.4(b), with respect to
those Indications it has opted-in to, each Party and each Ex-U.S. Genentech
Partner will each have one vote with decisions made by unanimous vote. Any Party
and any Ex-U.S. Genentech Partner may replace members of the GDPT appointed by
it upon written notice to the other members. The GDPT shall have no authority
with respect to marketing and commercialization matters. The functions which the
GDPT shall perform with respect to each Future Indication and Initial Indication
are as follows:
(i) formulate and amend as appropriate a Global Development Plan;
(ii) formulate and amend as appropriate budgets, and implement global
development activities within said budgets;
(iii) provide status updates regarding development activities; and
(iv) perform such other development related functions as appropriate.
(b) Issues relating to Indications which XOMA has opted-in to that come
before the GDPT and that require action, approval or resolution for which the
GDPT is unable to reach a unanimous vote shall be resolved as follows:
(i) XOMA vs. Genentech and an Ex-U.S. Genentech Partner - In the event
that XOMA disagrees with a position jointly held by Genentech and an
Ex-U.S. Genentech Partner on a matter before the GDPT such dispute will be
resolved as follows. The Parties, or either one of them, shall provide
prompt written
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notice of such dispute to the JSC. The JSC shall promptly commence good
faith discussions in order to resolve the dispute between Genentech and
XOMA. In the event that such dispute is not resolved within thirty (30)
days of the notice, an Executive Vice President or Senior Vice President of
Genentech and the Chief Executive Officer or a Senior Vice President of
XOMA shall promptly commence good faith discussions in order to resolve the
dispute. If the dispute remains unresolved after thirty (30) days following
commencement of these discussions, then Genentech's position (which the
Ex-U.S. Genentech Partner is in agreement with) shall prevail.
(ii) XOMA vs. Genentech vs. an Ex-U.S. Genentech Partner- In the event
that XOMA, Genentech and an Ex-U.S. Genentech Partner all disagree with one
another, the dispute between Genentech and XOMA shall be resolved as set
forth in Section 3.4(b)(i) above. The dispute between Genentech and the
Ex-U.S. Genentech Partner shall be resolved in accordance with the dispute
resolution procedures which govern under the Genentech and Ex-U.S.
Genentech Partner agreement relating to Anti-CD11a, and although not a
party, XOMA agrees to abide by decisions arising from such dispute
resolution process.
(iii) XOMA and an Ex-U.S. Genentech Partner vs. Genentech - In the
event that XOMA agrees with an Ex-U.S. Genentech Partner but disagrees with
Genentech on a matter before the GDPT, the dispute shall be resolved in
accordance with the dispute resolution procedures which govern under the
Genentech and Ex-U.S. Genentech Partner agreement relating to Anti-CD11a,
and although not a party, XOMA agrees to abide by decisions arising from
such dispute resolution process.
ARTICLE 4
DEVELOPMENT OBLIGATIONS
4.1 Development Efforts. XOMA and Genentech each agree to use Commercially
Reasonable and Diligent Efforts to develop and bring Licensed Products to market
for the Joint Development Indications. The Parties further agree to cooperate
with each other in carrying out the Development Plans for the Joint Development
Indications.
4.2 Initial Indications.
(a) With respect to the psoriasis Indication only, Genentech agrees to be
responsible for the following specific activities necessary to complete
development of Anti-CD11a up to completion of Phase II Clinical Trials:
(i) Transfer all preclinical data, assays and associated materials,
protocols, procedures and any other information in Genentech's possession
required to initiate clinical development of Anti-CD11a for the psoriasis
Indication at no cost to XOMA.
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(ii) Complete development of a pilot process to manufacture Anti-CD11a
for the psoriasis Indication. Transfer the cell bank for Anti-CD11a
production as well as all associated assays, procedures and other
information required for XOMA to supply Licensed Product for any
IND-enabling studies and human clinical trials to the end of Phase II
Clinical Trials for the psoriasis Indication. The Joint Core Team will
determine if any process improvements or refinements are required and which
Party will be responsible for such improvements or refinements. XOMA will
pay all costs incurred in making such improvements or refinements after
Genentech has transferred the pilot process to XOMA and XOMA has accepted
it, such acceptance not to be unreasonably withheld.
(b) Subject in each case to XOMA's rights with respect to each Organ
Transplant Indication as described in Section 2.1 and with respect to the renal
Organ Transplant Indication only during such period as the Parties are jointly
developing such indication, XOMA agrees to be responsible for the following
specific activities necessary to complete development of Anti-CD11a up to the
successful completion of Phase II Clinical Trials for the Initial Indications:
(i) Use Commercially Reasonable and Diligent Efforts to conduct all
IND-enabling studies and human clinical studies for the Initial Indications
through the successful completion of Phase II Clinical Trials and make all
filings with and all supporting communications with the U.S. Food and Drug
Administration ("FDA") necessary to conduct such studies, as set forth in
the Development Plan.
(ii) Upon transfer of manufacturing technology by Genentech, use
Genentech's process at XOMA's manufacturing facilities (upgrading such
facilities if necessary) to supply all requirements of Licensed Product for
preclinical and human clinical trials up to the successful completion of
the above referenced Phase II Clinical Trials for psoriasis in the
Co-Promotion Territory.
(c) No Opt-In Fee. Genentech will not be obligated to pay an opt-in fee
with respect to the Initial Indications.
(d) Development Costs. XOMA shall be solely responsible for costs it incurs
pursuant to Sections 4.2(a)(ii), 4.2(b)(i) and 4.2(b)(ii) and for all
Development Costs incurred for the Organ Transplant Indications through
completion of Phase II Clinical Trials and such costs will not be chargeable to
GenXOMA (as defined in Exhibit A) as provided in the definitions section of
Exhibit A. Genentech shall be solely responsible for costs it incurs pursuant to
Sections 4.2(a)(i) and 4.2(a)(ii) and such costs shall not be chargeable to
GenXOMA as provided in the definitions section of Exhibit A. Genentech shall be
responsible for conducting Phase III Clinical Trials for the indications it has
opted-in to and the cost of such Phase III Clinical Trials shall be chargeable
to GenXOMA as provided in Exhibit A for all Joint Development Indications.
4.3 Drug Approval Applications. With respect to all Indications which
Genentech has opted-in to, consistent with the Development Plan, Genentech shall
use Commer-
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cially Reasonable and Diligent Efforts to file Drug Approval Applications and
seek Regulatory Approvals for Licensed Products in the Co-Promotion Territory.
Genentech shall file and own all regulatory submissions including but not
limited to all Drug Approval Applications for Licensed Products for Joint
Development Indications. If the Parties Co-Promote Licensed Products, the
Parties will include on all package labels and inserts for Licensed Products
sold in the Co-Promotion Territory the names and logos of XOMA and Genentech
with equal prominence, to the extent permitted by the applicable regulatory
authorities. To the extent that both Genentech's and XOMA's names and logos are
not permitted to appear on such package labels and inserts, then only
Genentech's name and logo shall be designated.
4.4 Genentech Territory. Notwithstanding anything to the contrary herein,
Genentech shall have the sole responsibility for, and right to make all
decisions regarding, all development and commercialization activities in the
Genentech Territory.
ARTICLE 5
FUTURE INDICATIONS AND ORGAN TRANSPLANT INDICATIONS
5.1 Proposals. Any Party may propose a Future Indication or an Organ
Transplant Indication to the JCT. If the JCT agrees to further evaluate the
proposal, the JCT will develop a detailed proposal, which will include a
clinical plan, a proposed clinical trial budget, time lines and commercial
analysis. The JSC shall review and evaluate such proposals and make a
recommendation as to whether or not to pursue the Future Indication and/or the
Organ Transplant Indication, as the case may be, which is proposed. The
recommendations made by the JSC shall not be binding unless and until
Genentech's Chief Executive Officer or a Genentech Executive Vice President
approves of the proposed Future Indication or the Organ Transplant Indication,
as the case may be, in writing. Each Party shall review and evaluate proposals
for Future Indications and Organ Transplant Indications in good faith; however,
either Party may decline to participate ("Opt-Out") in the development of a
proposed Future Indication or Organ Transplant Indication in its sole
discretion. Pursuant to Sections 5.4 through 5.6, as applicable, the Parties may
also "opt back in" to development and commercialization of an Indication after
having Opted Out pursuant to this Section 5.1. The exercise of any such opt-in
rights shall be subject to the other provisions of this Agreement, including
without limitation the obligation to share Operating Profit or Loss, Development
Costs and U.S. Commercialization Costs and such exercise shall not entitle a
Party to any rights greater than those they would have had if they agree to
develop an Indication in accordance with this Section 5.1. By way of example, if
XOMA opts-in to an Indication pursuant to Section 5.5 or 5.6, the licenses
granted hereunder shall be for the Co-Promotion Territory only. For purposes of
this Agreement, the Parties are deemed to be opted-in to the psoriasis
Indication and any Indication they opt-in to pursuant to Sections 5.4 through
5.6.
5.2 Genentech's Sole Right to Prohibit Development. Subject to payment of a
prohibition fee if required by Section 5.7, and notwithstanding anything to the
contrary herein, for each Future Indication and Organ Transplant Indication,
Genentech shall have the right in its sole discretion to prohibit XOMA from
investigating and/or developing or assisting
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others in investigating or developing such Future Indication or Organ Transplant
Indication as follows ("Right of Prohibition"):
(a) Exercise upon JSC's Recommendation to Develop. Genentech may exercise
its Right of Prohibition initially upon Genentech's review of the JSC's
recommendation concerning a proposed Future Indication or Organ Transplant
Indication. If Genentech exercises its Right of Prohibition at this stage no
prohibition fee as described in Section 5.7 shall be owed.
(b) Exercise after Phase II Clinical Trials. In the alternative, Genentech
may permit XOMA to conduct Phase II Clinical Trials for a proposed Future
Indication or Organ Transplant Indication at XOMA's sole cost and risk but
Genentech shall have the right, in its sole discretion, to exercise its Right of
Prohibition after completion of each such Phase II Clinical Trial. Following
completion of each such Phase II Clinical Trial, XOMA shall provide Genentech
with written notice of such completion and enclose a copy of a summary analysis
performed in accordance with the pre-specified statistical analysis plan filed
with the FDA. Upon receipt of the notice and report, Genentech shall have sixty
(60) days to exercise its Right of Prohibition. During this sixty (60) day
period, XOMA shall provide Genentech with all updates to the report, and all
additional material information, data and reports. In addition, XOMA shall make
its personnel, agents and/or contractors available to respond to reasonable
inquiries by Genentech.
5.3 Study Objectives and Success Criteria. Genentech will have final
approval of all study objectives, primary study end points and success criteria
for all studies relating to any Future Indication or Organ Transplant
Indication. Said approval shall be made prior to enrollment in a study and shall
be made by means of a written document executed by Genentech's Executive Vice
President of Development or her designee.
5.4 Opt-Ins After Opt-Outs
(a) Genentech -- End of Phase II. For each Permitted Indication, Genentech
shall have the right to opt-in to such Permitted Indication upon completion of a
successful Phase II Clinical Trial for such Permitted Indication under the
following terms and conditions:
(i) Notice, Delivery of Reports and Time to Exercise. Following
completion of each successful Phase II Clinical Trial for a Permitted
Indication, XOMA shall provide Genentech with written notice of such
completion and enclose a copy of a summary analysis performed in accordance
with the pre-specified statistical analysis plan filed with the FDA. Upon
receipt of the notice and report, Genentech shall have ninety (90) days to
exercise its opt-in right by providing written notice to XOMA of such
intent. During this ninety (90) day period, XOMA shall provide Genentech
with all updates to the report and all additional material information,
data and reports. In addition, upon request XOMA shall make the raw data as
well as its personnel, agents and/or contractors available in response to
reasonable inquiries by Genentech.
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(ii) Fees. For each Future Indication which Genentech opts-in to
pursuant to Section 5.4(a)(i), Genentech shall owe XOMA an amount equal to
[*]. With respect to Organ Transplant Indications, Genentech shall have no
opt-in fee. Opt-in fees owed pursuant to this Section 5.4(a) shall be
payable within thirty (30) days of exercise.
(iii) Waiver. Genentech will waive its opt-in rights under this
Section 5.4(a) with respect to a specific Indication if it fails to timely
provide written notice of such intent and timely tender opt-in fees for
such Indication.
(b) XOMA - End of Phase II - Future Indications. For each Future Indication
which XOMA has Opted-Out of pursuant to Section 5.1, XOMA shall have a one time
right to opt-in to such Future Indication upon completion of a successful Phase
II Clinical Trial for such Future Indication under the following terms and
conditions:
(i) Notice, Delivery of Reports and Time to Exercise. Following
completion of each successful Phase II Clinical Trial for a Future
Indication, Genentech shall provide XOMA with written notice of such
completion and enclose a copy of a summary analysis performed in accordance
with the pre-specified statistical analysis plan filed with the FDA. Upon
receipt of the notice and report, XOMA shall have ninety (90) days to
exercise its opt-in right by providing written notice to Genentech of such
intent. During this ninety (90) day period, Genentech shall provide XOMA
with all updates to the report and all additional material information,
data and reports. In addition, upon request Genentech shall make the raw
data as well as its personnel, agents and/or contractors available in
response to reasonable inquiries by XOMA.
(ii) Fees. For each Future Indication which XOMA opts-in to pursuant
to Section 5.4(b)(i), XOMA shall owe Genentech an amount equal to the sum
of [*]. Opt-in fees owed pursuant to this Section 5.4(b) shall be payable
within thirty (30) days of exercise. Such fees may not be funded under the
Note Agreements.
(iii) Waiver. XOMA will waive its opt-in rights under this Section
5.4(b) if it fails to timely provide written notice of such intent and
timely tender the opt-in fees.
(c) XOMA - End of Phase II - Organ Transplant Indications. XOMA shall have
no right to opt-in to an Organ Transplant Indication at any time after
Opting-Out of such Organ Transplant Indication in accordance with Section 5.1.
(d) Genentech - End of Phase III. For each Permitted Indication, Genentech
shall have a one time right to opt-in to such Permitted Indication upon
completion of a successful Phase III Clinical Trial for such Permitted
Indication under the following terms and conditions:
(i) Notice, Delivery of Reports and Time to Exercise. Following
completion of each successful Phase III Clinical Trial for a Permitted
Indication,
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XOMA shall provide Genentech with written notice of such completion and
enclose a copy of a summary analysis performed in accordance with the
pre-specified statistical analysis plan filed with the FDA. Upon receipt of
the notice and report, Genentech shall have ninety (90) days to exercise
its opt-in right by providing written notice to XOMA of such intent. During
this ninety (90) day period, XOMA shall provide Genentech with all updates
to the report and all additional material information, data and reports. In
addition, upon request XOMA shall make the raw data as well as its
personnel, agents and/or contractors available in response to reasonable
inquiries by Genentech.
