Exhibit 2.4
*Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
200.83 and 240.24b-2
COLLABORATION AGREEMENT
BETWEEN
XXX XXXXX AND COMPANY
AND
ISIS PHARMACEUTICALS, INC.
AUGUST 17, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.........................................................................1
ARTICLE 2 COLLABORATION OVERVIEW AND GOVERNANCE...............................................1
2.1 The Collaboration.......................................................................1
2.2 Reagent Provision Program...............................................................2
2.3 Drug Discovery Target Validation Program................................................2
2.4 Antisense Drug Discovery Program........................................................2
2.5 Governance - Executive Committee........................................................2
2.5.1 Executive Committee Meetings...................................................2
2.5.2 Executive Committee Responsibilities...........................................3
2.5.3 Executive Committee Decisions..................................................4
2.6 Governance - Joint Research Committee...................................................4
2.6.1 Joint Research Committee Meetings..............................................4
2.6.2 Joint Research Committee Responsibilities......................................5
2.6.3 Joint Research Committee Decisions.............................................6
2.6.4 Joint Research Committee Semiannual Status Reports.............................7
2.7 Governance - Operating Committees.......................................................7
2.7.1 Initial Operating Committees...................................................8
2.7.2 IP Committee...................................................................8
2.8 Dissolution of the Committees...........................................................8
2.9 Alliance Managers.......................................................................9
ARTICLE 3 THE COLLABORATION...................................................................9
3.1 Collaboration Staffing..................................................................9
3.2 Subcontracting..........................................................................9
3.3 Staff Availability.....................................................................10
3.4 Facility Visits........................................................................10
3.5 Exchange of Information................................................................10
3.6 Records................................................................................10
3.7 Compliance.............................................................................10
ARTICLE 4 THE REAGENT PROVISION PROGRAM......................................................11
4.1 Description and Term...................................................................11
i.
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PAGE
4.2 Reagent Targets........................................................................11
4.3 Results of Lilly First Pass In Vitro Analysis..........................................11
4.4 Protected Reagent Targets..............................................................11
4.5 Isis Use of Reagent Targets and Reagent ASO Compounds..................................12
4.6 Isis GeneTrove Database................................................................12
4.7 Reagent ASO Products...................................................................13
4.8 Lilly Confidential Information.........................................................13
4.9 Use and Disclosure.....................................................................13
ARTICLE 5 THE DRUG DISCOVERY TARGET VALIDATION PROGRAM.......................................13
5.1 Description and Term...................................................................13
5.2 Target Designation.....................................................................14
5.3 Target Validation Program..............................................................14
5.4 Joint Research Committee Review........................................................15
5.5 Accepted Validation Targets............................................................15
5.6 Rejected Validation Targets............................................................16
5.7 Lilly Rights Regarding Other Targets...................................................17
5.8 Exclusive Targets......................................................................17
5.9 Validation ASO Products................................................................18
5.10 Lilly Confidential Information.........................................................18
5.11 Use and Disclosure.....................................................................18
ARTICLE 6 THE ANTISENSE DRUG DISCOVERY PROGRAM...............................................18
6.1 Description and Term...................................................................18
6.2 Drug Discovery Target Designation......................................................19
6.2.1 Targets Available for Designation as Drug Discovery Targets...................19
6.2.2 Disagreements Regarding Drug Discovery Target Designation.....................19
6.2.3 Restriction on Isis' Right to Use Drug Discovery Targets......................20
6.3 Further Designation as Stage 1, 2 or 3 Drug Discovery Target...........................20
6.4 Development Candidate Designation......................................................21
6.4.1 During the Antisense Drug Discovery Term......................................21
6.4.2 After the Antisense Drug Discovery Term.......................................21
ii.
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(CONTINUED)
PAGE
6.5 Continued Development of Drug Discovery Targets After the Antisense Drug Discovery
Term...................................................................................21
6.6 Development and Commercialization of Development Candidates............................22
6.7 Abandoned Drug Discovery Targets.......................................................22
6.8 Reserved Targets.......................................................................22
6.9 Limitation on Number of Drug Discovery Targets and Reserved Targets....................23
ARTICLE 7 DEVELOPMENT, COMMERCIALIZATION, MANUFACTURING AND SUPPLY...........................23
7.1 Research Supply........................................................................23
7.2 Clinical Supply........................................................................24
7.3 Development and Commercialization......................................................24
ARTICLE 8 GRANT OF RIGHTS....................................................................24
8.1 Licenses to Lilly......................................................................24
8.1.1 Research Licenses.............................................................24
8.1.2 Product Licenses..............................................................25
8.2 Lilly Product Options..................................................................25
8.2.1 Option to Isis Blocking Patent Rights for Reagent Non-ASO Products............25
8.2.2 Option to Reagent Targets and Validation Targets and Exclusive Targets........25
(a) Grant of Option......................................................25
(b) Exercise of Option...................................................26
(c) Diligence and Reporting..............................................26
8.2.3 Option to Drug Discovery ASO Targets..........................................27
(a) Grant of Option......................................................27
(b) Exercise of Option...................................................27
(c) Diligence and Reporting..............................................27
8.3 Lilly's Right of First Negotiation.....................................................28
8.4 Licenses to Isis.......................................................................30
8.4.1 Research Licenses.............................................................30
8.4.2 Product Licenses..............................................................30
iii.
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(CONTINUED)
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8.5 Isis Option to License Lilly Non-Collaboration ASO Patent Rights.......................30
8.6 No Implied Licenses....................................................................32
8.7 Isis GeneTrove Database Subscription...................................................32
8.8 Technology Transfer....................................................................32
8.9 Manufacturing Improvements.............................................................33
ARTICLE 9 PAYMENTS AND ACCOUNTING............................................................34
9.1 Collaboration Funding..................................................................34
9.1.1 Collaboration FTEs............................................................34
9.1.2 Reagents......................................................................34
9.1.3 Protected Reagent Targets.....................................................34
9.1.4 Audits........................................................................34
9.1.5 Increase in Loan Commitment...................................................35
9.1.6 Modifications to Loan Disbursement Schedule...................................35
9.1.7 Action by Executive Committee.................................................35
9.2 Technology Access Fee..................................................................35
9.2.2 Credits Against Technology Access Fee.........................................36
9.3 License, Milestone and Royalty Payments - Lilly........................................36
9.3.1 Reagent Non-ASO Products......................................................36
(a) Milestone Payments...................................................36
(b) Royalties............................................................37
9.3.2 Validation Non-ASO Products and Drug Discovery Non-ASO Products...............37
(a) Milestone Payments...................................................37
(b) Royalties............................................................38
9.3.3 Reagent ASO Products and Validation ASO Products..............................38
(a) License Fees.........................................................38
(b) Milestone Payments...................................................38
(c) Royalties............................................................39
9.3.4 Drug Discovery ASO Products...................................................39
(a) License Fees.........................................................39
iv.
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(b) Milestone Payments...................................................40
(c) Royalties............................................................40
9.3.5 Lilly Sublicensing Obligations................................................41
9.4 Pass Through Royalties.................................................................41
9.4.1 [*]...........................................................................41
9.4.2 [*]...........................................................................41
9.5 Access to Third Party Rights...........................................................42
9.5.1 Third Party Licenses..........................................................42
9.5.2 Oral Preparation or Formulation Technology....................................42
9.6 Payments by Isis.......................................................................42
9.6.1 Isis Non-Collaboration ASO Products...........................................42
9.6.2 Isis Validation ASO Products..................................................42
9.6.3 Isis Drug Discovery ASO Products..............................................43
9.6.4 Isis Drug Discovery ASO Products..............................................43
9.6.5 Lilly Summary Reports.........................................................43
9.6.6 ASO Product Competition.......................................................44
9.7 Royalty Obligations....................................................................44
9.8 COPS Protection........................................................................44
9.9 Compulsory License.....................................................................45
9.10 Inflation..............................................................................45
9.11 Accounting Reports; Payment of Royalty.................................................45
9.12 Audits.................................................................................45
9.13 Payment................................................................................46
9.14 Income Tax Withholding.................................................................46
ARTICLE 10 CONFIDENTIALITY....................................................................46
10.1 Nondisclosure and Nonuse Obligations...................................................46
10.2 Permitted Disclosure of Confidential Information.......................................46
ARTICLE 11 DISCLAIMERS, REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS......................47
11.1 Isis Representations and Warranties....................................................47
* Confidential Treatment Requested
v.
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(CONTINUED)
PAGE
11.1.1 Corporate Existence and Authority.............................................47
11.1.2 Patents, Prior Art............................................................47
11.1.3 Absence of Litigation, Infringement, Misappropriation.........................47
11.1.4 Full Disclosures..............................................................48
11.1.5 Employee Obligations..........................................................48
11.1.6 Compliance with Laws..........................................................48
11.1.7 No Debarment..................................................................48
11.1.8 Licenses......................................................................48
11.1.9 Target Availability...........................................................48
11.2 Lilly Representations and Warranties...................................................48
11.2.1 Corporate Existence and Authority.............................................48
11.2.2 Employee Obligations..........................................................49
11.2.3 Compliance with Laws..........................................................49
11.2.4 No Debarment..................................................................49
11.2.5 Licenses......................................................................49
11.3 Disclaimer.............................................................................49
11.4 Responsibility and Control.............................................................49
11.5 Isis' Right to Indemnification.........................................................49
11.6 Lilly's Right to Indemnification.......................................................50
11.7 Indemnification Procedures.............................................................50
ARTICLE 12 INTELLECTUAL PROPERTY..............................................................51
12.1 Disclosures and Reports................................................................51
12.2 Ownership..............................................................................51
12.3 Patent Filing and Prosecution..........................................................51
12.4 Election Not to File, Prosecute or Maintain............................................52
12.5 Inventions Otherwise Unpatentable in the United States.................................53
12.6 Costs and Expenses.....................................................................53
12.7 Patent Term Extensions.................................................................54
12.8 Audit of Costs.........................................................................54
12.9 Notice of Certification................................................................54
vi.
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(CONTINUED)
PAGE
12.10 Notice of Infringement Claim...........................................................54
12.10.1 Responsibilities...............................................................55
12.11 Infringement Claims Against Third Parties..............................................55
12.11.1 Protection Against Infringement................................................55
12.11.2 Notice of Infringement.........................................................55
12.11.3 Expenses of Bringing Infringement Action.......................................56
12.11.4 Lilly's Failure to Institute, Prosecute and Control............................56
12.11.5 Isis' Failure to Institute, Prosecute and Control..............................56
12.11.6 Settlement Approval............................................................56
ARTICLE 13 TERM AND TERMINATION...............................................................56
13.1 Term of Collaboration..................................................................56
13.2 Term of Agreement......................................................................57
13.3 Termination of Collaboration Upon Change of Control....................................57
13.4 Termination for Breach.................................................................57
13.5 Termination Upon Insolvency............................................................58
13.6 Effect of Termination Due to Lilly Breach or Insolvency................................58
13.7 Effect of Termination Due to Isis Breach or Insolvency.................................59
13.8 Accrued Rights/Surviving Obligations...................................................61
13.9 Limitation of Liability................................................................62
ARTICLE 14 PUBLICITY..........................................................................62
14.1 Disclosure of Agreement................................................................62
14.2 Use of Names, Logos or Symbols.........................................................62
14.3 Publication............................................................................63
ARTICLE 15 XXXX-XXXXX-XXXXXX FILING...........................................................64
15.1 HSR Act Compliance.....................................................................64
15.2 Cooperation on Filing..................................................................64
ARTICLE 16 MISCELLANEOUS......................................................................65
16.1 Key Personnel..........................................................................65
16.2 Force Majeure..........................................................................65
16.3 Assignment.............................................................................65
vii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
16.4 Severability...........................................................................65
16.5 Notices................................................................................65
16.6 Dispute Resolution.....................................................................66
16.7 Choice of Law..........................................................................66
16.8 Entire Agreement.......................................................................66
16.9 Headings...............................................................................67
16.10 Independent Contractors................................................................67
16.11 Non-Solicitation of Employees..........................................................67
16.12 Further Actions........................................................................67
16.13 Waiver.................................................................................67
16.14 Jointly Prepared.......................................................................67
16.15 Counterparts...........................................................................67
viii.
COLLABORATION AGREEMENT
THIS
COLLABORATION AGREEMENT (the "AGREEMENT") is entered into as of
August 17, 2001 and effective as of the Effective Date, by and between XXX LILLY
AND COMPANY, a corporation organized and existing under the laws of Indiana and
its Affiliates (together "LILLY"), and ISIS PHARMACEUTICALS, INC., a corporation
organized and existing under the laws of Delaware ("ISIS").
RECITALS
A. Isis is engaged in the research and development of antisense
oligonucleotides and has accumulated considerable knowledge in the field of
antisense technology, including processes and techniques relating to the design,
synthesis and research of antisense oligonucleotides for use in gene
functionalization and target validation and as therapeutic products.
X. Xxxxx has expertise in the research, development, distribution and
sale of prophylactic and therapeutic products for human use.
X. Xxxxx and Isis wish to establish a collaborative relationship to
identify, characterize and/or develop antisense oligonucleotides that modulate
the expression of biological molecules and to characterize the effect of such
modulation to validate gene targets for drug discovery, including antisense drug
discovery.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Capitalized terms used in this Agreement, whether in the
singular or plural, have the meanings set forth in SCHEDULE 1.1 which is
attached hereto and made part of this Agreement, or as otherwise specifically
defined in this Agreement.
ARTICLE 2
COLLABORATION OVERVIEW AND GOVERNANCE
2.1 THE COLLABORATION. Lilly and Isis hereby agree to undertake
the Collaboration during the Collaboration Term under the terms and conditions
set forth in this Agreement. The Collaboration shall consist of the Reagent
Provision Program, the Target Validation Program and the Antisense Drug
Discovery Program.
1.
2.2 REAGENT PROVISION PROGRAM. Under the Reagent Provision Program
Isis will identify ASO Compounds using Antisense Technology that are directed to
Targets identified by Lilly and provide such ASO Compounds to Lilly for use in
Lilly's research efforts outside of the Collaboration. The Joint Research
Committee will manage the Reagent Provision Program as set forth below. The
activities to be undertaken by the Parties in the course of Reagent Provision
Program are set forth in detail in the Collaborative Research Plan, which is
attached hereto as SCHEDULE 2.2 and is incorporated by reference as part of the
Agreement.
2.3 DRUG DISCOVERY TARGET VALIDATION PROGRAM. The goal of the drug
discovery Target Validation Program is to provide information regarding gene
functionalization and validation for drug discovery with respect to Targets
related to the Collaboration Therapeutic Areas. An additional purpose of the
Target Validation Program is to validate and prioritize Targets related to the
Collaboration Therapeutic Areas for potential inclusion in the Antisense Drug
Discovery Program. The Joint Research Committee will manage the Target
Validation Program as set forth below. The activities to be undertaken by the
Parties in the course of Target Validation Program are set forth in detail in
the Collaborative Research Plan.
2.4 ANTISENSE DRUG DISCOVERY PROGRAM. The goal of the Antisense
Drug Discovery Program is to develop Drug Discovery ASO Compounds directed
against Targets related to the Collaboration Therapeutic Areas and to qualify
such Drug Discovery ASO Compounds as Development Candidates for development by
Lilly or by Isis as pharmaceutical products. The Joint Research Committee will
manage the Antisense Drug Discovery Program as set forth below. The activities
to be undertaken by the Parties in the course of the Antisense Drug Discovery
Program are set forth in detail in the Collaborative Research Plan.
2.5 GOVERNANCE - EXECUTIVE COMMITTEE. The strategic direction and
overall management of the Collaboration shall be the responsibility of the
Executive Committee. The Executive Committee shall consist of three (3) members
from each Party. The initial members of the Executive Committee are listed in
SCHEDULE 2.5. The Executive Committee may name additional members to the
Executive Committee from time to time so long as each Party has an equal number
of members. Each Party will designate a member who will be the primary contact
on the Executive Committee for that Party. Not later than thirty (30) days after
the Effective Date the Executive Committee shall hold an organizational meeting
to establish the operational requirements for the Executive Committee. The
designated Lilly representative shall be responsible for scheduling the meeting
of the Executive Committee for that purpose. Either Party can change its
representatives on the Executive Committee by written notice to the other Party.
2.5.1 EXECUTIVE COMMITTEE MEETINGS. During the
Collaboration Term and for one (1) year thereafter the Executive Committee shall
meet at least every six (6) months to review the research carried out under the
Collaboration and to consider modifications to the strategy and goals of the
Reagent Provision Program, Target Validation Program and the Antisense Drug
Discovery Program. In addition, the Executive Committee may meet on an ad hoc
basis. The Parties shall mutually agree upon the times and places for such
meetings, alternating between Indianapolis, Indiana and Carlsbad, California, or
such other location as members of the Executive Committee shall agree. Each
Party shall bear its own costs associated with holding and attending such
meetings. If mutually agreed by the Parties, such meetings may
2.
be held by videoconference or teleconference. An agenda shall be agreed upon by
the Executive Committee members and be distributed to the Parties no less than
one (1) week before any semiannual meeting. If a representative of a Party on
the Executive Committee is unable to attend a meeting of the Executive
Committee, such Party may designate an alternate to attend such meeting and vote
on behalf of such missing representative. In addition, each Party may, at its
discretion, invite nonvoting employees, consultants or advisors (which
consultants and advisors shall be under an obligation of confidentiality no less
stringent than those terms set forth herein) to attend any meeting of the
Executive Committee. Minutes shall be kept of all Executive Committee meetings
by the hosting Party and sent to all members of the Executive Committee for
review and approval within seven (7) days after each meeting. Minutes shall be
deemed approved unless any member of the Executive Committee objects to the
accuracy of such minutes by providing written notice to the other members of the
Executive Committee within ten (10) days of receipt of the minutes; PROVIDED,
HOWEVER, that in the event of any such objection by a Party that the Parties are
unable to resolve, such MINUTES shall reflect such unresolved dispute.
2.5.2 EXECUTIVE COMMITTEE RESPONSIBILITIES. The Executive
Committee shall have the following responsibilities:
(a) to periodically review the Collaborative
Research Plan from a strategic perspective, including consideration of expanding
or contracting the Collaboration Therapeutic Areas;
(b) to review changes to the Collaborative
Research Plan made by the Joint Research Committee or an Operating Committee as
permitted by Sections 2.6.2 and 2.7.2, respectively, and to resolve any matters
related thereto that are appealed to the Executive Committee by the Joint
Research Committee or an Operating Committee;
(c) to periodically review the progress and
results of the Collaboration to ensure that the Parties are meeting their
commitments for both human and financial support and are each fulfilling all of
their respective contractual obligations;
(d) to attempt to resolve any disagreements
between the Parties with respect to the research conducted under the
Collaboration, including those disagreements referred to it by the Joint
Research Committee, the IP Committee or any Operating Committee;
(e) to approve changes to the allocation of
Collaboration Funds set forth in the Collaborative Research Plan between the
Target Validation Program and Antisense Drug Discovery Program, on the one hand,
and the Reagent Provision Program, on the other hand;
(f) to approve changes to the assignment of
Collaboration Funds and Collaboration FTEs between the Collaboration Therapeutic
Areas as set forth in the Collaborative Research Plan;
(g) to propose to Lilly changes in the amount
and/or timing of funding under the Loan Agreement as provided for in Sections
9.1.5 and 9.1.6, in the unexpected event that such is necessary;
3.
(h) to provide guidance to the Joint Research
Committee as to the data package required by Lilly in considering a Development
Candidate for further development and commercialization efforts; and
(i) to establish and oversee an intellectual
property committee that will operate in accordance with Section 2.7.2.
2.5.3 EXECUTIVE COMMITTEE DECISIONS. Decisions of the
Executive Committee shall be made by unanimous vote, with each member having one
(1) vote. No vote of the Executive Committee may be taken unless all members of
the Executive Committee vote. If the Executive Committee is unable to reach a
unanimous vote on any matter, including matters referred to it for decision by
the Joint Research Committee, then the matter shall be referred to [*] All
decisions related to selection and advancement of Lilly Products being developed
by Lilly outside the scope of the Collaboration Programs shall be made by Lilly.
2.6 GOVERNANCE - JOINT RESEARCH COMMITTEE. Promptly after the
Effective Date a Joint Research Committee shall be established. The Joint
Research Committee shall have the day-to-day management responsibilities for the
Target Validation Program and the Antisense Drug Discovery Program in the
Collaboration Therapeutic Areas. The Joint Research Committee shall consist of
three (3) members from each Party, as appointed by each such Party. The Joint
Research Committee shall be subordinate to the Executive Committee, which shall
have the right upon timely appeal to review, accept, reject or modify all
actions of the Joint Research Committee. The initial members of the Joint
Research Committee are listed on SCHEDULE 2.6. Each Party will designate a
member of the Joint Research Committee who will be the primary contact for that
Party on the Joint Research Committee. Not later than thirty (30) days after
Effective Date the Joint Research Committee shall meet to hold an organizational
meeting to establish the operational requirements for the Joint Research
Committee. The Lilly representatives that are the designated primary contacts on
the Joint Research Committee shall be responsible for scheduling the first
meeting for that purpose. Either Party can change its representatives on the
Joint Research Committee by written notice to the other Party.
2.6.1 JOINT RESEARCH COMMITTEE MEETINGS. The Joint Research
Committee shall meet at least quarterly to review the research carried out under
the Collaboration and, if necessary, to consider modifications to the
Collaborative Research Plan. The Parties shall mutually agree upon the times and
places for such meetings, alternating between Indianapolis, Indiana and
Carlsbad, California, or such other location as members of the Joint Research
Committee shall agree. Each Party shall bear its own costs associated with
holding and attending such meetings. If mutually agreed by the Parties, such
meeting may be held by videoconference or teleconference. An agenda shall be
agreed upon by the members of the Joint Research Committee and be distributed to
the Parties no less than one (1) week before any quarterly meeting. If a
representative of a Party on the Joint Research Committee is unable to attend a
meeting of the Joint Research Committee, such Party may designate an alternate
to attend such meeting and vote on behalf of such missing representative. In
addition, each Party may, at its discretion, invite nonvoting employees,
consultants or advisors (which consultants and advisors shall be under an
obligation of confidentiality no less stringent than those terms set forth
herein) to attend any meeting of the Joint Research Committee. Minutes of all
Joint Research Committee meetings shall be kept by the hosting Party and sent to
all members on the Joint
4.
Research Committee for review and approval within seven (7) days after each
meeting. Minutes shall be deemed approved unless any member of the Joint
Research Committee objects to the accuracy of such minutes by providing written
notice to the other members of the Joint Research Committee within ten (10) days
of receipt of the minutes; PROVIDED, HOWEVER, that in the event of any such
objection by a Party that the Parties are unable to resolve, such minutes shall
reflect such unresolved dispute. Any changes made by the Joint Research
Committee to the Critical Success Factors shall be included in the minutes. A
current and complete version of the Critical Success Factors shall be provided
in the minutes of the Joint Research Committee meeting.
