Common use of Reductions Clause in Contracts

Reductions. (a) If during the Royalty Term, on a country-by-country and Product by Product basis, such Product ceases to be Covered by a Valid Claim in the country of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, the applicable royalty rate will thereafter be reduced to [***] of the applicable royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the royalty rate for such Product in such country will thereafter be reduced to [***] of the applicable royalty rate set forth in Section 8.5 for so long as such reduction in units sold persists. (c) If during the Royalty Term, Mereo pays Third Party Payments with respect to a Product, Mereo may credit [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited.

Reductions. In the event that: (a) If in any country in the Territory during any portion of the Royalty Term, on a country-by-Licensed Product sold in a country and Product by Product basis, such Product ceases to be Covered in the Territory is not claimed by a Valid Claim of the Licensed Patents covering such Licensed Product in such country when the Regulatory Exclusivity Period (if any) for such Licensed Product in such country is in effect, the royalty rates set forth in Section 4.5.1 shall be reduced by [***] percent [***] for such Licensed Product in such country. *** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. (b) in any country in the Territory during any portion of the Royalty Term, a Licensed Product sold in a country in the Territory is not claimed by a Valid Claim of manufacturethe Licensed Patents covering such Licensed Product in such country when no Regulatory Exclusivity Period for such Licensed Product in such country is in effect and, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-Howsolely in the case of an Emerging Market Country, the applicable Generic Competition Threshold for such Licensed Product in such Emerging Market Country has been met, the royalty rate will thereafter rates set forth in Section 4.5.1 shall be reduced by [***] percent [***] for such Licensed Product in such country. (c) Licensee enters into an agreement with a Third Party other than [***] or its Affiliates (or its or their successors) in order to obtain a license to a Patent of a Third Party (other than any Patents Controlled by [***] or any of its Affiliates or its or their successors in interest with respect to any Patents) that is necessary for the Manufacture, use or sale of a Licensed Product in the Field in a country in the Territory (a “Third Party Patent Right”), Licensee shall be entitled to deduct from royalties payable hereunder in a given Calendar Quarter with respect to such Licensed Product in such country [***] percent [***] of royalties actually paid to such Third Party with respect to such Calendar Quarter under such agreement, solely to the extent that such royalties are (i) triggered by sales of such Licensed Product that would, absent such agreement, infringe such a Third Party Patent Right that is licensed in such country in such Calendar Quarter under such agreement and (ii) otherwise exclusively attributable to such Third Party Patent Right; provided that in no event shall the total deduction under this Section 4.5.3(c) reduce the royalties payable to MedImmune under Section 4.5.1 (as reduced in accordance with Section 4.5.3(a) or Section 4.5.3(b) if applicable) with respect to a given Licensed Product in a given country in any Calendar Quarter by more than [***] percent [***]. Licensee, upon request by MedImmune, shall provide reasonable evidence, including a copy of any applicable agreement, of such royalties actually paid to such Third Party with respect to such Third Party Patent Right. For clarity, Licensee shall be solely responsible for, and the foregoing reduction shall not apply to, any royalty or other amount owed to [***] of the applicable royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country pursuant to any agreement between Licensee and Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the royalty rate for such Product in such country will thereafter be reduced to [***] of the applicable royalty rate set forth in Section 8.5 for so long as such reduction in units sold persists. (c) If during the Royalty Term, Mereo pays Third Party Payments with respect to a the Development or Commercialization of any Licensed Product, Mereo may credit [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited.

