Common use of Shared Development Costs Clause in Contracts

Shared Development Costs. Except as set forth in Section 5.3 (▇▇▇▇▇▇▇’s Opt-Out Right), and further subject to this Section 5.2.4 (Shared Development Costs), (x) during the Development Term, subject to Section 11.4.2 (Overruns), the Parties will share Development Costs incurred in the performance of Shared Global Development Activities undertaken in accordance with the Joint Development Plan and Joint Development Budget and (y) the Parties will share Development Costs incurred in the performance of Shared Global Development Activities undertaken in accordance with Section 3.2.3 (Expedited Dispute Resolution) or Section 5.2.3(b), as applicable, with GSK bearing [**] percent ([**]%) of such Development Costs and Mersana bearing [**] percent ([**]%) of such Development Costs. (a) Notwithstanding the foregoing, to the extent that ▇▇▇▇▇▇▇’s aggregate share of Development Costs (including all Deemed Buy-In payments) exceeds [**] Dollars ($[**]) (the “Mersana Development Cost Cap”), then unless and until Mersana exercises its Profit Share Election pursuant to Section 9.1.1 (Exercise of Profit Share Election), ▇▇▇▇▇▇▇’s portion of any additional Development Costs (including any -52- Deemed Buy-In payments) incurred above the Mersana Development Cost Cap (such Development Costs, “Cap Excess Amounts”) shall be borne by GSK; provided that (i) any such Cap Excess Amounts for which GSK is responsible pursuant to this Section 5.2.4(a) shall accrue with interest in accordance with Section 11.4.4 (Cap Excess Amounts), (ii) such Cap Excess Amounts (and any accrued interest thereon) shall be, [**] repaid in full or in part by Mersana or offset against any future Regulatory Milestone Payments, Sales Milestone Payments or Royalties in accordance with Section 11.4.4 (Cap Excess Amounts), and (iii) if Mersana exercises its Profit Share Election pursuant to Section 9.1.1 (Exercise of Profit Share Election), the Mersana Development Cost Cap would automatically expire upon the Profit Share Start Date and ▇▇▇▇▇▇▇ would thereafter recommence bearing its [**] percent ([**]%) share of Development Costs in accordance with this Section 5.2.4 (Shared Development Costs), subject to Section 5.2.4(b). (b) Notwithstanding anything to the contrary set forth herein, from and after the first expiry of the Royalty Term of a Licensed Product in [**] (the “Development Cost Share End Date”), (A) ▇▇▇▇▇▇▇’s obligation to share in [**] percent ([**]%) of such Development Costs shall terminate; provided, however, that Mersana shall continue to have an obligation to share in Development Costs incurred (A) during the [**] period following the Development Cost Share End Date in connection with any Shared Global Development Activities (including any ongoing Clinical Trials) that were Initiated prior to the Development Cost Share End Date or (B) in connection with any Clinical Trial Initiated prior to the Development Cost Share End Date, solely to the extent such Clinical Trial is required by the FDA or EMA in order to maintain a Marketing Approval obtained for a Licensed Product prior to the Development Cost Share End Date (the “Ongoing Shared Global Development Activities”) and to perform any of its obligations with respect to such Ongoing Shared Global Development Activities as set forth in the Joint Development Plan in accordance with this Agreement; and (ii) other than with respect to the Ongoing Shared Global Development Activities as set forth in the Joint Development Plan, as between the Parties, GSK, either itself or as it may determine, by and through its Affiliates, Sublicensees or subcontractors, will be solely responsible for, and shall have sole decision-making authority with respect to, the conduct of all Development activities for the Licensed Compound and Licensed Products, at GSK’s sole cost and expense. For clarity, following the Development Cost Share End Date, other than with respect to any Ongoing Shared Global Development Activities, GSK shall have no further obligation to provide any Updates to the Joint Development Plan or Joint Development Budget or seek the JSC’s approval therefor. (c) Reporting, reconciliation and sharing of Development Costs shall be managed in accordance with Section 11.4 (Sharing of Development Costs).