2.6.2 JOINT RESEARCH COMMITTEE RESPONSIBILITIES. The Joint
Research Committee shall oversee implementation and execution of the
Collaborative Research Plan. The Joint Research Committee shall be responsible
for planning, managing, directing and overseeing specific activities under its
areas of responsibility, including but not limited to the following, any of
which may be delegated to an Operating Committee, as the Joint Research
Committee deems appropriate consistent with the goals of the Collaboration:
(a) reviewing the Collaborative Research Plan
from a scientific and operational perspective;
(b) making changes to the portions of the
Collaborative Research Plan relating to the Target Validation Program and the
Antisense Drug Discovery Program as it deems necessary to accomplish the purpose
of the Collaboration, so long as such changes do not cause the Collaboration to
exceed the budget established for the Target Validation Program and the
Antisense Drug Discovery Program in the Collaborative Research Plan, as such
budget may be amended by the Executive Committee;
(c) proposing other changes to the Collaborative
Research Plan to the Executive Committee as it deems necessary to accomplish the
purpose of the Collaboration;
(d) prioritizing and monitoring progress of
antisense lead identification for the Reagent Provision Program, Target
Validation Program and Drug Discovery Program; PROVIDED, HOWEVER, that if there
is a disagreement concerning the prioritization of a Reagent Target or a
Validation Target, such disagreement shall be appealed to the Executive
Committee, and, in the event the Executive Committee is unable to resolve such
disagreement, such prioritization shall be decided by Lilly;
(e) reviewing the progress and results of the
Collaboration to ensure, to the extent reasonably practical, that the Parties
are meeting their commitments for both human and financial support and are each
fulfilling all of their respective contractual obligations;
(f) reviewing the qualifications of the
Collaboration FTEs to ensure that the Parties are meeting the intent of the
Collaborative Research Plan;
(g) referring disputes or appealing decisions to
the Executive Committee as necessary;
(h) approving changes to the allocation of
Collaboration Funds set forth in the Collaborative Research Plan (i) within the
Reagent Provision Program, (ii) between
5.
the Target Validation Program and the Antisense Drug Discovery Program and (iii)
among the Collaboration Therapeutic Areas, so long as such changes do not cause
the Collaboration to exceed the budget established for the Target Validation
Program and the Antisense Drug Discovery Program in the Collaborative Research
Plan, as such budget may be amended by the Executive Committee;
(i) reallocating Collaboration FTEs within each
Collaboration Therapeutic Area;
(j) reviewing and approving the use of any Third
Party in the Collaboration, including review and approval of any related Third
Party contract;
(k) reviewing and monitoring all results of the
work performed under Collaboration, including scientific efforts of both
Parties, and providing prioritization, oversight and direction regarding such
work in accordance with the Collaborative Research Plan;
(l) determining assignment of Collaboration
Funds and Collaboration FTEs assigned to each Collaboration Therapeutic Area;
(m) adopting and modifying the Critical Success
Factors related to a Collaboration Therapeutic Area either generally or
specifically with respect to a Validation Target or a Drug Discovery Target as
documented by approved Joint Research Committee minutes;
(n) determining whether a Validation Target is
an Accepted Validation Target or Rejected Validation Target;
(o) designating Drug Discovery Targets;
(p) making a determination of whether a Drug
Discovery ASO Compound meets the criteria for designation as a Development
Candidate and making such designations; and
(q) coordinating with the IP Committee to
optimize the value of the intellectual property arising from the Collaboration.
2.6.3 JOINT RESEARCH COMMITTEE DECISIONS. Decisions of the
Joint Research Committee shall be made by unanimous vote with each member having
one (1) vote. All issues voted on by the Joint Research Committee shall be
appealable to the Executive Committee. No vote of the Joint Research Committee
may be taken unless all of the members of such Joint Research Committee vote.
Any Party desiring to appeal an issue to the Executive Committee shall make its
appeal in writing to all Executive Committee members within ten (10) days of
receipt of the minutes for the meeting at which the issue was voted on. Action
pursuant to any decision appealed to the Executive Committee shall be suspended
pending a determination by the Executive Committee to accept, reject or modify
the decision of the Joint Research Committee. If it is not feasible to suspend
the action without causing potential damage to the Collaboration, the Executive
Committee shall be requested to provide immediate review. Any Party may at any
time request reconsideration of any issue by the Joint Research Committee or
6.
Executive Committee if such Party in good faith believes that substantial
changes in circumstances have occurred which necessitates such reconsideration.
2.6.4 JOINT RESEARCH COMMITTEE SEMIANNUAL STATUS REPORTS.
During the Collaboration Term and upon expiration thereof the Joint Research
Committee shall provide the Executive Committee with a semiannual status report
(which may be in the form of a presentation) that generally summarizes the
research and development efforts conducted by each Party under the Collaboration
during the two (2) previous Calendar Quarters. Such reports shall be submitted
or presented to the Executive Committee to coincide with the semiannual meeting
of Executive Committee. The report shall include, without limitation, a general
summary of important events, progress on critical success objectives, any
milestones reached, personnel changes, learning points and other matters that
the Executive Committee may deem appropriate. The Joint Research Committee shall
establish annual goals and objectives for each year of the Collaboration to be
provided to and approved by the Executive Committee.
2.7 GOVERNANCE - OPERATING COMMITTEES. The Executive Committee and
the Joint Research Committee may appoint one or more other working teams
("OPERATING COMMITTEES") to perform such functions as the Executive Committee or
Joint Research Committee, respectively, may determine. All Operating Committees
shall have at least one (1) representative of each Party. Operating Committees
shall have such decision-making authority as may be delegated to them by the
Executive Committee or Joint Research Committee (in either case, the "DELEGATING
COMMITTEE"). All issues voted on by an Operating Committee shall be appealable
to the Delegating Committee. No vote of an Operating Committee may be taken
unless all of the members of such Operating Committee vote. Any Party desiring
to appeal an issue to the Delegating Committee shall make its appeal in writing
to all Delegating Committee members within ten (10) days of receipt of the
minutes for the meeting at which the issue was voted on. Action pursuant to any
decision appealed to the Delegating Committee shall be suspended pending a
determination by the Delegating Committee to accept, reject or modify the
decision of such Operating Committee. If it is not feasible to suspend the
action without causing potential damage to the Collaboration, the Delegating
Committee shall be requested to provide immediate review. Any Party may at any
time request reconsideration of any issue by the Delegating Committee if such
Party in good faith believes that substantial changes in circumstances have
occurred which necessitates such reconsideration. Each Operating Committee shall
meet as agreed by its members or directed by the Joint Research Committee. Each
Party shall bear its own costs associated with holding and attending such
meetings. If mutually agreed by the Parties, such meeting may be held by
videoconference or teleconference. If the representative of a Party is unable to
attend a meeting, such Party may designate an alternate to attend such meeting
and vote on behalf of such missing representative. Minutes of all Operating
Committee meetings shall be kept by the hosting Party and sent to the other
Party for review and approval within seven (7) days after each meeting. Minutes
shall be deemed approved unless a Party objects to the accuracy of such minutes
by providing written notice to the other Party within ten (10) days of receipt
of the minutes; PROVIDED, HOWEVER, that in the event of any such objection by a
Party that the Parties are unable to resolve, such minutes shall reflect such
unresolved dispute. Any changes made by an Operating Committee to the Critical
Success Factors shall be included in such minutes
7.
2.7.1 INITIAL OPERATING COMMITTEES. Without limiting the
generality of the foregoing, the Joint Research Committee shall establish the
following three (3) Operating Committees, with such number of representatives of
each Party and such decision-making authority as the Joint Research Committee
shall determine:
(i) the Reagent Provision Operating Committee,
which shall be responsible for matters relating to the Reagent Provision
Program, including, without limitation, managing the submission and acceptance
of Reagent Targets and the timeframe for delivery of Reagent ASO Compounds and
providing each Party with a written quarterly report that lists the Reagent
Targets for which Isis has provided Lilly with Reagent ASO Compounds during the
preceding Calendar Quarter and such Reagent ASO Compounds, the Reagent Targets
for which Isis is scheduled to provide Lilly with Reagent ASO Compounds during
the ensuing Calendar Quarter, and the anticipated timing of delivery of such
Reagent ASO Compounds.
(ii) the Inflammation/Bone Operating Committee,
which shall be responsible for matters relating to the activities of the
Collaboration in the Collaboration Therapeutic Areas of inflammation and bone;
and
(iii) the Metabolic Disease Operating Committee,
which shall be responsible for matters relating to the activities of the
Collaboration in the Collaboration Therapeutic Area of metabolic disease.
For avoidance of doubt, it is intended that the Executive Committee and
Joint Research Committee will delegate decision-making authority for day-to-day
management of the Collaboration to the Operating Committees described in Section
2.7.1. The Joint Research Committee will manage issues that effect more than one
Operating Committee or Collaboration Therapeutic Area. While the Joint Research
Committee retains the ability to review the decisions of the Operating
Committees, it is intended that the Operating Committees shall be given
sufficient latitude to make decisions without the need to first consult the
Joint Research Committee.
2.7.2 IP COMMITTEE. The Executive Committee shall establish
a committee that is responsible for intellectual property issues arising in the
course of the Collaboration and thereafter (the "IP COMMITTEE"). The IP
Committee shall be subordinate to the Executive Committee and shall work closely
with the Joint Research Committee to implement the activities of the Parties as
contemplated by Article 12 and as otherwise agreed by the Parties.
2.8 DISSOLUTION OF THE COMMITTEES. Except as the Parties may
otherwise agree in writing, once the Collaboration Term has expired or is
terminated, the Joint Research Committee shall dissolve. The Executive Committee
shall cease having regular meetings twelve (12) months after expiration or
termination of the Collaboration Term but shall meet on an AD HOC basis for so
long thereafter as is necessary to oversee the activities of the IP Committee.
The IP Committee shall continue for so long as there are Patent Rights that are
licensed by a Party to the other Party under this Agreement.
2.9 ALLIANCE MANAGERS. Each Party shall designate one (1)
representative to coordinate the activities of the Parties under the
Collaboration (the "ALLIANCE MANAGERS"). The
8.
initial Alliance Managers are listed on SCHEDULE 2.9. The Alliance Managers'
responsibilities shall include maintenance of a current list of Reagent Targets,
Validation Targets (including Rejected Validation Targets and Accepted
Validation Targets), Drug Discovery Targets and Reserved Targets, coordinating
meetings of the Joint Research Committee and Executive Committee and otherwise
facilitating the activities of the Parties in the course of the Collaboration
under this Agreement. Each Party may change its Alliance Manager by written
notice to the other Party.
ARTICLE 3
THE COLLABORATION
3.1 COLLABORATION STAFFING. Isis and Lilly employees involved in
the Collaboration will conduct the research activities in a manner as required
to maintain progress on the objectives of the Collaboration as set forth herein
and in the Collaborative Research Plan. To achieve these objectives, Isis and
Lilly will assign qualified employees as set forth herein and in the
Collaborative Research Plan. Isis and Lilly each acknowledge that there will be
a reasonable initial hiring ramp-up period before the number of Collaboration
FTEs dedicated to the Collaboration reaches the level specified in the
Collaborative Research Plan. Isis shall use its best efforts to ramp-up to the
number of Isis Collaboration FTEs specified in the Collaborative Research Plan
as soon as possible after the Effective Date. Lilly shall use its best efforts
to ramp-up to the number of Lilly Collaboration FTEs specified in the
Collaborative Research Plan as soon as possible after the Effective Date. By
decision of the Executive Committee the number of FTEs committed to the
Collaboration may be increased or decreased from the levels specified in the
Collaborative Research Plan. Upon the approval of the Joint Research Committee,
each Party may place one or more employees at the other Party's facilities in
order to participate in the conduct of the Collaboration. Such employee(s) shall
be fully committed to the Collaboration as Collaboration FTEs. Each Party shall
bear the travel, lodging and meal expenses of any of its Collaboration FTEs who
visit the other Party's facilities as described in the preceding sentence and
shall not be reimbursed by the other Party or out of the Collaboration Funds for
any such expenses.
3.2 SUBCONTRACTING. Except to the extent approved by the Joint
Research Committee or as otherwise expressly permitted in the Collaborative
Research Plan, neither Party shall subcontract to a Third Party any portion of
the activities assigned to it under the Collaborative Research Plan, other than
through the use of on site contract employees. To the extent such subcontracting
is approved, prior to engaging a Third Party, Isis or Lilly, as applicable,
shall first obtain a written agreement with such Third Party containing
appropriate confidentiality and non-use provisions as determined by the IP
Committee and written assignments to Isis or Lilly, as applicable, of all Patent
Rights and Know-How that such subcontractors may develop by reason of work
performed under such contract. Moreover, any Third Party subcontractor shall be
required to perform its services in accordance with any applicable generally
accepted professional standards as well as standards designated by the Joint
Research Committee (if any) and with any applicable codes, rules and
regulations.
3.3 STAFF AVAILABILITY. Each Party shall make its employees, and
permitted subcontractors engaged in the Collaboration reasonably available upon
reasonable notice during
9.
normal business hours at their respective places of employment to consult with
the other Party on issues arising during Collaboration and in connection with
any request from any regulatory agency, including those relating to regulatory,
scientific, and technical issues.
3.4 FACILITY VISITS. In addition to a Party's employees located at
the other Party's facilities pursuant to Section 3.1, representatives of Lilly
and Isis may, upon reasonable notice during normal business hours, (a) visit the
facilities where the Collaboration is being conducted, including by Third
Parties, (b) consult informally, during such visits and by telephone, with
personnel for the other Party performing work on the Collaboration, and (c) with
the other Party's prior approval, which approval shall not be unreasonably
withheld, visit the sites of any experiments or tests being conducted by, or on
behalf of, such other Party in connection with the Collaboration. On such
visits, an employee of the Party being visited shall accompany the employee(s)
of the visiting Party. If requested by a Party, the other Party shall cause
appropriate individuals working on the Collaboration to be reasonably available
for meetings at times and places reasonably convenient to the Party subject to
such request.
3.5 EXCHANGE OF INFORMATION. Isis will promptly make available and
disclose to Lilly such information regarding the sequence, design, synthesis and
screening of Reagent ASO Compounds, Validation ASO Compounds and Drug Discovery
ASO Compounds generated by Isis in carrying out the Collaboration as set forth
in the Collaborative Research Plan. All discoveries or inventions made in the
course of the Collaboration by a Party will be promptly disclosed to the other
Party. At a Party's request, the other Party will provide written reports of any
studies performed by such other Party as part of the Collaboration required to
support regulatory submissions relating to Products to be made by such first
Party or its Sublicensees and will allow such first Party and its Sublicensees
to use the data included in such reports to support such submissions. The
Parties are encouraged to communicate often by telephone, electronic mail or
other mechanisms to keep each Party fully advised of the activities being
carried out by a Party under the Collaboration.
3.6 RECORDS. Isis and Lilly will each maintain records in
sufficient detail and in good scientific and business manner appropriate for
purposes such as patent and regulatory matters, which will be complete and
accurate and will fully and properly reflect all work done and results achieved
in the performance of the Collaboration including prompt signing and
corroboration of laboratory notebooks and conception documents.
3.7 COMPLIANCE. All studies done in connection with the
Collaboration shall be carried out in compliance with any applicable laws,
regulations, or guidelines governing the conduct of research at the site where
such studies are being conducted. All animals involved in the Collaboration
shall be provided humane care and treatment in accordance with generally
acceptable current veterinary practices.
ARTICLE 4
THE REAGENT PROVISION PROGRAM
4.1 DESCRIPTION AND TERM. The Reagent Provision Program shall
commence on the Effective Date and be conducted by Isis during the Reagent
Provision Term in accordance with
10.
the Collaborative Research Plan. The Reagent Provision Term shall become
effective on the Effective Date and shall continue in effect for four (4) years,
unless Lilly exercises it option to extend the Reagent Provision Term, as
provided in Section 13.1, the Parties otherwise mutually agree to extend or
terminate the Reagent Provision Program, or the Collaboration is terminated in
accordance with Article 13. The Parties estimate that approximately six hundred
and seventy-five (675) Targets from any therapeutic area of interest to Lilly
will be analyzed in the course of the Reagent Provision Program. Such Targets
shall be selected by Lilly and designated as Reagent Targets.
4.2 REAGENT TARGETS. For each Reagent Target, Isis will use
reasonable efforts to promptly provide to Lilly Reagent ASO Compounds for each
Reagent Target in accordance with the Collaborative Research Plan. Each Reagent
ASO Compound shall be delivered to Lilly in accordance with the specifications
set forth in the Collaborative Research Plan. Isis will also promptly provide to
Lilly Reagent Target gene reduction data generated by Isis on the inhibition of
the Reagent Target by each Reagent ASO Compound delivered to Lilly. Isis shall
also provide to Lilly ongoing consultation as reasonably requested by Lilly on
the utilization of each Reagent ASO Compound in Lilly's research efforts during
the Collaboration Term. Lilly will use best efforts to request, and Isis will
use best efforts to provide to Lilly, Reagent ASO Compounds at the flow rate
that is specified in the Collaborative Research Plan; PROVIDED, HOWEVER, that if
Lilly requests Reagent ASO Compounds at a flow rate that is greater than that
specified in the Collaborative Research Plan, Isis will use reasonable efforts
to provide the Reagent ASO Compounds to Lilly at such greater flow rate.
4.3 RESULTS OF LILLY FIRST PASS IN VITRO ANALYSIS. [*]
4.4 PROTECTED REAGENT TARGETS. [*]
4.5 ISIS USE OF REAGENT TARGETS AND REAGENT ASO COMPOUNDS. Except
as provided otherwise in this Agreement, [*]
4.6 ISIS GENETROVE DATABASE. It is the intention of the Parties
that the designation of Targets to be included in the Reagent Provision Program,
the Target Validation Program or the Antisense Drug Discovery Program shall not
influence the analysis or prioritization of Targets by Isis outside the course
of the Collaboration. To this end, Isis shall not utilize Lilly Confidential
Information outside the Collaboration for the purpose of prioritizing the
Targets to be analyzed for inclusion in the GeneTrove Database or for any other
purpose except as expressly permitted by this Agreement. [*]
(i) [*]
(ii) [*]
(iii) [*]
[*]
4.7 REAGENT ASO PRODUCTS. Lilly shall have an option to obtain one
or more licenses with respect to Reagent ASO Products in accordance with Section
8.2.2.
11.
*Confidential Treatment Requested
4.8 LILLY CONFIDENTIAL INFORMATION. All information provided to
Isis by Lilly with respect to a Reagent Target shall be considered the
Confidential Information of Lilly and shall be subject to the obligations of
Article 10 of this Agreement, including any nucleic acid or amino acid sequence
of a Reagent Target that is provided to Isis by Lilly. As long as such
information is Confidential Information, Isis shall use such Confidential
Information of Lilly only (a) in the course of the Collaboration, (b) in Isis'
internal antisense drug discovery efforts as expressly permitted by this
Agreement, (c) in accordance with Section 4.3 hereof or (d) as otherwise
expressly permitted by this Agreement, but for no other purpose.
4.9 USE AND DISCLOSURE. Use of Reagent ASO Compounds and Reagent
Targets by a Party shall not be considered part of the Collaboration unless such
use is carried out as specifically provided in the Collaborative Research Plan.
Know-How generated outside the course of the Collaboration by Lilly or Isis,
including through use of Reagent ASO Compounds, Reagent Non-ASO Compounds, or
Reagent Targets, shall not be Lilly Collaboration Know-How or Isis Collaboration
Know-How, respectively, and any resulting Patent Rights shall not be Lilly
Collaboration Patent Rights or Isis Collaboration Patent Rights, respectively.
ARTICLE 5
THE DRUG DISCOVERY TARGET VALIDATION PROGRAM
5.1 DESCRIPTION AND TERM. The drug discovery Target Validation
Program shall commence on the Effective Date and be conducted by Lilly and Isis
during the Target Validation Program Term in accordance with the Collaborative
Research Plan. The Target Validation Program Term shall become effective on the
Effective Date and shall continue in effect for four (4) years, unless Lilly
exercises it option to extend the Target Validation Program Term, as provided in
Section 13.1, the Parties otherwise mutually agree to extend or terminate the
Target Validation Program, or the Collaboration is terminated in accordance with
Article 13. The Collaborative Research Plan includes the Critical Success
Factors for the Target Validation Program including the Critical Success Factors
for Validation Targets. By execution of this Agreement, the initial
Collaborative Research Plan, including the Critical Success Factors, are
approved by each Party. The Joint Research Committee is responsible for
implementing the Collaborative Research Plan and any modifications or amendments
thereto consistent with the terms of this Agreement.
5.2 TARGET DESIGNATION. The Parties estimate that approximately
three hundred and twenty five (325) Targets will be analyzed in the course of
the drug discovery Target Validation Program. Such Targets shall be selected by
Lilly and designated as Validation Targets in accordance with this Section 5.2.
Lilly shall provide written notice to Isis identifying each Target that it
wishes to designate as a Validation Target (a "PROPOSED VALIDATION TARGET").
Within fifteen (15) days after such notice, Isis shall provide written notice to
Lilly indicating whether such Proposed Validation Target is subject to any
agreement between Isis and a Third Party under which such Third Party has or may
acquire rights to ASO Products directed to such Proposed Validation Target, or
whether Isis has an Isis Internal Program with respect to such Proposed
Validation Target or ASO Products directed thereto.
12.
5.2.1 If a Proposed Validation Target is not subject to an
agreement between Isis and a Third Party under which such Third Party has or may
acquire rights to ASO Products directed to such Proposed Validation Target and
Isis does not have an Isis Internal Program with respect to such Proposed
Validation Target or ASO Products directed thereto, then such Proposed
Validation Target shall be deemed a Validation Target and shall be made part of
the Target Validation Program.
5.2.2 If a Proposed Validation Target is subject to an
agreement between Isis and a Third Party under which such Third Party has or may
acquire rights to ASO Products directed to such Proposed Validation Target [*]
5.2.3 [*]
5.3 TARGET VALIDATION PROGRAM. Validation Targets and Validation
ASO Compounds directed thereto shall be analyzed under the Target Validation
Program with the aim of achieving the applicable Critical Success Factors set
forth in the Collaborative Research Plan. All results generated in the course of
Target Validation Program shall be promptly provided to a member of the Joint
Research Committee for the other Party by means of a written report generated by
the Parties and by placing such results in the shared database described in the
Collaborative Research Plan. Following consultation with Isis, Lilly shall
decide whether to conduct Validation Tier 1 studies and/or Validation Tier 2
studies (as such terms are defined in the Collaborative Research Plan) with
respect to each Validation Target. [*]
5.4 JOINT RESEARCH COMMITTEE REVIEW. At the next Joint Research
Committee meeting following the completion of the evaluation of a Validation
Target under the Target Validation Program, the Joint Research Committee shall
review the results generated with respect to such Validation Target and shall
determine whether such Validation Target has achieved the Critical Success
Factors set out in the Collaborative Research Plan. If the Joint Research
Committee determines that a Validation Target meets the Critical Success
Factors, such Validation Target shall be deemed an "ACCEPTED VALIDATION TARGET."
If the Joint Research Committee determines that a Validation Target does not
meet the Critical Success Factors, such Validation Target shall be deemed a
"REJECTED VALIDATION TARGET."
5.5 ACCEPTED VALIDATION TARGETS. [*]
5.5.1 [*]
5.5.2 Isis shall provide written notice to Lilly [*]
5.6 REJECTED VALIDATION TARGETS. [*]
5.6.1 [*]
5.6.2 [*]
5.7 LILLY RIGHTS REGARDING OTHER TARGETS. [*]
13.
*Confidential Treatment Requested
5.8 EXCLUSIVE TARGETS. During the Reagent Provision Term or the
Target Validation Program Term, as applicable, Lilly may elect to designate any
Reagent Target or Validation Target, respectively, an "EXCLUSIVE TARGET" as
described in this Section 5.8. Lilly shall provide Isis with a written
description of each Target that Lilly desires to designate as an Exclusive
Target. The date upon which Isis receives such notice from Lilly shall be the
"TARGET NOTICE DATE." [*]
5.9 VALIDATION ASO PRODUCTS. Lilly shall have an option to obtain
one or more licenses with respect to Validation ASO Products in accordance with
Section 8.2.2.