Reductions. Notwithstanding the foregoing, in the event that: (i) in any country in the Territory during the Royalty Term for a Licensed Product, one or more Generic Products of a Licensed Product is launched in such country, and Net Sales of such Licensed Product in such country decline by the percentages described below relative to the average Net Sales of such Licensed Product in such country for the [**] immediately preceding the Calendar Quarter in which the Generic Product is launched in such country (the “Pre-Generic Launch Net Sales”), the royalty rates provided in Section 7.3.1 shall be reduced in such country by the applicable percentage described below for each Calendar Quarter ending after the Generic Product was launched in which such Net Sales remain below the applicable percentage of the Pre-Generic Launch Net Sales. For clarity, the foregoing sentence shall not preclude the applicability of this Section 7.3.3(i) to future Calendar Quarters if such Generic Product or any other Generic Product is re-launched or launched, as applicable, in such country and Net Sales again fall below the applicable percentage of the Pre-Generic Launch Net Sales. For a decline of: (a) greater than or equal to [**], but less than [**], of Net Sales of the applicable Licensed Product in such country, a royalty rate reduction of [**]; or (b) greater than or equal to [**] of Net Sales of the applicable Licensed Product in such country, a royalty rate reduction of [**]. (ii) If Sanofi enters into an agreement with a Third Party in order to obtain a license or other right under a Third Party Patent that is reasonably necessary to avoid infringement of such Third Party Patent by the use, offer for sale, sale or importation of a Licensed Product (or the Licensed Compound contained therein) in a country pursuant to Section 8.8, Sanofi shall be entitled to deduct from any [**] royalties (under this Section 7.3) payable hereunder with respect to such Licensed Product in such country [**] of all upfront payments, milestone payments, royalties, and other amounts paid to such Third Party in respect of such agreement, in each case, to the extent reasonably allocable to such Third Party Right (“Third Party Payments”); provided that, Sanofi may not include in Third Party Payments any amounts paid to Third Party suppliers or contract manufacturers of Licensed Products, Licensed Compounds or raw materials therefor. (iii) If a court or a governmental agency of competent jurisdiction requires Sanofi or any of its Affiliates or its or their Sublicensees to grant a compulsory license to a Third Party permitting such Third Party to make and sell a Licensed Product in a country in the Territory, the royalties otherwise due to Lexicon pursuant to this Section 7.3 for Net Sales by compulsory licensees shall, in lieu of the royalties that would otherwise apply, be the lesser of [**] of the amount received by Sanofi from such licensee and the applicable royalties that would otherwise be payable hereunder, and the Licensed Products sold by such Third Party in such country shall be deemed to be Generic Products for purposes of Section 7.3.3(i). (iv) As to royalties payable on Net Sales in [**], during any period within the applicable Royalty TermTerm when there is no Lexicon Patent or Joint Patent in such country that contains a Valid Claim that Covers the applicable Licensed Product or its Manufacture, use, offer for sale, sale or importation in such country and the Regulatory Exclusivity Period has expired with respect to the applicable Licensed Product in such country, the otherwise applicable royalty rate percentage with respect to such Licensed Product in such country shall be reduced by [**]. (v) On a country-by-country basis with respect to each country in [**] during each period in which there is a [**], Sanofi shall be entitled to deduct from the royalty rate payable on Net Sales in such country [**] of the [**]; provided that such deduction shall not exceed [**]. The [**] is, with respect to a given period and country outside [**], the percentage equal to (x) [**], divided by (y) [**] in such country for such period. The [**] is, with respect to a given period, the percentage equal to [**]. For example, if the [**] for a given period and country equals [**] and the royalty rate for a given country would without application of this clause (v) equal [**], the royalty rate for such country would equal [**]. For clarity, [**] are not required to be calculated on a country-by-country and Product by Product basis, such Product ceases to but may be Covered by calculated using a Valid Claim standard cost basis across multiple countries in the country of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, the applicable royalty rate will thereafter be reduced to [***] of the applicable royalty rate accordance with Sanofi’s general internal practices. Any reductions set forth in this Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then 7.3.3 shall be applied to the royalty rate for such Product payable to Lexicon in such country will thereafter be reduced to [***] of the applicable royalty rate set forth following order: clause (i) (in Section 8.5 for so long as such reduction in units sold persists. (c) If during the Royalty Term, Mereo pays Third Party Payments with respect to a Product, Mereo may credit [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo which case no further reductions shall be entitled to carry forward any amount applied under the subsequent clauses of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one 7.3.3), clause (1ii), clause (iii), clause (iv) Calendar Year to the following Calendar Year until such amount is fully creditedand clause (v).