(ii) Fees. For each Future Indication which Genentech opts-in to
pursuant to Section 5.4(d), Genentech shall owe XOMA an amount equal to
[*]. For an Organ Transplant Indication which Genentech opts-in to pursuant
to Section 5.4(d), Genentech shall have no payment obligations with respect
to any development costs incurred through Phase II but shall owe XOMA an
amount equal to [*]. Opt-in fees owed pursuant to this Section 5.4(d) shall
be payable within thirty (30) days of exercise
(iii) Waiver. Genentech will waive its opt-in rights under this
Section 5.4(d) if it fails to timely provide written notice of such intent
and timely tender the opt-in fees.
5.5 Opt-Ins With Global Partners - Genentech Opt-in at Beginning of
Development. For those Future Indications and Organ Transplant Indications which
Genentech decides to develop with an Ex-U.S. Genentech Partner at the
pre-clinical/IND-filing stage, XOMA shall have a right to opt-in to the
development of such Indications being jointly developed by Genentech and an
Ex-U.S. Genentech Partner under the following terms and conditions:
(a) Opt-in at Beginning of Development. Genentech shall provide XOMA
with prompt written notice each time it reaches an agreement with an
Ex-U.S. Genentech Partner to develop a Future Indication and/or Organ
Transplant Indication which is not being developed by the Parties and
enclose a copy of the material information, data and reports that Genentech
reviewed in making its decision to enter into the agreement with an Ex-U.S.
Genentech Partner. XOMA may exercise its right to opt-in to such Indication
by providing Genentech with written notice of such intent within ninety
(90) days. During this ninety (90) day period, Genentech shall provide XOMA
with all updates to the information, data and reports referred to in the
first sentence of this Section 5.5(a) and all additional material
information, data and reports. In addition, upon request Genentech shall
make raw data as well as its personnel, agents and/or contractors available
in response to reasonable inquiries by XOMA. With respect to such Future
Indications which XOMA opts-in to pursuant to this Section 5.5(a), XOMA
shall share U.S. Specific Development Costs and Global Development Costs
for that particular Future Indication in accordance
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with Section 6.1 and Commercialization Costs in accordance with Section
6.2. With respect to Initial Indications, XOMA shall be responsible for [*]
of Development Costs up through Phase II Clinical Trial completion;
thereafter, XOMA shall share U.S. Specific Development Costs and Global
Development Costs in accordance with Section 6.1 and Commercialization
Costs in accordance with Section 6.2. XOMA will waive its opt in rights
under this Section 5.5(a) if it fails to timely provide written notice of
its intent to exercise.
(b) Opt In after Future Indication Phase II Trial. For Future
Indications only, XOMA shall have an additional opt-in right upon
completion of a successful Phase II Clinical Trial for each such Future
Indication being jointly developed by Genentech and an Ex-U.S. Genentech
Partner under the following terms and conditions:
(i) Notice, Delivery of Reports and Time to Exercise. Following
completion of each successful Phase II Clinical Trial for a Future
Indication, Genentech shall provide XOMA with written notice of such
completion and enclose a copy of a summary analysis performed in
accordance with the pre-specified statistical analysis plan filed with
the FDA or similar agency outside of the United States. Upon receipt
of the notice and report, XOMA shall have ninety (90) days to exercise
its opt-in right by providing written notice to Genentech of such
intent. During this ninety (90) day period, Genentech shall provide
XOMA with all updates to the report and all additional material
information, data and reports. In addition, upon request Genentech
shall make the raw data as well as its personnel, agents and/or
contractors available in response to reasonable inquiries by XOMA.
(ii) Fees. In the event XOMA exercises its opt-in right pursuant
to Section 5.5(b)(i), XOMA shall pay Genentech within thirty (30) days
of exercise of its opt-in right [*].
(iii) Waiver. XOMA will waive its opt-in rights under this
Section 5.5(b) if it fails to timely provide written notice of such
intent and timely tender opt-in fees.
5.6 Opt-Ins With Global Partners - Genentech Opt-In After Pre-Clinical/IND
Stage. For Future Indications and Organ Transplant Indications which Genentech
first commences development of with an Ex-U.S. Genentech Partner after the
pre-clinical/IND filing stage, XOMA shall have a right to opt-in to the
development of such Future Indications and Organ Transplant Indications being
jointly developed by Genentech and an Ex-U.S. under the following terms and
conditions:
(a) Notice, Delivery of Reports and Time to Exercise. Following
completion of each successful Phase II Clinical Trial for a Future
Indication, Genentech shall provide XOMA with written notice of such
completion and enclose a copy of a summary analysis performed in accordance
with the pre-specified statistical analysis plan filed with the FDA or
similar agency outside of the United States. Upon receipt of the notice and
report, XOMA shall have ninety (90) days to exercise its opt-in right by
providing written notice to Genentech of such intent. During this ninety
(90) day period, Genentech shall provide XOMA with all updates to the
report and all additional material information, data and reports. In
addition, upon request Genentech shall make the raw data available to
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XOMA as well as its personnel, agents and/or contractors available to
respond to reasonable inquiries by XOMA.
(b) Fees. In the event XOMA exercises its opt-in right pursuant to
Section 5.6(a), XOMA shall pay Genentech within thirty (30) days of
exercise of its opt-in right [*].
(c) Waiver. XOMA will waive its opt-in rights under this Section 5.6
if it fails to timely provide the written notice of such intent and timely
tender opt-in fees.
5.7 Prohibition Fee.
(a) Future Indications and Organ Transplant Indications. In the event that
Genentech permits XOMA to develop a proposed Future Indication or an Organ
Transplant Indication at XOMA's sole cost and then pursuant to Section 5.2
following completion of a Phase II Clinical Trial elects to prohibit such
development after XOMA has incurred Development Costs for such proposed Future
Indication or Organ Transplant Indication, then:
(i) If XOMA has met the criteria for success of such Phase II Clinical
Trial as pre-defined pursuant to Section 5.3, then Genentech shall owe XOMA
[*].
(ii) If the studies sponsored by XOMA have failed to meet the criteria
for success defined by Genentech pursuant to Section 5.3 or neither Party
wishes to continue further development for the particular Future Indication
or Organ Transplant Indication, then Genentech shall have no payment
obligations to XOMA.
5.8 No Opt-In. In the event that XOMA does not opt-in to an Indication,
XOMA's sole compensation with respect to world-wide Royalty Bearing Sales of
Licensed Product for such Indication is set forth in Section 8.3(b). In the
event that Genentech does not opt-in to an Indication, Genentech's sole
compensation with respect to Royalty Bearing Sales of Licensed Product in the
Co-Promotion Territory for Permitted Indications is set forth in Section 8.3(c).
5.9 Collaboration with Third Parties. Genentech may at any time and in its
sole discretion collaborate with or otherwise jointly develop an Indication with
an Ex-U.S. Genentech Partner in the Genentech Territory. In addition, for
Permitted Indications, XOMA may collaborate with an Ex-U.S. Genentech Partner
with respect to only the development of such Permitted Indications. Further, in
the event that Genentech does not opt-in to a Future Indication or Organ
Transplant Indication by the end of a successful Phase III Clinical Trial as
provided in Section 5.4(d), and does not exercise its Right of Prohibition under
Section 5.2, XOMA may enter into agreements for the promotion of Licensed
Product for such Indications in the Co-Promotion Territory with Third Party
providers of sales and/or marketing services as long as such Third Parties
provide such services only in the Co-Promotion Territory and the Third Parties
are not one of the top twenty-five (25) largest biotechnology or pharmaceutical
companies, as meas-
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ured by sales revenues from pharmaceutical product sales ("Contract Sales
Organizations"). Neither this Section 5.9 nor any other provision in this
Agreement is intended to grant XOMA any rights to use, sell, offer for sale,
make or import Licensed Product in the Genentech Territory. For purposes of
clarity, this section is not intended to create or otherwise address Genentech's
manufacturing obligations which are set forth in Article 9.
5.10 Compliance with Privacy Laws. As of the Restatement Date, the Parties
shall use Commercially Reasonable and Diligent Efforts to obtain all necessary
consents required for disclosure of the data and reports which they are required
to provide pursuant to this Article 5. For purposes of this Article 5,
Commercially Reasonable and Diligent Efforts shall include seeking contractual
obligations from clinical research sites obligating the sites to seek subjects'
consent to disclosure of private data to the Parties, their licensees and
collaborators. In the event that any such consent can not be obtained, the Party
having the opt-in right shall be provided with data and documentation which is
redacted to make disclosure lawful.
ARTICLE 6
COST SHARING
6.1 Development Costs.
(a) Initial Indications -- Through Phase II. XOMA shall bear all
Development Costs of Anti-CD11a for the Initial Indications through the
successful completion of Phase II Clinical Trials, including but not limited to
costs of IND-enabling studies, supplying Anti-CD11a and other costs incurred
through successful completion of Phase II Clinical Trials which arise from
activities set forth in the Development Plan, as amended from time to time by
the Joint Core Team, subject in each case to XOMA's rights with respect to each
Organ Transplant Indication, as described in Section 2.1.
(b) Initial Indications Post-Phase II and Future Indications. XOMA will pay
[*] incurred at any time for any Future Indications as to which both Parties
have opted-in as contemplated by this Agreement or incurred for Initial
Indications after Phase II Clinical Trials are completed. In addition to the
foregoing, with respect to the psoriasis indication only, XOMA shall pay [*]
incurred in Europe prior to the first Regulatory Approval permitting the sale of
Anti-CD11a outside of the United States, up to a maximum of [*] dollars ($[*])
for clinical trial work necessary for European Regulatory Approval. For Organ
Transplant Indications and Future Indications, XOMA shall have no payment
obligations with respect to Ex-U.S. Development Costs. Genentech and/or one or
more Ex-U.S. Genentech Partners will pay all Ex-U.S. Development Costs.
(c) Phase II Clinical Studies for Publication. Phase II Clinical Studies
which are designed primarily for publication purposes shall be conducted only in
the event that the JSC agrees, as evidenced by written minutes executed by a JSC
member from each Party. Such minutes shall also reflect each Party's cost
sharing obligations agreed to by the JSC; provided, however, XOMA shall be fully
responsible for all costs of publication studies for Initial
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Indications which it does not Opt-Out of. In the event that the JSC can not
reach agreement on whether or not to pursue a publication study, with respect to
the Initial Indications only, Genentech's position shall prevail and with
respect to Future Indications, such dispute shall be resolved in accordance with
Article 18.
(d) Payment. Development Costs for Joint Development Indications will be
charged against profits from such Joint Development Indications; provided,
however, that in the event there is no Operating Profit, XOMA's payment
obligations shall remain in full force and effect and XOMA shall promptly make
payment to Genentech unless otherwise provided in the Note Agreements.
(e) Budget. Notwithstanding anything to the contrary herein, the Party
managing clinical studies for Licensed Products shall pay all Development Costs
greater than [*] of the budget approved of by the JCT for such clinical studies
unless the JSC approves of such increase or otherwise agrees or unless the FDA
or EMEA requires a material change to the Development Plan which results in such
increased costs.
6.2 Commercialization Costs. With respect to Joint Development Indications,
XOMA will pay [*] and Genentech will pay [*] incurred for such Indications. U.S.
Commercialization Costs for Joint Development Indications will be charged
against the profits and losses from such Indications; provided, however, that in
the event there is no Operating Profit, XOMA's payment obligations shall remain
in full force and effect and XOMA shall promptly make payment to Genentech
unless otherwise provided by the Note Agreements.
ARTICLE 7
COMMERCIALIZATION
7.1 Genentech Territory. Genentech shall have the sole right to develop and
market Licensed Products in the Genentech Territory including but not limited to
the right to make decisions relating to development and marketing activities
designed to enhance revenues generated by, and/or government approved uses of,
Licensed Product solely in the Genentech Territory. Notwithstanding the
foregoing, XOMA may enter into development agreements with Ex-U.S. Genentech
Partners for Future Indications and/or Organ Transplant Indications in the event
that Genentech declines, pursuant to Section 5.1, to develop a Future Indication
or Organ Transplant Indication and Genentech does not exercise its rights under
Section 5.2. Genentech shall nonetheless maintain its rights to opt-in to such
Future Indication or Initial Indication in accordance with Section 5.4(a) and
5.4(d). Neither this Section 7.1, nor any other provision in this Agreement is
intended to grant XOMA any rights to use, sell, offer for sale, make or import
Licensed Product in the Genentech Territory. For purposes of clarity, this
section is not intended to create or otherwise address Genentech's manufacturing
obligations which are set forth in Article 9.
7.2 Cooperation on Development Efforts. To facilitate cooperation between
the Parties on the worldwide development and marketing of Licensed Products,
Genentech shall
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keep XOMA informed of all substantive development activities in the Genentech
Territory. Genentech shall consider in good faith any comments made by XOMA.
Both Parties agree that they will do nothing during Licensed Product development
activities to intentionally imperil Regulatory Approvals in any country in any
territory which has the potential to be a major economic market.
7.3 Co-Promotion Territory.
(a) Co-Promote Election. As of the Restatement Date, XOMA has elected not
to exercise its right, granted on the Effective Date, to co-promote Licensed
Products in the Co-Promotion Territory. Notwithstanding the foregoing, XOMA
shall have future rights to co-promote in the Co-Promotion Territory under the
following terms and conditions. On each occasion that Genentech intends to
expand its sales force for Licensed Product, Genentech shall provide XOMA with
prior written notice of such intent along with job descriptions for such
proposed positions. XOMA shall have thirty (30) days in the case of a sales
force expansion of a current Indication and sixty (60) days in the case of a
sales force expansion due to a new Indication, to notify Genentech in writing of
its election to fill such positions with its own staff. XOMA will waive such
rights if it fails to timely provide notice of its election to co-promote.