5.10 LILLY CONFIDENTIAL INFORMATION. All information provided to
Isis by Lilly with respect to a Validation Target shall be considered the
Confidential Information of Lilly and shall be subject to the obligations of
Article 10 of this Agreement, including any nucleic acid or amino acid sequence
of a Validation Target that is provided to Isis by Lilly. As long as such
information is Confidential Information, Isis shall use such Confidential
Information of Lilly only (a) in the course of the Collaboration, (b) in Isis'
internal antisense drug discovery efforts as expressly permitted by this
Agreement, (c) in accordance with Section 4.3 hereof or (d) as otherwise
expressly permitted by this Agreement, but for no other purpose.
5.11 USE AND DISCLOSURE. Use of Validation ASO Compounds or
Validation Targets by a Party as expressly permitted by this Agreement shall not
be considered part of the Collaboration unless such use is carried out as
specifically provided in the Collaborative Research Plan. Know-How generated
outside the course of the Collaboration by Lilly or Isis as expressly permitted
by this Agreement, including through use of Validation ASO Compounds, Validation
Non-ASO Compounds, or Validation Targets, shall not be Lilly Collaboration
Know-How or Isis Collaboration Know-How, respectively, and any resulting Patent
Rights shall not be Lilly Collaboration Patent Rights or Isis Collaboration
Patent Rights, respectively.
ARTICLE 6
THE ANTISENSE DRUG DISCOVERY PROGRAM
6.1 DESCRIPTION AND TERM. The Antisense Drug Discovery Program
shall be conducted by Isis and Lilly during the Antisense Drug Discovery Term in
accordance with the Collaborative Research Plan. The Antisense Drug Discovery
Term shall become effective on the Effective Date and shall continue in effect
for four (4) years, unless Lilly exercises it option to extend the Antisense
Drug Discovery Term, as provided in Section 13.1, the Parties otherwise mutually
agree to extend or terminate the Antisense Drug Discovery Program, or the
Collaboration is terminated in accordance with Article 13. Lilly and Isis shall
use commercially reasonable efforts to develop Drug Discovery ASO Compounds into
Development Candidates in accordance with the Collaborative Research Plan. The
Collaborative Research Plan includes the Critical Success Factors for the
Antisense Drug Discovery Program. By execution of this Agreement the Critical
Success Factors are approved by each Party. The Joint Research Committee is
responsible for implementing the Collaborative Research Plan, and any
modifications or amendments thereto, consistent with the terms of this
Agreement.
14.
*Confidential Treatment Requested
6.2 DRUG DISCOVERY TARGET DESIGNATION.
6.2.1 TARGETS AVAILABLE FOR DESIGNATION AS DRUG DISCOVERY
TARGETS. During the Antisense Drug Discovery Term, the Joint Research Committee
shall designate the Drug Discovery Targets to be analyzed under the Antisense
Drug Discovery Program in one or more Collaboration Therapeutic Areas. [*]
Targets designated as Drug Discovery Targets may include any Target that is
suspected of playing a role in a Collaboration Therapeutic Area, including
Reserved Targets, Reagent Targets, Accepted Validation Targets, Exclusive
Targets, Rejected Validation Targets, and other Targets that the Joint Research
Committee determines to be of interest based on the scientific merits of
applying Antisense Technology to modulate such Target; [*] The initial Drug
Discovery Targets provided by Isis for each Collaboration Therapeutic Area and
the stage of development of such Targets as of the Effective Date (I.E., whether
such Target is a Xxxxx 0, Xxxxx 2 or Stage 3 Drug Discovery Target) are
identified in the Collaborative Research Plan.
6.2.2 DISAGREEMENTS REGARDING DRUG DISCOVERY TARGET
DESIGNATION. If the Joint Research Committee cannot agree on whether to
designate a Target a Drug Discovery Target, the matter shall be referred to the
Executive Committee for a decision. If the Executive Committee cannot agree on
whether to designate a Target a Drug Discovery Target, [*]
6.2.3 RESTRICTION ON ISIS' RIGHT TO USE DRUG DISCOVERY
TARGETS. Except as otherwise expressly permitted by this Agreement, Isis shall
not (i) conduct any research on any Drug Discovery Target or any ASO Compound
directed thereto, outside the course of the Collaboration either on its own or
for a Third Party or (ii) grant or assign any rights to a Third Party with
respect to any Drug Discovery Target or ASO Compound directed thereto, in each
case, while such Drug Discovery Target is the subject of an Active Program.
6.3 FURTHER DESIGNATION AS STAGE 1, 2 OR 3 DRUG DISCOVERY TARGET.
Concurrently with the designation by the Joint Research Committee of a Target as
a Drug Discovery Target, the Joint Research Committee shall also designate such
Target as a Stage 1 Drug Discovery Target, Stage 2 Drug Discovery Target, or
Stage 3 Drug Discovery Target, as appropriate.
6.4 DEVELOPMENT CANDIDATE DESIGNATION.
6.4.1 DURING THE ANTISENSE DRUG DISCOVERY TERM. During the
Antisense Drug Discovery Term, if in the opinion of a Party, a Drug Discovery
ASO Compound has met the Critical Success Factors set out in the Collaborative
Research Plan and such Drug Discovery ASO Compound is ready for IND-enabling
toxicology studies, such Party may recommend to the Joint Research Committee
that such Drug Discovery ASO Compound be designated a Development Candidate and,
at the next meeting of the Joint Research Committee, the Joint Research
Committee shall vote on such matter. Either Party may appeal the outcome of such
vote to the Executive Committee, in which event the Executive Committee shall
meet as promptly as practicable thereafter to resolve the matter. If the Joint
Research Committee (in the absence of an appeal to the Executive Committee) or
the Executive Committee determines that a Drug Discovery ASO Compound has met
the Critical Success Factors, then such Drug Discovery ASO Compound shall be
considered to be a "DEVELOPMENT CANDIDATE." Lilly shall have the option to
license each Development Candidate in accordance with Section 8.2.3.
15.
*Confidential Treatment Requested
6.4.2 AFTER THE ANTISENSE DRUG DISCOVERY TERM. Subject to
Section 6.5, after the Antisense Drug Discovery Term, Lilly shall make the
decision of whether a Drug Discovery ASO Compound corresponding to a Drug
Discovery Target that is the subject of an Active Program shall be designated a
Development Candidate, using criteria substantially similar to those used by the
Joint Research Committee during the Antisense Drug Discovery Term. Lilly shall
have the option to license each Development Candidate in accordance with Section
8.2.3.
6.5 CONTINUED DEVELOPMENT OF DRUG DISCOVERY TARGETS AFTER THE
ANTISENSE DRUG DISCOVERY TERM. Within ten (10) days following expiration or
termination (subject to Article 13) of the Antisense Drug Discovery Term and
again on the first (1st) anniversary of such expiration or termination, Lilly
shall provide Isis with written notice of those Drug Discovery Targets with
respect to which Lilly intends to continue an Active Program. In addition, from
the date that is six (6) months following such expiration or termination of the
Antisense Drug Discovery Term until the [*] anniversary of the expiration or
termination (subject to Article 13) of the Antisense Drug Discovery Term, Lilly
shall provide Isis with semiannual written reports describing the work conducted
in the previous six (6) months on each such Drug Discovery Target and Drug
Discovery ASO Compounds directed thereto in sufficient detail to permit Isis to
verify that Lilly is maintaining an Active Program with respect thereto and
notifying Isis of any such Drug Discovery Target with respect to which Lilly has
discontinued an Active Program; PROVIDED, HOWEVER, such reports shall be given
annually once such Drug Discovery Target has been licensed by Lilly under
Section 8.2.3. Subject to the provisions of Article 13, for so long as Lilly
maintains an Active Program with respect to a Drug Discovery Target after the
expiration or termination of the Antisense Drug Discovery Term (but in no event
to exceed [*] years after such expiration or termination), Lilly shall have the
right to continue to perform research and development on such Drug Discovery
Target and Drug Discovery ASO Compounds directed thereto.
6.6 DEVELOPMENT AND COMMERCIALIZATION OF DEVELOPMENT CANDIDATES.
Unless agreed otherwise by the Executive Committee and subject to Section 8.2.3,
Lilly shall be solely responsible for all development and commercialization
activities relating to Development Candidates.
6.7 ABANDONED DRUG DISCOVERY TARGETS. During the Antisense Drug
Discovery Term, the Joint Research Committee may designate a Drug Discovery
Target as an "ABANDONED DRUG DISCOVERY TARGET" if such Joint Research Committee
concludes that such Drug Discovery Target should no longer be the subject of an
Active Program as part of the Collaboration. Such vote shall be appealable to
the Executive Committee. [*]
6.8 RESERVED TARGETS. During the Collaboration Term Lilly may
designate any Target related to a Collaboration Therapeutic Area as a "RESERVED
TARGET," [*] Lilly shall provide written notice to Isis identifying each Target
that Lilly desires to designate as a Reserved Target. The date upon which Isis
receives such notice shall be deemed the "RESERVED TARGET NOTICE DATE." [*]
6.9 LIMITATION ON NUMBER OF DRUG DISCOVERY TARGETS AND RESERVED
TARGETS. During the Antisense Drug Discovery Term, the total number of both (i)
Drug Discovery Targets that are the subject of an Active Program and (ii)
Reserved Targets, shall not [*] PROVIDED,
16.
*Confidential Treatment Requested
HOWEVER, that the Joint Research Committee shall decrease the total number of
Drug Discovery Targets that are the subject of an Active Program and Reserved
Targets to [*] by the expiration of the Antisense Drug Discovery Term or any
extensions thereof. For purposes of clarification, upon exercise by Lilly of its
option under Section 8.2.3 with respect to a Drug Discovery Target, such Drug
Discovery Target shall no longer be counted toward the maximum number of Drug
Discovery Targets and Reserved Targets permitted by this Section 6.9. Effective
as of the [*] anniversary of the expiration of the Antisense Drug Discovery
Term, no Target shall be deemed a Reserved Target for purposes of this
Agreement.
ARTICLE 7
DEVELOPMENT, COMMERCIALIZATION, MANUFACTURING AND SUPPLY
7.1 RESEARCH SUPPLY. Isis shall supply Reagent ASO Compounds,
Validation ASO Compounds and Drug Discovery ASO Compounds to Lilly as set forth
in the Collaborative Research Plan. In the event that Lilly elects to obtain
additional quantities of a Reagent ASO Compound, Validation ASO Compound and/or
Drug Discovery ASO Compound for use outside of the Collaboration, Lilly shall so
inform Isis in writing specifying the additional quantity desired by Lilly. Isis
shall promptly provide Lilly such additional quantities of such Reagent ASO
Compounds, Validation ASO Compound and/or Drug Discovery ASO Compound in
accordance with the specifications set out in the Collaborative Research Plan.
Within [*] days after receipt of such Reagent ASO Compound, Validation ASO
Compound, and/or Drug Discovery ASO Compound, Lilly shall pay Isis [*]
(inclusive of all shipping, freight and other delivery charges) for the first
gram (or fraction thereof) of such additional Reagent ASO Compound, Validation
ASO Compound or Drug Discovery ASO Compound requested by and delivered to Lilly
in any one order. For any quantities of Reagent ASO Compound, Validation ASO
Compound or Drug Discovery ASO Compound requested by and delivered to Lilly
above [*] in any one order Lilly shall pay for such extra quantity in an amount
equal to [*] per gram or fraction thereof within [*] after receipt of such
additional quantities of Reagent ASO Compound, Validation ASO Compound, and/or
Drug Discovery ASO Compound.
7.2 CLINICAL SUPPLY. Upon request by Lilly, Isis will supply all
of Lilly's requirements of any Reagent ASO Compound, Validation ASO Compound
and/or Drug Discovery ASO Compound required by Lilly (not to exceed [*] such ASO
Compounds per year, nor to exceed [*] kilograms of all ASO Compounds provided
under this Section 7.2 per year) through the completion of Phase II Clinical
Trials on such Reagent ASO Compound, Validation ASO Compound or Drug Discovery
ASO Compound. Isis will also provide any information and documentation on such
Reagent ASO Compound, Validation ASO Compound or Drug Discovery ASO Compound
that is required by regulatory authorities. Isis will supply any such Reagent
ASO Compound, Validation ASO Compound or Drug Discovery ASO Compound pursuant to
mutually agreed upon specifications. The Parties will negotiate in good faith on
the terms of a clinical supply agreement containing these and other customary
terms. If Isis is not able to supply a Reagent ASO Compound, Validation ASO
Compound or Drug Discovery ASO Compound to Lilly or if Lilly determines to
obtain supply of any such Reagent ASO Compound, Validation ASO Compound or Drug
Discovery ASO Compounds from a Third Party, then Isis will, at Lilly's request
and expense, promptly transfer all necessary technology and technical assistance
and grant all necessary rights and licenses to permit Lilly, a Lilly
Sublicensee, or
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Third Parties on behalf of Lilly or a Lilly Sublicensee, to manufacture and
supply such Validation ASO Compound and Drug Discovery ASO Compounds.
7.3 DEVELOPMENT AND COMMERCIALIZATION. Lilly shall be solely
responsible for all development and commercialization of Lilly Products,
including toxicology, clinical development, regulatory, manufacturing and
commercialization efforts, except as agreed otherwise by the Parties. Lilly and
its Sublicensees shall have the sole right and responsibility for the
preparation of any regulatory filings required in order to conduct clinical
trials on Lilly Products in the Territory, together with the preparation of
suitable applications for marketing approval in the Territory and shall be the
owner and party of record of all such regulatory filings. Isis shall cooperate
with Lilly, at Lilly's expense, as Lilly reasonably requires in preparing such
regulatory filings including, without limitation, any and all data contained
therein.
ARTICLE 8
GRANT OF RIGHTS
8.1 LICENSES TO LILLY.
8.1.1 RESEARCH LICENSES. Subject to the terms and
conditions of this Agreement, Isis hereby grants to Lilly:
(a) a co-exclusive (with Isis),
nonsublicensable, royalty free license during the Collaboration Term under the
Isis Collaboration Technology solely to the extent necessary or appropriate to
carry out Lilly's responsibilities under the Collaborative Research Plan;
(b) a non-exclusive, nonsublicensable, royalty
free license, under the Isis Technology solely to the extent necessary or
appropriate to carry out Lilly's responsibilities under the Collaborative
Research Plan; and
(c) an exclusive, nonsublicensable, royalty free
license under the Isis Collaboration Blocking Patents, and a non-exclusive,
nonsublicensable, royalty free license under the Isis Collaboration Technology
other than the Isis Collaboration Blocking Patent Rights, in each case to
conduct research outside the course of the Collaboration in the Non-ASO Field in
the Territory.
8.1.2 PRODUCT LICENSES. Subject to the terms and conditions
of this Agreement, Isis hereby grants to Lilly (i) an exclusive license,
including the right to sublicense, under the Isis Collaboration Blocking
Patents, and (ii) a non-exclusive license, including the right to sublicense,
under the Isis Collaboration Technology other than the Isis Collaboration
Blocking Patents, in each case to make, use, import, sell and offer to sell
Reagent Non-ASO Products, Validation Non-ASO Products, and Drug Discovery
Non-ASO Products in the Territory. Such licenses shall be royalty-bearing as
expressly provided by this Agreement.
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8.2 LILLY PRODUCT OPTIONS.
8.2.1 OPTION TO ISIS BLOCKING PATENT RIGHTS FOR REAGENT
NON-ASO PRODUCTS. Subject to the terms and conditions of this Agreement, Isis
hereby grants to Lilly an option, exercisable on a Reagent Non-ASO
Compound-by-Reagent Non-ASO Compound basis, to obtain a non-exclusive
royalty-bearing licenses under the Isis Blocking Patent Rights to develop, make,
use, import, offer for sale and sell Reagent Non-ASO Products in the Territory;
such license(s) shall include the right to grant sublicenses solely for the
purpose of developing, making, using, importing, offering for sale and selling
the applicable Reagent Non-ASO Product. Lilly may exercise an option granted
pursuant to this Section 8.2.1 at any time during the term of this Agreement by
providing written notice to Isis that includes a description of the Isis
Blocking Patent Rights for which Lilly desires to obtain such non-exclusive
license. Any license granted to Lilly pursuant to exercise of an option under
this Section 8.2.1 shall be royalty-bearing in accordance with Section 9.3.1(b)
hereof.
8.2.2 OPTION TO REAGENT TARGETS AND VALIDATION TARGETS AND
EXCLUSIVE TARGETS.
(a) GRANT OF OPTION. Subject to the terms and
conditions of this Agreement, Isis hereby grants to Lilly an option, exercisable
on a Reagent Target-by-Reagent Target or Validation Target-by-Validation Target
basis, as applicable, to obtain an exclusive, royalty-bearing license, including
the right to sublicense, under the Isis Collaboration Technology and the Isis
Technology to develop, make, use, import, offer for sale and sell Reagent ASO
Products containing one or more Reagent ASO Compounds directed to such Reagent
Target or Validation ASO Products containing one or more Validation ASO
Compounds directed to such Validation Target, as applicable, in the Territory.
(b) EXERCISE OF OPTION. Lilly may exercise an
option granted pursuant to this Section 8.2.2 with respect to (i) any Reagent
Target during the [*] year period commencing upon delivery to Lilly of a Reagent
ASO Compound directed to such Reagent Target and (ii) any Validation Target
during the Target Validation Program Term and [*] year thereafter, in each case,
by providing written notice to Isis that includes a description of such Reagent
Target or Validation Target, as applicable. The date that Isis receives such
notice shall be deemed the "SECTION 8.2.2 EXERCISE NOTICE DATE." Within [*] days
following the Section 8.2.2 Exercise Notice Date for a Reagent Target or
Validation Target, Isis shall notify Lilly whether or not Isis has granted or
assigned any rights to any Third Party as permitted by this Agreement with
respect to such Reagent Target or Validation Target, or any ASO Compounds
directed thereto as of the Section 8.2.2 Exercise Notice Date and the nature of
the rights so granted, if any, or whether Isis has an Isis Internal Program with
respect to such Reagent Target or Validation Target. Isis shall have no
obligation to disclose to Lilly the identity of any such Third Party to which
rights or licenses have been granted. If Isis has not granted any such rights or
license and does not have an Isis Internal Program with respect to such Target
as of the Section 8.2.2 Exercise Notice Date, then Isis shall grant to Lilly,
and is hereby deemed to grant to Lilly, the license described above in this
Section 8.2.2 with respect to such Reagent Target or Validation Target as of the
Section 8.2.2 Exercise Notice Date and Lilly shall be obligated to make payments
to Isis with respect to such Reagent ASO Product or Validation ASO Product
directed to such Reagent Target or Validation Target, as applicable, in
accordance
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with Section 9.3.3. It is understood and agreed that a Reagent Target or
Validation Target may not be available to be licensed by Lilly under this
Section 8.2.2 if: (i) Isis has previously granted a Third Party exclusive
rights with respect to such Reagent Target and all ASO Compounds directed
thereto or Validation Target and all ASO Compounds directed thereto, or (ii)
Isis has an Isis Internal Program with respect to the Reagent Target or
Validation Target.
(c) DILIGENCE AND REPORTING. In order to
maintain any license granted to Lilly under this Section 8.2.2 with respect to a
Reagent Target or Validation Target, Lilly must (i) maintain an Active Program
with respect to such Reagent Target or Validation Target, (ii) achieve Program
Sanction Approval on Reagent ASO Compounds or Validation ASO Compounds directed
to such Reagent Target or Validation Target, as applicable, in no more than [*]
months from the time of licensing of such Target by Lilly and (iii) consider a
Reagent ASO Compound directed to such Reagent Target or a Validation ASO
Compound directed to such Validation Target under Lilly's formal review process
for CSAG Approval in no more than [*] months from Program Sanction Approval. In
the event that any of the foregoing diligence obligations is not met by Lilly
with respect to a Reagent Target or Validation Target or ASO Compound directed
thereto, the license granted to Lilly under this Section 8.2.2 with respect to
such Reagent Target or Validation Target and ASO Compounds directed thereto
shall terminate. Lilly shall provide Isis with annual written reports that
include a description of the research, development and commercialization
activities by Lilly on any Reagent Target or Validation Target (and ASO
Compounds directed thereto) licensed by Lilly under this Section 8.2.2. Lilly
shall provide prompt written notice to Isis when it ceases to have an Active
Program on any Reagent Target or Validation Target licensed by Lilly pursuant to
this Section 8.2.2 and thereafter such license shall terminate. Within six (6)
months of such notice from Lilly, or within six (6) months of termination of
this Agreement by Isis pursuant to Section 13.4 or 13.5, Isis shall provide
written notice to Lilly if it desires to develop an ASO Product to such Reagent
Target or Validation Target and receive from Lilly summary reports on completed
IND-enabling toxicology studies and completed clinical trials for the ASO
Compound related to such Reagent Target or Validation Target. Lilly shall
provide such summary reports promptly after receiving such notice from Isis. If
Isis fails to provide such notice within such six (6) month period Lilly shall
have no obligation to provide such summary reports to Isis.
8.2.3 OPTION TO DRUG DISCOVERY ASO TARGETS.
(a) GRANT OF OPTION. Subject to the terms and
conditions of this Agreement, Isis hereby grants to Lilly an exclusive option,
exercisable on a Drug Discovery Target-by-Drug Discovery Target basis, to obtain
an exclusive, royalty-bearing license, including the right to sublicense, under
the Isis Collaboration Technology and the Isis Technology to develop, make, use,
import, offer for sale and sell Drug Discovery ASO Products containing one or
more Drug Discovery ASO Compounds directed to such Drug Discovery Target in the
Territory.
(b) EXERCISE OF OPTION. Lilly's option under
this Section 8.2.3 with respect to any Drug Discovery Target shall be
exercisable during the Antisense Drug Discovery Term and for so long thereafter
(not to exceed [*] as Lilly has an Active Program with respect thereto or to the
Drug Discovery Target; PROVIDED, HOWEVER, that such option shall, in any event,
expire upon the earliest to occur of (i) [*]) days after a Drug Discovery ASO
Compound directed to such Drug Discovery Target achieves CSAG Approval or (ii)
[*] after the date that a Drug Discovery ASO Compound directed
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to such Drug Discovery Target was designated a Development Candidate. Lilly
may exercise an option granted pursuant to this Section 8.2.3 by providing
written notice to Isis that includes a description of the Drug Discovery
Target for which Lilly desires to obtain such exclusive license. The date
that Isis receives such notice shall be deemed the "SECTION 8.2.3 EXERCISE
NOTICE DATE." The exclusive license described above in this Section 8.2.3
shall be deemed granted to Lilly on the Section 8.2.3 Exercise Notice Date
and Lilly shall be obligated to make payments to Isis with respect to Drug
Discovery ASO Products directed to such Drug Discovery Target in accordance
with Section 9.3.4. If Lilly fails to timely exercise its option under this
Section 8.2.3, then thereafter the Drug Discovery Target corresponding to
such the Drug Discovery ASO Compound shall be deemed an Abandoned Drug
Discovery Target; PROVIDED, HOWEVER, that prior to the expiration of Lilly's
option under this Section 8.2.3 with respect to such Drug Discovery Target,
Lilly shall have the right to designate such Drug Discovery Target as a
Reserved Target for no more than [*] months, subject to the provisions of
Sections 6.8 and 6.9.