Reductions. (a) If during In the Royalty Termevent that it is necessary for Mallinckrodt, on in order to Exploit a country-by-country and Product by Product basisLicensed Product, such Product ceases to be Covered obtain a license under any Patents owned by a Valid Claim in Third Party that has claims that Cover [***] such Licensed Product or the country of manufactureLicensed Product, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, the applicable royalty rate will thereafter Mallinckrodt shall be reduced entitled to deduct [***] of the applicable royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more Generic Versions amount of the Product are marketed and sold in such country in a given [***] during accrued and payable by Mallinckrodt to such Third Party from the Royalty Termroyalties paid to Silence in any given Quarter (determined in accordance with the Accounting Standards) pursuant to Section 8.6, and such provided always that Generic Versions nothing in this Section 8.6.3 shall operate to reduce the amount of the Product sold in such country equal or exceed in the aggregate royalties otherwise payable to Silence to less than [***] of the total units sold royalties provided for in Section 8.6.1. (b) On a Licensed Product-by-Licensed Product basis, if the Royalty Term does not end on the date upon which there is no Valid Claim [***] that Covers such Licensed Product in the country of sale or the country of manufacture, then with respect to sales of such Licensed Product occurring from and after such date in such country, the royalty rate used to calculate royalties due on Net Sales of such Licensed Product in such country for the remainder of the Royalty Term for such Licensed Product in such country (subject to further reduction in accordance with Section 8.6.3(c) below, but subject to Section 8.6.4 below), shall be reduced by [***] from the applicable royalty rate (i.e., [***] as applicable). (c) If, during the Royalty Term with respect to a Licensed Product and a particular country, one or more Generic Version(sProducts of such Licensed Product are sold in such country, then (i) during each Quarter in which there is an Initial Loss of Market Share with respect to such Licensed Product in such country, then the royalty rates used to calculate royalties due on Net Sales of such Licensed Product in such country for such Quarter shall be reduced by [***] from the applicable royalty rate (i.e., [***], as applicable) and (ii) during each Quarter in which there is a Loss of Market Share with respect to such Licensed Product in such country, then the royalty rates used to calculate royalties due on Net Sales of such Licensed Product in such country for such Quarter shall be reduced by [***] from the applicable royalty rate (i.e., [***], as applicable) it being understood that the deduction under part (ii) of this Section 8.6.3(c) is in substitution for, not in addition to, part (i) of this Section 8.6.3(c). (d) If in a country, the Net Sales of a Licensed Product in that country in a Year are less than [***] of the Net Sales of the Licensed Product in that country in the immediately preceding Year and such decline is demonstrated to be due to a Competing Product of such Licensed Product being sold in such country, then the royalty rate for used to calculate the royalties due on Net Sales of such Licensed Product in such country will thereafter shall be reduced to by [***] of from the applicable royalty rate set forth for such Year (such Net Sales in Section 8.5 such Year the “Baseline Calendar Year Net Sales”) and for so long as such reduction in units sold persists. (c) If each Year during the remainder of the Percentage Royalty Term, Mereo pays Third Party Payments with Term in which: (i) such Competing Product continues to be sold in such country and (ii) Net Sales of such Licensed Product in such country remain at or below the Baseline Calendar Year Net Sales (the “Competing Product Reduction”). With respect to a Productthe Year in which the Competing Product Reduction first occurs, Mereo may credit then within [***] days after the end of such Third Party Payments paid against Year, Mallinckrodt shall report to Licensor the difference between the royalties otherwise due to AstraZeneca on the actually paid in respect of Net Sales of that particular Product in that [***]; provided, however that such Year and the royalties that should have been paid in such Year taking into consideration the Competing Product Reduction and Licensor shall remit such difference to AstraZeneca on such Net Sales Mallinckrodt promptly after application its receipt of such credit shall not be less than [***] report. For the avoidance of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basisdoubt, provided that Mereo the Competing Product Reduction, if any, shall be entitled in addition to carry forward any amount of Third Party Payments which it is not entitled reduction in the royalty rate pursuant to credit from the royalties due Section 8.6.3(b) or 8.6.3(c) above, but subject to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited8.6.4 below.

