Common use of Inhaled Products Clause in Contracts

Inhaled Products. If GSK exercises the Inhaled Option, then subject to Section 10.5(c) below, GSK shall pay Liquidia non-refundable, non-creditable incremental royalties on worldwide annual Net Sales on each Inhaled Product, as calculated by multiplying the applicable royalty rate by the corresponding amount of incremental Net Sales of such Inhaled Product in each calendar year as follows: Confidential treatment has been requested with respect to portions of this agreement as indicated by “[***]” and such confidential portions have been deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Royalty Rate on an Inhaled Product-by-Inhaled Product basis Annual Net Sales of Each Inhaled Product For the first [***] Inhaled Products that achieve First Commercial Sale For the [***] Inhaled Products that achieve First Commercial Sale For [***] and all subsequent Inhaled Products that achieve First Commercial Sale For that portion less than or equal to $[***] [***] % [***] % [***] % For that portion greater than $[***]but less than or equal to $[***] [***] % [***] % [***] % For that portion greater than $[***] [***] % [***] % [***] % For example, if worldwide annual Net Sales of the first Inhaled Product are $800,000,000, then the royalties payable with respect to such annual Net Sales, subject to adjustment as set forth below, would be [***]. Notwithstanding the foregoing, in the event of a Development Delay and the subsequent conversion of GSK’s Inhaled License to non-exclusive as set forth in Section 6.2, the royalty rates for Inhaled Products sold after such conversion shall be reduced to [***] percent ([***]%) of the rate set forth in the table above. By way of illustration only, if a Development Delay occurs and GSK subsequently achieves First Commercial Sale for the first Inhaled Product, then the royalty rates payable on Net Sales of such Inhaled Product would be [***] percent ([***]%) for Net Sales less than or equal to $[***] and [***] percent ([***]%) for Net Sales in excess of $[***], in either case, subject to the reductions set forth below in Section 10.5(c).