Notwithstanding the foregoing, in no event may XOMA fill more than [*] percent
([*]%) of the total sales force for Licensed Product nor less than [*] percent
([*]%) of any open sales positions and in no event shall Genentech fill less
than [*] percent ([*]%) of the sales positions for any Indication. In addition
to the foregoing, in the event that Regulatory Approval is obtained for an
Indication other than psoriasis or there is a significant expansion in the
number of marketing positions for any Indication, the JSC will discuss in good
faith a proposal from XOMA relating to its role in marketing activities. The JSC
may approve a proposal relating to XOMA's marketing activities in the event that
such proposal satisfies criteria used by Genentech in determining proper
allocation of Genentech's marketing and sales resources. The Parties agree that
if XOMA elects to co-promote Licensed Products, Genentech will play the primary
role and XOMA the secondary role in all sales, marketing and product launch
activities and tactical execution of marketing and sales promotional programs in
the Co-Promotion Territory.
(b) Commercialization Efforts. For Joint Development Indications, XOMA and
Genentech each agree to use Commercially Reasonable and Diligent Efforts to
commercialize Licensed Products for such Indications in such a manner as to
maximize profit potential. The Parties agree that if XOMA elects to co-promote
Licensed Products, Genentech will play the primary role and XOMA the secondary
role in all sales, marketing and product launch activities and tactical
execution of marketing and sales promotional programs in the Co-Promotion
Territory. The Parties shall be guided by a standard of reasonableness in
economic terms and of fairness to each of the Parties, striving to balance as
best they can the legitimate interests and concerns of the Parties and to
realize the economic potential of the Licensed Products. The Joint Core Team
(subject to approval by the Joint Steering Committee) shall develop a plan for
commercialization of Licensed Product at such time as the members of the Joint
Core Team decide it is useful to do so. Such plan shall, among other things,
determine the responsibilities for sales of and distributing Licensed Products,
development of marketing and promotional materials and conduct of training
programs for Sales Representatives of both Parties. Unless otherwise agreed,
Genentech shall have the sole responsibility with respect to the following:
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(i) Booking sales for and distributing the Licensed Products;
(ii) Handling all returns of the Licensed Products;
(iii) Handling all recalls of the Licensed Products;
(iv) Handling all aspects of order processing, invoicing, credit and
collection, Licensed Product distribution, warehousing, inventory and
receivables and collection of data of sales to hospitals and other end
users (e.g., DDD data); and
(v) Handling all other customer service related functions.
(c) Sales Efforts in the Co-Promotion Territory.
(i) Although Genentech shall have the primary marketing role, in the
event that XOMA timely elects to co-promote Licensed Product pursuant to
Section 3(a) XOMA shall be permitted to deploy Sales Representatives in the
Co-Promotion Territory, to the extent that such deployment will enhance the
Parties' ability to maximize Operating Profits, but in no event may XOMA
deploy more than [*] of the total number of Sales Representatives in the
Co-Promotion Territory or make more than [*] of the sales calls in the
Co-Promotion Territory. For so long as Genentech and XOMA are both
deploying Sales Representatives in accordance with the foregoing, the
Parties agree to allocate markets and accounts in an unbiased manner based
on objective, quantifiable information and market research data with the
objectives of allocating to each Party markets and accounts from which each
such Party will have the opportunity to maximize Operating Profit.
(ii) The Parties shall recover their Sales Costs in accordance with
Exhibit A.
ARTICLE 8
LOANS, PROFIT SHARING AND ROYALTIES
8.1 Note Purchases. Genentech will increase the amount loaned to XOMA under
the terms and conditions of the Note Agreements for the purposes of developing
Licensed Products for the Joint Development Indications until the earliest of:
(i) first Regulatory Approval by the FDA for Licensed Product; (ii) expiration
or termination of this Agreement; or (iii) April 22, 2005 provided that (a) the
balance of outstanding loans made in accordance with the Note Agreements do not
exceed eighty million dollars ($80 million) for Development Costs and (b) the
total amount of the loans made in accordance with the Note Agreements does not
exceed fifteen million dollars ($15 million) for U.S. Commercialization Costs.
In the event that the provisions in the Agreement conflict with the Note
Agreements, this Agreement shall prevail.
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8.2 Share of Operating Profit or Loss/Royalties.
(a) Term of Profit and Loss Share. XOMA and Genentech shall share Operating
Profit or Loss from sales of Licensed Products for Joint Development Indications
in the Co-Promotion Territory as provided in Exhibit A until the earliest of (a)
the termination of this Agreement pursuant to Section 16.2, 16.3, 16.4, or 16.8,
or (b) [*] after the first commercial sale of the first Licensed Product to be
approved by the FDA in the Co-Promotion Territory (the "[*]"). (For the
avoidance of doubt, the [*] is not reset by the approval of a Licensed Product
in a different Indication.) At the end of the [*], XOMA's rights to Co-Promote
and share Operating Profit or Loss shall cease.
(b) Royalty After Term of Profit and Loss Share. Following termination of
the Parties' profit and loss sharing obligations, Genentech may continue to
commercialize Licensed Products for Joint Development Indications, in which
event Genentech will pay XOMA a royalty of [*] percent ([*]%) of Royalty-Bearing
Sales for such Joint Development Indications made in the Co-Promotion Territory.
Notwithstanding the foregoing, in the event that XOMA develops with or without
Genentech a Future Indication or Organ Transplant Indication but as a result of
the foregoing would not get a full [*] of profit sharing on such Future
Indication or Organ Transplant Indication, then for a period of [*], Genentech
shall pay XOMA a royalty of [*] percent ([*]%) of Royalty-Bearing Sales of
Licensed Product for such Future Indication or Organ Transplant Indication at
issue in the Co-Promotion Territory (the "Higher Royalty Term") in place of, and
not in addition to, the [*] percent ([*]%) royalty that would have been owed on
said Royalty Bearing Sales. Once the Higher Royalty Term ceases, XOMA shall
receive [*] percent ([*]%) per annum of Royalty-Bearing Sales of Licensed
Product for such Future Indication or Organ Transplant Indication in the
Co-Promotion Territory.
(c) Royalty After Profit and Loss Sharing Where Competitive Products are
Approved. Notwithstanding the foregoing, at any time that there is at least one
FDA approved indication for Licensed Product and a Third Party has obtained a
Regulatory Approval in any such indication to market an anti-CD11a or a
Non-Anti-CD18 Anti-LFA1 Protein Product, Genentech's royalty obligations under
this Section 8.2 shall be reduced by [*] percent ([*]%); but in no event shall
such royalty be less than [*] percent ([*]%).
8.3 Royalties.
(a) Joint Development - Royalty Rate and Offsets (Genentech Territory).
Genentech shall pay XOMA a royalty of [*] percent ([*]%) on Royalty-Bearing
Sales of Licensed Products for Joint Development Indications which are sold in
the Genentech Territory. Genentech shall pay any Third Party royalties owed on
account of sales of Licensed Product in the Genentech Territory, including
royalties owed due to the manufacture of Licensed Products by Genentech.
Genentech shall receive an offset of [*] percent ([*]%) of the royalties it pays
on account of the manufacture, use or sale of Licensed Products against such
royalties due to XOMA, provided however, that in no event shall such royalty be
less than [*] percent ([*]%). Notwithstanding the foregoing, Genentech will be
solely responsible and shall not receive credit for [*].
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(b) No XOMA Opt-In (Co-Promotion Territory and Genentech Territory).
Genentech shall pay XOMA a royalty of [*] percent ([*]%) on Royalty-Bearing
Sales in the Co-Promotion Territory and the Genentech Territory of Licensed
Products for Future Indications and Organ Transplant Indications as to which
XOMA has not opted-in. Genentech shall be responsible for payment of any Third
Party royalties owed on account of sales, use or manufacture of Licensed Product
for such Future Indications and Organ Transplant Indications in the Co-Promotion
Territory and in the Genentech Territory, including royalties owed due to the
manufacture of Licensed Products for such Future Indications and Organ
Transplant Indications by Genentech. Genentech's royalty obligations to XOMA
under this Section 8.3(b) shall be offset by [*] percent ([*]%) of the royalties
owed to Third Parties as a result of Royalty-Bearing Sales of Licensed Products
for such Future Indications and Organ Transplant Indications, but not the
manufacture of such Licensed Products, provided however, that in no event shall
the royalty on worldwide Royalty-Bearing Sales of Licensed Products for such
Indications be less than [*] percent ([*]%). Notwithstanding the foregoing,
Genentech will be solely responsible and shall not receive credit for [*]. For
purposes of this subsection, Royalty-Bearing Sales of Licensed Products for the
Future Indications and Organ Transplant Indications will be confirmed by a
custom audit commissioned by Genentech not more than semi-annually at the
reasonable cost of Genentech. The audit will be similar in design to other
product audits conducted by Genentech. XOMA shall have the right to review the
audit data and format.
(c) No Genentech Opt-in (Co-Promotion Territory). XOMA shall pay Genentech
a royalty of [*] percent ([*]%) on Royalty-Bearing Sales of Licensed Products in
the Co-Promotion Territory for Future Indications and Organ Transplant
Indications as to which Genentech has not opted-in. XOMA shall be responsible
for payment of any Third Party royalties owed on account of sales, use or
manufacture of Licensed Product for such Future Indications and Organ Transplant
Indications. XOMA's royalty obligations to Genentech under this Section 8.3(c)
shall be offset by [*] percent ([*]%) of the royalties owed to Third Parties as
a result of Royalty Bearing Sales and use of such Licensed Products, but not the
manufacture of such Licensed Products, provided however, that in no event shall
the royalty be less than [*] percent ([*]%) on such Royalty-Bearing Sales of
Licensed Products for Future Indications or Organ Transplant Indications in the
Co-Promotion Territory. For purposes of this subsection, Royalty-Bearing Sales
of Licensed Products for the Future Indications and Organ Transplant Indications
will be confirmed by a custom audit commissioned by Genentech not more than
semi-annually at the reasonable cost of XOMA. The audit will be similar in
design to other product audits conducted by Genentech. XOMA shall have the right
to review the audit data and format.
(d) Royalties Non-Cumulative. The royalties set forth in this Section 8.3
are intended to be exclusive of one another such that payment under one
subsection of Section 8.3 precludes payment under any other subsection of
Section 8.3.
8.4 Royalty Payment Reports. Royalty payments due under this Agreement
shall be made quarterly within ninety (90) days following the end of each
calendar quarter for which such royalties are due. Each royalty payment shall be
accompanied by a report estimating, if final data is not available, or otherwise
summarizing the Royalty-Bearing Sales during the relevant three-month period.
Payments of estimated royalties will be promptly reconciled upon
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issuance by Genentech of each final audit report which is prepared in accordance
with Section 8.3(b) or 8.3(c).
8.5 Term of Royalty Obligations.
(a) Genentech's Obligations (Co-Promotion Territory and Genentech
Territory). The term of Genentech's royalty obligations under Sections 8.3(a)
and (b) is as follows:
(i) Genentech's royalty obligations under Section 8.3(a) shall be, on
a country by country basis, [*] from the date of the first commercial sale
of the first Licensed Product approved in each country in the Genentech
Territory.
(ii) Genentech's royalty obligations under Section 8.3(b) shall be [*]
from the date of the first commercial sale of the first Licensed Product
approved in the Co-Promotion Territory for an Indication to which XOMA has
not opted-in.
(b) XOMA's Obligations (Co-Promotion Territory). The term of XOMA's royalty
obligations under Section 8.3(c) shall be [*] from the date of the first
commercial sale of the first Licensed Product approved for any Permitted
Indication in the Co-Promotion Territory.
(c) Paid-up License - Genentech Territory. Upon expiration of the royalty
terms set forth above, Genentech shall thereafter have an exclusive, paid-up,
irrevocable license under the XOMA Patents and XOMA Know-How to make, use, sell,
offer for sale, have sold and import Licensed Product in the applicable country
within the Genentech Territory where such royalty term has expired.
8.6 Taxes. Each Party receiving payments under this Agreement shall pay any
and all taxes levied on account of, or measured exclusively by, such payments
including royalties it receives under this Agreement. If laws or regulations
require that taxes be withheld, the Party making such payment shall (i) deduct
those taxes from the remittable royalty, (ii) timely pay the taxes to the proper
taxing authority, and (iii) send proof of payment to the other Party within
sixty (60) days following that payment.
8.7 Blocked Currency. In each country where the local currency is blocked
and cannot be removed from the country, royalties shall continue to be accrued
in such country and Royalty-Bearing Sales in such country shall continue to be
reported, but such royalties will not be paid until they may be removed from the
country. At such time as Genentech is able to remove such blocked currency from
such country it shall also remove and pay any royalties accrued during such
blocked period on XOMA's behalf.
8.8 Foreign Exchange. For the purpose of computing Royalty-Bearing Sales
for Licensed Products sold in a currency other than United States Dollars, such
currency shall be converted into United States Dollars in accordance with
Genentech's customary and usual translation procedures consistently applied.
8.9 Payments to or Reports by Affiliates. Any payment required under any
provision of this Agreement to be made to either Party or any report required to
be made by any
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Party shall be made to or by an Affiliate of that Party if designated by that
Party as the appropriate recipient or reporting entity.
8.10 Fees From Sublicensees. In the event Genentech grants licenses or
sublicenses to others (including without limitation an Ex-U.S. Genentech
Partner) to make or sell Licensed Products in the Genentech Territory and such
licenses or sublicenses are granted to an unrelated Third Party (understanding
that Roche (as defined in Section 10.3 of the Amended and Restated Convertible
Secured Note Agreement between the Parties) is not an unrelated Third Party),
then Genentech shall pay XOMA [*]. Any licenses or sublicenses granted by
Genentech shall include an obligation for the licensee or sublicensee to account
for and report its Royalty-Bearing Sales using the same accounting standards
used to determine royalties owed on sales of Product in the Genentech Territory
(as further set forth in Exhibit A) and Genentech shall pay royalties to XOMA as
if the Royalty-Bearing Sales of the sublicensee were Royalty-Bearing Sales of
Genentech. Genentech shall provide XOMA with copies of any licenses or
sublicenses it grants, with any financial or other confidential terms redacted.
8.11 Opt-In Fees. XOMA shall be entitled to [*] which an Ex-U.S. Genentech
Partner pays Genentech [*]. Payments due to XOMA under this Section 8.11 shall
be due thirty (30) days after receipt by Genentech [*] from an Ex-U.S. Genentech
Partner.