Reductions. Notwithstanding the foregoing: (a) If during the Royalty Termif, on a country-by-in any country and Product by Product basis, such Product ceases to be Covered by a Valid Claim in the ExUS Territory (or the United States with respect to a Non-Co-Promote Product) there is [***]. (b) if Kite or Arcellx enters into an agreement with a Third Party pursuant to Section 8.6 in order to obtain a license or right under Blocking Third Party Technology owned or controlled by such Third Party for a particular country of manufactureor other jurisdiction in the ExUS Territory (or the United States with respect to a Non-Co-Promote Product) [***], useKite shall be entitled to deduct from any royalties payable under this Section 8.4 with respect to such Licensed Product in such country or other jurisdiction in a Calendar Quarter [***], saleas the case may be, offer for sale or import but does contain, incorporate or use any Product Know-Howsuch Blocking Third Party Technology (collectively, the applicable “Kite Third Party Payments”) to [***], and Arcellx shall be entitled to increase any royalties payable under this Section 8.4 with respect to such Licensed Product in such country or other jurisdiction in a Calendar Quarter [***], as the case may be, for such Blocking Third Party Technology [***], (collectively, “Arcellx Third Party Payments”). Additionally, [***]. Notwithstanding the foregoing, the royalty rate will thereafter payable to Arcellx with respect to such Licensed Product for such country or other jurisdiction would not as a result of the net adjustments called for in this Section 8.4.5(b) be reduced to less or more than [***] of the applicable royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the royalty rate for such Product in such country will thereafter be reduced to [***] of the applicable royalty rate set forth in Section 8.5 for so long as such reduction in units sold persists. (c) If during the Royalty Term, Mereo pays Third Party Payments with respect to a Product, Mereo may credit [***] of such Third Party Payments paid against the royalties amount otherwise due to AstraZeneca on the Net Sales of that particular Product in that due; [***]; provided; (c) notwithstanding anything in this Agreement to the contrary, however that under no circumstances shall the reductions set forth in this Section 8.4 cause the royalties paid payable to AstraZeneca on such Net Sales after application of such credit shall not Arcellx with respect to a given Licensed Product in any country in the ExUS Territory (or in the United States with respect to a Non-Co-Promote Product) in any Calendar Quarter to be reduced to less than [***] of those the amount that would otherwise be due above (i.e., without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled giving effect to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca reductions specified in accordance with this Section 8.5.3 by reason of 8.4) with respect to such limitation from one (1) Licensed Product in such country in such Calendar Year to the following Calendar Year until such amount is fully creditedQuarter.

Reductions. (a1) If, at any time during the Royalty Term for a Royalty-Bearing Product, Generic Competition exists in a given country with respect to a Reference Product, then Buyer may reduce the royalties due hereunder for such Reference Product [***] by [***] for so long as such Generic Competition exists. (2) If during the Royalty TermTerm for a given Royalty-Bearing Product in a particular country, on a country-by-country and Product by Product basis, such Product ceases to be Covered by a there is no Valid Claim in within the country of manufactureCompany Intellectual Property within such country, usethen, sale, offer for sale or import but does contain, incorporate or use any Product Know-Howas from the date this Section 1.6(f)(iv)(2) applies, the applicable royalty rate will thereafter for Net Sales of such Royalty-Bearing Product otherwise due pursuant to Section 1.6(b)(vi), Section 1.6(c)(viii) and Section 1.6(c)(ix) (as applicable), or Section 1.6(d)(v) shall be reduced by [***]. (3) If after the Effective Date, Company, Buyer or a Selling Party determines that it is in the best interest of one or more Selling Parties to obtain one or more licenses to Third Party patent rights or other intellectual property so as to prevent a claim by a Third Party that the Development, Commercialization or Manufacturing of a Royalty-Bearing Product infringes