(c) DILIGENCE AND REPORTING. In order to
maintain any license granted to Lilly under this Section 8.2.3 with respect to a
Drug Discovery Target, Lilly must maintain an Active Program on such Drug
Discovery Target, and as long as Lilly has an Active Program with respect to a
Drug Discovery Target Isis shall not conduct any research on its own or with a
Third Party on such Drug Discovery Target or any ASO Compound directed to such
Drug Discovery Target. In the event that the foregoing diligence obligation is
not met by Lilly with respect to a Drug Discovery Target or Drug Discovery ASO
Compounds directed thereto, the license granted to Lilly under this Section
8.2.3 with respect to such Drug Discovery Target shall terminate. Lilly shall
provide Isis with annual written reports that include a description of the
research, development and commercialization activities by Lilly on any Drug
Discovery Target and Drug Discovery ASO Compounds related thereto licensed by
Lilly under this Section 8.2.3. Lilly shall provide prompt written notice to
Isis when it ceases to have an Active Program on any Drug Discovery Target or
Drug Discovery ASO Compounds directed thereto licensed by Lilly pursuant to this
Section 8.2.3 and thereafter such license shall terminate. Within six (6) months
of such notice from Lilly, or within [*] months of termination of this Agreement
by Isis pursuant to Section 13.4 or 13.5, Isis shall provide written notice to
Lilly if it desires to develop an ASO Product to such Drug Discovery Target and
whether it desires to receive from Lilly summary reports on completed
IND-enabling toxicology studies and completed clinical trials for the ASO
Compound related to such Drug Discovery Target. Lilly shall provide such summary
reports promptly after receiving such notice from Isis. If Isis fails to provide
such notice within such six (6) month period Lilly shall have no obligation to
provide such summary reports to Isis.
8.3 LILLY'S RIGHT OF FIRST NEGOTIATION. Isis hereby grants to
Lilly a right of first negotiation (the "LILLY RIGHT OF FIRST NEGOTIATION") to
obtain from Isis an exclusive, worldwide, license under the Isis Collaboration
Technology and the Isis Technology regarding (a) Isis Products directed to
Abandoned Drug Discovery Targets, Exclusive Targets, Lilly-Blocked Targets
(subject to Section 6.2.2) or Accepted Validation Targets that (i) Isis elects
to partner or develop or commercialize in collaboration with a Third Party or
(ii) are developed by Isis and achieve Phase III Study Initiation. The Lilly
Right of First Negotiation shall be exercisable by Lilly during the term of this
Agreement and shall operate as follows:
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8.3.1 Isis shall promptly notify Lilly in writing (the
"ISIS NOTIFICATION") of (i) its intention to negotiate with or seek a
collaborator for the commercialization of any Isis Product directed to an
Abandoned Drug Discovery Target or Accepted Validation Target or any Isis
Reagent ASO Products and/or (ii) when any Isis Product directed to an Abandoned
Drug Discovery Target, Exclusive Targets, Lilly-Blocked Targets or Accepted
Validation Target achieves Phase III Study Initiation. The Isis Notification
shall include a description of the Isis Product that includes summaries of
preclinical, toxicological and available clinical data and patent information of
the level of detail included in a Clinical Investigators Brochure and, for Isis
Products that achieve Phase III Study Initiation, a written report setting out
the Phase II Clinical Trial Protocol and the Clinical Investigative Brochure for
the Phase III Clinical Trials, in order to permit Lilly to evaluate its interest
in exercising its rights under this Section 8.3. All information contained in
the Isis Notification shall be considered Confidential Information of Isis and
subject to Article 10 and shall be used by Lilly solely for the purpose of
evaluating its interest in exercising its rights under this Section 8.3.
8.3.2 Lilly shall notify Isis within [*] days after receipt
of the Isis Notification (the "LILLY RESPONSE PERIOD"), indicating its interest,
if any, in initiating discussions regarding an agreement with Isis with respect
to the commercialization of such Isis Product.
8.3.3 In the event that Lilly notifies Isis prior to the
termination of the Lilly Response Period that it has an interest in the
commercialization of such Isis Product (a "LILLY EXPRESSION OF INTEREST"), then
the Parties shall negotiate exclusively in good faith reasonable terms that are
intended to form the basis of a final agreement for a period of up to the longer
of (i) [*] from the date of Isis's receipt of the Lilly Expression of Interest
or (ii) [*] days from the Isis Notification.
8.3.4 In the event that (i) Lilly fails to notify Isis
prior to the termination of the Lilly Response Period, or (ii) Lilly notifies
Isis prior to the termination of the Lilly Response Period that it has no
interest in collaborating with Isis in the commercialization of such Isis
Product, or (iii) the Parties fail to reach agreement on the terms that are
intended to form the basis of a final agreement within [*] days of the Isis
Notification, or (iv) the Parties fail to reach a final agreement within [*]
days following the date on which the Parties reach agreement on the terms that
are intended to form the basis of a final agreement, then Isis shall thereafter
be free to develop such Isis Product on its own or to initiate discussions with
potential alternative partners with respect to the commercialization of such
Isis Product; PROVIDED, HOWEVER, that in the event Isis enters into discussions
with alternative partner the following provisions shall apply:
(a) [*] For the purpose of calculating net
present value under this Section 8.3.4 the following timing definitions will
apply:
(I) [*] and
(II) [*] and
(b) [*]
8.3.5 Isis shall disclose the terms of any such proposed
Third Party agreement terms to Lilly, and in the event that Lilly disputes that
such terms meet the requirements of this
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Section 8.3, then an independent Third Party with the requisite expertise,
selected by the Parties, shall make such determination. The expense of such
independent Third Party shall be shared equally by the Parties. In the event
that any Third Party terms include non-monetary consideration (E.G.,
licensing of patent rights), then such independent Third Party shall value
such non-monetary consideration as well as any other terms offered by such
Third Party and decide whether as a whole the Third Party offer exceeds the
Lilly offer as set forth above.
8.3.6 If a Third Party offer for the Isis Product exceeds
the Lilly offer by the guidelines outlined in Section 8.3.4 and is accepted by
Isis, Lilly shall receive from Isis the milestones and running royalty that
would be owed by Isis to Lilly under Section 9.6.
8.3.7 In the event that Lilly provides Isis with a timely
offer of terms, pursuant to Section 8.3.3 (the "LILLY OFFERED TERMS"), but Isis
does not enter into an agreement with Lilly or reach a mutually agreed-upon term
sheet that represents a firm commitment from a Third Party approved by an
officer of the company of such Third Party with respect to the commercialization
of such ASO Product pursuant to the provisions of Section 8.3.4 within [*]
months of the receipt by Isis of the Lilly Offered Terms, then the Lilly Right
of First Negotiation with respect to such ASO Product shall be revived.
8.4 LICENSES TO ISIS.
8.4.1 RESEARCH LICENSES. Subject to the terms and
conditions of this Agreement, Lilly hereby grants to Isis:
(a) a co-exclusive (with Lilly),
nonsublicensable, royalty free license during the Collaboration Term under the
Lilly Collaboration Technology solely to the extent necessary or appropriate to
carry out Isis' responsibilities under the Collaborative Research Plan;
(b) an exclusive, nonsublicensable, royalty-free
license under the Lilly Collaboration Technology in the ASO Field in the
Territory to conduct research outside the course of the Collaboration; PROVIDED,
HOWEVER, that such license shall automatically terminate for any particular
Lilly Collaboration Patent Right that covers a Reagent ASO Product, Validation
ASO Product, or Drug Discovery ASO Product upon the licensing of the related
Reagent Target, Validation Target or Drug Discovery Target by Lilly under
Sections 8.2.1, 8.2.2 or 8.2.3.
8.4.2 PRODUCT LICENSES. Subject to the terms and conditions
of this Agreement, Lilly hereby grants to Isis an exclusive, royalty-bearing
license, including the right to sublicense, under Lilly Collaboration Technology
to develop, make, have made, use, import, offer for sale and sell Isis
Validation ASO Products and Isis Drug Discovery ASO Products in the Territory.
Isis shall provide Lilly with annual written reports that include a description
of the research, development and commercialization activities by Isis on any
Isis Validation ASO Products or Isis Drug Discovery ASO Products licensed by
Isis under this Section 8.4.2.
8.5 ISIS OPTION TO LICENSE LILLY NON-COLLABORATION ASO PATENT
RIGHTS. Subject to the terms and conditions of this Agreement, including this
Section 8.5, [*]. During the Reagent Provision Term plus [*] years thereafter
Isis may acquire the Isis Option with respect to any such Reagent Target as set
forth below:
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(i) [*]
(ii) [*] Isis shall be limited as to the number of Reagent
Targets with respect to which it may make such inquiries as follows:
(1) Until the expiration of [*] months after the
Effective Date, Isis may not make any such inquiries;
(2) During the [*] months following the period
described in Section 8.5(ii)(1), Isis may inquire on the status of up to [*]
Reagent Targets;
(3) During the [*] following the period
described in Section 8.5(ii)(2), Isis may inquire on the status of up to [*]
Reagent Targets; and
(4) During the [*] months following the period
described in Section 8.5(ii)(3) and during each successive [*] month period
thereafter until the expiration of the [*] year following expiration of the
Reagent Provision Term, Isis may inquire on the status of up to [*] Reagent
Targets per [*] month period.
Isis may make such inquiries under this Section 8.5(ii) no more than two (2)
times per year; PROVIDED, HOWEVER, [*] Within five (5) days of receipt of any
such notice from Isis under this Section 8.5(ii), the Third Party Reviewer shall
notify Isis in writing whether such Reagent Target is an Excluded Reagent
Target.
(iii) On or after such time as any Reagent Target validated
and functionalized by Isis in its own internal drug discovery programs has
reached [*]
(iv) Isis may exercise each Isis Option granted under
Section 8.5(iii) at any time following such grant during the Reagent Provision
Term plus [*] years upon written notice to Lilly. Any license granted to Isis
pursuant to exercise of an Isis Option under this Section 8.5 shall be
royalty-bearing in accordance with Section 9.6.1 hereof.
(v) Isis shall provide Lilly with annual written reports
that include a description of the research, development and commercialization
activities by Isis on any Isis Validation ASO Products or Isis Non-Collaboration
ASO Products licensed by Isis under this Section 8.5.
8.6 NO IMPLIED LICENSES. Except as expressly provided otherwise
herein, neither Party hereto will be deemed by this Agreement to have been
granted any license or other rights to the other Party's intellectual property
rights.
8.7 ISIS GENETROVE DATABASE SUBSCRIPTION. Until November 1, 2001,
Lilly shall have the right to become [*] for the GeneTrove Database for a period
of [*] months [*] During such [*] month period, Lilly shall have the option of
becoming a subscriber to the Genetrove Database [*] and otherwise upon the terms
and conditions set forth in SCHEDULE 8.7 hereto and thereafter, during the
Collaboration Term, Lilly shall have the option of becoming a subscriber to the
GeneTrove Database [*] preceding Lilly's exercise of such option for a
comparable subscription.
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8.8 TECHNOLOGY TRANSFER. Upon expiration or termination (other
than for breach by Lilly) of the Collaboration Term, Lilly shall have the option
to obtain a non-exclusive license, including the right to sublicense solely in
connection with the grant of a license to develop, make, use, import, offer for
sale and sell Lilly Products, to use the Isis Technology described in SCHEDULE
8.8 hereto on the terms set forth in such SCHEDULE 8.8.
8.9 MANUFACTURING IMPROVEMENTS. During the first [*] years of the
term of this Agreement, the Parties will meet at least annually to review
Manufacturing Improvements developed by either of the Parties outside of the
course of the Collaboration. [*]
8.9.1 The entire right, title, and interest in and to all
Manufacturing Improvements developed or invented solely by employees or
consultants of Lilly during the term of this Agreement will be the sole and
exclusive property of Lilly. [*]
8.9.2 The entire right, title, and interest in and to all
Manufacturing Improvements developed or invented solely by employees or
consultants of Isis during the term of this Agreement will be the sole and
exclusive property of Isis. [*]
8.9.3 The entire right, title, and interest in and to all
Manufacturing Improvements developed or invented jointly by employees or
consultants of Isis and Lilly during the term of this Agreement will be the
joint property of Isis and Lilly. Each Party will have an undivided joint
ownership interest in such Manufacturing Improvements, and may license its
rights under such Manufacturing Improvements for its own account and without the
consent of the other Party, subject to the licenses granted to Lilly under
Sections 8.1 and 8.2.
ARTICLE 9
PAYMENTS AND ACCOUNTING
9.1 COLLABORATION FUNDING. The Collaboration Funds shall be
applied by Isis solely towards the Collaboration and in accordance with the
Collaborative Research Plan.
9.1.1 COLLABORATION FTES. Collaboration FTEs shall be
billed against the Collaboration Funds at the FTE Rate. Each Party shall
maintain complete and accurate records of all monies expended by it for research
under the Collaboration and the Collaboration FTEs applied in the course of the
Collaboration. During Collaboration Term, each Party shall submit to the other
Party within [*] days following each Calendar Quarter a written statement
accompanied by a certificate signed by the Vice President of Finance or Director
of Finance on behalf of Isis, or in the case of Lilly, the Director of Finance
for Lilly Research Laboratories (or successor positions), setting forth (i) the
number of Collaboration FTEs dedicated to work on the Collaboration for the
previous Calendar Quarter, (ii) the dollar amount of Collaboration Funds
expended during the Calendar Quarter for which the report is made and the
subject matter of such expenditures; and (iii) a description of the activities
conducted. Isis will also include in such report to Lilly the beginning balance
of Collaboration Funds for such Calendar Quarter. Within [*] days of receipt of
Lilly's report for any Calendar Quarter, Isis shall submit to Lilly an
additional written statement, accompanied by a certificate signed by the Vice
President of Finance or Director of Finance of Isis, setting forth the amount of
Collaboration Funds expended
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in the preceding Calendar Quarter, the ending balance of Collaboration Funds
at the end of such Calendar Quarter and the total amount of monies to be
reimbursed to Lilly by Isis from Collaboration Funds for expenses incurred by
Lilly under the Collaboration. Isis shall reimburse Lilly concurrently with
the delivery of the report under the preceding sentence. Such reimbursement
shall be made by wire transfer to an account designated by Lilly.
9.1.2 REAGENTS. Isis shall charge the Collaboration Funds
for Reagent ASO Compounds provided to Lilly by Isis under the Reagent Provision
Program at the Isis HTS Standard Cost or Isis RTS Standard Cost, as applicable,
in accordance with the provisions of Section 9.1.1.
9.1.3 PROTECTED REAGENT TARGETS. For any Reagent ASO
Compound delivered to Lilly by Isis under this Agreement that is directed to a
Target that Lilly chooses to make a Protected Reagent Target pursuant to Section
4.4, Isis shall charge the Collaboration Funds an amount that is [*] above the
amount that would otherwise be charged by Isis under Section 9.1.2 with respect
to Reagent ASO Compounds to such Protected Reagent Target.
9.1.4 AUDITS. If a Party desires to audit the other Party's
records regarding Collaboration Funds and Collaboration FTEs, it shall utilize
the independent, certified public accountant of the other Party to examine such
records. Such accountant shall be instructed to provide the Party desiring the
audit a report on the findings of the agreed upon procedures which verifies any
previous report made or payment submitted by the audited Party during such
period. The expense of such audit shall be borne by the auditing Party;
PROVIDED, HOWEVER, that if an error in favor of the auditing Party of more than
the greater of [*] of the amount reported or paid or [*] is discovered, then
such expenses shall be paid by the audited Party. Any information received by a
Party pursuant to this Section 9.1.4 shall be deemed to be the Confidential
Information of the other Party. This right to audit shall remain during the
Collaboration Term and for a period of [*] years thereafter, but no more often
than one (1) time per year.
9.1.5 INCREASE IN LOAN COMMITMENT. Lilly and Isis have
agreed on the Lilly Loan commitment and the Loan Disbursement schedule set forth
in the Loan Agreement based on the mutual understanding of Lilly and Isis that
that Loan commitment and Loan Disbursement schedule will provide Collaboration
Funds on a timely basis to allow completion of the Collaboration activities
during the initial term of the Collaboration as set forth in this Agreement. If,
pursuant to Subsection 2.5.2(g), the Executive Committee recommends to Lilly
that an increase in Collaboration Funds is desirable to cover Collaboration
efforts during the initial four (4) year term of the Collaboration as a result
of expanding the therapeutic area focus of the Collaboration, Lilly may at its
sole option either increase the Loan commitment under the Loan Agreement or pay
cash to provide sufficient Collaboration Funds to cover such expanded area of
focus, and Lilly and Isis agree to execute such amendments to the Loan Agreement
as are necessary to cover the increased Loan commitment and adjustments in the
Loan Disbursement schedule.
9.1.6 MODIFICATIONS TO LOAN DISBURSEMENT SCHEDULE. While
not expected, if for any reason there is a substantial acceleration or delay in
the conduct of Collaboration activity from the Collaborative Research Plan used
in determining the Loan Disbursement schedule set forth in the Loan Agreement,
the Executive Committee shall recommend modifications to Lilly
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in the Loan Disbursement schedule as appropriate to reflect the resulting
acceleration or delay in the need to provide Collaboration Funds, and, if
such recommended modifications are acceptable to Lilly, then Lilly and Isis
agree to execute such amendments to the Loan Agreement as are appropriate to
reflect the changes recommended by the Executive Committee to the Loan
Disbursement schedule.
9.1.7 ACTION BY EXECUTIVE COMMITTEE. If either Party
believes that activity by the Executive Committee pursuant to Section 9.1.5 or
9.1.6 is appropriate, it shall so notify the other Party in writing, and the
Parties will cooperate in calling an Executive Committee meeting to consider
such matters at the earliest feasible time thereafter.
9.2 TECHNOLOGY ACCESS FEE. If Lilly is conducting any research,
development or commercialization activities relating to any Lilly Product as of
the fourth (4th) anniversary of the Effective Date, Lilly shall commence making
the first of [*] equal installments of the Technology Access Fee to Isis. For a
period of [*] years thereafter, if Lilly continues to conducting any research,
development or commercialization activities relating to any Lilly Product as of
each anniversary of the Effective Date then Lilly shall pay the next installment
of the Technology Access Fee. Technology Access Fee installments shall be paid
by Lilly within thirty (30) days after the fourth (4th) anniversary of the
Effective Date and each anniversary date thereafter until a total [*] such
Technology Access Fee installments have been made by Lilly. The total amount of
each such Technology Access Fee installment shall be calculated by:
(a) subtracting from the Collaboration Funds both:
(i) [*] and
(ii) [*] and
(b) [*] pursuant to this Section 9.2.
Capitalized terms used in this Section 9.2 that are not defined in this
Agreement shall have the meanings set forth in the Loan Agreement.
9.2.2 CREDITS AGAINST TECHNOLOGY ACCESS FEE. [*]
9.3 LICENSE, MILESTONE AND ROYALTY PAYMENTS - LILLY.
9.3.1 REAGENT NON-ASO PRODUCTS.
(a) MILESTONE PAYMENTS. Lilly will pay to Isis
the following milestone payments for a Reagent Non-ASO Product within [*] days
after achievement of each of the following events in the first Major Market
Country; PROVIDED, HOWEVER, that no milestone payment shall be due or owing for
any Reagent Non-ASO Compound being developed as a Reagent ASO Product that has
as its site of activity the same Target that is the site of activity of any
Lilly Product with respect to which such milestone payment has already been
paid:
27.
*Confidential Treatment Requested
------------------------------------------ -----------------------------------
MILESTONE EVENT MILESTONE PAYMENT
------------------------------------------ -----------------------------------
[*]
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
Lilly shall be obligated to pay milestone
payments with respect to a Reagent Non-ASO Compound under this Section 9.3.1
only if such Reagent Non-ASO Compound achieves Program Sanction Approval within
[*] years of the date that Lilly performs the Lilly First Pass In Vitro Assay
with respect to the related Reagent ASO Compound delivered to Lilly by Isis
under this Agreement that is directed to the same Target as such Reagent Non-ASO
Compound, as reasonably evidenced by Lilly's laboratory notebooks or other
scientific records.
(b) ROYALTIES. Lilly will pay to Isis one
percent [*] on the annual Net Sales of a Reagent Non-ASO Product on a
country-by-country basis from the date of the First Commercial Sale in each such
country of a Reagent Non-ASO Product until the expiration of the last to expire
Isis Blocking Patent Right licensed by Lilly under Section 8.2.1 that includes a
Valid Claim that Covers such Reagent Non-ASO Product.
9.3.2 VALIDATION NON-ASO PRODUCTS AND DRUG DISCOVERY NON-ASO
PRODUCTS.
(a) MILESTONE PAYMENTS. Lilly will pay to Isis
the following milestone payments for a Validation Non-ASO Product or Drug
Discovery Non-ASO Product within thirty (30) days after achievement of each of
the following events in the first Major Market Country; PROVIDED, HOWEVER, that
no milestone payment shall be due or owing for any Validation Non-ASO Compound
being developed as a Validation Non-ASO Product or Drug Discovery Non-ASO
Compound being developed as a Drug Discovery Non-ASO Product that has as its
site of activity the same Target that is the site of activity of any Lilly
Product with respect to which such milestone payment has already been paid:
------------------------------------------ -----------------------------------
MILESTONE EVENT MILESTONE PAYMENT
------------------------------------------ -----------------------------------
[*]
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
------------------------------------------ -----------------------------------
28.
*Confidential Treatment Requested
Lilly shall be obligated to make only those
milestone payments for the events listed above in this Section 9.3.2 that occur
after the Validation Target or Drug Discovery Target that is targeted by the
Validation Non-ASO Compound being developed as a Validation Non-ASO Product or
Drug Discovery Non-ASO Compound being developed as a Drug Discovery Non-ASO
Product is designated [*]
Lilly shall be obligated to pay milestone
payments with respect to a Validation Non-ASO Compound being developed as a
Validation Non-ASO Product or Drug Discovery Non-ASO Compound being developed as
a Drug Discovery Non-ASO Product under this Section 9.3.2 only if such
Validation Non-ASO Compound or Drug Discovery Non-ASO Compound achieves Program
Sanction Approval within [*] years of the date that Lilly or the Collaboration,
as applicable, performs the equivalent of the Lilly First Pass In Vitro Analysis
with respect to the related Validation ASO Compound or Drug Discovery ASO
Compound that is directed to the same Target as the Validation Non-ASO Compound
or Drug Discovery Non-ASO Compound, as reasonably evidenced by Lilly's
laboratory notebooks or other scientific records.
(b) ROYALTIES. Lilly will pay the following
royalties to Isis on a country-by-country basis from the date of the First
Commercial Sale in each such country of a Validation Non-ASO Product or Drug
Discovery Non-ASO Product:
(i) [*] on the annual Net Sales of
Validation Non-ASO Product or Drug Discovery Non-ASO Product for a period of [*]
years if there is no Isis Collaboration Patent Right or Isis Patent Right that
includes a Valid Claim that Covers such Validation Non-ASO Product or Drug
Discovery Non-ASO Product; PROVIDED, HOWEVER, that no royalty payment shall be
owed by Lilly under this Section 9.3.2(b) for a Validation Non-ASO Product or
Drug Discovery Non-ASO Product that is [*] or
(ii) [*] on the annual Net Sales of a
Validation Non-ASO Product or Drug Discovery Non-ASO Product until the
expiration of the last to expire Isis Collaboration Patent Right or Isis Patent
Right that includes a Valid Claim that Covers such Validation Non-ASO Product or
Drug Discovery Non-ASO Product.
9.3.3 REAGENT ASO PRODUCTS AND VALIDATION ASO PRODUCTS.
(a) LICENSE FEES. In the event that Lilly
exercises its option to license a Reagent Target or a Validation Target in
accordance with Section 8.2.2, Lilly shall pay Isis a one time license fee of
[*] within [*] days after the Section 8.2.2 Exercise Notice Date for each such
licensed Reagent Target or Validation Target.
(b) MILESTONE PAYMENTS. Lilly will pay to Isis
the following milestone payments for a Reagent ASO Compound being developed as a
Reagent ASO Product or a Validation ASO Compound being developed as a Validation
ASO Product within thirty (30) days after achievement of each of the following
events in the first Major Market Country; PROVIDED, HOWEVER, that no milestone
payment shall be due or owing for any Reagent ASO Compound or a Validation ASO
Compound that has as its site of activity the same Target that is
29.