ARTICLE 9
MANUFACTURE AND SUPPLY
9.1 General. On the Effective Date Genentech (or its designee) was granted
a first option to manufacture Licensed Product for clinical and/or commercial
supply, which Genentech could exercise in its sole discretion. Genentech
exercised such right subsequent to the Effective Date. So long as the Parties
are sharing Operating Profit or Loss in accordance with this Agreement, GenXOMA
(as defined in Exhibit A) shall be charged Genentech's (or its designee's) Cost
of Goods Sold for Clinical and Commercial Supplies of Licensed Product. If the
Parties are not sharing Operating Profit & Loss, XOMA's payment obligations
shall be as set forth below.
9.2 No Joint Development. For Future Indications and Organ Transplant
Indications for which Genentech has not opted-in, clinical supplies of Licensed
Product will be provided at the Cost of Goods Sold, and the Parties will
negotiate a commercial supply agreement, on commercially reasonable terms which
shall represent not more than [*]. Notwithstanding the foregoing, Genentech may
elect in its sole discretion not to manufacturer or otherwise supply such
Licensed Product and in such event the terms of Section 9.3 shall apply.
9.3 Termination of Election to Manufacture.
(a) Genentech Right to Terminate. Genentech may in its sole discretion,
elect to cease manufacturing or otherwise supplying Licensed Product for all or
certain Indications.
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(b) XOMA's Rights. In the event Genentech elects not to manufacture or
otherwise supply Licensed Product, provided that Genentech has not exercised its
rights under Section 5.2 and further provided that XOMA has a license to use,
sell, offer for sale and have sold Licensed Product, Genentech and XOMA shall
thereafter enter into a license and manufacturing agreement (the "Manufacturing
License Agreement"), with respect to only those indications for which Genentech
elects not to manufacture or otherwise supply. The Manufacturing License
Agreement shall grant to XOMA an exclusive license under the Genentech Know-How
and the Genentech Patents and a non-exclusive license, if determined by XOMA to
be necessary, under both the Cabilly Chimera Patents and the Cabilly
Coexpression Patents ( the "Cabilly Patents"), to make or have made or import
Licensed Products in the Field in the Co-Promotion Territory for sale in the
Co-Promotion Territory. Such license shall be sublicensable by XOMA only upon
Genentech's prior written approval, which shall not be unreasonably withheld.
The Manufacturing License Agreement shall also require that any manufacturer
other than XOMA be experienced in manufacturing marketed pharmaceuticals using
Chinese Hamster Ovary cells and unless otherwise agreed to by the Parties such
manufacturer must be a company or a division of a company which derives its
revenues solely from manufacturing the products of other companies.
(c) Technology Transfer. Upon entering into the Manufacturing License
Agreement, Genentech shall promptly provide to XOMA, at XOMA's sole cost and
expense, the Genentech Know-How. In no event, however, shall Genentech be
obligated to transfer Genentech Know-How on more than one occasion.
(d) Genentech Obligations. In the event that XOMA cannot find a Third Party
to manufacture that is acceptable to Genentech, and to the extent the
manufacture of Licensed Product for XOMA will not unreasonably, and adversely
impact Genentech or its obligations to Third Parties or Affiliates, then
Genentech will continue to supply Licensed Product in bulk form only until the
earlier of (i) [*] from XOMA's receipt of notice of Genentech's election not to
produce or supply or (ii) [*] from the date on which Genentech and XOMA find a
mutually acceptable manufacturer. In the event Genentech does approve of a Third
Party to manufacture Licensed Product, and to the extent the manufacture of bulk
Licensed Product for XOMA will not materially and unreasonably adversely impact
Genentech or its obligations to Third Parties or Affiliates, Genentech shall, at
XOMA's request, continue to manufacture Licensed Product in bulk form for up to
[*] after Genentech and XOMA approve a Third Party manufacturer. Notwithstanding
anything to the contrary, at a minimum, Genentech must supply XOMA with the
amount of Licensed Product in bulk form which is yielded from one successful [*]
Run each year that Genentech is obligated to supply Licensed Product hereunder.
(e) XOMA's Obligations. XOMA shall pay any Third Party royalties which
arise as a result of XOMA's exercise of the license grants to XOMA pursuant to
this Section 9.3 and that are owed on account of sales, use and manufacture of
Licensed Product and XOMA shall not receive any offsets for such payments except
as permitted under Section 8.3(c). In the event that Genentech is required to
manufacture and/or supply Licensed Product in bulk form pursuant to this Section
9.3, then XOMA shall pay not more than [*].
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ARTICLE 10
LICENSES
10.1 Licenses to XOMA Within the Field.
(a) With respect to only Permitted Indications, Genentech grants to XOMA a
co-exclusive license under the Genentech Patents and Genentech Know-How in the
Field solely for the purposes of using, selling, having sold and offering for
sale (but not to make, have made or import, except as provided in Section 9.3)
Licensed Products in the Co-Promotion Territory. Except as set forth in Article
8 and Article 16, as applicable, said license shall be royalty-free. In the
event that XOMA gains approval of a Permitted Indication and Genentech has
elected pursuant to Section 9.3 not to manufacture or otherwise supply Licensed
Product for such Permitted Indication, Genentech will grant to XOMA the licenses
set forth in Section 9.3, under the terms set forth in Section 9.3. XOMA shall
pay any Third Party royalties owed on account of the sale, use and manufacture
of Licensed Product for the Permitted Indications which Genentech has not
opted-in on.
(b) XOMA covenants and agrees not to use, make, have made, sell, offer for
sale or import Licensed Product in the Genentech Territory.
10.2 License to Genentech Within the Field. XOMA grants to Genentech a
worldwide license under the XOMA Patents and XOMA Know-How in the Field to
develop, make, have made, use, sell, offer for sale, have sold and import
Licensed Products. Such license shall be co-exclusive with XOMA in the
Co-Promotion Territory and exclusive even as to XOMA in the Genentech Territory.
Except as set forth in Article 8 and Article 16, as applicable, said license
shall be royalty-free.
10.3 Sublicensing. Genentech may grant sublicenses with the prior written
consent of XOMA, such consent not to be unreasonably withheld. XOMA hereby
consents to such a sublicense to X. Xxxxxxxx-Xx Xxxxx or any of its Affiliates
and to Ares Trading S.A. Unless otherwise agreed, each sublicensee shall be
subject to all of the obligations of Genentech hereunder applicable to that part
of the territory being licensed.
ARTICLE 11
TRADEMARKS
11.1 Product Trademarks. All Licensed Products shall be sold in the
Co-Promotion Territory under trademarks selected and owned by Genentech (the
"Genentech Marks"). Genentech hereby grants XOMA a fully paid-up co-exclusive
license to use the Genentech Marks in the Co-Promotion Territory for the
Co-Promotion activities provided for in this Agreement. In using the Genentech
Marks, XOMA shall display said xxxx in a style or size of print distinguishing
the xxxx from any accompanying wording or text. XOMA hereby acknowledges
Genentech's exclusive right, title and interest in and to all the Genentech
Marks and agrees that it will not at any time do, or cause to be done, any act
or thing contesting or in any way in-
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tending to impair the validity of and/or Genentech's exclusive right, title and
interest in and to the Genentech Marks. XOMA will not in any manner represent
that it owns the Genentech Marks and XOMA hereby acknowledges that use of the
Genentech Marks shall not create any rights, title or interest in or to the
Genentech Marks in favor of XOMA, but that all use of the Genentech Marks by
XOMA shall inure to the benefit of Genentech.
11.2 Infringement of Trademarks. XOMA shall notify the Joint Core Team
promptly upon learning of any actual, alleged or threatened infringement of a
Genentech Xxxx in the Co-Promotion Territory or of any unfair trade practices,
trade dress imitation, passing off of counterfeit goods or like offenses in the
Co-Promotion Territory. The Joint Core Team shall confer with Genentech
regarding the defense of such Genentech Xxxx. The decision whether and how to
defend such a Genentech Xxxx will rest with Genentech; provided, however, that
if Genentech fails to bring an action or proceeding in the Co-Promotion
Territory within a period of sixty (60) days of notice by XOMA to Genentech
requesting action, XOMA will have the right, at its own expense, to bring and
control any such action or proceeding in the Co-Promotion Territory by counsel
of its own choice.
11.3 Costs of Defense for Solely Owned Trademarks. All of the costs,
expenses and legal fees in bringing, maintaining and prosecuting any action to
maintain, protect or defend a Genentech Xxxx shall be borne solely by the Party
bringing the action and any recovery shall be solely for that Party's account.
ARTICLE 12
CONFIDENTIALITY
12.1 Confidentiality; Exceptions. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing, the Parties agree that, for
the term of this Agreement and for [*] thereafter, the receiving Party shall
keep confidential and shall not publish or otherwise disclose or use for any
purpose other than as provided for in this Agreement any Information and other
information and materials furnished to it by the other Party pursuant to this
Agreement, including, but not limited to, financial statements and budgets of
GenXOMA (collectively, "Confidential Information"), except to the extent that it
can be established by the receiving Party that such Confidential Information:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other
Party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
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(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to
the disclosing Party not to disclose such information to others; or
(e) was subsequently developed by the receiving Party without use of
the Confidential Information as demonstrated by competent written records.
12.2 Authorized Disclosure. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is reasonably necessary in
filing or prosecuting patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations or conducting preclinical or
clinical trials, provided that if a Party is required by law or regulation to
make any such disclosure of the other Party's Confidential Information it will,
except where impracticable for necessary disclosures, for example in the event
of medical emergency, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, will use its reasonable efforts to secure confidential
treatment of such Confidential Information required to be disclosed. In
addition, each Party shall be entitled to disclose, under a binder of
confidentiality containing provisions as protective as those of this Article 12,
Confidential Information to consultants, potential and actual sublicensees and
other Third Parties only for any purpose provided for in this Agreement and/or
the development and commercialization of Licensed Product in the Genentech
Territory. Nothing in this Article 12 shall restrict any Party from using for
any purpose any Information developed by it during the course of the
collaboration hereunder.
12.3 Survival. This Article 12 shall survive the termination or expiration
of this Agreement for a period of [*].
12.4 Termination of Prior Agreement. This Article 12 supersedes Article 11
of the Original Agreement and the Confidentiality Agreements between the Parties
dated October 11, 1995, one of which was last signed on October 20, 1995 and one
of which was last signed on January 11, 1996 and both of which were amended on
April 11, 1996, except that the Research Scientists, as defined in the Oxford
Agreement, shall continue to be third party beneficiaries under this Agreement
to the extent such previous Confidentiality Agreement is superseded. All
Information exchanged between the Parties under the above referenced agreements
shall be deemed Confidential Information and shall be subject to the terms of
this Article 12.
12.5 Publications. Prior to the launch of any Licensed Product as to which
both Parties have opted-in as contemplated by this Agreement in the Co-Promotion
Territory, the Joint Core Team will determine the overall strategy for
publication in support of such Licensed Product in the Co-Promotion Territory.
Except as required by law, each Party agrees that it shall not publish or
present the results of studies carried out as part of the collaboration without
the opportunity for prior review by the other Party. Each Party shall provide to
the other the opportunity to review any proposed manuscripts or presentations
(including information to be presented orally) which relate to the Field at
least forty-five (45) days prior to their intended submission for publication
and abstracts which relate to the Field at least thirty (30) days prior to their
intended submission and such submitting Party agrees, upon written request from
the other Party, not to submit such abstract or manuscript for publication or to
make such presentation until the
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other Party is given a reasonable period of time to seek patent protection for
any material in such publication or presentation which it believes is
patentable.
ARTICLE 13
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
13.1 Ownership of Intellectual Property. XOMA shall own all inventions made
under this Agreement solely by its employees ("XOMA Inventions"). Genentech
shall own all inventions made under this Agreement solely by its employees
("Genentech Inventions"). All inventions made under this Agreement jointly by
employees of XOMA and Genentech ("Joint Inventions") will be owned jointly by
XOMA and Genentech and each Party shall retain full ownership under any Patents
resulting therefrom ("Joint Patents"), with full ownership rights in any field
and the right to sublicense without the consent of the other Party, without
accounting. The laws of the United States with respect to inventorship shall
apply in all jurisdictions giving force and effect to this Agreement.
13.2 Disclosure of Patentable Inventions. Each Party shall provide to the
other any invention disclosure submitted in the normal course of this
collaboration and disclosing an invention relating to a Licensed Product. Such
invention disclosures shall be provided to the other Party within thirty (30)
days after the Party determines that an invention has been made.
13.3 Patent Filings.
(a) Sole Inventions. Each Party, at its sole discretion and responsibility,
shall file, prosecute and maintain Patents in the Co-Promotion Territory to
cover its own discoveries and inventions relating to any Licensed Product and
shall use reasonable efforts to first file all applications in the Co-Promotion
Territory. The determination of the countries in the Genentech Territory in
which to file any patent applications on sole inventions relating to any
Licensed Product shall be made by Genentech, and Genentech shall be responsible
for such filings in such countries. Genentech shall have the right, at its
expense, to direct and control all material actions relating to the prosecution
or maintenance of Genentech Patents and XOMA Patents in the Genentech Territory,
including without limitation, oppositions, appeals and revocation proceedings.
(b) Joint Inventions. Genentech shall file, prosecute and maintain Joint
Patents relating to any Licensed Product in the United States. Genentech shall
also file, prosecute and maintain Joint Patents relating to any Licensed Product
in such countries in the Genentech Territory as it may determine. If Genentech
elects not to file a Joint Patent, it shall so inform XOMA. XOMA may then file,
prosecute and maintain any such Joint Patents. The Party which is responsible
for filing such a Joint Patent will be termed the "filing Party." The filing
Party shall keep the other Party apprised of the status of each Joint Patent and
shall seek the advice of the other Party with respect to patent strategy and
draft applications and shall give reasonable consideration to any suggestions or
recommendations of the other Party concerning the preparation, filing,
prosecution, maintenance and defense thereof. The Parties shall cooperate
reasona-
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xxx in the prosecution of all Joint Patents and shall share all material
information relating thereto promptly after receipt of such information. If,
during the term of this Agreement, the filing Party intends to allow any Joint
Patent relating to a Licensed Product to lapse or become abandoned without
having first filed a substitute, the filing Party shall make reasonable efforts
to notify the other Party of such intention at least sixty (60) days prior to
the date upon which such Joint Patent shall lapse or become abandoned, and the
other Party shall thereupon have the right, but not the obligation, to assume
responsibility for the prosecution, maintenance and defense thereof.
(c) Information Sharing. Each Party agrees to bring to the attention of the
other Party any patent or patent application it discovers, or has discovered,
and which relates to the subject matter of this Agreement.