the intellectual property of a Third Party and a Selling Party obtains any such license, Buyer and its Affiliates may deduct from any royalty payment made hereunder up to an amount equal to [***] of the applicable royalty rate set forth in Section 8.5. (b) If during royalties paid to such 39881135.1 ACTIVE/118012393.3 Third Party licensors for the Royalty Termuse, on a country-by-country and Product by Product basismanufacture, one (1) import, export or more Generic Versions of the Product are marketed and sold in such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold sale of such Product or Generic Version(s) in such country, then the royalty rate for such Royalty-Bearing Product in such country will thereafter be reduced up to an amount equal to [***] of the applicable royalty rate set forth in Section 8.5 royalties owed for so long as such reduction in units sold persists. (c) If during the Royalty Term, Mereo pays Third Party Payments with respect to a Product, Mereo may credit any fiscal [***] of such hereunder. No Third Party Payments paid against payments that exceeded the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product amount eligible for a deduction in that any fiscal [***]; provided] may be carried over into any succeeding period. (4) Notwithstanding anything in this Agreement to the contrary, however that under no circumstances shall the reductions set forth in this Section 1.6(f)(iv) cause the total royalties paid due in any financial [***] to AstraZeneca on such Net Sales after application of such credit shall not be less reduced by more than [***] of those the amount that would otherwise be due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled giving effect to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited1.6(f)(iv).

Reductions. Notwithstanding the foregoing: (a) If following the first market entry of a Generic Product of a Licensed Product in a given country in the Territory during the Royalty TermTerm for such Licensed Product in such country, on there has been in any Calendar Quarter after such entry a country-by-decline of the Sales of such Licensed Product in such country and greater than [***] of the average level of the Sales of such Licensed Product by Product basisachieved in such country [***] immediately preceding such Calendar Quarter (such percentage drop in Sales following the first market entry of a Generic Product, such Product ceases to be Covered by a Valid Claim “Generic Entry”), then, except as set forth in the country of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-HowSection 8.7.3(c) below, the applicable royalty rate will thereafter on the Net Sales of such Licensed Product in such country shall be reduced to [***] for the remainder of the applicable Royalty Term for such Licensed Product in such country. (b) Genentech shall be entitled to deduct from any royalties payable hereunder with respect to a Licensed Product for a particular country or other jurisdiction [***] of all [***] paid under Genentech In-License Agreements with respect to such Licensed Product for such country or other jurisdiction; provided that in no case shall such deduction effectively reduce such royalties set forth in Section 8.7.1 below the royalties that would be payable under the royalty rates set forth in Section 8.7.3(d). [***] [***], subject to the preceding proviso. (c) If in a given country in the Territory in a Calendar Quarter during the Royalty Term for a Licensed Product such Licensed Product is not Covered by a Valid Claim of a [***] that Covers [***] such Licensed Product in such country, the royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in 8.7.1 with respect to such country in a given [***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the royalty rate for such Licensed Product in such country will thereafter shall be reduced to [***] of replaced by the applicable royalty rate rates set forth in Section 8.5 8.7.3(d) for so long as such reduction in units sold persists. Calendar Quarter; provided that following the tenth (c10th) If during anniversary of the Royalty Term, Mereo pays Third Party Payments with respect to First Commercial Sale of a Product, Mereo may credit [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Licensed Product in that [***]; provideda country, however that if the royalties paid to AstraZeneca on such Net Sales after application last Valid Claim of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basisthat Covers such Licensed Product in such country only Covers [***] such Licensed Product, provided that Mereo then [***]. (d) Except as set forth in Section 8.7.3(a), the cumulative reductions set forth in this Section 8.7.3 shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from reduce the royalties due payable to AstraZeneca BicycleTx on any Licensed Product in accordance with this Section 8.5.3 by reason of such limitation from one (1) any Calendar Year Quarter to less than the following Calendar Year until such amount is fully credited.amounts set forth in the table below at each royalty tier. [***] [***] [***] [***] [***] [***] [***] [***]