*Confidential Treatment Requested
the site of activity of any Lilly Product with respect to which such milestone
payment has already been paid:
------------------------------------------ ---------------------------------------
MILESTONE EVENT MILESTONE PAYMENT
------------------------------------------ ---------------------------------------
[*]
------------------------------------------ ---------------------------------------
------------------------------------------ ---------------------------------------
------------------------------------------ ---------------------------------------
------------------------------------------ ---------------------------------------
PROVIDED, HOWEVER, that with respect to any Combination Product that contains
more than one (1) Reagent ASO Compound and/or Validation ASO Compound, Lilly
shall be obligated to the milestones set forth in the foregoing table for Phase
III Study Initiation, Registration and First Commercial Sale only once for such
Combination Product.
(C) ROYALTIES. Lilly will pay to Isis the
following royalties on a country-by-country basis from the date of the First
Commercial Sale in each such country of a Reagent ASO Product or a Validation
ASO Product until the expiration of the last to expire Isis Collaboration Patent
Right or Isis Patent Right that includes a Valid Claim that Covers such Reagent
ASO Product or Validation ASO Product, as applicable:
------------------------------------------------------------- --------------------
WORLDWIDE ANNUAL SALES OF THE PRODUCT ROYALTY RATE
------------------------------------------------------------- --------------------
[*]
------------------------------------------------------------- --------------------
------------------------------------------------------------- --------------------
------------------------------------------------------------- --------------------
PROVIDED, HOWEVER, that the royalty rate payable by Lilly under this Section
9.3.3(c) shall be increased by the amount of any pass through royalties payable
by Isis to a Third Party on Lilly's sale of such Reagent ASO Product or
Validation ASO Product but in no event shall the royalty rate payable by Lilly
under this Section be increased to amount greater than [*]
9.3.4 DRUG DISCOVERY ASO PRODUCTS.
(A) LICENSE FEES. In the event that Lilly
exercises an option to license a Drug Discovery ASO Target in accordance with
Section 8.2.3, Lilly shall pay the following applicable one-time license fee [*]
days after the Section 8.2.3 Exercise Notice Date for each such Drug Discovery
ASO Target:
30.
--------------------------------------------- ----------------------------------
DRUG DISCOVERY ASO TARGET LICENSE FEE
--------------------------------------------- ----------------------------------
[*]
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
--------------------------------------------- ----------------------------------
(B) MILESTONE PAYMENTS. Lilly will pay to Isis
the following milestone payments for a Drug Discovery ASO Compound being
developed as a Drug Discovery ASO Product within [*] days after achievement of
each of the following events in the first Major Market Country; PROVIDED,
HOWEVER, that no milestone payment shall be due or owing for any Drug Discovery
ASO Compound that has as its site of activity the same Target that is the site
of activity of any Drug Discovery ASO Product with respect to which such
milestone payment has already been paid:
--------------------------------------------------------------------------------------------------------------------
MILESTONE PAYMENT
--------------------------------------------------------------------------------------------------------------------
MILESTONE EVENT STAGE 1 DRUG DISCOVERY STAGE 2 DRUG DISCOVERY STAGE 3 DRUG DISCOVERY
TARGET TARGET TARGET
------------------------------------- ------------------------- ------------------------- --------------------------
[*]
------------------------------------- ------------------------- ------------------------- --------------------------
------------------------------------- ------------------------- ------------------------- --------------------------
------------------------------------- ------------------------- ------------------------- --------------------------
------------------------------------- ------------------------- ------------------------- --------------------------
PROVIDED, HOWEVER, that with respect to any Combination Product that contains
more than one (1) Drug Discovery ASO Compound, Lilly shall be obligated to the
milestones set forth in the foregoing table for Phase III Study Initiation,
Registration and First Commercial Sale only once for such Combination Product.
(C) ROYALTIES. Lilly will pay to Isis the
following royalties on a country-by-country basis from the date of the First
Commercial Sale in each such country of a Drug Discovery ASO Product until the
expiration of the last to expire Isis Collaboration Patent Right or Isis Patent
Right that includes a Valid Claim that Covers such Drug Discovery ASO Product:
31.
--------------------------------------------- -------------------------------------------------------------------------
ROYALTY RATES
--------------------------------------------- ------------------------ ------------------------ -----------------------
WORLDWIDE ANNUAL NET SALES OF THE PRODUCT STAGE 1 DRUG DISCOVERY STAGE 2 DRUG DISCOVERY STAGE 3 DRUG
TARGET TARGET DISCOVERY TARGET
--------------------------------------------- ------------------------ ------------------------ -----------------------
[*]
--------------------------------------------- ------------------------ ------------------------ -----------------------
--------------------------------------------- ------------------------ ------------------------ -----------------------
--------------------------------------------- ------------------------ ------------------------ -----------------------
9.3.5 LILLY SUBLICENSING OBLIGATIONS. In the event that
Lilly elects to sublicense its rights to a Reagent ASO Compound, a Drug
Discovery ASO Product or a Validation ASO Product, as permitted by this
Agreement, Lilly shall be obligated to pay to Isis, at Lilly's option, either
(i) [*] of any and all Sublicense Income received by Lilly pursuant to a
sublicense agreement entered into by Lilly with respect to such Reagent ASO
Compound, a Drug Discovery ASO Product or a Validation ASO Product or (ii) any
payments as set forth in this Article 9 that would be owed by Lilly if Lilly
were selling such Reagent ASO Product, Drug Discovery ASO Product or Validation
ASO Product; PROVIDED, HOWEVER, [*]
9.4 PASS THROUGH ROYALTIES. [*]
9.4.1 [*]
9.4.2 [*]
9.5 ACCESS TO THIRD PARTY RIGHTS.
9.5.1 THIRD PARTY LICENSES. If, after the Effective Date
access to a Third Party's intellectual property rights becomes necessary to
make, use, import, or offer to sell, or sell a Reagent ASO Product, Validation
ASO Product or Drug Discovery ASO Product in the Territory, Lilly shall have the
right to acquire such access. [*] of the acquisition cost paid by Lilly (I.E.,
all consideration paid by Lilly in connection with such acquisition including,
without limitation up-front payments, milestones payments and royalties) shall
be credited against future royalties owed to Isis by Lilly under this Agreement
for a Reagent ASO Product, Validation ASO Product or Drug Discovery ASO Product.
Except as the Parties may otherwise agree in writing, under no circumstance
shall Lilly acquisitions of Third Party intellectual property rights under the
provisions of this Section 9.5 result in a reduction of Net Royalties payable to
Isis under this Agreement by more than [*] percent of the royalty otherwise due
to Isis.
9.5.2 ORAL PREPARATION OR FORMULATION TECHNOLOGY. Any oral
preparation or formulation technology that is applicable to Reagent ASO
Products, Validation ASO Products or Drug Discovery ASO Products that is
obtained by Isis from any Affiliate or Third Party, including Elan, shall be
made available to Lilly for use at a cost (including royalties, milestones and
other payments) that is no greater than the amount payable by Isis to such Third
Party. Any oral preparation or formulation technology developed by Isis during
the term of the Agreement
32.
that is applicable to Reagent ASO Products, Validation ASO Products or Drug
Discovery ASO Products shall be made available to Lilly hereunder as Isis
Technology.
9.6 PAYMENTS BY ISIS. Subject to the terms and conditions of this
Agreement, Isis shall pay to Lilly royalties on a country-by-country basis from
the date of the First Commercial Sale of an Isis Product in each such country as
follows:
9.6.1 ISIS NON-COLLABORATION ASO PRODUCTS. For Isis
Non-Collaboration ASO Products, Isis shall pay Lilly [*] on Isis' annual Net
Sales of each Isis Non-Collaboration ASO Product until the expiration of the
last to expire Lilly Non-Collaboration ASO Patent Right that includes a Valid
Claim that Covers such Isis Non-Collaboration ASO Product;
9.6.2 ISIS VALIDATION ASO PRODUCTS. For Isis Validation ASO
Products, Isis shall pay Lilly [*] on Isis' annual Net Sales of each Isis
Validation ASO Product until the expiration of the last to expire Isis
Collaboration Patent Right or Lilly Collaboration Patent Right that includes a
Valid Claim that Covers such Isis Validation ASO Product; PROVIDED, HOWEVER,
that the total royalty payable by Isis with respect to any Isis Product under
Sections 9.6.1 and 9.6.2 shall not exceed [*] of Net Sales in the aggregate; and
9.6.3 ISIS DRUG DISCOVERY ASO PRODUCTS. For an Isis Drug
Discovery ASO Product that is not directed to a Stage 2 Drug Discovery Target or
a Stage 3 Drug Discovery Target, Isis shall pay to Lilly the applicable
percentage of Net Sales set forth below for each such Isis Drug Discovery ASO
Product until the expiration of the last to expire Isis Collaboration Patent
Right or Lilly Collaboration Patent Right that includes a Valid Claim that
Covers such Isis Drug Discovery ASO Product:
--------------------------------------------------------------- ------------------
STAGE AT WHICH LILLY'S LICENSE TO A ISIS DRUG DISCOVERY ASO ROYALTY RATE
PRODUCT WAS TERMINATED
--------------------------------------------------------------- ------------------
[*]
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
9.6.4 ISIS DRUG DISCOVERY ASO PRODUCTS. For Isis Drug
Discovery ASO Products that are directed to Stage 2 Drug Discovery Targets or
Stage 3 Drug Discovery Targets, Isis will pay to Lilly the applicable percentage
of Net Sales set forth below for each such a Isis Drug Discovery ASO Product
until the expiration of the last to expire Isis Collaboration Patent Right or
Lilly Collaboration Patent Right that includes a Valid Claim that Covers such
Isis Drug Discovery ASO Product:
33.
--------------------------------------------------------------- ------------------
STAGE AT WHICH LILLY'S LICENSE TO A ISIS DRUG DISCOVERY ASO ROYALTY RATE
PRODUCT WAS TERMINATED
--------------------------------------------------------------- ------------------
[*]
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
--------------------------------------------------------------- ------------------
9.6.5 LILLY SUMMARY REPORTS. If Isis elects to receive a
summary report from Lilly under Section 8.2.2(c) or 8.2.3(c) with respect to an
ASO Compound, Isis shall make the applicable payment set forth below to Lilly
with respect to any Isis Reagent ASO Product, Isis Validation Product or Isis
Drug Discovery Product based thereon, as applicable within [*] days after
receipt of such report from Lilly:
(a) If Isis acquires rights to an Isis Reagent
ASO Product, Isis Validation ASO Product or Isis Drug Discovery ASO Product
pursuant to Section 8.2.2(c) or 8.2.3(c) prior to completion of IND-enabling
toxicology studies, then Isis shall pay Lilly [*];
(b) If Isis acquires rights to an Isis Reagent
ASO Product, Isis Validation ASO Product or Isis Drug Discovery ASO Product
pursuant to Section 8.2.2(c) or 8.2.3(c) after completion of IND-enabling
toxicology studies but before completion of Phase I Clinical Trials, then Isis
shall pay Lilly [*];
(c) If Isis acquires rights to an Isis Reagent
ASO Product, Isis Validation ASO Product or Isis Drug Discovery ASO Product
pursuant to Section 8.2.2(c) or 8.2.3(c) after completion of Phase I Clinical
Trials but prior to completion of Phase II Clinical Trials, then Isis shall pay
Lilly [*]; and
(d) If Isis acquires rights to an Isis Reagent
ASO Product, Isis Validation ASO Product or Isis Drug Discovery ASO Product
pursuant to Section 8.2.2(c) or 8.2.3(c) after completion of Phase II Clinical
Trials, then Isis shall pay Lilly [*].
9.6.6 ASO PRODUCT COMPETITION. In the event that during the
term of this Agreement, Isis develops or commercializes an ASO Product not
subject to payment obligations under any other provision of this Section 9.6
that:
(a) selectively modulates a Target that has [*]
and
(b) [*]
then Isis shall pay to Lilly royalties on the Net Sales of such ASO Product
being developed or commercialized by Isis for such same indication(s) that is
equal to [*] of the Net Royalty payable by Lilly to Isis for such competing
Lilly ASO Product.
34.
9.7 ROYALTY OBLIGATIONS. Except as otherwise provided in this
Agreement both Parties acknowledge and agree that each is solely responsible for
any and all royalty obligations that have accrued or may accrue in the future
with respect to any agreements and/or arrangement that such Party may have
agreed to prior to the Effective Date. Except as otherwise provided in this
Agreement, any Third Party technology acquired by Isis that is applicable to
Reagent ASO Products, Validation ASO Products or Drug Discovery ASO Products
shall be made available to Lilly at the cost (including royalties, milestones
and other payments) payable by Isis to such Third Party.
9.8 COPS PROTECTION. Isis and Lilly agree to discuss in good faith
a royalty reduction for any Lilly Product or Isis Product for which the COPS is
greater than [*]
9.9 COMPULSORY LICENSE. If in any country a Third Party obtains a
Compulsory License to sell a Lilly Product or Isis Product, then Lilly or Isis,
respectively, shall promptly notify the other Party. If the royalty rate payable
by the grantee of the Compulsory License is less than the then-current royalty
rate paid under this Agreement, then the royalty rate, payable under this
Agreement with respect to such Lilly Product or Isis Product, as applicable,
shall be reduced to such lower rate in the subject country for so long as sales
are made pursuant to the Compulsory License; PROVIDED, HOWEVER,[*]
9.10 INFLATION. The increments of annual Net Sales tiers set forth
in Sections 9.3.3(c) or and 9.3.4(c) will be adjusted on a Calendar Year basis
commencing January 1, 2002 (and on January 1 of each year thereafter during the
term of this Agreement) by an amount equal to the percentage change, if any, in
the CPI for the preceding year.
9.11 ACCOUNTING REPORTS; PAYMENT OF ROYALTY. Each Party (including
its Affiliates) and its Sublicensees shall keep complete and accurate books and
records which may be necessary to ascertain properly and to verify the payments
owed hereunder. [*] Each Party will make royalty payments to the other Party for
Products sold by such Party, its Affiliates and Sublicensees during the Calendar
Quarter within [*] days of the last day of that Calendar Quarter. Each royalty
payment will be accompanied by a written report for that Calendar Quarter
showing the Net Sales of the Products sold by such Party, its Affiliates and
Sublicensees worldwide during the quarterly reporting period and the calculation
of the royalties payable under this Agreement.
9.12 AUDITS. Upon the written request of a Party (the "AUDITING
PARTY"), and not more than once in each Calendar Year, the other Party (the
"AUDITED PARTY") will permit the Audited Party's independent certified public
accountant to have access during normal business hours to such of the records of
the Audited Party as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder for the current year and the preceding two (2) years
prior to the date of such request. The Auditing Party shall submit an audit
plan, including audit scope, to the Audited Party for the Audited Party's
approval, which shall not be unreasonably withheld, prior to audit
implementation. The independent certified public accountants shall keep
confidential any information obtained during such inspection and shall report to
the Auditing Party only the amounts of Net Sales and royalties due and payable.
Upon the expiration of two (2) years following the end of any Calendar Year, the
calculation of royalties payable with respect to such year will be binding and
conclusive upon the Auditing Party, and the Audited Party and its
35.
Affiliates and Sublicensees will be released from any liability or
accountability with respect to royalties for such year. If such accounting
firm concludes that additional royalties were owed, or that the Audited Party
overpaid royalties, during such period, the Audited Party will pay the
additional royalties, or the Auditing Party shall return any overpaid
royalties, within ninety (90) days of the date the Auditing Party delivers to
the Audited Party such accounting firm's written report. The fees charged by
such accounting firm will be paid by the Auditing Party unless the additional
royalties owed by the Audited Party exceed [*] of the royalties paid for the
royalty period subject to the audit, in which case the Audited Party will pay
the reasonable fees of the accounting firm. The Audited Party will include in
each sublicense granted by it pursuant to this Agreement a provision
requiring the Sublicensee to make reports to the Audited Party, to keep and
maintain records of sales made pursuant to such sublicense and to grant
access to such records by a mutually agreed upon independent accountant to
the same extent required of the Audited Party under this Agreement. The
Auditing Party will treat all financial information subject to review under
this Section 9.12 or under any sublicense agreement in accordance with the
confidentiality provisions of this Agreement, and will cause its accounting
firm to enter into an acceptable confidentiality agreement with the Audited
Party obligating it to retain all such financial information in confidence
pursuant to such confidentiality agreement.
9.13 PAYMENT. All payments to a Party under this Agreement will be
made in United States Dollars by bank wire transfer in next day available funds
to such bank account in the United States designated in writing by the other
Party from time to time. Each Party will pay a late payment service charge of
[*] per month (or the highest amount allowed by law, if lower than [*] on all
past-due amounts owed by such Party under this Agreement.
9.14 INCOME TAX WITHHOLDING. Each Party will be responsible for its
own tax liabilities resulting from the payments received from the other Party
under this Agreement. If laws, rules or regulations require withholding of
income taxes or other taxes imposed upon payments set forth in this Article 9,
the paying Party will make such withholding payments as required and subtract
such withholding payments from the payments set forth in this Article 9. The
paying Party will submit appropriate proof of payment of the withholding taxes
to the other Party within a reasonable period of time.
ARTICLE 10
CONFIDENTIALITY
10.1 NONDISCLOSURE AND NONUSE OBLIGATIONS. All (i) Confidential
Information disclosed by one Party to the other Party hereunder and (ii)
Collaboration Know-How will be maintained in confidence and will not be
disclosed to any Third Party or used for any purpose except as expressly
permitted herein without the prior written consent of the other Party.
10.2 PERMITTED DISCLOSURE OF CONFIDENTIAL INFORMATION.
Notwithstanding Section 9.1, a Party may disclose Confidential Information of
the other Party or Collaboration Know-How as follows:
10.2.1 to appropriate U.S. and/or foreign tax authorities,
appropriate patent agencies in order to obtain Patent Rights pursuant to this
Agreement, appropriate regulatory
36.
authorities to gain approval to conduct clinical trials or to market Lilly
Products or Isis Products pursuant to this Agreement, but such disclosure,
may be only to the extent reasonably necessary to obtain such Patent Rights
or authorizations;
10.2.2 if required by any governmental authority other than
under Section 10.2.1, provided that prior to such disclosure, the Party subject
to the request for such disclosure (the "NOTIFYING PARTY") promptly notifies the
other Party of such requirement so that such other Party may seek a protective
order or other appropriate remedy; and provided, further, that in the event that
no such protective order or other remedy is obtained, or that such other Party
waives compliance with this Article 10, the Notifying Party will furnish only
that portion of the other Party's Confidential Information or of the
Collaboration Know-How that it is advised by counsel it is legally required to
furnish and will exercise all reasonable efforts to obtain reasonable assurance
that confidential treatment will be accorded the other Party's Confidential
Information or Collaboration Know-How so furnished.
10.2.3 by a Party to its permitted Sublicensees, agents,
consultants, Affiliates and/or other Third Parties for the research and
development, manufacturing and/or marketing of Lilly Products or Isis Products
(or for such Parties to determine their interest in performing such activities)
in accordance with this Agreement on the condition that such Affiliates and
Third Parties agree to be bound by the confidentiality and non-use obligations
contained in this Agreement; or
10.2.4 if required to be disclosed by law or court order,
provided that notice is promptly delivered to the non-disclosing Party in order
to provide an opportunity to challenge or limit the disclosure obligations.
ARTICLE 11
DISCLAIMERS, REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS
11.1 ISIS REPRESENTATIONS AND WARRANTIES. Isis represents and
warrants to Lilly as follows:
11.1.1 CORPORATE EXISTENCE AND AUTHORITY. As of the
Effective Date, Isis: (a) is a corporation duly organized, validly existing and
in good standing under the laws of the state in which it is incorporated, (b)
has full corporate power and authority and the legal right to own and operate
its property and assets and to carry on its business as it is now being
conducted and as contemplated in this Agreement, including the right to grant
the options to license and licenses granted hereunder, (c) has the corporate
power and authority and the legal right to enter into this Agreement and perform
its obligations hereunder, (d) has taken all necessary corporate action on its
part required to authorize the execution and delivery of the Agreement and the
performance of its obligations hereunder, and (e) has delivered an Agreement
that has been duly executed and constitutes a legal, valid, binding obligation
of Isis and is enforceable against it in accordance with its terms;
11.1.2 PATENTS, PRIOR ART. As of the Effective Date and to
the best of Isis' knowledge, it has the sufficient legal and/or beneficial title
and ownership under the Isis
37.
Technology as is necessary to fulfill its obligations under this Agreement
and to grant the licenses and options to license to Lilly pursuant to this
Agreement. Isis is not aware of any communications alleging that it has
violated or, by conducting its business as currently proposed under this
Agreement, would violate any of the intellectual property rights of any Third
Party;
11.1.3 ABSENCE OF LITIGATION, INFRINGEMENT,
MISAPPROPRIATION. As of the Effective Date and to the best of Isis' knowledge,
there is no pending or threatened litigation (and Isis has not received any
communication relating thereto) which alleges that Isis' activities in the field
of Antisense Technology or under this Agreement would infringe or misappropriate
any intellectual property rights of any Third Party. To the best of Isis'
knowledge, there is no material unauthorized use, infringement or
misappropriation of any of its intellectual property rights that are the subject
of the licenses or options to license granted hereunder;
11.1.4 FULL DISCLOSURES. Isis has provided Lilly with all
information that Lilly has requested for deciding the merits of entering into
this Agreement and all information reasonably useful or necessary to enable
Lilly to make an informed decision regarding entering into this Agreement;
11.1.5 EMPLOYEE OBLIGATIONS. All Isis employees who will
conduct research under this Agreement have legal obligations requiring
assignment to Isis of all inventions made in the course of and as a result of
their association with Isis and obligating the individual to maintain as
confidential the Confidential Information of Isis, as well as the Confidential
Information of Lilly which Isis may receive;
11.1.6 COMPLIANCE WITH LAWS. In carrying out its work under
this Agreement, all Isis work shall be carried out in compliance with any
applicable laws including, without limitation, federal, state, or local laws,
regulations, or guidelines governing the work at the site where such work is
being conducted. Moreover, Isis will carry out all work under the Collaboration
in accordance with current Good Laboratory Practices, Good Clinical Practices,
and Good Manufacturing Practices, if applicable based on the specific work to be
conducted;
11.1.7 NO DEBARMENT. Isis will comply at all times with the
provisions of the Generic Drug Enforcement Act of 1992 and will upon request
certify in writing to Lilly that none of its employees nor any person providing
services to Isis in connection with the Collaboration have been debarred under
the provisions of such Act;
11.1.8 LICENSES. Isis has not taken nor will it take any
action which would, in Isis' good faith judgment, interfere with any obligations
of Isis set forth in this Agreement, including but not limited to the obligation
to xxxxx Xxxxx the licenses and options to license described in Article 8; and
11.1.9 TARGET AVAILABILITY. Isis agrees not to enter into
any collaboration with, or render services for, a Third Party wherein Antisense
Technology is applied to Targets in a Collaboration Therapeutic Area whereby
such collaboration or service with or for a Third Party will negatively impact
the timely accomplishment of the objectives of the Collaboration.
11.2 LILLY REPRESENTATIONS AND WARRANTIES. Lilly represents and
warrants to Isis as follows:
38.