13.4 Initial Filings if Made Outside of the United States. The Parties
agree to use reasonable efforts to ensure that any Patent filed outside of the
United States prior to a U.S. filing will be in a form sufficient to establish
the date of original filing as a priority date for the purposes of a subsequent
U.S. filing.
13.5 Patent Costs.
(a) Patent Costs arising in the Co-Promotion Territory with respect to
Genentech Patents and XOMA Patents shall be chargeable to the collaboration as
Other Operating Income/Expense in accordance with Exhibit A.
(b) Patent Costs arising in the Genentech Territory with respect to
Genentech Patents and XOMA Patents after the Effective Date shall be borne by
Genentech.
13.6 Enforcement Rights.
(a) Notification of Infringement. If either Party learns of any
infringement or threatened infringement by a Third Party of the XOMA Patents or
Genentech Patents, such Party shall promptly notify the other Party and shall
provide such other Party with available evidence of such infringement.
(b) Enforcement. Genentech shall have the right, but not the obligation, to
institute, prosecute and control at its own expense any action or proceeding
with respect to infringement of any of the Genentech Patents, by counsel of its
own choice. XOMA shall have the right, at its own expense, to be represented in
any action by counsel of its own choice. XOMA shall have the right, but not the
obligation, to institute, prosecute and control at its own expense any action or
proceeding with respect to infringement of any of the XOMA Patents, by counsel
of its own choice. Genentech shall have the right, at its own expense, to be
represented in any action by counsel of its own choice. In the event of an
infringement of a Joint Patent, the Joint Steering Committee shall decide the
best way for the Parties to proceed. If one Party brings any such action or
proceeding, the other Party agrees to be joined as a party plaintiff if
necessary to prosecute the action or proceeding and to give the first Party
reasonable assistance and authority to file and prosecute the suit. Any damages
or other monetary awards recovered pursuant to this Section 13.6(b) shall be
allocated first to the costs and expenses of the Party bringing suit, then to
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the costs and expenses, if any, of the other Party. Any amounts remaining shall
be allocated [*] to the Party bringing suit and [*] to the other Party.
(c) Settlement with a Third Party. The Party that controls the prosecution
of a given claim with respect to a Licensed Product shall also have the right to
control settlement of such claim; provided, however, that if one Party controls,
no settlement shall be entered into without the written consent of the other
Party if such settlement would materially and adversely affect the interests of
such other Party. If there is no agreement between the Parties, then the dispute
will be resolved pursuant to Article 18.
13.7 Infringement Defense. If a Third Party asserts that a patent or other
right owned by it is infringed by any Licensed Product, Genentech will be solely
responsible for deciding how and whether to defend against any such assertions
at its cost and expense. XOMA shall have the right, at its own expense, to be
represented in any such action by counsel of its choice. If Genentech is
required to pay royalties to such Third Party as a result of such action, it
will be entitled to credit such royalties against royalties owing to XOMA as
provided in Article 8 or Article 16 as applicable. No settlement of such an
action shall be entered into by Genentech without XOMA's written consent if such
settlement would materially and adversely affect XOMA's interests.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties. Each of the Parties hereby represents
and warrants as follows:
(a) This Agreement is a legal and valid obligation binding upon such
Party and enforceable in accordance with its terms. The execution, delivery
and performance of this Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a
party or by which it is bound, or violate any law or regulation of any
court, governmental body or administrative or other agency having
jurisdiction over it.
(b) Such Party has not, and during the term of this Agreement will
not, grant any right to any Third Party relating to its respective Patents
and know-how in the Field in the Co-Promotion Territory which would
conflict with the rights granted to the other Party hereunder.
(c) Such Party has the right to grant the licenses it has granted
herein.
14.2 Performance by Affiliates. The Parties recognize that each may perform
some or all of its obligations under this Agreement through Affiliates;
provided, however, that each Party shall remain responsible and be guarantor of
the performance by its Affiliates and shall cause its Affiliates to comply with
the provisions of this Agreement in connection with such performance.
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ARTICLE 15
INFORMATION AND REPORTS
15.1 Information. With respect to the Joint Development Indications: (i)
Genentech and XOMA will disclose and make available to each other all
preclinical, clinical, regulatory, commercial and other information, including
without limitation all information relevant to the joint promotion of Licensed
Products, known by Genentech or XOMA concerning Licensed Products at any time
during co-development of Licensed Products by the Parties and during
Co-Promotion; (ii) XOMA will disclose the same information set forth in Section
15.1(i) to Genentech at any time during the term of this Agreement; (iii) each
Party will use Commercially Reasonable and Diligent Efforts to disclose to the
other Party all significant information promptly after it is learned or its
significance is appreciated; (iv) with respect to the Co-Promotion Territory,
each Party shall own and maintain its own database of clinical trial data
accumulated from all clinical trials of Licensed Products for which it was
responsible and of adverse drug event information for all Licensed Products; and
(v) at the option of the requesting Party, the data referred to in Section
15.1(iv) above, shall be provided in a computer readable format by the providing
Party, to the extent available, which shall also assist in the transfer and
validation of such data to the receiving Party. Notwithstanding the foregoing,
the Parties shall have no obligation to make disclosures prohibited by law or
contract. Each Party will use Commercially Reasonable and Diligent Efforts to
obtain all necessary consents required for disclosure of the information
described above. In the event that such consent cannot be obtained, the
disclosing Party shall provide the other Party with information that is redacted
to make disclosure lawful.
15.2 Complaints. XOMA shall maintain a record of all complaints it receives
with respect to any Licensed Product. XOMA shall notify Genentech of any
complaint received by XOMA in sufficient detail and within five (5) business
days after the event, and in any event in sufficient time to allow Genentech to
comply with any and all regulatory requirements imposed upon it in any country.
Genentech shall notify XOMA of any complaint received by Genentech in the
Co-Promotion Territory within forty-five (45) business days after the event.
15.3 Adverse Drug Events. The Parties recognize that the holder of a Drug
Approval Application may be required to submit information and file reports to
various governmental agencies on compounds under clinical investigation,
compounds proposed for marketing or marketed drugs. Information must be
submitted at the time of initial filing for investigational use in humans and at
the time of a request for market approval of a new drug. In addition,
supplemental information must be provided on compounds at periodic intervals and
adverse drug experiences must be reported at more frequent intervals depending
on the severity of the experience. Consequently, regardless of whether both
Parties remain opted-in to a particular Indication for a Licensed Product each
Party agrees to provide the other Party with the following information and
reports they have knowledge of:
(a) for initial and/or periodic submission to government agencies,
significant information relating to Licensed Product from preclinical
laboratory, animal toxicology
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and pharmacology studies, as well as adverse drug experience reports from
clinical trials and registries with Licensed Product;
(b) in connection with Licensed Products in clinical trials conducted
for approval, report to the other within three (3) days of the initial
receipt of a report of any Unexpected Adverse Event (defined below) or
Serious Adverse Event (defined below), or sooner if required for either
Party to comply with regulatory requirements; and
(c) in connection with Licensed Products having Regulatory Approval
report to the other within five (5) business days of the initial receipt of
a report of any adverse event with the Licensed Product that is a Serious
Adverse Event and or an Unexpected Adverse Event, or sooner if required for
either Party to comply with regulatory requirements.
"Serious Adverse Event" means any event that suggests a significant hazard,
contraindication, side effect or precaution, or any event that is fatal or life
threatening, is permanently disabling, requires or prolongs inpatient
hospitalization or is a congenital anomaly, cancer or overdose. An "Unexpected
Adverse Event" is one not identified in nature, specificity, severity or
frequency in the current investigator brochure or the U.S. labeling for the
drug. Each Party also agrees that if it contracts with a Third Party for
research to be performed by such Third Party on the drug, that Party agrees to
require such Third Party to report to the contracting Party the information set
forth in Section 15.3(a), (b), and (c) above.
15.4 Records of Net Sales and Costs. For Joint Development Indications and
those Indications a Party is developing without the other Party through
completion of Phase II Clinical Trials or Phase III Clinical Trials, each Party
will maintain complete and accurate records which are relevant to costs,
expenses, sales and payments under this Agreement and such records shall be open
during reasonable business hours for a period of three (3) years from creation
of individual records for examination at the other Party's expense and not more
often than once each year by an independent public accountant selected by the
other Party as described in Exhibit A. Any records or accounting information
received from the other Party shall be Confidential Information for purposes of
Article 12. Results of any such audit shall be provided to both Parties, subject
to Article 12.
15.5 Contribution of Information. It is the intention of the Parties that
each will bring to the collaboration such information in its possession that is
useful to the development and commercialization of Licensed Products.
15.6 Publicity Review. XOMA and Genentech will jointly discuss and agree,
based on the principles of this Section 15.6, on any statement to the public
regarding this Agreement or any aspect of this Agreement subject in each case to
disclosure otherwise required by law or regulation as determined in good faith
by each Party. The principles to be observed by XOMA and Genentech in such
public disclosures will be: accuracy, the requirements for confidentiality under
Article 12, the advantage a competitor of XOMA or Genentech may gain from any
public statements under this Section 15.6, and the standards and customs in the
biotechnology and pharmaceutical industries for such disclosures by companies
comparable to XOMA and
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Genentech. Public disclosures of new Information not previously released and all
press releases will always require joint review by the Parties and shall be
subject to the other provisions of this Agreement. Notwithstanding the
foregoing, no such prior review by the non-issuing Party will be required for
public disclosures of information which has already been released. The terms of
this Agreement may also be disclosed to (i) government agencies where required
by law, including filings required to be made by law with the Securities and
Exchange Commission, the New York Stock Exchange, or any national exchange or
(ii) Third Parties with the prior written consent of the other Party, which
consent shall not be unreasonably withheld, so long as such disclosure is made
under a binder of confidentiality (in the case of Third Parties), so long as
highly sensitive terms and conditions such as financial terms are extracted from
this Agreement or not disclosed upon the request of the other Party and the
disclosing Party gives reasonable advance notice of the disclosure under the
circumstances requiring the disclosure.
ARTICLE 16
TERM AND TERMINATION
16.1 Term. This Agreement shall commence as of the Effective Date. The
Parties have specifically provided elsewhere in this Agreement the term during
which certain rights and obligations hereunder shall apply. Unless sooner
terminated as provided herein and except as provided below, (a) the provisions
of this Agreement relating to activities in the Co-Promotion Territory shall
continue in effect until the date on which XOMA is no longer entitled to receive
a share of Operating Profit or Loss on any Licensed Product and (b) the
provisions of this Agreement relating to activities in the Genentech Territory
shall continue in effect until the date on which Genentech is no longer paying a
royalty on Royalty-Bearing Sales in the Genentech Territory.
16.2 Termination by XOMA Without Cause. XOMA may terminate this Agreement
without cause effective upon ninety (90) days' prior written notice to Genentech
under the following conditions:
(a) Upon the effective date of such termination by XOMA, Genentech
shall automatically be granted an exclusive (even as to XOMA), perpetual,
worldwide, sublicensable license under all XOMA's rights and interests in
the XOMA Patents and XOMA Know-How to develop, make, have made, use, sell,
offer for sale and import Licensed Product in the Field.
(b) The rights and obligations of the Parties, including, without
limitation, the royalty payment obligations of Genentech, shall be as
follows:
(i) In the event of such a termination prior to the first
Regulatory Approval of the first Licensed Product to be approved by
the FDA or foreign equivalent, Genentech may elect, on the date of the
termination, either to pay XOMA [*]. In such event, payment by
Genentech may be in the form of a forbearance of XOMA's outstanding
indebtedness to Genentech, in whole or in part, at Genen-
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tech's sole discretion. In the event of such a termination following
the first Regulatory Approval of the first Licensed Product to be
approved by the FDA or foreign equivalent, Genentech shall pay XOMA a
royalty on worldwide Royalty-Bearing Sales of [*] percent ([*]%)
payable quarterly. Genentech's royalty obligations under this section
shall continue, with respect to Licensed Product for use in a
particular country in the world for [*] from the date of first
commercial sale of the first Licensed Product to be approved in the
first country within the Co-Promotion Territory or the Genentech
Territory. Genentech shall pay any Third Party royalties owed on
account of manufacture, use or sale of Licensed Product and Genentech
shall not receive any offsets for such payments.
(ii) The provisions of the Note Agreements shall remain in full
force and effect for the term of said agreements.
(iii) Upon the effective date of termination, at Genentech's
option XOMA shall transfer and/or Genentech shall automatically be
granted a right to use all of the INDs and Drug Approval Applications
made by or on behalf of the Parties for Licensed Products and, as soon
as reasonably practicable thereafter, XOMA shall provide Genentech
with all data XOMA may have from any ongoing clinical study.
(iv) In the event of termination by XOMA pursuant to this Section
16.2, the Parties shall agree upon a technology transfer plan which
will designate the obligations of each Party. The technology transfer
plan shall provide that XOMA shall make its personnel and other
resources reasonably available to Genentech after the effective date
of termination as necessary to effect an orderly transition of
development and/or commercialization responsibilities, with the
reasonable cost of such personnel and resources to be borne solely by
Genentech. XOMA's obligations under this Agreement and the technology
transfer plan shall be fulfilled upon completion of the tasks set
forth in the technology transfer plan or one year from commencement of
the technology transfer, which ever is earlier.
(v) The royalty provisions in this Section 16.2 are exclusive of
and shall be in place of those set forth in Section 8.3, but subject
to Section 8.4 and Sections 8.6 through and including Section 8.9.
16.3 Termination by Genentech Without Cause. Genentech shall have a right
to terminate this Agreement without cause effective upon ninety (90) days' prior
written notice to XOMA in the event Genentech has permanently determined to
abandon all further development and commercialization efforts with respect to
Anti-CD11a. In the event XOMA seeks to continue the development of Anti-CD11a
notwithstanding Genentech's termination, XOMA's rights to the Genentech Patents
and Genentech Know-How shall be as set forth in Section 16.5(b) subject to
payment by XOMA as follows: (i) if the termination by Genentech is prior to the
first Regulatory Approval of the first Licensed Product to be approved by the
FDA,
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XOMA may elect, on the date of the termination, either to pay Genentech [*];
(ii) if the termination by Genentech is after the first Regulatory Approval of
the first Licensed Product to be approved by the FDA, XOMA shall pay Genentech a
royalty on Royalty-Bearing Sales in the Co-Promotion Territory [*]. XOMA shall
pay any Third Party royalties owed on account of sales of Licensed Product and
XOMA shall not receive any offsets for such payments. In the event of
termination by Genentech pursuant to this Section 16.3, the Parties shall agree
upon a technology transfer plan which will designate the obligations of each
Party. The technology transfer plan shall provide that Genentech shall make its
personnel and other resources reasonably available to XOMA after the effective
date of termination as necessary to effect an orderly transition of development
and/or commercialization responsibilities, with the reasonable cost of such
personnel and resources to be borne solely by XOMA. Genentech's obligations
under this Agreement and the technology transfer plan shall be fulfilled upon
completion of the tasks set forth in the technology transfer plan or one year
from commencement of the technology transfer, which ever is earlier. The royalty
provisions in this Section 16.3 are exclusive of and shall be in place of those
set forth in Section 8.3, but subject to Section 8.4 and Section 8.6 through and
including Section 8.9.