Reductions. (a) If In the event that in any country in the Territory during the Royalty TermTerm for a Licensed Product, on a country-by-country and Product by Product basis, such Product ceases to be Covered by a Valid Claim in the country unit sales of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, the applicable royalty rate will thereafter be reduced to [***] of the applicable royalty rate set forth in Section 8.5. (b) If during the Royalty Term, on a country-by-country and Product by Product basis, one (1) or more all Generic Versions of the Product are marketed and sold Products in such country in a given [Calendar Quarter is: (i) equal to or greater than *** percent (***] during the Royalty Term, and such that Generic Versions of the Product sold in such country equal or exceed in the aggregate [%) but less than *** percent (***] %) of the total units sold sum of unit sales of such Licensed Product or and all such Generic Version(s) Products in such country, then then, commencing upon that particular Calendar Quarter and for the remainder of the Royalty Term for such Licensed Product in such country thereafter, the royalty rate for such indication(s) set forth in Clause 5.4 (Royalties) with respect to such country, each shall be reduced by *** percent (***%); or (ii) equal to or greater than *** percent (***%) of the sum of unit sales of such Licensed Product and all such Generic Products in such country, then, commencing upon that particular Calendar Quarter and for the remainder of the Royalty Term for such Licensed Product in such country will thereafter thereafter, the royalty rate for such indication(s) set forth in Clause 5.4(a) (Royalty Rate) with respect to such country, each shall be reduced to [by *** percent (***] %). Unit sales shall be measured by IMS Health Data (or, in the absence of such data, an appropriate end user-level database). Notwithstanding the foregoing, Licensee’s obligation to pay royalties at the full royalty rates shall be reinstated on the first day of the applicable Calendar Quarter immediately following the Calendar Quarter in which sales of such Generic Products account for *** percent (***%) or less of the aggregate unit sales of Licensed Products and Generic Products in such country. If Licensee or its Affiliates are required, or determines in good faith that it is reasonably necessary, to obtain a license to any Patents of such Third Parties to Manufacture or Commercialize the Licensed Compound portion of any Licensed Product and makes any royalty payments to such third parties under any such in-license agreement, Licensee may deduct *** percent (***%) of such royalty payments from royalties thereafter payable to ArQule. Notwithstanding anything to the contrary in this Section 5.4, if any Licensed Product is sold by Licensee or any of its Affiliates or Sublicensees in a country and is not covered by a Valid Claim of the ArQule Patents in such country, the royalty rate in such country shall be reduced by *** percent (***%) of the rate set forth in Section 8.5 for so long as such reduction in units sold persists. Clause 5.4(a) (c) If during Royalty Rate), continuing until the last day of the applicable Royalty Term, Mereo pays Third Party Payments Term with respect to such Licensed Product. Notwithstanding anything to the contrary in this Clause 5.4 (Royalties), in no event shall any royalty payment payable to ArQule for any Licensed Product in a Product, Mereo may credit [given calendar quarter be reduced as a result of the payment reductions set forth in this Clause 5.4 (Royalties) to less than *** percent (***] %) of such Third Party Payments paid against the royalties amount otherwise due payable to AstraZeneca on the Net Sales of that particular Product in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully creditedArQule.