11.2.1 CORPORATE EXISTENCE AND AUTHORITY. As of the
Effective Date, Lilly: (a) is a corporation duly organized, validly existing and
in good standing under the laws of the state in which it is incorporated, (b)
has full corporate power and authority and the legal right to own and operate
its property and assets and to carry on its business as it is now being
conducted and as contemplated in this Agreement, including the right to grant
the options to license and licenses granted hereunder, (c) has the corporate
power and authority and the legal right to enter into this Agreement and perform
its obligations hereunder, (d) has taken all necessary corporate action on its
part required to authorize the execution and delivery of the Agreement and the
performance of its obligations hereunder, and (e) has delivered an Agreement
that has been duly executed and constitutes a legal, valid, binding obligation
of Lilly and is enforceable against it in accordance with its terms;
11.2.2 EMPLOYEE OBLIGATIONS. All Lilly personnel who will
conduct research under this Agreement have legal obligations requiring
assignment to Lilly of all inventions made in the course of and as a result of
their association with Lilly and obligating the individual to maintain as
confidential the confidential information of Lilly, as well as the confidential
information of Isis which Lilly may receive;
11.2.3 COMPLIANCE WITH LAWS. In carrying out its work under
this Agreement, all Lilly work shall be carried out in compliance with any
applicable laws including, without limitation, federal, state, or local laws,
regulations, or guidelines governing the work at the site where such work is
being conducted. Moreover, Lilly will carry out all work under the Collaboration
in accordance with current Good Laboratory Practices, Good Clinical Practices,
Good Manufacturing Practices, if applicable based on the specific work to be
conducted;
11.2.4 NO DEBARMENT. Lilly will comply at all times with the
provisions of the Generic Drug Enforcement Act of 1992 and will upon request
certify in writing to Isis that none of its employees nor any person providing
services to Lilly in connection with this Collaboration or this Agreement have
been debarred under the provisions of such Act; and
11.2.5 LICENSES. Lilly has not taken not will it take any
action which would, in Lilly's good faith judgment, interfere with any
obligations of Lilly set forth in this Agreement, including but not limited to
the obligation to grant Isis the licenses and options to license described in
Article 8.
11.3 DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER
PARTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Without limiting the generality of the foregoing, each Party
expressly does not warrant (a) the success of any research undertaken in the
course of the Collaboration or (b) the safety for any purpose of the
technology it provides hereunder.
11.4 RESPONSIBILITY AND CONTROL. Lilly and Isis shall each be
solely responsible for the safety of their respective employees, agents,
licensees or Sublicensees with respect to efforts employed under this Agreement
and each shall hold the other harmless with regard to any
39.
liability for damages or personal injuries resulting from acts of its
respective employees, agents, licensees or Sublicensees.
11.5 ISIS' RIGHT TO INDEMNIFICATION. Lilly shall indemnify each of
Isis, its Affiliates, Sublicensees, permitted successors and assigns, and the
directors, officers, employees, agents and counsel thereof (the "ISIS
INDEMNITEES"), and defend and hold each Isis Indemnitee harmless from and
against any and all liabilities, damages, losses, settlements, claims, actions,
suits, penalties, fines, costs or expenses (including, without limitation
reasonable attorneys' fees) (any of the foregoing, "DAMAGES") incurred by or
asserted against any Isis Indemnitee of whatever kind or nature, including,
without limitation, any claim or liability based upon negligence, warranty,
strict liability, or violation of government regulation but only to the extent
arising from or occurring as a result of a claim or demand made by a Third Party
(a "THIRD PARTY CLAIM") against any Isis Indemnitee arising because of: (a)
breach of any representation or warranty made by Lilly pursuant to this Article
11; (b) any material breach of this Agreement by Lilly; (c) the manufacture,
use, handling, storage, sale or other disposition of a Lilly Product that is
sold by Lilly, its Affiliates, agents or Sublicensees; (d) violation of the
trade secrets of any Third Party by Lilly; (e) any Third Party Claim that any
Lilly Collaboration Technology or Lilly Non-Collaboration ASO Patent Right
should not have been disclosed or made available to Isis; or (f) any Third Party
Claim that either Party's use of a Target designated by Lilly for use in the
Collaboration infringes the intellectual property rights of such Third Party;
except, in each such case in subparagraphs (a) through (f) above, to the extent
that such Damages are finally determined to have resulted from the negligence or
misconduct of an Isis Indemnitee, or the breach of any representation or
warranty under Section 11.1 by Isis.
11.6 LILLY'S RIGHT TO INDEMNIFICATION. Isis shall indemnify each of
Lilly, its Affiliates, Sublicensees, successors and assigns, and the directors,
officers, employees, agents and counsel thereof (the "LILLY INDEMNITEES"), and
defend and hold each Lilly Indemnitee harmless from and against any and all
Damages incurred by or asserted against any Lilly Indemnitee of whatever kind or
nature, including, without limitation, any claim or liability based upon
negligence, warranty, strict liability, violation of government regulation but
only to the extent arising from or occurring as a result of a Third Party Claim
against any Lilly Indemnitee arising because of: (a) breach of any
representation or warranty made by Isis pursuant to this Article 11; (b) any
material breach of this Agreement by Isis; (c) the manufacture, use, handling,
storage, sale or other disposition of an Isis Product that is sold by Isis, its
Affiliates, agents or Sublicensees; (d) violation of the trade secrets of any
Third Party by Isis; (e) any Third Party Claim that any Isis Technology or Isis
Collaboration Technology should not have been disclosed or made available to
Lilly; or (f) any Third Party Claim that either Party's use of a Target
designated by Isis for use in the Collaboration infringes the intellectual
property rights of such Third Party; except, in each such case, in subparagraphs
(a) through (f) above, to the extent that such Damages are finally determined to
have resulted from the negligence or misconduct of a Lilly Indemnitee, or the
breach of any representation or warranty under Section 11.2 by Lilly.
11.7 INDEMNIFICATION PROCEDURES. Promptly after a Party entitled to
indemnification under Section 11.5 or 11.6 (an "INDEMNITEE") receives notice of
any pending or threatened claim against it (an "ACTION"), such Indemnitee shall
give written notice to the Party to whom the Indemnitee is entitled to look for
indemnification pursuant to Section 11.5 or 11.6, as applicable (the
"INDEMNIFYING PARTY"), of the commencement thereof, provided that the failure so
to notify
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the Indemnifying Party shall not relieve it of any liability that it may have
to any Indemnitee hereunder, except to the extent the Indemnifying Party
demonstrates that it is prejudiced thereby. In case any Action that is
subject to indemnification under this Article 11, shall be brought against an
Indemnitee and it shall give written notice to the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
therein and, if it so desires, to assume the defense thereof with counsel
reasonably satisfactory to such Indemnitee and, after notice from the
Indemnifying Party to the Indemnitee of its election to assume the defense
thereof, the Indemnifying Party shall not be liable to such Indemnitee under
this Article 11 for any fees of other counsel or any other expenses, in each
case subsequently incurred by such Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation. Notwithstanding an
Indemnifying Party's election to assume the defense of any such Action that
is subject to indemnification under this Article 11, the Indemnitee shall
have the right to employ separate counsel and to participate in the defense
of such Action, and the Indemnifying Party shall bear the reasonable fees,
costs and expenses of such separate counsel if: (i) the use of counsel chosen
by the Indemnifying Party to represent the Indemnitee would present such
counsel with a conflict of interest; (ii) the actual or potential defendants
in, or targets of, any such Action include both the Indemnifying Party and
the Indemnitee, and the Indemnitee shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional
to those available to the Indemnifying Party (in which case the Indemnifying
Party shall not have the right to assume the defense of such Action on the
Indemnitee's behalf); (iii) the Indemnifying Party shall not have employed
counsel satisfactory to the Indemnitee to represent the Indemnitee within a
reasonable time after notice of the institution of such Action; or (iv) the
Indemnifying Party shall authorize the Indemnitee to employ separate counsel
at the Indemnifying Party's expense. If an Indemnifying Party assumes the
defense of such Action, no compromise or settlement thereof may be effected
by the Indemnifying Party without the Indemnitee's written consent, which
consent shall not be unreasonably withheld or delayed, unless (1) there is no
finding or admission of any violation of law or any violation of the rights
of any other Party and no effect on any other claims that may be made against
the Indemnitee and (2) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party.
ARTICLE 12
INTELLECTUAL PROPERTY
12.1 DISCLOSURES AND REPORTS. During the Collaboration Term, each
Party shall promptly disclose to the other in writing all Know-How generated in
the course of the Collaboration. Such disclosure shall be in sufficient detail
to permit the other Party to employ such Know-How as provided herein. Within
ninety (90) days after completion of the Collaboration, each Party shall provide
the other Party with a comprehensive final written report with respect to the
Know-How generated by such Party in the course of the Collaboration.
12.2 OWNERSHIP. Lilly shall own all inventions within the scope of
the Collaboration made solely by its employees and Isis shall own all inventions
within the scope of the Collaboration made solely by its employees. All
inventions made jointly by employees of Lilly and employees of Isis pursuant to
35 USC 116 within the scope of the Collaboration shall be owned jointly by Isis
and Lilly (the "JOINT COLLABORATION PATENT RIGHTS"). All Patent Rights
41.
covering any invention made within the scope of the Collaboration shall be
owned by the Parties or Party, as the case may be, that own(s) said invention.
12.3 PATENT FILING AND PROSECUTION. Lilly and Isis shall work
closely, through their interactions on the Executive Committee and the IP
Committee, to ensure that, when appropriate, Patent Rights are obtained for
inventions arising in the course of the Collaboration. Each Party shall use its
commercially reasonable efforts in filing and prosecuting Patent Rights claiming
inventions arising in the course of the Collaboration under this Section 12.3.
With respect to inventions arising in the course of the Collaboration, and when
appropriate, the Parties shall file patent applications containing ASO Compound
composition of matter claims and claims directed to the use of such ASO Compound
(each, an "ASO COMPOSITION OF MATTER PATENT RIGHT") separately from patent
applications containing all other claims, including, without limitation, non-ASO
Compound composition of matter claims and claims directed to the use of such
non-ASO Compound. Lilly shall not be responsible for reimbursement under Section
12.6 of any of Isis' external costs of filing, prosecuting, maintaining and
extending any ASO Composition of Matter Patent Right solely owned by Isis unless
such ASO Composition of Matter Patent Right is exclusively licensed to Lilly
under Article 8 in which case the terms of Section 12.6 shall apply; PROVIDED,
HOWEVER, that the Parties shall reimburse [*] of Isis' external costs of filing,
prosecuting, maintaining and extending ASO Composition of Matter Patent Rights
claiming Drug Discovery ASO Compounds and/or the use of Drug Discovery ASO
Compounds directed to a Drug Discovery Target until such time as either such
Target ceases to be a Drug Discovery Target for purposes of this Agreement,
Lilly exclusively licenses such ASO Composition of Matter Patent Right, or Lilly
elects to discontinue such reimbursement pursuant to Section 12.6. Isis shall be
responsible for preparing, filing, prosecuting, maintaining and taking such
other actions as are reasonably necessary or appropriate with respect to the
Isis Collaboration Patent Rights and the Isis Patent Rights. Lilly shall be
responsible for preparing, filing, prosecuting, maintaining and taking such
other actions as are reasonably necessary or appropriate with respect to the
Lilly Collaboration Patent Rights. The Executive Committee shall designated one
of the Parties as being the responsible Party for preparing, filing,
prosecuting, maintaining and taking such other actions as are reasonably
necessary or appropriate with respect to the Joint Collaboration Patent Rights.
Each Party shall provide the IP Committee with a copy of any patent application
that first discloses an invention arising in the course of the Collaboration or
any Collaboration Know-How, prior to filing the first of such applications in
any jurisdiction, for review and comment by the IP Committee. Each Party shall
keep the other Party continuously informed of all significant matters relating
to the preparation, filing, prosecution and maintenance of Collaboration Patent
Rights. Each Party shall provide the other Party with copies of any substantial
prosecution papers within thirty (30) days of receipt. Each Party shall endeavor
in good faith to coordinate its efforts with those of the other Party to
minimize or avoid interference with the prosecution of the other Party's patent
applications. The Executive Committee shall review and have oversight
responsibility for all patent matters pertaining to the Collaboration.
12.4 ELECTION NOT TO FILE, PROSECUTE OR MAINTAIN. If the
responsible Party under Section 12.3 elects (a) not to file a patent application
claiming an invention made in the course of the Collaboration in a particular
country, or (b) to discontinue prosecution or maintenance of any Patent Right
Controlled by such Party Covering a Product being developed or commercialized by
the other Party hereunder or of any Collaboration Patent Right, that Party (the
"INITIAL
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RESPONSIBLE PARTY") shall give thirty (30) days advance written notice to the
other Party of any decision to cease preparation, filing, prosecution and
maintenance of that Patent Right (a "DISCONTINUED PATENT"); PROVIDED,
HOWEVER, that abandonment of a patent application in favor of a continuation
or a continuation-in-part thereof shall not constitute discontinuance of the
patent application. In such case, the other Party may elect at its sole
discretion to continue preparation, filing, prosecution or maintenance of the
Discontinued Patent at its sole expense. The Party so continuing shall own
any such patent application and patents maturing therefrom and be solely
responsible for all costs, and the Initial Responsible Party shall have a
non-exclusive, worldwide, irrevocable, perpetual, fully-paid license to
continue to practice such Discontinued Patent, including the right to
sublicense solely in connection with the grant of a license to develop, make,
use, import, offer for sale and sell a product of the Initial Responsible
Party. In addition, such Party so continuing shall cease to have any
obligation to pay royalties to the Initial Responsible Party under this
Agreement with respect to the Discontinued Patent. The Initial Responsible
Party shall execute such documents and perform such acts as may be reasonably
necessary for the other Party to file or to continue prosecution or
maintenance, including assigning ownership of such patents and inventions to
such electing Party. Discontinuance may be on a country-by-country basis or
for a patent application or patent series in total.
12.5 INVENTIONS OTHERWISE UNPATENTABLE IN THE UNITED STATES. Any
invention made by a Party in the course of the Target Validation Program or Drug
Discovery Program hereto that would be rendered unpatentable in the United
States solely on account of prior art under one or more of subsections 102(e),
(f), or (g) of Title 35, U.S.C., but for the absence of an obligation of
assignment of said invention (or an undivided interest therein) to the other
Party hereto, is hereby subjected to an obligation of assignment to such other
Party of such interest in the invention as renders the invention patentable in
the United States. Such assignment shall have force and effect only with respect
to patents granted in the United States. The rights of the Parties with respect
to any invention subject to an obligation of assignment under this Section 12.5,
except for subject matter patentable to the assignee in the absence of the
assignment, shall be the same as the rights that would have applied under this
Agreement had no obligation to assign under this Section 12.5 existed. If and
only if required to give force and effect to the immediately preceding sentence
and, in such case, only to the extent required to give such force and effect,
each assignee under this Section 12.5 hereby grants to each of the assignors
under this Section 12.5 such licenses, if any, as are required to vest in the
assignor rights to make, have made, use, sell and import the assigned invention,
except for subject matter patentable to the assignee in the absence of the
assignment.
12.6 COSTS AND EXPENSES. Lilly shall bear its own costs and
expenses in filing, prosecuting, maintaining and extending Lilly Collaboration
Patent Rights and, subject to Section 12.3, shall reimburse Isis for [*] of
Isis' external costs of filing, prosecuting, maintaining and extending any Isis
Collaboration Patent Rights for which costs are incurred after the Effective
Date of this Agreement; PROVIDED, HOWEVER, Lilly shall be responsible for [*] of
Isis' external costs of filing, prosecuting, maintaining and extending such Isis
Collaboration Patent Rights incurred on and after such time as any Isis
Collaboration Patent Right is exclusively licensed to Lilly under Article 8.
Lilly and Isis patent costs and expenses shall not be paid from the
Collaboration Funds. Lilly may at any time, and in its sole discretion,
discontinue reimbursement of the external costs incurred by Isis in filing,
prosecuting (including any interference), maintaining, and extending any Isis
Collaboration Patent Right, on an Isis
43.
Collaboration Patent Right-by-Isis Collaboration Patent Right and
country-by-country basis. Lilly shall provide Isis with written notice
designating each Isis Collaboration Patent Right and country for which Lilly
has decided to discontinue such reimbursement. Lilly's obligation to
reimburse Isis for any external costs with respect to any such Isis
Collaboration Patent Right shall cease on the date of receipt of such
notification; PROVIDED, HOWEVER, that Lilly shall remain responsible for [*]
of the external costs incurred up to the date of receipt of such
notification. The license granted under this Agreement with respect to each
Isis Collaboration Patent Right in each country that is specified in the
written notice provided by Lilly to Isis pursuant to this Section 12.6 shall
terminate on the date of receipt of such written notification and Lilly shall
cease to have any obligation to pay royalties to Isis under this Agreement
with respect to such Isis Collaboration Patent Right.
12.7 PATENT TERM EXTENSIONS. The Parties shall cooperate with each
other in gaining patent term extension wherever applicable to any Lilly Product
or Isis Product. The Party selling the product shall determine which patents
shall be extended. All filings for such extension shall be made by the Party to
whom the patent is assigned; PROVIDED, HOWEVER, that in the event that the Party
to whom the patent is assigned elects not to file for an extension, such Party
shall (i) inform the other Party of its intention not to file, (ii) grant the
other Party the right to file for such extension, and (iii) cooperate as
necessary to assist the other Party in filing such extension.
12.8 AUDIT OF COSTS. Upon written notice, Lilly and Isis shall each
have the right at its own expense and not more than annually in or in respect of
any Calendar Year, and during normal business hours, to audit those books and
records as may be reasonably necessary to verify the accuracy and reasonableness
of any costs incurred by the other Party and for which the other Party is
seeking or has received partial reimbursement pursuant to Section 12.6 in
respect of any Calendar Year ending not more than one (1) year prior to the date
of such notice. Any information received or obtained in connection with an audit
under this Section 12.8 is Confidential Information and both Parties shall
retain all such information in confidence.
12.9 NOTICE OF CERTIFICATION. Isis and Lilly each shall immediately
give notice to the other of any certification filed under the U.S. "Drug Price
Competition and Patent Term Restoration Act of 1984" claiming that (a) a
Collaboration Patent Right or Isis Patent Right Covering a Lilly Product being
developed or commercialized by Lilly hereunder, or (b) a Collaboration Patent
Right Covering an Isis Product being developed or commercialized by Isis
hereunder, is invalid or that any infringement will not arise from the
manufacture, use, sale, offer for sale or import of any product by a Third
Party. If Lilly decides not to bring infringement proceedings against the entity
making such a certification with respect to a Collaboration Patent Right or Isis
Patent Right Covering a Lilly Product being developed or commercialized by Lilly
hereunder, Lilly shall give notice to Isis of its decision not to bring suit
within twenty-one (21) days after receipt of notice of such certification. Isis
may then, but is not required to, bring suit against the entity that filed the
certification. If Isis decides not to bring infringement proceedings against the
entity making such a certification with respect to a Collaboration Patent Right
Covering an Isis Product being developed or commercialized by Isis hereunder,
Isis shall give notice to Lilly of its decision not to bring suit within
twenty-one (21) days after receipt of notice of such certification. Lilly may
then, but is not required to, bring suit against the Party that filed the
certification. Any suit by Lilly or Isis shall either be in the name of Lilly or
in the name of Isis, or jointly by Lilly and Isis, as may be required by law.
For this purpose, the Party not
*Confidential Treatment Requested
44.
bringing suit shall execute such legal papers necessary for the prosecution
of such suit as may be reasonably requested by the Party bringing suit. Any
costs incurred or benefits received as a result of proceeding under this
Section 12.9 shall be paid or received entirely by the Party who pursued the
action.
12.10 NOTICE OF INFRINGEMENT CLAIM. If the practice of a license
granted to a Party under this Agreement results in a claim against a Party for
patent infringement or for inducing or contributing to patent infringement
("INFRINGEMENT CLAIM"), the Party first having notice of an Infringement Claim
shall promptly notify the other in writing. The notice shall set forth the facts
of the Infringement Claim in reasonable detail.
12.10.1 RESPONSIBILITIES. Isis shall have the sole right to
control any defense of any Infringement Claim involving alleged infringement of
Third Party rights by Isis' activities at its own expense and by counsel of its
own choice, and Lilly shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. Lilly shall have
the sole right to control any defense of any Infringement Claim involving
alleged infringement of Third Party rights by Lilly's activities at its own
expense and by counsel of its own choice, and Isis shall have the right, at its
own expense, to be represented in any such action by counsel of its own choice.
Notwithstanding the foregoing, if the claim involves an allegation of a
violation of the trade secret rights of a Third Party, the Party accused of such
violation shall have the obligation to defend against such claim and shall
indemnify the other Party against all costs associated with such claim. Neither
Party shall have the right to settle any patent infringement litigation under
this Section 12.10 relating to any Patent Rights owned by or exclusively
licensed to the other Party hereunder without the consent of such other Party.
Each Party shall also keep the other Party continually informed of all
significant matters relating to Infringement Claims of Third Parties.
12.11 INFRINGEMENT CLAIMS AGAINST THIRD PARTIES.
12.11.1 PROTECTION AGAINST INFRINGEMENT. Isis and Lilly each
agree to take reasonable actions to protect their respective patents and
technology from infringement and from unauthorized possession or use.
12.11.2 NOTICE OF INFRINGEMENT. If any Collaboration
Know-How, Collaboration Patent Right or any other Patent Right licensed by one
Party to the other under this Agreement is infringed or misappropriated, as the
case may be, by a Third Party, the Party to this Agreement first having
knowledge of such infringement or misappropriation, shall promptly notify the
other in writing. The notice shall set forth the facts of such infringement or
misappropriation in reasonable detail. The owner of the Collaboration Know-How
or Patent Right shall have the primary right, but not the obligation, to
institute, prosecute, and control any action or proceeding with respect to
infringement or misappropriation of such Patent Right or Know-How by its own
counsel. The other Party shall have the right, at its own expense, to be
represented in such action by its own counsel. The Parties shall promptly
determine which Party shall have the primary responsibility to institute,
prosecute, and control any action or proceeding with respect to infringement or
misappropriation of Joint Collaboration Patent Rights, and the other Party shall
have the right, at its expense, to be represented in such action by its counsel.
During the Collaboration Term, such determination may be made by the Executive
Committee.
45.
Except as otherwise agreed to by the Parties as part of a cost-sharing
arrangement, any recovery realized as a result of such litigation, after
reimbursement of any litigation expenses of Isis and Lilly, shall be retained
by the Party that brought and controlled such litigation for purposes of this
Agreement, except that any recovery realized by Isis or Lilly as a result of
such litigation, after reimbursement of the Parties' litigation expenses,
shall, to the extent attributable to lost sales of Isis Products or Lilly
Products, respectively, be treated as Net Sales of Isis Products by Isis or
Net Sales of Lilly Products by Lilly, respectively.
12.11.3 EXPENSES OF BRINGING INFRINGEMENT ACTION. Lilly shall
bear the costs and expenses of all infringement or misappropriation actions on
Collaboration Know-How, Collaboration Patent Rights, or any other Patent Right
licensed to Lilly under this Agreement to the extent such Collaboration
Know-How, Collaboration Patent Rights or any other Patent Right licensed to
Lilly under this Agreement Cover a Lilly Product. Isis shall bear the costs and
expenses of all infringement or misappropriation actions on Collaboration
Know-How, Collaboration Patent Rights, or any other Patent Right licensed to
Isis under this Agreement to the extent such Collaboration Know-How,
Collaboration Patent Rights, or any other Patent Right licensed to Isis under
this Agreement Cover an Isis Product.
12.11.4 LILLY'S FAILURE TO INSTITUTE, PROSECUTE AND CONTROL.
If Lilly fails to institute, prosecute, and control such action or prosecution
within a period of one hundred twenty (120) days after receiving notice of the
infringement, Isis, subject to the prior rights of any Third Party, shall have
the right to bring and control any such action by counsel of its own choice, and
Lilly shall have the right, at its own expense, to be represented in any such
action by counsel of its own choice. Except as otherwise agreed to by the
Parties as part of a cost-sharing arrangement, any recovery realized as a result
of such litigation, after reimbursement of 100% of any litigation expenses of
Isis and 100% of any litigation expenses of Lilly (including the costs and
expenses incurred by Lilly in providing reasonable assistance to Isis), shall be
shared equally by the Parties. No settlement or consent judgment or other
voluntary final disposition of a suit under this Section 12.11.4 may be entered
into without the joint consent of Isis and Lilly (which consent shall not be
unreasonably withheld or delayed).