16.4 Termination for Breach. If either Party materially breaches this
Agreement at any time and such breach is not cured within sixty (60) days of
written notice thereof from the non-breaching Party (or if such breach is not
susceptible of cure within such period, and the breaching Party is making
diligent good faith efforts to cure such breach, then the cure period will be
extended for an additional sixty (60) days), the non-breaching Party shall have
the right to terminate this Agreement. Subject to payment by XOMA of a royalty
on Royalty-Bearing Sales in the Co-Promotion Territory of [*] percent ([*]%)
payable quarterly in the event of termination by XOMA pursuant to this Section
16.4, and payment by Genentech of a royalty of [*] percent ([*]%) payable
quarterly on worldwide Royalty-Bearing Sales in the event of termination by
Genentech under this Section 16.4, the Parties shall have the licenses set forth
in Section 16.5. Pursuant to this Section 16.4, in the event of breach by
Genentech, XOMA shall pay any Third Party royalties owed on account of
manufacture, use or sale of Licensed Product; and in the event of breach by
XOMA, Genentech shall pay any Third Party royalties owed on account of
manufacture, use or sale of Licensed Product. No royalty offset shall be
available to the non-breaching Party pursuant to this section. The Parties
acknowledge and agree that failure to exercise any right or option with respect
to any Licensed Product or to take any action expressly within the discretion of
a Party shall not be deemed to be material breach hereunder. Further, upon the
effective date of termination, the non-breaching Party shall at its option, have
transferred or automatically be granted a right to use all INDs and Drug
Approval Applications made by or on behalf of the Parties and, as soon as
reasonably practicable, the breaching Party shall provide the non-breaching
Party with all data it may have from any ongoing clinical study.
16.5 Additional Obligations and Rights Upon Expiration and Termination.
(a) General. In the event of termination by a Party under Sections 16.2,
16.3 or 16.4: (i) both Parties shall remain responsible for their share of
Development Costs incurred up to the effective date of termination under the
then current Development Plan, and (ii) with respect to termination under
Section 16.4, the breaching Party shall be additionally responsible for their
share of all budgeted costs under the then current Development Plan for one year
following termination and the breaching Party shall make its personnel and other
resources reasonably available to the other Party as necessary to effect an
orderly transition of development and/or commercialization responsibilities,
with the reasonable cost of such personnel and resources to
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be borne solely by the other Party. The breaching Party's technology transfer
obligations shall be fulfilled upon completion of the tasks set forth in the
technology transfer plan (should the Parties enter into one) or one year from
commencement of the technology transfer in the event the Parties do not enter a
technology transfer plan. For so long as XOMA has a license under Section
16.5(b)(i) or Section 16.5(b)(ii) to use, sell, offer for sale, and have sold
Licensed Product, the provisions of Section 9.3 shall govern the manufacture and
supply of Licensed Product.
(b) Licenses Under Genentech Patents and Genentech Know-How. The licenses
granted to XOMA herein shall terminate upon expiration or termination of this
Agreement except as follows:
(i) Termination. Upon termination of this Agreement by Genentech
pursuant to Section 16.3 or termination by XOMA pursuant to Section 16.4,
and subject to the payment of royalties owed under Sections 16.3 and
Section 16.4 as applicable, XOMA shall have (a) a sublicensable license
under the Genentech Patents to use, develop, manufacture, have
manufactured, sell, have sold, and offer for sale Licensed Product in the
Field in the Co-Promotion Territory; such license shall be exclusive only
with respect to Permitted Indications and (b) pursuant to the terms of
Section 9.3, a sublicensable license under the Cabilly Patents, if
Genentech elects not to manufacture or otherwise supply Licensed Product.
The term of such licenses under the Cabilly Patents, and the Genentech
Patents and XOMA's royalty obligations in Section 16.4, shall be until the
last to expire Genentech Patent or Cabilly Patent , containing a Valid
Claim that, but for the license granted in this Section 16.5(b)(i)(A),
would be infringed by the use, sale, or offer for sale of any Licensed
Product.
(ii) Expiration. Upon expiration of this Agreement pursuant to Section
16.1, provided that XOMA has at the time of expiration completed a Phase
III Clinical Trial for any Permitted Indication which Genentech has not
opted-in to prior to such expiration, XOMA shall have (a) an exclusive
license under the Genentech Patents to use, sell, have sold, and offer for
sale Licensed Product only for such Permitted Indication in the Field in
the Co-Promotion Territory which license shall be sublicensable only to a
Contract Sales Organization (as defined in Section 5.9) and (b) pursuant to
the terms of Section 9.3, a sublicensable license under the Cabilly
Patents, if Genentech elects not to manufacture or otherwise supply
Licensed Product. Such licenses shall be subject to a royalty payment of
[*] percent ([*]%) on Royalty Bearing Sales in the Co-Promotion Territory.
The royalty provisions in this Section 16.5(b) are exclusive of and shall
be in place of those set forth in Section 8.3, but subject to Section 8.4
and Section 8.6 through and including Section 8.9. In addition, XOMA shall
pay any Third Party royalties owed on account of manufacture, use or sale
of Licensed Product for such indications in the Co-Promotion Territory.
XOMA's royalty obligations to Genentech under this Section 16.5(ii) shall
be offset by [*] percent ([*]%) of the royalties owed to Third Parties as a
result of Royalty Bearing Sales of such Licensed Products; provided,
however, that in no event shall the royalty be less than [*] percent ([*]%)
on such Royalty Bearing Sales in the Co-Promotion Territory. For pur-
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poses of this Section 16.5(b), in the event that quarterly Royalty-Bearing
Sales can not be determined strictly from sales data, a custom audit will
be commissioned by Genentech not more than semi-annually. The audit will be
similar in design to other product audits conducted by Genentech. XOMA
shall have the right to review the audit data and format. The term of such
licenses and royalty obligations under this Section 16.5(b)(ii) shall be
until the last to expire Genentech Patent or Cabilly Patent containing a
Valid Claim, that, but for such license granted in this Section
16.5(b)(ii), would be infringed by the use, sale, or offer for sale of any
Licensed Product.
(c) Licenses Under XOMA Patents and XOMA Know-How. Upon termination by
Genentech pursuant to Section 16.4, subject to payment of royalties as set forth
in Section 16.4, Genentech shall have an exclusive (even as to XOMA) worldwide,
sublicensable license under all of XOMA's rights and interests in the XOMA
Patents and XOMA Know-How to develop, make, have made, use, sell, offer for sale
and import Licensed Product in the Field. The term of Genentech's royalty
obligations under Section 16.4 shall be until the last to expire XOMA Patent
containing a Valid Claim that, but for the license granted in this Section
16.5(c), would be infringed by the use, sale, or offer for sale of any Licensed
Product. Upon termination by XOMA pursuant to Section 16.2, Genentech's license
rights under the XOMA Patents and XOMA Know-How are as set forth in Section
16.2. At the end of the royalty terms provided in this Agreement, all licenses
granted to Genentech hereunder with respect to the Co-Promotion Territory and
the Genentech Territory, as the case may be, shall become fully paid-up,
perpetual and irrevocable.
16.6 Royalty Reports and Payments. For those royalties owed pursuant to
Section 16, such payments will be accompanied by a report estimating, if final
data is not available, or otherwise summarizing the Royalty-Bearing Sales during
the relevant three-month period. Payments of estimated royalties will be
promptly reconciled upon issuance of each final audit report which is prepared
by Genentech in accordance with Section 16.5(b) above.
16.7 Surviving Rights. The obligations and rights of the Parties under
Sections 8.2(a)-(c), 8.5(c), 8.6, 8.7, 9.3, 11.1, 13.1, 13.3(a), 13.3(b),
13.5(b), 13.6(b), 13.6(c), 13.7, and 15.4 and Articles 1, 12, 14, 16, 17, 18 and
19 of this Agreement will survive termination or expiration.
16.8 Accrued Rights, Surviving Obligations. Termination, relinquishment or
expiration of this Agreement for any reason shall be without prejudice to any
payments which shall have accrued to the benefit of either Party prior to such
termination, relinquishment or expiration, including damages arising from any
breach hereunder. Such termination, relinquishment or expiration shall not
relieve either Party from obligations which are expressly indicated to survive
termination or expiration of this Agreement.
16.9 Bankruptcy. Either Party may, in addition to any other remedies
available to it by law or in equity, terminate this Agreement, in whole or in
part as the terminating Party may determine, by written notice to the other
Party in the event the other Party shall have become bankrupt, or shall have
made an assignment for the benefit of its creditors or there shall
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have been appointed a trustee or receiver of the other Party or for all or a
substantial part of its property or any case or proceeding shall have been
commenced or other action taken by or against the other Party in bankruptcy or
seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts or any other relief under any
bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect and any such event shall have continued
for sixty (60) days undismissed, unbonded and undischarged. All rights and
licenses granted under this Agreement by one Party to the other Party are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101(56) of the Bankruptcy Code. The Parties agree that the licensing
Party under this Agreement shall retain and may fully exercise all of its rights
and elections under the Bankruptcy Code in the event of a bankruptcy by the
other Party. The Parties further agree that in the event of the commencement of
a bankruptcy proceeding by or against one Party under the Bankruptcy Code, the
other Party shall be entitled to complete access to any such intellectual
property pertaining to the rights granted in the licenses hereunder of the Party
by or against whom a bankruptcy proceeding has been commenced and all
embodiments of such intellectual property.
ARTICLE 17
INDEMNIFICATION
17.1 Indemnification in the Genentech Territory.
(a) Genentech hereby agrees to save, defend and hold XOMA and its agents
and employees harmless from and against any and all losses, damages,
liabilities, settlements, suits, claims, actions, demands, penalties, fines,
costs and expenses (including reasonable attorney's fees and expenses)
(collectively the "Losses") resulting directly from the manufacture, use,
handling, storage, sale or other disposition of Licensed Products sold or used
in the Genentech Territory by Genentech, its Affiliates, agents or sublicensees,
except to the extent such Losses result from the negligence or willful
misconduct of XOMA, and also except for any Losses resulting directly from
XOMA's use of Genentech's processes or technology which XOMA or its agents have
modified without Genentech's prior written consent.
(b) In the event that XOMA is seeking indemnification under Section
17.1(a), it shall inform Genentech of a claim as soon as reasonably practicable
after it receives notice of the claim, shall permit Genentech to assume
direction and control of the defense of the claim (including the right to settle
the claim solely for monetary consideration), and shall cooperate as reasonably
requested (at the expense of Genentech) in the defense of the claim.
(c) XOMA hereby agrees to save, defend and hold Genentech and its agents
and employees harmless from and against any and all Losses resulting directly
from the manufacture by XOMA of Licensed Products sold or used in the Genentech
Territory by Genentech, its Affiliates, agents or sublicensees and/or XOMA's
activities in the Genentech Territory except to the extent such Losses result
from the negligence or willful misconduct of Genentech and also
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except for any Losses resulting directly from Genentech's use of any of XOMA's
processes or technology which Genentech or its agents have modified without
XOMA's prior written consent.
(d) In the event Genentech is seeking indemnification under Section
17.1(c), it shall inform XOMA of a claim as soon as reasonably practicable after
it receives notice of the claim, shall permit XOMA to assume direction and
control of the defense of the claim (including the right to settle the claim
solely for monetary consideration), and shall cooperate as reasonably requested
(at the expense of XOMA) in the defense of the claim.
17.2 Indemnification in the Co-Promotion Territory.
(a) Regardless of whether the Parties are jointly or individually opted-in
to an Indication each Party agrees to save, defend and hold the other Party and
its agents and employees harmless from and against any and all Losses resulting
directly or indirectly from Third Party claims related to or arising from: (i)
violations of securities laws by the indemnifying Party and its Affiliates or
employees, (ii) the use, handling, storage, sale, marketing or other disposition
of Licensed Products sold or used in the Co-Promotion Territory by the
indemnifying Party, its Affiliates, agents or sublicensees (if permitted
herein), but only to the extent such Losses result from the negligence or
willful misconduct of the indemnifying Party; or (iii) or the negligence or
willful misconduct of the indemnifying Party's employees, representatives,
contractors (excluding the indemnitee); but with respect to Sections
17.2(a)(i)-(iii) only to the extent that such Losses do not also result from the
negligence or willful misconduct of the Party seeking indemnification. With
respect to only Joint Development Indications, any other Losses arising directly
or indirectly from Third Party claims, including but not limited to those which
result directly or indirectly from the use, handling, storage, sale, marketing
or other disposition, but not manufacture, of Licensed Products for Joint
Development Indications in the Co-Promotion Territory, but excluding Losses
arising from or related to securities laws violations, shall be charged to the
collaboration as Other Operating Income/Expense if this Agreement is still
effective and if not, such Losses shall be shared in accordance with each
Party's respective shares of profit and losses set forth in Section 6.2.
(b) In the event that either Party receives notice of a claim with respect
to a Licensed Product in the Co-Promotion Territory, such Party shall inform the
other Party as soon as reasonably practicable. The Parties shall confer how to
respond to the claim and how to handle the claim in an efficient manner.
(c) Neither Party shall be liable to the other for indirect, incidental,
special or consequential damages (including lost profits) arising out of or
resulting from any term or condition of this Agreement or with respect to their
performance or lack thereof.
ARTICLE 18
DISPUTE RESOLUTION
18.1 Disputes. The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights
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and/or obligations hereunder. It is the objective of the Parties to establish
procedures to facilitate the resolution of disputes arising under this Agreement
in an expedient manner by mutual cooperation and without resort to litigation.
To accomplish this objective, the Parties agree to follow the procedures set
forth in this Article 18 if and when a dispute arises under this Agreement.