Reductions. (a) If during Subject to Section 6.3.2(c), if one or more Third Parties sell a Competing Product that has received Regulatory Approval for, or is otherwise used for, an Indication in any country in the Territory for which a Licensed Product has received Regulatory Approval for such Indication, then commencing on the date on which sales of the Competing Product by such Third Parties are equal to or greater than [*] of aggregate unit volume of sales of the Licensed Product in such country (as measured by IMS Health data or other similar information available from a Third Party data provider and applicable to such country) and continuing for the remainder of the Royalty Term, on a country-by-country and Product by Product basis, such Product ceases to be Covered by a Valid Claim in the country of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, then the applicable royalty rate will thereafter rates in effect with respect to the Licensed Product in such country shall be reduced to [***] of the applicable royalty rate rates set forth in Section 8.56.3.1. (b) If Subject to Section 6.3.2(c), beginning in the first Calendar Quarter during the Royalty Term, on Term for a country-by-particular Licensed Product in a country and in the Territory for which there is no Valid Claim of a UroGen Patent that Covers such Licensed Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during and continuing for the remainder of the Royalty Term, and Term for such that Generic Versions of the Licensed Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the applicable royalty rate for in effect with respect to such Licensed Product in such country will thereafter shall be reduced to [***] of the applicable royalty rate rates set forth in Section 8.5 6.3. 1. For clarity, for so long any particular Licensed Product in any particular country, in the event any pending patent application within any UroGen Patent issues during the Royalty Term but after the royalty reduction under this Section 6.3.2(b) has been triggered, the claims in such pending application shall be deemed “Valid Claims” for the purpose of calculating the Royalty Term for such Licensed Product in such country, but shall not result in the reversal of the royalty rate reduction for such Licensed Product in such country under this Section 6.3.2(b). [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as such reduction in units sold persistsamended. (c) If during Notwithstanding the Royalty Termforegoing, Mereo pays Third Party Payments with respect to a Productif both Section 6.3.2(a) and Section 6.3.2(b) apply, Mereo may credit then the royalty rates shall be [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product royalty rates set forth in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited6.3.1.

Reductions. (a) If during Subject to Section 6.3.2(c), if one or more Third Parties sell a Competing Product that has received Regulatory Approval for, or is otherwise used for, an Indication in any country in the Territory for which a Licensed Product has received Regulatory Approval for such Indication, then commencing on the date on which sales of the Competing Product by such Third Parties are equal to or greater than [*] of aggregate unit volume of sales of the Licensed Product in such country (as measured by IMS Health data or other similar information available from a Third Party data provider and applicable to such country) and continuing for the remainder of the Royalty Term, on a country-by-country and Product by Product basis, such Product ceases to be Covered by a Valid Claim in the country of manufacture, use, sale, offer for sale or import but does contain, incorporate or use any Product Know-How, then the applicable royalty rate will thereafter rates in effect with respect to the Licensed Product in such country shall be reduced to [***] of the applicable royalty rate rates set forth in Section 8.56.3.1. [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. (b) If Subject to Section 6.3.2(c), beginning in the first Calendar Quarter during the Royalty Term, on Term for a country-by-particular Licensed Product in a country and in the Territory for which there is no Valid Claim of a UroGen Patent that Covers such Licensed Product by Product basis, one (1) or more Generic Versions of the Product are marketed and sold in such country in a given [***] during and continuing for the remainder of the Royalty Term, and Term for such that Generic Versions of the Licensed Product sold in such country equal or exceed in the aggregate [***] of the total units sold of such Product or Generic Version(s) in such country, then the applicable royalty rate for in effect with respect to such Licensed Product in such country will thereafter shall be reduced to [***] of the applicable royalty rate rates set forth in Section 8.5 6.3. 1. For clarity, for so long as any particular Licensed Product in any particular country, in the event any pending patent application within any UroGen Patent issues during the Royalty Term but after the royalty reduction under this Section 6.3.2(b) has been triggered, the claims in such pending application shall be deemed “Valid Claims” for the purpose of calculating the Royalty Term for such Licensed Product in such country, but shall not result in the reversal of the royalty rate reduction for such Licensed Product in units sold persistssuch country under this Section 6.3.2(b). (c) If during Notwithstanding the Royalty Termforegoing, Mereo pays Third Party Payments with respect to a Productif both Section 6.3.2(a) and Section 6.3.2(b) apply, Mereo may credit then the royalty rates shall be [***] of such Third Party Payments paid against the royalties otherwise due to AstraZeneca on the Net Sales of that particular Product royalty rates set forth in that [***]; provided, however that the royalties paid to AstraZeneca on such Net Sales after application of such credit shall not be less than [***] of those otherwise due above without such credit. Such credit for Third Party Payments allowed hereunder shall apply on a [***] basis, provided that Mereo shall be entitled to carry forward any amount of Third Party Payments which it is not entitled to credit from the royalties due to AstraZeneca in accordance with this Section 8.5.3 by reason of such limitation from one (1) Calendar Year to the following Calendar Year until such amount is fully credited6.3.1.