12.11.5 ISIS' FAILURE TO INSTITUTE, PROSECUTE AND CONTROL. If
Isis fails to institute, prosecute, and control such action or prosecution
within a period of one hundred twenty (120) days after receiving notice of the
infringement, Lilly, subject to the prior rights of any Third Party, shall have
the right to bring and control any such action by counsel of its own choice, and
Isis shall have the right, at its own expense, to be represented in any such
action by counsel of its own choice. Except as otherwise agreed to by the
Parties as part of a cost-sharing arrangement, any recovery realized as a result
of such litigation, after reimbursement of 100% of any litigation expenses of
Lilly and 100% of any litigation expenses of Isis (including the costs and
expenses incurred by Isis in providing reasonable assistance to Lilly), shall be
shared equally by the Parties. No settlement or consent judgment or other
voluntary final disposition of a suit under this Section 12.11.5 may be entered
into without the joint consent of Isis and Lilly (which consent shall not be
unreasonably withheld or delayed).
12.11.6 SETTLEMENT APPROVAL. Neither Party shall settle any
such proceeding under this Section 12.11 without the approval of the other
Party, which approval shall not be unreasonably withheld or delayed.
46.
ARTICLE 13
TERM AND TERMINATION
13.1 TERM OF COLLABORATION. The Collaboration Term shall become
effective on the Effective Date and shall continue in effect for four (4) years
unless terminated in accordance with this Article 13. Prior to the close of the
Collaboration Term, Lilly shall have the option to extend each or all of the
Reagent Provision Program Term, Target Validation Program Term, and/or the Drug
Discovery Program Term for two (2) consecutive two year periods provided that
Lilly gives notice to Isis at least nine (9) months prior to the expiration of
the Collaboration Term or any extension period of the Reagent Provision Program
Term, Target Validation Program Term, and/or the Drug Discovery Program Term.
However, Lilly and Isis shall begin discussions concerning the expiration or
extension of Collaboration at least twelve (12) months prior to the end of the
Collaboration Term or any extension period of the Reagent Provision Program
Term, Target Validation Program Term, and/or the Drug Discovery Program Term. If
the Reagent Provision Program Term, Target Validation Program Term, and/or the
Drug Discovery Program Term are extended, any such extension shall be on terms
that are the same as those provided herein; PROVIDED, HOWEVER, that (i) the
funding amount paid by Lilly for any such extension shall be paid by Lilly in
cash, unless agreed otherwise, disbursed on a schedule substantially the same as
the disbursement schedule of Collaboration Funds under the Loan Agreement and
(ii) such funding amount shall be the same as provided in this Agreement for the
Reagent Provision Program, Target Validation Program, and/or the Drug Discovery
Program, as applicable, such funding amount adjusted for the reduction in the
duration of the extension period as compared to the original Collaboration Term.
13.2 TERM OF AGREEMENT. This Agreement shall commence on the
Effective Date and shall continue until no payments are due or are capable of
becoming due hereinunder, unless the Agreement is terminated earlier. All
licenses granted hereunder that are in effect at expiration of this Agreement
shall be deemed fully paid-up and perpetual, except as provided otherwise by
this Agreement.
13.3 TERMINATION OF COLLABORATION UPON CHANGE OF CONTROL. Lilly has
the right to terminate the Collaboration prior to the fourth (4th) anniversary
after the Effective Date as set forth in this Section 13.3. In the event of a
Change of Control of Isis, Isis shall notify Lilly of such change specifying the
effective date of the change and the name(s) of the controlling Party or
Parties. Lilly has the right to terminate either or all of the Reagent Provision
Program, Target Validation Program and the Antisense Drug Discovery Program and
transfer all research and development activities to Lilly as a result of such
Change of Control at any time within ninety (90) days following such Change of
Control, effective upon thirty (30) days written notice by Lilly. The Parties
shall treat a termination under this Section 13.3 as an expiration of the
Reagent Provision Program, Target Validation Program and/or Antisense Drug
Discovery Program, as applicable. Lilly shall receive a non-exclusive license
from Isis under Isis Technology and Isis Collaboration Technology to carry out
all activities that would have otherwise been carried out under the
Collaboration Agreement if there were no such termination by Lilly under this
Section 13.3. In the alternative, Lilly may elect to continue either or all of
the Reagent Provision Program, Target Validation Program and the Antisense Drug
Discovery Program pursuant to the terms of this Agreement.
47.
13.4 TERMINATION FOR BREACH. Either Party may terminate this
Agreement by notice to the other Party at any time during the term of this
Agreement if the other Party is in breach of any material obligations hereunder
and has not cured such breach within ninety (90) days after notice requesting
cure of the breach or such longer period of time as is required to cure such
breach as long as the breaching Party is proceeding in good faith to cure;
PROVIDED, HOWEVER, that in any case when a breach is alleged regarding the
payment of money hereunder, the time period will be thirty (30) days and
undisputed amounts must be paid prior to such time to avoid breach. Lilly shall
have the right to terminate this Agreement upon written notice to Isis in the
event Isis is in breach of its obligation to pay the debt on the Payment Date as
required by the Loan Agreement, which breach has not been cured within thirty
(30) days of such notice. Upon material breach by a Party of its obligations
hereunder, if such Party decides not to terminate this Agreement, such Party
shall have the right to offset any costs it may incur as a result of curing such
breach against the amounts payable to the breaching Party for the performance of
such obligations. Further, to the extent that a Party prevails in a lawsuit
brought against the other Party for material breach of this Agreement, such
prevailing Party shall be entitled to collect from the other Party reasonable
attorneys' fees and legal costs incurred in connection with such law suit. If
the non-breaching Party terminates this Agreement under Section 13.4 following
material breach by the breaching Party, the breaching Party shall return to the
non-Breaching Party all of the non-breaching Party's Confidential Information
and all materials received from the non-breaching Party during the Agreement,
and the breaching Party shall cease all use of the non-breaching Party's
Confidential Information and materials received from the non-breaching Party for
any purpose except as provided in Sections 13.6 and 13.7, and except that the
breaching Party may (1) keep a copy of all documents for record keeping purposes
only and (2) keep and use any Confidential Information and materials received
from the non-breaching Party that are necessary for the breaching Party to
exercise those of its rights and fulfill those of its obligations that survive
the termination of this Agreement.
13.5 TERMINATION UPON INSOLVENCY. Either Party may terminate this
Agreement upon notice to the other should the other Party become insolvent or
file or consent to the filing of a petition under any bankruptcy or insolvency
law or have any such petition filed against it which has not been stayed within
sixty (60) days of such filing. During the term of this Agreement, all rights
and licenses granted under or pursuant to this Agreement by Isis or Lilly are,
and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of right to "intellectual property" as defined under
Section 101 of the U.S. Bankruptcy Code. The Parties agree that, during the term
of this Agreement, the Parties, as licensees of such rights under this
Agreement, will retain and may fully exercise all of their rights and elections
under the U.S. Bankruptcy Code. The Parties further agree that, in the event of
the commencement of a bankruptcy proceeding-by or against either Party under the
U.S. Bankruptcy Code, the Party hereto that is not a party to such proceeding
will be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in their possession, will be
promptly delivered to them (i) upon any such commencement of a bankruptcy
proceeding upon their written request therefor, unless the Party subject to such
proceeding elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, following the rejection of
this Agreement by or on behalf of the Party subject to such proceeding upon
written request therefor by the non-subject Party.
48.
13.6 EFFECT OF TERMINATION DUE TO LILLY BREACH OR INSOLVENCY. If
Isis terminates the Agreement based on material breach by or insolvency of
Lilly, then:
(a) licenses granted by Lilly to Isis pursuant to
Sections 8.4.1(b) and 8.4.2, and all licenses granted under Section 8.5 prior to
such termination, shall survive;
(b) Isis payment obligations set forth in Article 9 shall
continue; PROVIDED, HOWEVER, that the amounts of the payments shall be decreased
to reflect the nature of Lilly's breach and the damages caused thereby by
amounts to be agreed upon by the Parties or, if the Parties are unable to reach
agreement, by an independent Third Party with the requisite expertise selected
by the Parties, the expense of which shall be borne by Lilly;
(c) Lilly's payment obligations set forth in Article 9
shall continue; PROVIDED, HOWEVER, that the amounts of the payments shall be
increased to reflect the nature of Lilly's breach and the damages caused thereby
by amounts to be agreed upon by the Parties or, if the Parties are unable to
reach agreement, by an independent Third Party with the requisite expertise
selected by the Parties, the expense of which shall be borne by Lilly;
(d) the licenses granted by Isis to Lilly pursuant to
Sections 8.1.1(a) and 8.1.1(b) shall terminate;
(e) the licenses granted by Isis to Lilly pursuant to
Sections 8.1.1(c) and 8.1.2 shall survive and the option under Sections 8.2.1,
8.2.2, and 8.2.3 shall terminate; PROVIDED, HOWEVER, that any license granted to
Lilly under Sections 8.2.1, 8.2.2, and 8.2.3 before termination under Section
13.4 or 13.5 by Isis shall survive;
(f) the Lilly Right of First Negotiation granted by Isis
to Lilly pursuant to Section 8.3 shall terminate;
(g) Isis shall retain all rights to Validation Targets,
Reserved Targets and Drug Discovery Targets not licensed by Lilly before such
termination with no obligation to Lilly with respect to such to Validation
Targets, Reserved Targets and Drug Discovery Targets; PROVIDED, HOWEVER, that
Lilly shall have the right to license any such Validation Targets, Reserved
Targets or Drug Discovery Targets within ninety (90) days of the date of
termination under Section 13.4 or 13.5 and thereafter Lilly shall pay the
applicable license fees; and
(h) any sublicense granted by either Party to any
Sublicensee under a license hereunder that terminates as a result of termination
of this Agreement by Isis pursuant to Section 13.4 or 13.5 shall continue in
full force and effect but be assigned by such Party to the other Party, and such
Party shall provide the other Party with complete and accurate copies of such
sublicense agreements within thirty (30) days following the effective date of
such termination.
13.7 EFFECT OF TERMINATION DUE TO ISIS BREACH OR INSOLVENCY. If
Lilly terminates the Agreement based on material breach by or insolvency of
Isis, then:
(a) licenses granted by Isis to Lilly pursuant to
Sections 8.1.1(c), 8.1.2, 8.2.1, 8.2.2, 8.2.3 and 8.3 shall survive;
49.
(b) the Lilly Right of First Negotiation granted by Isis
to Lilly pursuant to Section 8.3 shall survive;
(c) Lilly's payment obligations set forth in Article 9
shall continue, PROVIDED, HOWEVER, that the amounts of the payments shall be
decreased to reflect the nature of Isis's breach and the damages caused thereby
by amounts to be agreed upon by the Parties or, if the Parties are unable to
reach agreement, by an independent Third Party with the requisite expertise
selected by the Parties, the expense of which shall be borne by Isis;
(d) Isis' payment obligations set forth in Article 9
shall continue, PROVIDED, HOWEVER, that the amounts of the payments shall be
increased to reflect the nature of Isis' breach and the damages caused thereby
by amounts to be agreed upon by the Parties or, if the Parties are unable to
reach agreement, by an independent Third Party with the requisite expertise
selected by the Parties, the expense of which shall be borne by Isis;
(e) all Drug Discovery Targets and the Reserved Targets
on the date of such termination of this Agreement by Lilly under Section 13.4 or
13.5 shall be deemed to be licensed by Lilly under Section 8.2.3 as Drug
Discovery Targets; PROVIDED, HOWEVER, that: (i) with respect to each such Drug
Discovery Target and Reserved Target, no license fee shall be payable under
Section 9.3.4(a) until the date that is [*] years after the Effective Date and,
prior to such date, Lilly may terminate its license with respect to any Drug
Discovery Target or Reserved Target by providing written notice to Isis and no
license fee shall be owed by Lilly with respect to such Drug Discovery Target or
Reserved Target; (ii) the provision regarding diligence set forth in Section
8.2.3(c) shall not apply until [*] years after the Effective Date; and (iii)
Lilly's milestone payment obligations set forth in Section 9.3.4(b) and royalty
payment obligations set forth in Section 9.3.4(c) shall continue; PROVIDED,
HOWEVER, that the amounts of the milestone and royalty payments shall be
decreased to reflect the nature of Isis' breach and the damages caused thereby
by amounts to be agreed upon by the Parties or, if the Parties are unable to
reach agreement, by an independent Third Party with the requisite expertise
selected by the Parties, the expense of which shall be borne by Isis;
(f) Lilly shall have the right to select [*] Validation
Targets, to be identified by Lilly within [*] days following the date of
termination of this Agreement by Lilly under Section 13.4 or 13.5, and such
Validation Targets shall be deemed licensed by Lilly under Section 8.2.2;
PROVIDED, HOWEVER, that: (i) with respect to each such Validation Target, no
license fee shall be payable by Lilly under Section 9.3.2(a) until the date that
is [*] years after the Effective Date and, prior to such date, Lilly may
terminate its license with respect to any such Validation Target by providing
written notice to Isis and no license fee shall be owed by Lilly with respect to
such Validation Target; (ii) the provision regarding diligence set forth in
Section 8.2.2(c) shall not apply until [*] years after the Effective Date; and
(iii) Lilly's milestone payment obligations set forth in Section 9.3.3(b) and
royalty payment obligations set forth in Section 9.3.3(c) shall continue;
PROVIDED, HOWEVER, that the amounts of the milestone and royalty payments shall
be decreased to reflect the nature of Isis' breach and the damages caused
thereby by amounts to be agreed upon by the Parties or, if the Parties are
unable to reach agreement, by an independent Third Party with the requisite
expertise selected by the Parties, the expense of which shall be borne by Isis;
*Confidential Treatment Requested
50.
(g) the licenses granted by Lilly to Isis pursuant to
Section 8.4.1 shall terminate;
(h) the option granted by Lilly to Isis pursuant to
Section 8.5 and all of Lilly's obligation under Section 8.5 shall terminate;
PROVIDED, HOWEVER, that any license granted to Isis under Section 8.5 before
termination of this Agreement under Section 13.4 or 13.5 by Lilly shall survive;
(i) Lilly's obligations under Section 4.3 shall cease;
(j) any sublicense granted by either Party to any
Sublicensee under a license hereunder that terminates as a result of termination
of this Agreement by Lilly pursuant to Section 13.4 or 13.5 shall continue in
full force and effect but be assigned by such Party to the other Party, and such
Party shall provide the other Party with complete and accurate copies of such
sublicense agreements within thirty (30) days following the effective date of
such termination;
(k) the Technology Transfer described in Section 8.8
shall (i) occur immediately upon termination under this Section by Lilly, (ii)
be at no cost to Lilly and (iii) Lilly shall have the right to practice such
technology so transferred for research, development and commercialization
purposes; and
(l) any milestone payments that are paid by Lilly between
the date that this Agreement is terminated under Section 13.4 or 13.5 and the
date that is four (4) years after the Effective Date shall be fully creditable
towards any Technology Access Fee payable by Lilly under Section 9.2.
13.8 ACCRUED RIGHTS/SURVIVING OBLIGATIONS. Except as expressly
provided in this Agreement, expiration or termination of this Agreement will not
relieve the Parties of any obligation that accrued prior to such expiration or
termination, and Lilly will be obligated to pay and will pay to Isis, within
thirty (30) days of such expiration or termination, all payments and royalties
due or accrued pursuant to the terms of Article 9 and Isis will be obligated to
pay and will pay to Lilly, within thirty (30) days of such expiration or
termination, all payments and royalties due or accrued pursuant to the terms of
Article 9. Upon expiration or early termination of this Agreement, all rights
and obligations of the Parties shall cease, except as follows:
(a) In the case of expiration of this Agreement only
(and, for purposes of clarification, not in the case of termination of this
Agreement pursuant to Section 13.4 or 13.5), each of the licenses set forth in
Sections 8.1, 8.2, 8.4 and 8.5 shall survive and shall be deemed to be perpetual
and fully paid up, provided that all payment and other obligations with respect
to such licenses have been fulfilled;
(b) The obligations to pay royalties and other sums
accruing hereunder up to the date of termination or expiration shall survive;
(c) The obligations of confidentiality set forth in
Article 10 shall survive;
51.
(d) The obligations for record keeping and accounting
reports set forth in Article 9 shall survive for so long as Lilly Products or
Isis Products are sold. At such time after termination or expiration of this
Agreement when sales or other dispositions of Lilly Products or Isis Products
have ceased, the Party selling such Product shall render a final report along
with any royalty payment due;
(e) Isis' and Lilly's rights to inspect books and records
as described in Article 9 shall survive;
(f) The obligations of defense and indemnity set forth in
Article 11 shall survive;
(g) Any cause of action or claim of Isis or Lilly accrued
or to accrue because of any breach or default by the other Party hereunder shall
survive; and
(h) All other terms, provisions, representations, rights
and obligations contained in this Agreement that are intended to survive as
specifically set forth elsewhere in this Agreement shall survive.
13.9 LIMITATION OF LIABILITY. No Party shall be liable to another
for indirect, incidental, consequential or special damages, including but not
limited to lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages. Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any Party under Article 11.
ARTICLE 14
PUBLICITY
14.1 DISCLOSURE OF AGREEMENT. Neither Party to this Agreement may
release any information to any Third Party regarding the terms or existence of
this Agreement or the reasons for any termination hereof, without the prior
written consent of the other Party. Without limitation, this prohibition applies
to press releases, educational and scientific conferences, quarterly investor
updates, promotional materials, governmental filings and discussions with public
officials, the media, security analysts and investors. However, this provision
does not apply to any disclosures regarding this Agreement or related
information to regulatory agencies such as the FDA or Federal Trade Commission
and/or Department of Justice for such disclosures which may be required by law,
including requests for a copy of this Agreement or related information by tax
authorities. If any Party to this Agreement determines a release of information
regarding the existence or terms of this Agreement is required by law (including
releases a may be required to be filed through the Securities Exchange
Commission or other government agency), that Party will notify the other Party
as soon as practicable and give as much detail as possible in relation to the
disclosure required. The Parties will then cooperate with respect to determining
what information should actually be released. The Parties hereby agree that
release of a press release upon complete execution of this Agreement is
appropriate and such press release shall be mutually agreed upon by the
Parties..
52.
14.2 USE OF NAMES, LOGOS OR SYMBOLS. No Party hereto shall use the
name, trademarks, logos, physical likeness, employee names or owner symbol of
any other Party for any purpose, including, without limitation, private or
public securities placements, without the prior written consent of the affected
Party, such consent not to be unreasonably withheld or delayed so long as such
use of name is limited to objective statements of fact, rather than for
endorsement purposes. Nothing contained herein shall be construed as granting
either Party any rights or license to use any of the other Party's trademarks or
tradenames without separate, express written permission of the owner of such
trademark or tradename.
14.3 PUBLICATION. The Parties acknowledge and agree that scientific
lead time is a key element of the value of the research to be performed under
this Agreement. The Parties also acknowledge and agree that the ability to
publish selected results of the research to be performed under this Agreement in
the course of the Collaboration is essential for the recruitment and retention
of scientific talent by the Parties. In order to ensure that scientific
publications are strictly monitored to prevent any adverse effect of premature
publication, the Joint Research Committee shall establish a procedure for
publication review and approval and each Party shall first submit to the Joint
Research Committee an early draft of all such publications, whether they are to
be presented orally or in written form, at least sixty (60) days prior to
submission for publication. The Joint Research Committee shall review each such
proposed publication in order to avoid the unauthorized disclosure of any
Confidential Information and to preserve the patentability of inventions arising
from the research performed in the course of the Collaboration. If, within
thirty (30) days following receipt of an advance copy of a Party's proposed
publication, the Joint Research Committee informs such Party that its proposed
publication contains the other Party's Confidential Information, then such Party
shall delete such Confidential Information from its proposed publication. If,
within thirty (30) days following receipt of an advance copy of a Party's
proposed publication, the Joint Research Committee informs such Party that its
proposed publication contains Collaboration Know-How, the publication of which
could be expected to have a material adverse effect on any Collaboration Patent
Rights or Collaboration Know-How, then such Party shall at the election of the
Joint Research Committee, either (1) delete such Confidential Information from
such Party's proposed publication or (2) delay such proposed publication
sufficiently long to permit the timely preparation and filing of a patent
application(s) on the information involved. If, within forty five (45) days
following receipt of an advance copy of a Party's proposed publication, the
Joint Research Committee fails to approve of such Party's proposed publication,
then such proposed publication shall be regarded as denied by the Joint Research
Committee and shall not be published.
53.
ARTICLE 15
XXXX-XXXXX-XXXXXX FILING
15.1 HSR ACT COMPLIANCE. Notwithstanding anything to the contrary
in this Agreement, the Effective Date of this Agreement and commencement of the
Collaboration shall not occur until such time as (1) the Parties shall have
complied with all applicable requirements of the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended the "HSR ACT"); (2) the waiting period
under the HSR Act shall have expired or earlier been terminated; (3) no judicial
or administrative proceeding opposing consummation of all or any part of this
Agreement shall be pending; (4) no injunction (whether temporary, preliminary or
permanent) prohibiting consummation of the transactions contemplated by this
Agreement or any material portion hereof shall be in effect; and (5) no
requirements or conditions shall have been imposed in connection therewith which
are not reasonably satisfactory to the Parties (collectively, the "HSR
CONDITIONS").
15.2 COOPERATION ON FILING. Both Lilly and Isis shall file, as soon
as reasonably practicable after the Effective Date of this Agreement, with the
Federal Trade Commission ("FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") the notification and report form ("REPORT")
required of each of them in the reasonable opinion of either or both Parties
under the HSR Act with respect to the transactions described in this Agreement
and any other agreements between the Parties contemplated hereby (collectively,
the "TRANSACTIONS"). Each Party shall cooperate with the other to the extent
necessary to assist the other Party in the preparation of its Report and to
proceed to obtain necessary approvals under the HSR Act to complete the
Transactions including, but not limited to, the expiration or earlier
termination of any and all applicable waiting periods required by the HSR Act
("REQUIRED APPROVAL"). Each Party will use reasonable efforts to obtain the
Required Approval. Each Party shall use reasonable good faith efforts to assist
the other Party in eliminating any concern on the part of any court of
governmental authority regarding the legality of the Transactions. Such
assistance shall include, if required by federal or state antitrust authorities,
such Party's taking all reasonable steps to secure Required Approval. The other
Party shall cooperate in good faith, at its own cost, with any government
investigation regarding the legality of the Transactions and promptly produce
documents, witnesses, and information demanded by the FTC or DOJ, whether by
informal request or by formal HSR Act Second Request or other legal process;
PROVIDED, HOWEVER, that neither Party shall be obligated to proceed to seek
Required Approval if it has received a second request for documents that it
determines is unreasonably burdensome or costly with which to comply; and
PROVIDED, FURTHER, that neither Party shall be obligated to proceed with
litigation if the transaction is challenged by the FTC or the DOJ. If either
Party determines that it does not wish to proceed with the Report process,
either because of a burdensome second request or litigation, the Parties will
discuss in good faith whether there are any modifications to the Agreement or
any other agreement between the Parties contemplated hereby that will avoid
antitrust issues and facilitate obtaining the Required Approval. Neither Party
shall be obligated in any way to engage in further negotiations of the terms of
this Agreement or any other agreement between the Parties contemplated hereby,
even if modifications are identified that will facilitate obtaining Required
Approval. If an unreasonably burdensome request is received or litigation is
commenced, either Party may terminate this Agreement.
54.