Except as set forth in Section 3.4 and unless otherwise specifically recited in
this Agreement, disputes among the Parties will be resolved as follows: (a) Any
disputes relating to matters within the purview of the JCT shall first be
referred to the JCT by written notice by one of the Parties, and if not resolved
within thirty (30) days to the JSC as set forth in Section 18.1(b); and (b) For
matters not within the purview of the JCT or in the event the JCT or Finance
Committee has authority to resolve such matters but fails to within thirty (30)
days, the JSC, upon written notice by any Party, shall seek to resolve the
dispute. If the JSC is unable to resolve such dispute within sixty (60) days of
being requested or the JSC agrees in advance of sixty (60) days that it is
unable to resolve a dispute among its members, the dispute will be referred to
an Executive Vice President or Senior Vice President of Genentech and the Chief
Executive Officer or a Senior Vice President of XOMA. If after sixty (60) days
the dispute remains unresolved, the Parties agree to refer the matter to
mediation pursuant to Section 18.2(a). If after forty-five (45) days the matter
cannot be resolved by mediation, the Parties agree to submit to arbitration
pursuant to Section 18.2(b).
18.2 Mediation and Arbitration.
(a) Mediation. The Parties agree that any dispute, controversy or claim
(except as to any issue relating to intellectual property owned in whole or in
part by XOMA or Genentech or any equitable claim) arising out of or relating to
this Agreement, or the breach, termination or invalidity thereof, shall be
resolved through negotiation and mediation. If a dispute arises between the
Parties, and if said dispute cannot be resolved pursuant to Section 18.1, the
Parties agree to try in good faith to resolve such dispute by mediation
administered by the American Arbitration Association in accordance with its
Commercial Mediation Rules. The mediation proceeding shall be conducted at the
location of the Party not originally requesting the resolution of the dispute.
The Parties agree that they shall share equally the cost of the mediation filing
and hearing fees, and the cost of the mediator. Each Party must bear its own
attorney's fees and associated costs and expenses.
(b) Arbitration. (i) If a dispute (other than any dispute which arises out
of or relates to infringement, validity and/or enforceability of patent rights
and/or which involves an equitable claim) cannot be resolved pursuant to Section
18.2(a) within the time period provided in Section 18.1, then, upon ten (10)
days written notice, either Party may initiate arbitration by giving notice to
that effect to the other Party and by filing the notice with the American
Arbitration Association or its successor organization (the "AAA") in accordance
with its Commercial Arbitration Rules. Such dispute shall then be settled by
arbitration in California in accordance with the Commercial Arbitration Rules of
the AAA or other rules agreed to by the Parties, by a panel of three neutral
arbitrators, who shall be selected by the Parties using the procedures for
arbitrator selection of the AAA.
(ii) The Parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. Insofar as it applies, the United States
Arbitration Act shall govern
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the interpretation of, enforcement of, and proceedings pursuant to the
arbitration clause in this Agreement. Except insofar as the United States
Arbitration Act applies to such matters, the agreement to arbitrate set forth in
this Section 18.2(b) shall be construed, and the legal relations among the
Parties shall be determined in accordance with, the substantive laws of
California.
(iii) The panel shall render its decision and award, including a statement
of reasons upon which such award is based, within thirty (30) days after the
arbitration hearing. The decision of the panel shall be determined by majority
vote among the arbitrators, shall be in writing and shall be binding upon the
Parties, final and non-appealable. Judgment upon the award rendered by the panel
may be entered in any court having jurisdiction thereof in accordance with
Section 18.3.
(iv) Except as provided under the United States Arbitration Act and with
respect to the infringement, validity and/or enforceability of patent rights, no
action at law or in equity based upon any dispute that is subject to arbitration
under this Section 18.2(b) shall be instituted.
(v) All expenses of any arbitration pursuant to this Section 18.2(b),
including fees and expenses of the Parties' attorneys, fees and expenses of the
arbitrators, and fees and expenses of any witness or the cost of any proof
produced at the request of the arbitrators, shall be paid by the non-prevailing
Party.
18.3 Jurisdiction. For the purposes of this Article 18, the Parties agree
to accept the jurisdiction of the federal courts located in the Northern
District of California for the purposes of enforcing the agreements reflected in
this Article.
18.4 Determination of Patents and Other Intellectual Property. Any dispute
relating to the determination of validity of a Party's Patents or other issues
relating solely to a Party's intellectual property shall be submitted
exclusively to the federal courts located in the Northern District of
California, San Francisco Division, and the Parties hereby consent to the
jurisdiction and venue of such court.
ARTICLE 19
MISCELLANEOUS
19.1 Assignment.
(a) Either Party may assign any of its rights under this Agreement in any
country to any Affiliates and, with the prior written consent of the other
Party, may delegate its obligations under this Agreement in any country to any
Affiliates; provided, however, that any such assignment shall not relieve the
assigning Party of its responsibilities for performance of its obligations under
this Agreement.
(b) Either Party may assign all of its rights and obligations under this
Agreement in connection with a merger or similar reorganization or the sale of
all or substantially all of its assets or otherwise with the prior written
consent of the other Party; provided, however, that
-45-
XOMA may not so assign its rights and obligations if it is not the surviving
company and the acquiror of XOMA is a direct competitor of Genentech. This
Agreement shall survive any such merger or reorganization of either Party with
or into, or such sale of assets to, another party and no consent (except as
otherwise set forth above) for such merger, reorganization or sale shall be
required hereunder.
(c) This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
19.2 Non-Solicitation. The Parties recognize that each Party has a
substantial interest in preserving and maintaining confidential its Confidential
Information hereunder. Each Party recognizes that certain of the other Party's
employees, including those engaged in development, marketing and sale of any
Licensed Product, may have access to such Confidential Information of the other
Party. The Parties therefore agree not to solicit or otherwise induce or attempt
to induce for purposes of employment any employees from the other Party involved
in the development, marketing or sales of any Licensed Product during the period
in which any Party is developing or commercializing a Licensed Product in the
Co-Promotion Territory hereunder and for a period of two years thereafter.
19.3 Consents Not Unreasonably Withheld. Except as otherwise provided
herein, whenever provision is made in this Agreement for either Party to secure
the consent or approval of the other, that consent or approval shall not
unreasonably be withheld, and except as otherwise provided herein, whenever in
this Agreement provision is made for one Party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
19.4 Retained Rights. Nothing in this Agreement shall limit in any respect
the right of either Party to conduct research and development with respect to
and market products outside the Field using such Party's technology.
19.5 Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, terrorism, fire, explosion, flood, earthquake, strike, lockout,
embargo, act of God, or any other cause beyond the control of the defaulting
Party; provided that the Party claiming force majeure has exerted all
Commercially Reasonable and Diligent Efforts to avoid or remedy such force
majeure; provided, however, that in no event shall a Party be required to settle
any labor dispute or disturbance.
19.6 Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.
19.7 No Right to Use Names. Except as otherwise provided herein, no right,
express or implied, is granted by this Agreement to use in any manner the name
"XOMA," "Genentech" or any other trade name or trademark of the other Party or
its Affiliates in connection with the performance of this Agreement.
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19.8 Notices. All notices hereunder shall be in writing and shall be deemed
given if delivered personally or by facsimile transmission (receipt verified),
telexed, mailed by registered or certified mail (return receipt requested),
postage prepaid, or sent by express courier service, to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice; provided that notices of a change of address shall be effective
only upon receipt thereof).
If to XOMA,
addressed to: XOMA (US) LLC
0000 0xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Company Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: X.X. Xxxxxx
If to Genentech,
addressed to: GENENTECH, INC.
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to the Vice President of
Business Development
Telecopy: (000) 000-0000
19.9 Waiver. Except as specifically provided for herein, the waiver from
time to time by either of the Parties of any of its rights or its failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.
19.10 Severability. If any term, covenant or condition of this Agreement or
the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) the remainder of this Agreement,
or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the Parties that the basic purposes of this Agreement are to be effectuated.
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19.11 Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against either Party, irrespective of which Party may be deemed to
have authorized the ambiguous provision.
19.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19.13 Entire Agreement. This Agreement, including all Exhibits attached
hereto, which are hereby incorporated herein by reference, together with the
Note Agreement, the Common Stock and Convertible Note Purchase Agreement dated
as of April 22, 1996, as amended, and that certain letter agreement between the
Parties dated April 7, 2000, set forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersedes and terminates all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties regarding the subject matter herein other than as set forth herein
and therein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.
-48-
In Witness Whereof, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the Effective Date.
XOMA (US) LLC GENENTECH, INC.
By:_________________________________ By:_________________________________
Xxxxxxxx X. Xxxxxx Xxxxx X. Xxxxxxx-Xxxxxxx
Title: Senior Vice President Title: Executive Vice President
and Chief Operating Officer Development and Product
Operations and Chief
Medical Officer
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EXHIBIT A
FINANCIAL PLANNING, ACCOUNTING AND REPORTING
FOR THE XOMA/GENENTECH COLLABORATION AGREEMENT
This Exhibit A to the Amended and Restated Collaboration Agreement (the
"Agreement") effective as of April 22, 1996, between XOMA (US) LLC ("XOMA") and
Genentech, Inc. ("Genentech") addresses the financial planning, accounting
policies and procedures to be followed in determining Operating Profit or Loss
and related sharing of revenue and expenses in the Co-Promotion Territory. Terms
not defined in this Exhibit shall have the meanings set forth in the Agreement.
This Exhibit sets forth the principles for reporting actual results and
budgeted plans of the combined operations in the Co-Promotion Territory, the
frequency of reporting, and the methods of determining payments to the Parties
and auditing of accounts.
For purposes of this Exhibit only, the consolidated accounting of
operations for the collaboration in the Co-Promotion Territory shall be referred
to as "GenXOMA." GenXOMA is not a legal entity and has been defined for
identification purposes only.
PRINCIPLES OF REPORTING
The results of operations of GenXOMA will be presented in the following
format, with the categories as defined below:
XOMA Genentech Total
---- --------- -----
Gross Sales
less Sales Returns and Allowances
= Net Sales
less Cost of Sales
= Gross Profits
less Marketing Costs
less Sales Costs
less Development Costs chargeable to
GenXOMA
less Other Operating Income/Expense
= Contribution
less Distribution Costs
less Administration Costs
= Operating Profit (Loss)
Exh. A-1
It is the intention of the Parties that the interpretation of these
definitions will be consistent with generally accepted accounting principles in
the United States.
FREQUENCY OF REPORTING
The fiscal year of GenXOMA will be a calendar year.
Reporting by each Party for GenXOMA revenues and expenses will be performed
as follows:
Reporting Event Frequency Timing of Submission
Actuals Quarterly Q1-Q3: +30 days
Q4: +45 days
Forecasts Quarterly Mid-Quarter
(rest of year - by quarter)
Budgets Annually October 15th
(one year - by month)
Long Range Plan Annually May 1st
(current year plus 5 years)
Genentech will be responsible for the preparation of consolidated
reporting, calculation of the profit/loss sharing and determination of the cash
settlement. Genentech will provide the Finance Committee within five working
days of the submission date shown above, a statement showing the consolidated
results and calculations of the profit/loss sharing and cash settlement required
in a format agreed to by the Parties.
Reports of actual results compared to budget will be made to the Joint Core
Team on a quarterly basis. After approval by the Finance Committee as to
amounts, the Finance Committee will forward the report to the Joint Steering
Committee for its approval. Line item variances from budgets judged to be
significant by the Finance Committee will only be included in calculation of
Operating Profit and Loss when approved by the Joint Core Team and the Joint
Steering Committee.
On a monthly basis Genentech will supply XOMA with Gross Sales in the
Co-Promotion Territory in units of each month's sales according to Genentech's
sales reporting system, which shall be consistent with the definitions herein.
The Finance Committee will meet as appropriate but at least quarterly to
review and approve the following:
o Actual Results
o Sales and Manufacturing Forecasts
Exh. A-2
o Budget
o Inventory Levels
o Sales Returns and Allowances
o Other financial matters, including each Party's methodologies for
charging costs and allocating Sales Representatives to GenXOMA for
actuals, forecasts, budgets and long range plans and the results of
applying such methodologies.
BUDGET AND LONG RANGE PLAN
Responsibility for the Budget and Long Range Plan will rest with the Joint
Core Team, who will develop budgets for development and commercialization in
coordination with the Finance Committee, subject to final approval by the Joint
Steering Committee.
Budgets will be prepared annually. In addition, headcount chargeable to
GenXOMA will be agreed to annually.
Budgets will be supplemented with detailed business plans for clinical
trials, registration applications, and detailed plans for product introduction,
sales efforts and promotion as determined by the Joint Core Team. Budgets, once
approved by the Joint Steering Committee, can only be changed with the approval
of the Joint Steering Committee.
A five-year Long Range Plan for GenXOMA will be established on a yearly
basis under the direction of the Joint Steering Committee and submitted to
Genentech and XOMA by May 1st.
DEFINITIONS
"Administration Costs" means costs chargeable to GenXOMA equal to [*]% of
the sum of each Party's own Marketing Costs and Sales Costs (both only to the
extent chargeable to GenXOMA).
"Allocable Overhead" means costs incurred by a Party or for its account
which are attributable to a Party's supervisory, services, occupancy costs,
corporate bonus (to the extent not charged directly to department), and its
payroll, information systems, human relations or purchasing functions and which
are allocated to company departments based on space occupied or headcount or
other activity-based method. Allocable Overhead shall not include any costs
attributable to general corporate activities including, by way of example,
executive management, investor relations, business development, legal affairs
and finance.
"Combination Product Adjustment" means the following: in the event a
Licensed Product is sold in the form of a combination product containing one or
more active ingredients in addition to a Licensed Product, Net Sales for such
combination product will be adjusted by multiplying actual Net Sales of such
combination product by the fraction A/(A + B) where A
Exh. A-3
is the invoice price of the Licensed Product, if sold separately, and B is the
invoice price of any other active component or components in the combination, if
sold separately. If, on a country-by-country basis, the other active component
or components in the combination are not sold separately in said country, Net
Sales shall be calculated by multiplying actual Net Sales of such combination
product by the fraction A/C where A is the invoice price of the Product if sold
separately, and C is the invoice price of the combination product. If, on a
country-by-country basis, neither the Licensed Product nor the other active
component or components of the combination product are sold separately in said
country, Royalty-Bearing Sales or Net Sales shall be determined by the Parties
in good faith.