Shared Development Costs. Except (a) During the Term, a Financial Working Group (as set forth defined in Section 5.3 (▇▇▇▇▇▇▇’s Opt-Out Right), Exhibit D) shall be established as of the Effective Date and further subject to this Section 5.2.4 (Shared responsible for management of the Development Costs), (x) during . All reasonable Direct Costs incurred by either Party or its Affiliates in conducting Development activities for the Product solely for the US pursuant to the Development Term, subject to Section 11.4.2 Plan (Overruns), the Parties will share Development Costs incurred including any Clinical Trials but excluding any Phase IV Studies conducted following Regulatory Approval which shall be included in the performance determination of Shared Global Development Activities undertaken Operating Profits or Losses) in accordance with the Joint Development Plan terms and Joint Development Budget and (y) the Parties will share Development Costs incurred in the performance conditions of Shared Global Development Activities undertaken in accordance with Section 3.2.3 (Expedited Dispute Resolution) or Section 5.2.3(b)this Agreement, as applicable, with GSK bearing [**] percent ([**]%) of such Development Costs and Mersana bearing [**] percent ([**]%) of such Development Costs. (a) Notwithstanding the foregoing, to the extent that ▇▇▇▇▇▇▇’s aggregate share of Development Costs (including all Deemed Buy-In payments) exceeds [**] Dollars ($[**]) (the “Mersana Development Cost Cap”), then unless and until Mersana exercises its Profit Share Election pursuant to Section 9.1.1 (Exercise of Profit Share Election), ▇▇▇▇▇▇▇’s portion of any additional Development Costs (including any -52- Deemed Buy-In payments) incurred above the Mersana Development Cost Cap (such Development Costs, “Cap Excess Amounts”) shall be borne by GSK; provided that but excluding (i) any such Cap Excess Amounts for which GSK is responsible pursuant to this Section 5.2.4(a) shall accrue with interest in accordance with Section 11.4.4 (Cap Excess Amounts), HEC’s Financial Responsibility; (ii) such Cap Excess Amounts (and any accrued interest thereon) shall be, [**] repaid in full or in part by Mersana or offset against any future Regulatory Milestone Payments, Sales Milestone Payments or Royalties in accordance with Section 11.4.4 (Cap Excess Amounts), and (iii) if Mersana exercises its Profit Share Election pursuant to Section 9.1.1 (Exercise of Profit Share Election), the Mersana Development Cost Cap would automatically expire upon the Profit Share Start Date and ▇▇▇▇▇▇▇ would thereafter recommence bearing its [**] percent ([**]%) share of Development Costs in accordance with this Section 5.2.4 (Shared Development Costs), subject to Section 5.2.4(b). (b) Notwithstanding anything to the contrary set forth herein, from and after the first expiry of the Royalty Term of a Licensed Product in [**] (the “Development Cost Share End Date”), (A) ▇▇▇▇▇▇▇’s obligation to share in [**] percent Financial Responsibility ([***]), and (iii) subject to Appendix 2 of the Development Plan, the costs and expenses of conducting Clinical Trials for the Product prior to Regulatory Approval (such costs, after exclusion of the costs in clauses (i) through (iii), the “Shared Development Costs”) shall be borne fifty percent (50%) of such by HEC and fifty percent (50%) by ▇▇▇▇▇▇▇ (the “Development Cost Share”) as provided in this Agreement; it being understood and agreed that (x) [***], (y) [***] and (z) neither Party shall be required to share any Shared Development Costs in excess of Thirteen Million U.S. Dollars ($13,000,000) in the aggregate (unless otherwise agreed by the Parties in writing). The Parties shall terminateseek to mutually and reasonably agree whether any Development activities were intended solely for the US or ROW or intended to be included in regulatory filings for Regulatory Approval on a global basis; provided, however, that Mersana shall continue to have an obligation to share in Development Costs incurred (A) during the [**] period following the Development Cost Share End Date in connection with any Shared Global Development Activities (including any ongoing Clinical Trials) that were Initiated prior to the Development Cost Share End Date or (B) in connection with any Clinical Trial Initiated prior to the Development Cost Share End Datethat, solely to the extent such Clinical Trial is required by the FDA or EMA in order to maintain a Marketing Approval obtained for a Licensed Product prior to the Development Cost Share End Date (the “Ongoing Shared Global Development Activities”) and to perform any of its obligations with respect to such Ongoing Shared Global Development Activities as set forth in the Joint Development Plan in accordance with this Agreement; and (ii) other than with respect to the Ongoing Shared Global Development Activities as set forth in the Joint Development Plan, as between the Parties, GSK, either itself or as it may determine, by and through its Affiliates, Sublicensees or subcontractors, will be solely responsible for, and shall have sole decision-making authority with respect to, the conduct of all Development activities that are not designed solely for the Licensed Compound and Licensed ProductsUS, at GSK’s sole cost and expenseshall be excluded from Shared Development Costs. For clarity, following the Development Cost Share End Date, other than with respect to any Ongoing Shared Global Development Activities, GSK shall have no further obligation to provide any Updates to the Joint Development Plan or Joint Development Budget or seek the JSC’s approval therefor. (c) Reporting, reconciliation and sharing of Development Costs shall initially be managed borne by the Party incurring the applicable costs or expenses, subject to reimbursement in accordance with Section 11.4 9.1(b). (Sharing b) Within forty-five (45) days following the end of each Calendar Quarter, each Party shall provide the other Party a report of actual Shared Development Costs incurred by such Party during such Calendar Quarter in accordance with the Development Plan, together with reasonable supporting evidence of such Shared Development Costs. Each Party shall submit any supporting information or clarifications reasonably requested by the other Party related to such Shared Development Costs included in such Party’s report within ten (10) days after such Party’s receipt of such request. The Parties shall conduct a reconciliation of Shared Development Costs for the subject Calendar Quarter within fifteen (15) days after receipt of all such supporting information (but in any case, within thirty (30) days after the end of the applicable Calendar Quarter), and an invoice shall be issued to the Party (if any) that has not paid for its full share of the Shared Development Costs for such Calendar Quarter so that each of the Parties bears its Development Cost Share after giving effect to such payment for such Calendar Quarter. The paying Party shall pay all amounts payable under any such invoice within thirty (30) days after its receipt of such invoice.