"Cost of Goods Sold" means the fully burdened cost of the Licensed Product
in final therapeutic form. The fully burdened cost of the Licensed Product will
be determined in accordance with generally accepted accounting principles in the
United States as applied by the Party performing or contracting for each stage
of the manufacturing process and will include direct labor, material, the cost
associated with a [*] percent ([*]%) failure rate of lots (regardless of the
actual percentage), product testing costs and Allocable Overhead.
"Cost of Sales" means Cost of Goods Sold, Third Party Royalties (i.e., any
allocable intellectual property acquisition and licensing costs), outbound
freight on sales if borne by the seller and a one-time working capital charge on
inventory calculated at an annual rate equal to [*] multiplied by Cost of Goods
Sold of the launch inventory, which charge shall apply for the period beginning
on the first commercial sale and ending when the launch inventory is completely
sold or after one year, whichever is earlier.
"Development Costs" means those costs, including Allocable Overhead,
arising from clinical trials or other Scientific Studies: (i) to obtain and/or
expand Regulatory Approvals, the authorization and/or ability to manufacture,
formulate, fill, ship and/or sell a Licensed Product in the Field in commercial
quantities and (ii) to enhance revenues from Licensed Product. Development Costs
shall include but are not limited to the cost of studies on the toxicological,
pharmacokinetic, metabolic or clinical aspects of a Licensed Product conducted
internally or by individual investigators or consultants necessary for the
purpose of obtaining and/or maintaining approval of a Licensed Product in the
Field by a government organization and costs for preparing, submitting,
reviewing or developing data or information for the purpose of submission to a
governmental authority to obtain and/or maintain approval of a Licensed Product
in the Field as well as costs of Studies to add data to or expand package
inserts and costs of scientific advisory boards and process development scale-up
and recovery (including allocable depreciation and plant operating costs)
regardless of where such work is performed. In addition, for those indications
as to which both Parties have opted-in as contemplated by the Agreement,
Development Costs shall include the cost of post-launch clinical studies in
support of a Licensed Product in the Field. Development Costs shall include
expenses for compensation, benefits and travel and other employee-related
expenses, as well as data management, statistical designs and studies, document
preparation, and other expenses associated with the clinical testing program.
Development Costs exclude costs incurred by Genentech pursuant to Section
4.2(a)(i) and 4.2(a)(ii) of the Agreement and costs incurred by XOMA pursuant to
Section 4.2(a)(ii), 4.2(b)(i) and 4.2(b)(ii) of the Agreement.
Exh. A-4
"Distribution Costs" means the costs, including Allocable Overhead,
specifically identifiable to the distribution of a Licensed Product including
customer services, collection of data of sales to hospitals and other end users
(e.g., DDD sales data), order entry, billing, credit and collection and other
activities described in Section 5.3 of the Agreement. For the purpose of the
Agreement, only Genentech will charge GenXOMA for Distribution Costs an amount
of [*]% of Net Sales in a lump sum.
"Ex-U.S. Development Costs" means Development Costs incurred solely for
expanding or obtaining Regulatory Approvals outside of the United States.
Development Costs will be deemed Ex-U.S. Development Costs if Genentech is not
obligated to share such costs contractually with an Ex-U.S. Genentech Partner.
In addition but subject to the $[*] payment XOMA is required to make pursuant to
Section 6.1(b), those costs which Genentech is required to fund [*] shall be
Ex-U.S. Development Costs.
"Fully Burdened Manufacturing Cost" means the fully burdened cost of the
Licensed Product in bulk or final form, as applicable. The fully burdened cost
of the Licensed Product will be determined in accordance with generally accepted
accounting principles in the United States as applied by the Party performing or
contracting for each stage of the manufacturing process and will include direct
labor, material, the cost associated with a [*] percent ([*]%) failure rate of
lots (regardless of the actual percentage), product testing costs and Allocable
Overhead.
"Global Development Costs" means those Development Costs incurred pursuant
to a coordinated global development plan designed to obtain approvals both in
the U.S. and ex-U.S. Development Costs shall be deemed Global Development Costs
if an Ex-U.S. Genentech Partner is contractually obligated to or otherwise
agrees to fund a share of such costs. In addition, Development Costs shall be
deemed Global Development Costs if, as in the case of psoriasis and psoriatic
arthritis, an Ex-U.S. Genentech Partner is entitled to use data generated from
clinical studies for development purposes without financial contribution or when
Genentech provides such data to an Ex-U.S. Genentech Partner without charge for
use in development outside the U.S. [*]
"Gross Sales" means the gross amount invoiced by either Party or its
Affiliates or permitted sublicensees for sales of a Licensed Product to Third
Parties in the Co-Promotion Territory.
"Marketing Costs" means the costs, including Allocable Overhead, of
marketing, promotion, advertising, professional education, product related
public relations, relationships with opinion leaders and professional societies,
market research, healthcare economics studies and other similar activities
directly related to the Licensed Products. Such costs will include both internal
costs (e.g., salaries, benefits, supplies and materials, etc.) as well as
outside services and expenses (e.g., consultants, agency fees, meeting costs,
etc.). Marketing Costs shall also include activities related to obtaining
reimbursement from payers and costs of sales and marketing data. Marketing Costs
will specifically exclude the costs of activities which promote either Party's
business as a whole without being product specific (such as corporate image
advertising).
Exh. A-5
"Net Sales" means with respect to sales in the Co-Promotion Territory,
Gross Sales less the sum of (a), (b) and (c) where (a) is a provision,
determined under generally accepted accounting principles in the United States,
for (i) trade, cash and quantity discounts or rebates (other than price
discounts granted at the time of invoicing and which are included in the
determination of Gross Sales), (ii) credits or allowances given or made for
rejection or return of previously sold products or for retroactive price
reductions (including Medicare and similar types of rebates), (iii) taxes,
duties or other governmental charges levied on or measured by the billing
amount, as adjusted for rebates and refunds, (iv) charges for freight and
insurance directly related to the distribution of Licensed Products (to the
extent not paid by the Third Party customer), and (v) credits or allowances
given or made for wastage replacement, indigent patient and any other sales
programs agreed to by the Parties, (b) is a periodic adjustment of the provision
determined in (a) to reflect amounts actually incurred for (i), (ii), (iii),
(iv) and (v), and (c) is the Combination Product Adjustment as defined in the
Agreement, if any. Provisions allowed in (a) and adjustments made in (b) and (c)
will be reviewed by the Finance Committee.
With respect to sales in the Genentech Territory, Net Sales and Royalty
Bearing Sales as used in the Agreement shall mean:
as to each calendar quarter, the gross invoiced sales prices charged for
all Licensed Products sold by an Ex-U.S. Genentech Partner, its Affiliates and
sublicensees in arm's length transactions to Third Parties in the Genentech
Territory during such quarter, less (i) rebates and price reductions,
retroactive or otherwise (including rebates similar to Medicare or other
government rebates), (ii) credits or allowances given or made for rejection or
return of, and for uncollectible amounts on, previously sold Licensed Products,
(iii) taxes, duties or other governmental charges levied on or measured by the
billing amount, as adjusted for rebates and refunds, (iv) charges for freight,
postage and insurance directly related to the distribution of Licensed Products
(to the extent not paid by the Third Party customer), (v) credits or allowances
given or made for wastage replacement, indigent patient and similar programs, to
the extent actually deducted from the gross amount invoiced, and (vi) amounts
debited on account of bad debts with respect to sales previously invoiced, all
of items (i) - (vi) above as adjusted periodically to represent actual results
in accordance with International Accounting Standards (IAS). If applicable, such
amounts shall then be adjusted by the Combination Product Adjustment which shall
be defined in the agreement(s) between Genentech and Ex-U.S. Genentech Partners
relating to the development of Anti-CD11a.
"Operating Profit or Loss" means GenXOMA's Net Sales less the following
items: Cost of Sales, Marketing Costs, Sales Costs, Development Costs (to the
extent chargeable to GenXOMA), Other Operating Income/Expense, Distribution
Costs and Administrative Costs, for a given period.
"Other Operating Income/Expense" means other operating income or expense
from or to third parties which is not part of the primary business activity of
GenXOMA, but is considered and approved by the Finance Committee as income or
expense generated from GenXOMA operations, and limited to the following:
Exh. A-6
- Inventory Write-Offs
- Patent Costs (as limited by Article 13 of the Agreement)
- Product liability insurance to the extent the Parties obtain a joint
policy
- Indemnification costs (as provided in Article 17 of the Agreement)
- Other (to be approved by Joint Steering Committee)
"Patent Costs" means the fees and expenses paid to outside legal counsel
and experts, and filing and maintenance expenses, incurred after the Effective
Date in connection with the establishment and maintenance of rights under
Patents covering any Licensed Product, including costs of patent interference,
reexamination, reissue, opposition and revocation proceedings.
"Sales Costs" means costs, including Allocable Overhead, approved by the
Joint Core Team and the annual budget and specifically identifiable to the sales
of Licensed Products to all markets in the Co-Promotion Territory including the
managed care market. Sales Costs shall include costs associated with Sales
Representatives, including compensation, benefits and travel, supervision and
training of the Sales Representatives, sales meetings, and other sales expenses.
Sales Costs will not include the start-up costs associated with either Party's
sales force, including recruiting, relocation and other similar costs.
"Sales Returns and Allowances" means Gross Sales less Net Sales.
"U.S. Commercialization Costs" means Marketing Costs and Sales Costs which
are incurred to generate revenues from Licensed Product sales solely in the
United States.
"U.S. Specific Development Costs" means those Development Costs designed to
obtain or expand Regulatory Approvals only in the United States. Except with
respect to [*], if an Ex-U.S. Genentech Partner is not financially contributing
to payment of such Development Costs, they will be deemed U.S. Specific
Development Costs. For purposes of clarity, Development Costs incurred for [*]
shall be deemed U.S. Specific Development Costs until such time as an Ex-U.S.
Genentech Partner opts-in to or otherwise funds costs for this Indication.
Audits and Interim Reviews
Either Party shall have the right to request that the other Party's
independent accounting firm perform an audit or interim review of the other
Party's books in order to express an opinion regarding said Party's compliance
with generally accepted accounting principles. Such audits or review will be
conducted at the expense of the requesting Party.
Either Party shall have the right to request that its independent
accounting firm perform an audit of the other Party's books of accounts for the
sole purpose of verifying compliance with the Agreement. Such audits will be
conducted at the expense of the requesting Party; provided, however, that if the
audit results in an adjustment of greater than [*]% of Operating Profit or Loss
in any period, the cost of the audit will be borne by the Party audited. Audit
results will be shared with both Parties.
Exh. A-7
PAYMENTS BETWEEN THE PARTIES AND CARRY FORWARD
Balancing payments between the Parties will be approved by the Joint
Steering Committee based on Operating Profit or Loss. Payments will be made
quarterly based on actual results within 90 days after the end of each quarter,
adjusted for reimbursement of the net expenses or income incurred or received by
each Party.
With respect to the psoriasis Indication only, if there is a net negative
operating cash flow, XOMA may defer its payment for any loss arising from
commercialization costs in the U.S. which accrue during the calendar year of the
launch, until the earlier of April 30th of the following calendar year or the
first calendar quarter with positive operating cash flow (the "Deferred
Payment"). Notwithstanding the foregoing, there will be no such deferral for
income statement purposes. The Deferred Payment shall accrue interest at the
rate of [*].
ACCOUNTING FOR DEVELOPMENT COSTS, MARKETING COSTS
AND SALES COSTS
All Development Costs, Marketing Costs and Sales Costs will be based on the
appropriate costs definition stated in Section A.4 of this Exhibit.
Each party shall report Development Costs in a manner consistent with its
Project Cost System. In general, these project cost systems report actual time
spent on specific projects, apply the actual labor costs, capture actual costs
of specific projects and allocate other expenses to projects. For Marketing
Costs, the Parties will report costs based on spending in marketing departments.
The Parties acknowledge that the methodologies used will be based on systems in
place.
For the purpose of determining actual and budgeted Sales Costs, the
Parties, through the Joint Core Team and the Finance Committee, shall determine
the number of Sales Representatives selling Licensed Products during the period
and develop a method consistent with Section A.4 of this Exhibit to allocate
Sales Costs to those Sales Representatives.
SHARING OF OPERATING PROFITS AND LOSSES
For Joint Development Indications, the Parties agree to share the Operating
Profit or Loss resulting from the collaborative arrangement in the Co-Promotion
Territory according to the following manner:
For each calendar year, XOMA shall receive 25% of the Operating Profit and
Genentech shall receive 75% of Operating Profit from such Joint Development
Indications. To the extent there is an Operating Loss on sales of Licensed
Product for Joint Development Indications in the Co-Promotion Territory in any
calendar year, XOMA shall absorb 25% of such loss and Genentech shall absorb 75%
of such Loss.
Exh. A-8
Start of Operations
Operation of GenXOMA will be deemed to have commenced on the date the
Parties began to share Development Costs for the psoriasis Phase III Clinical
Trial which occurred on or about May 4, 1999. Costs incurred prior to that date
are not chargeable to GenXOMA.
Exh. A-9
Exhibit B
[*]
Exh. B-1
Exhibit C
The "Itakura/Xxxxx Patents" shall mean the following U.S. patents and any and
all divisionals, continuations, continuations-in-part of any application from
which these U.S patents claim priority, including reissues, reexaminations or
extensions of these patents and foreign counterparts and supplementary
protection certificates of the foregoing:
U.S. 4,356,270
U.S. 4,366,246
U.S. 4,425,437
U.S. 4,431,739
U.S. 4,563,424
U.S. 4,571,421
U.S. 4,704,362
U.S. 4,812,554
U.S. 5,221,619
U.S. 5,420,020
U.S. 5,583,013
The "Cabilly Coexpression Patents" shall mean U.S. Patent No. 6,331,415 issued
December 18, 2001, and any and all patents issuing from divisionals,
continuations, or continuations-in-part of any application from which U.S.
Patent No. 6,331,415 claims priority, including reissues, reexaminations or
extensions of these patents and foreign counterparts and supplementary
protection certificates of the foregoing. Cabilly Coexpression Patents shall not
include Cabilly Chimera Patents identified below.
"Cabilly Chimera Patents" shall mean (i) U.S. Patent No. 4,816,567, issued March
28, 1989, and (ii) any claims directed to chimeric antibodies which claims are
found in any patent(s) issuing from divisionals, continuations, or
continuations-in-part of any application from which U.S. Patent No. 4,816,567
claims priority, or (iii) which claims are found in any patents that are
reissues, reexaminations, extensions, or foreign counterparts of any of the
foregoing (i) or (ii).
Exh. C-1