ARTICLE 16
MISCELLANEOUS
16.1 KEY PERSONNEL. During the Collaboration Term, Isis shall
inform Lilly if [*] leave the employ of Isis. In such case, Lilly shall have the
right to suggest replacements and interview any potential replacement in order
to provide feedback to Isis regarding any such potential replacement, but, for
purposes of clarification, Lilly shall not have the right to terminate this
Agreement or the Collaboration as a result of the events described in this
Section 16.1.
16.2 FORCE MAJEURE. No Party will be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached the Agreement
for failure or delay in fulfilling or performing any term of the Agreement
(except payment obligations) when such failure or delay is caused by or results
from causes beyond the reasonable control of the affected Party including, but
not limited to, fire, flood, embargo, war, acts of war (whether war be declared
or not), insurrection, riot, civil commotion, strike, lockout or other labor
disturbance, act of God or act, omission or delay in acting by any governmental
authority or the other Party. The affected Party will notify the other Party of
such force majeure circumstances as soon as reasonably practical.
16.3 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred, by a Party without the written
consent of the other Party; PROVIDED, HOWEVER, that either Party may, without
such consent, assign the Agreement and its rights and obligations hereunder to
(i) any wholly-owned subsidiary in a manner such that the assignor (if it
continues as a separate entity) shall remain liable and responsible for the
performance and observance of all its duties and obligations hereunder or (ii)
subject to Section 13.3(a) to any successor by merger or sale of substantially
all of its business unit to which this Agreement relates, or in the event of its
merger or consolidation or change in control or similar transaction. This
Agreement shall be binding upon the permitted successors and permitted assigns
of the Parties. Any assignment not in accordance with this Section 16.3 shall be
void.
16.4 SEVERABILITY. In the event that any of the provisions
contained in this Agreement are held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby, unless the
absence of the invalidated provision(s) adversely affect the substantive rights
of the Parties. The Parties will replace the invalid, illegal or unenforceable
provision(s) with valid, legal and enforceable provision(s), which, insofar as
practical, implement the purposes of this Agreement.
16.5 NOTICES. All notices or other communications which are
required or permitted hereunder will be in writing and deemed to be effective
(a) on the date of delivery if delivered in person and written confirmation of
delivery is provided, (b) on the date sent by facsimile or other electronic
transmission, provided such receipt is verified, (c) on the day following date
of deposit with an overnight courier if a receipt confirming delivery by
overnight courier is provided, or (d) three days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to another address as it will designate by written notice given to the
other Party.
*Confidential Treatment Requested
55.
IF TO ISIS, TO:
Isis Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
WITH A COPY TO:
Attention: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
IF TO LILLY, TO:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Group Vice President, Lilly Research Laboratories
Telephone: 000-000-0000
Facsimile: 000-000-0000
WITH A COPY TO:
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
16.6 DISPUTE RESOLUTION. In the event of any controversy or claim
arising from or relating to any provision of this Agreement, or any term or
condition hereof, or the performance by a Party of its obligations hereunder, or
its construction or its actual or alleged breach, the Parties will try to settle
their differences amicably between themselves. All disputes relating to the
implementation of the Collaborative Research Plan shall be handled in accordance
with Article 2.
16.7 CHOICE OF LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of
New York and the United
States without reference to any rules of conflict of laws.
16.8 ENTIRE AGREEMENT. This Agreement (including all Schedules
hereto), together with the Loan Agreement, Registration Rights Agreement and the
Securities Purchase Agreement, constitutes the entire agreement between the
Parties with respect to the subject matter hereof, and supersedes all previous
arrangement with respect to the subject matter hereof, whether written or oral.
Any amendment or modification to this Agreement shall be made in writing signed
by both Parties. In the event of any conflict between the terms of this
Agreement and the Collaborative Research Plan, the terms of this Agreement shall
govern.
56.
16.9 HEADINGS. The captions to the several Articles and Sections
hereof are not a part of the Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
16.10 INDEPENDENT CONTRACTORS. It is expressly agreed that the
Parties will be independent contractors and that the relationship between the
Parties will not constitute a partnership, joint venture or agency. No Party
will have the authority to make any statements, representations or commitments
of any kind, or to take any action, which will be binding on the other Parties,
without the prior consent of such other Parties. Members of the Executive
Committee shall be and shall remain employees of Isis or Lilly as the case may
be. Lilly shall not incur any liability for any act or failure to act by
employees of Isis, including members of the Executive Committee or Joint
Research Committee who are employees of Isis. Isis shall not incur any liability
for any act or failure to act by employees of Lilly, including members of the
Executive Committee or Joint Research Committee who are employees of Lilly.
16.11 NON-SOLICITATION OF EMPLOYEES. During the Collaboration Term
and for a period of six (6) months thereafter, each Party agrees that it will
not directly recruit, solicit or induce any employee of the other Party who is
directly associated with the Collaboration to terminate his or her employment
with such other Party. However, nothing set forth in this Section 16.11 shall
prohibit a Party from indirectly recruiting, soliciting or inducing such
employees to leave the other Party through the use of advertisements in trade
journals and the like or from discussing employment opportunities with such
employees to the extent such employees contact such Party first.
16.12 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 the
Agreement.
16.13 WAIVER. The waiver by a Party hereto of any right hereunder or
the failure to perform or of a breach by another Party will not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.
16.14 JOINTLY PREPARED. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.
16.15 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
57.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
XXX XXXXX AND COMPANY ISIS PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ B. Xxxxx Xxxxxxxx
------------------------------------ --------------------------------
Xxxxxx Xxxxxx B. Xxxxx Xxxxxxxx
Chairman of the Board, Chief Executive Vice President and
Executive Officer and President Chief Financial Officer
[SIGNATURE PAGE TO
COLLABORATION AGREEMENT]
LIST OF SCHEDULES
Schedule 1.1 Definitions
Schedule 2.2 Collaborative Research Plan
Schedule 2.5 Initial Members of Executive Committee
Schedule 2.6 Initial Members of Joint Research Committee
Schedule 2.9 Initial Alliance Managers
Schedule 8.7 GeneTrove Database Subscription Terms
Schedule 8.8 Technology Transfer Terms
Schedule A Existing Isis Internal Programs
Schedule B Isis Manufacturing Patent Rights
Schedule C Isis Core Technology Patent Rights
SCHEDULE 1.1
DEFINITIONS
"ABANDONED DRUG DISCOVERY TARGET" means any Drug Discovery Target
following termination by Lilly of an Active Program for such Drug Discovery
Target, as more fully described in Section 6.7.
"ACCEPTED VALIDATION TARGETS" has the meaning set forth in Section 5.4.
"ACTIVE PROGRAM" means:
(a) with respect to a Drug Discovery Target, any reasonable (as
defined below) ongoing research, development, or commercialization, including
sublicensing efforts, of a Drug Discovery ASO Compound directed to such Drug
Discovery Target that occurs (i) in the course of the Collaboration or (ii) by
Lilly outside the course of the Collaboration during the Collaboration Term plus
[*] years thereafter; and
(b) with respect to a Reagent Target, Validation Target or a Drug
Discovery Target licensed by Lilly under Article 8 or an Isis-Blocked Target
pursuant to Section 6.2, any reasonable (as defined below) ongoing research,
development, or commercialization, including sublicensing efforts, of an ASO
Compound directed to such Target.
For purposes of clarification, research, development and commercialization
efforts with respect to a Target or ASO Compound shall be deemed reasonable if
Lilly's research and development efforts with respect to such Target or ASO
Compound are reasonably comparable with other projects in Lilly's portfolio at a
similar stage of development and of similar market potential.
"AFFILIATE" means any person, organization, corporation or other
business entity that controls, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of another person,
organization, corporation or entity, whether through the ownership of voting
securities or by contract or court order or otherwise. For purposes of this
definition, an entity will be deemed to control another entity if it owns or
controls, directly or indirectly, at least fifty percent (50%) of the
outstanding stock or other voting rights entitled to elect directors or their
equivalent of such other entity.
"ALLIANCE MANAGERS" has the meaning set forth in Section 2.9.
"ANTISENSE DRUG DISCOVERY PROGRAM" means the program of research and
development of Drug Discovery ASO Compounds and Products in the Collaborative
Therapeutic Areas under this Agreement, as described in Section 2.4, Article 6
and the Collaborative Research Plan.
"ANTISENSE DRUG DISCOVERY TERM" means the term of the Antisense Drug
Discovery Program carried out pursuant to this Agreement and any extension
thereof.
1.1-1.
*Confidential Treatment Requested
"ANTISENSE TECHNOLOGY" means the selective modulation of protein
synthesis at the nucleic acid level caused by the binding of an oligonucleotide
or an analog thereof (an "OLIGONUCLEOTIDE") to a complementary sequence.
"ASO COMPOUND" means an oligonucleotide or an analog thereof (an
"OLIGONUCLEOTIDE") that selectively modulates protein synthesis at the nucleic
acid level through the binding of such oligonucleotide to a complementary
sequence.
"ASO FIELD" means the development, manufacture and sale of ASO Products
as therapeutic or prophylactic pharmaceutical products.
"ASO PRODUCT" means any preparation in final form for sale by
prescription, over-the-counter or any other method for any indication, including
human or animal use, which contains one or more ASO Compounds.
"CALENDAR QUARTER" shall mean the respective three month periods ending
on March 31, June 30, September 30, or December 31 for so long as the Agreement
is in effect.
"CALENDAR YEAR" shall mean each successive twelve month period
commencing on January 1 and ending on December 31 for so long as the Agreement
is in effect.
"CHANGE OF CONTROL" means any of the following events: (i) the
acquisition by any Person or group, other than a Person or group controlling
such Party as of the Effective Date, of "beneficial ownership" (as defined in
Rule 13d-3 under the United States Securities Exchange Act of 1934, as amended),
directly or indirectly, of fifty percent (50%) or more of the shares of such
Party's capital stock the holders of which have general voting power under
ordinary circumstances to elect at least a majority of such Party's Board of
Directors or equivalent body (the "BOARD OF DIRECTORS") (the "VOTING STOCK");
(ii) the first day of which less than two-thirds of the total membership of such
Party's Board of Directors shall be Continuing Directors (as such term is
defined below); (iii) the approval by the shareholders of such Party of a
merger, share exchange, reorganization, consolidation or similar transaction of
such Party (a "TRANSACTION"), other than a Transaction which would result in the
Voting Stock of such Party outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the Voting
Stock of such Party or such surviving entity immediately after such Transaction;
or (iv) approval by the shareholders of such Party of a complete liquidation of
such Party or a sale or disposition of all or substantially all of the assets of
such Party. For purposes of this definition, "Continuing Directors" means
individuals serving as of the date hereof on such Party's Board of Directors and
any individuals elected after the date hereof whose election or nomination was
approved by at least a majority of the Continuing Directors serving at the time.
"COLLABORATION" means, collectively, the Reagent Provision Program, the
Target Validation Program and the Antisense Drug Discovery Program.
"COLLABORATION ASO PRODUCT" means a Drug Discovery ASO Product or
Validation ASO Product.
1.1-2.
"COLLABORATION FTE" means a Lilly Collaboration FTE or an FTE applied
by Isis in conducting the research under the Target Validation Program or
Antisense Drug Discovery Program.
"COLLABORATION FUNDS" means the funds provided to Isis by Lilly
pursuant to the Loan Agreement.
"COLLABORATION KNOW-HOW" means Isis Collaboration Know-How and Lilly
Collaboration Know-How.
"COLLABORATION PATENT RIGHTS" shall mean the Isis Collaboration Patent
Rights, the Lilly Collaboration Patent Rights and the Joint Collaboration Patent
Rights.
"COLLABORATION TERM" means the term of the collaborative research
efforts carried out pursuant to this Agreement and any extension thereof.
"COLLABORATION THERAPEUTIC AREAS" means inflammation, bone, and
metabolism (E.G., diabetes and obesity).
"COMPULSORY LICENSE" shall mean, in the case of a Lilly Product or Isis
Product, a compulsory license under the a Party's technology obtained by a Third
Party through the order, decree or grant of a governmental authority having
competent jurisdiction, authorizing such Third Party to manufacture, use, sell,
offer for sale or import such Lilly Product or Isis Product in a particular
country.
"CONFIDENTIAL INFORMATION" means any and all inventions, know-any, and
data and shall include, without limitation, information relating to research and
development plans, experiments, results and plans, compounds, therapeutic leads,
candidates and products, clinical and preclinical data, trade secrets and
manufacturing, marketing, financial, regulatory, personnel and other business
information and plans, all scientific, clinical, regulatory, marketing,
financial and commercial information or data, all whether communicated in
writing, orally or by any other means, and which is provided by one Party to the
other Party in connection with this Agreement. Confidential Information will not
include information that:
(a) is known by the receiving Party at the time of its receipt,
and not through a prior disclosure by the disclosing Party, as documented by
written records;
(b) is properly in the public domain through no fault of the
receiving Party;
(c) is subsequently disclosed to the receiving Party by a Third
Party who may lawfully do so and is not under an obligation of confidentiality
to the disclosing Party; or
(d) is developed by the receiving Party independently of
Confidential Information received from the other Party, as documented by written
records.
"CONTROL" or "CONTROLLED" means with respect to any intellectual
property right, that the Party owns or has a license to such intellectual
property right and has the ability to grant access, a license, or a sublicense
to such intellectual property right to the other Party as provided for in
1.1-3.
this Agreement without violating an agreement with, or infringing any rights
of, a Third Party as of the time the Party would be first required under this
Agreement to grant the other Party such access, license or sublicense.
"COST OF PRODUCTS" or "COPS" means costs of supplying Products
calculated in accordance with a Party's accounting methods consistently applied
which methodology shall be calculated in compliance with U.S. generally accepted
accounting principles (GAAP). For the purposes of this Agreement, COPS shall
include Third Party royalty burdens, royalties due to the other Party, final
filling/finishing and packaging of the Product.
"COVER" (including variations thereof such as "COVERING", "COVERED",
and "COVERAGE") means that the manufacture, use, import, offer for sale or sale
of a Lilly Product or Isis Product would infringe a Valid Claim; provided, with
respect to a process or manufacturing patent, that such a Valid Claim therein
effectively precludes a Third Party from manufacturing, using, importing,
offering for sale, or selling such Lilly Product or Isis Product. The
determination of whether a Lilly Product or Isis Product is Covered by a
particular Valid Claim shall be made on a country-by-country basis. A Valid
Claim shall be deemed to provide effective preclusion hereunder where (i) there
is no competing product being marketed or (ii) if a product is being marketed by
a competitor, it infringes the Valid Claim (including any period in which, and
provided that, the Valid Claim is being litigated).
"CPI" or "CONSUMER PRICE INDEX" means the consumer price index for all
urban consumer series ID CUUR0000SAO as published from time to time by the US
Bureau of Labor Statistics, where the CPI for June, 2001 was 178.
"CRITICAL SUCCESS FACTOR" has the meaning set forth in the
Collaborative Research Plan as applicable to Reagent Targets, Validation Targets
and Drug Discovery Targets.
"CSAG APPROVAL" means [*]
"DEVELOPMENT CANDIDATE" means a Drug Discovery ASO Compound that is
directed to a Drug Discovery Target, that is ready for IND Supporting Toxicology
Studies and that is designated as a Development Candidate by the Joint Research
Committee, as described in Section 6.4.1 or by Lilly in accordance with Section
6.4.2.
"DRUG DISCOVERY ASO COMPOUND" means an ASO Compound that selectively
modulates protein synthesis of a Drug Discovery Target.
"DRUG DISCOVERY ASO PRODUCT" means any preparation in final form for
sale by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more Drug Discovery ASO
Compounds.
"DRUG DISCOVERY NON-ASO COMPOUND" means a compound that (a) is
developed by Lilly through the use of Collaboration Know-How and (b) is not an
ASO Compound and (c) is either (i) an agonist or antagonist of a Drug Discovery
Target or (ii) is a Drug Discovery Target.
1.1-4.
*Confidential Treatment Requested
"DRUG DISCOVERY NON-ASO PRODUCT" means any preparation in final form
for sale by prescription, over-the-counter or any other method for any
indication, including human or animal use, which contains one or more Drug
Discovery Non-ASO Compounds.
"DRUG DISCOVERY TARGET" means any Target included in the Antisense Drug
Discovery Program by the Joint Research Committee.
"EFFECTIVE DATE" means the last date on which the last Party executes
this Agreement or, if later, the next day following the expiration or earlier
termination of any notice and waiting period under The Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
"EXCLUSIVE TARGET" has the meaning set forth in Section 5.8.
"EXECUTIVE COMMITTEE" means the committee established pursuant to
Section 2.5.
"FDA" means the United States Food and Drug Administration or any
successor agency having the administrative authority to regulate the approval
for marketing of new human pharmaceutical or biological therapeutic products in
the United States.
"FIRST COMMERCIAL SALE" means with respect to any Lilly Product or Isis
Product the first sale to a Third Party by (i) Lilly or its Sublicensees, or
(ii) Isis, its Affiliates or Sublicensees. First Commercial Sale shall not
include transfer of reasonable quantities of any free samples of a Lilly Product
or Isis Product or reasonable quantities of a Lilly Product or Isis Product
solely for development purposes, such as for use in experimental studies or
clinical trials.
"FTE" means the equivalent of the work of one (1) employee full time
for one (1) year (consisting of at least a total of [*] weeks or [*] hours per
year (excluding vacations and holidays) of work on or directly related to the
Collaboration), carried out by an Isis employee or a Lilly Collaboration FTE, or
Third Party mutually agreed upon by the Joint Research Committee. Overtime shall
not be counted toward the number of hours that are used to calculate the FTE
contribution. No one person shall be permitted to account for more than one (1)
FTE. Scientific work on the Collaboration to be performed by Isis employees,
Lilly Collaboration FTEs, or mutually agreeable Third Parties can include, but
is not limited to, experimental laboratory work, recording and writing up
results, reviewing literature and references, and holding scientific
discussions.
"FTE RATE" means [*]
"GENETROVE DATABASE" means Isis' proprietary GeneTrove Human Gene
Function Database consisting, without limitation, of data from the study of the
effect of gene-specific inhibition of up to 10,000 human genes in a set of human
cell-based pharmacology assays utilizing Isis' proprietary antisense technology,
and software appropriate for storing, viewing and performing queries on the
incorporated data.
"GENETROVE DATABASE QUEUE" means those human genes which have been
identified and prioritized in Isis' HTS and RTS queue to begin the work required
to identify a lead antisense oligonucleotide. The GeneTrove Database Queue will
contain the number of genes
1.1-5.
*Confidential Treatment Requested
which can reasonably be screened within three to six months using Isis'
combined RTS and HTS resources.
"HTS STANDARD COST" [*]
"IDT AGREEMENT" means that certain agreement between Isis and
Integrated DNA Technologies, Inc., effective March 12, 1999, and any amendments
thereto.
"IND" means an Investigational New Drug application as defined in 21
C.F.R. 312 and any versions thereof governing the FDA as may be amended from
time to time.
"IP COMMITTEE" has the meaning provided in Section 2.7.2.
"ISIS ASO COMPOUND PATENT RIGHTS" means Patent Rights Controlled by
Isis on or after the Effective Date that claim inventions that are conceived
outside the course of the Target Validation Program or Drug Discovery Program
and that that Cover the composition of matter of an ASO Compound or the method
of using such ASO Compound per se, including Patent Rights that Cover inventions
made in the course of the Reagent Provision Program and Patent Rights that Cover
the composition of matter or use of an antisense oligonucleotide(s) directed to
Stage 2 Drug Discovery Targets and Stage 3 Drug Discovery Targets included in
the Research Plan on the Effective Date or thereafter.
"ISIS-BLOCKED TARGET" has the meaning set forth in Section 6.2.2.
"ISIS BLOCKING PATENT RIGHTS" means Patent Rights Controlled by Isis on
the Effective Date or come into Isis' Control during the Collaboration Term that
claim inventions that are conceived outside the course of the Validation Program
or Drug Discovery Program and that Cover the method of treating a condition by
modulating a Target through the use of a non-ASO Compound.
"ISIS COLLABORATION ASO COMPOUND PATENT RIGHTS" means Patent Rights
Controlled by Isis that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program and that Cover the
composition of matter of an ASO Compound or the use of such ASO Compound.
"ISIS COLLABORATION BLOCKING PATENT RIGHTS" means Patent Rights
Controlled by Isis that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program that Cover the method
of treating a condition by modulating a Target through the use of a non-ASO
Compound.
"ISIS COLLABORATION CORE TECHNOLOGY PATENT RIGHTS" means Patent Rights
Controlled by Isis that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program that Cover the
practice of Isis Standard Chemistry including Patent Rights that Cover
chemistries, motifs (patterns of arranging the chemical building blocks of an
antisense oligonucleotides) and/or cellular mechanism of action by which an
oligonucleotide promotes RNA cleavage.
1.1-6.
*Confidential Treatment Requested
"ISIS COLLABORATION KNOW-HOW" means Know-How Controlled by Isis that is
conceived in the course of the Target Validation Program or the Antisense Drug
Discovery Program.
"ISIS COLLABORATION MANUFACTURING PATENT RIGHTS" means Patents
Controlled by Isis that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program that Cover the
practice of the Isis Standard Chemistry Manufacturing Process.
"ISIS COLLABORATION PATENT RIGHTS" means the Isis Collaboration ASO
Compound Patent Rights, Isis Collaboration Manufacturing Patent Rights, Isis
Collaboration Core Technology Patent Rights and Isis Collaboration Blocking
Patent Rights.
"ISIS COLLABORATION TECHNOLOGY" means Isis Collaboration Know-How and
Isis Collaboration Patent Rights.
"ISIS CORE TECHNOLOGY PATENT RIGHTS" means Patent Rights Controlled by
Isis on the Effective Date or during the Collaboration Term that claim
inventions that are conceived outside the course of the Validation Program or
Drug Discovery Program and that Cover the practice of Isis Standard Chemistry
including Patent Rights that Cover chemistries, motifs (patterns of arranging
the chemical building blocks of an antisense oligonucleotides) and/or cellular
mechanism of action by which an oligonucleotide promotes RNA cleavage. The Isis
Core Technology Patent Rights that exist as of the date of this Agreement are
listed in SCHEDULE C.
"ISIS DRUG DISCOVERY ASO PRODUCT" means any preparation in final form
for sale by prescription, over-the-counter or any other method for any
indication, including human or animal use, which contains one or more ASO
Compounds directed against a Drug Discovery Target that is developed by Isis as
permitted by Section 8.2.3(c).
"ISIS INTERNAL PROGRAM" means an internal research effort on the
development of ASO Compounds directed to a Target for use as ASO Products
conducted by Isis conducted outside the course of the Collaboration whereby such
internal research effort on such Target has advanced to a stage that is
equivalent to the achievement of the Critical Success Factors for a Validation
Target as reasonably evidenced to Lilly by written documentation of Isis;
PROVIDED, HOWEVER, that if there is a disagreement as to whether such Target has
advanced to a stage that is equivalent to the achievement of the Critical
Success Factors for a Validation Target such matter shall be referred to the
Executive Committee for resolution, and lacking resolution by the Executive
Committee such internal research effort shall be deemed an Isis Internal
Program. The existing Isis Internal Programs in the Collaboration Therapeutic
Areas as of the date of this Agreement are listed in SCHEDULE A.
"ISIS KNOW-HOW" means all Know-How that is either (i) Controlled by
Isis as of the Effective Date or (ii) that becomes Controlled by Isis after the
Effective Date that is not Collaboration Know-How that is reasonably necessary
or useful for research, development, manufacture, use and sale of Lilly
Products, including Know-How that is discovered or developed by employees or
agents of Isis in the course of the Reagent Provision Program.
"ISIS MANUFACTURING PATENT RIGHTS" means Patent Rights Controlled by
Isis on or after the Effective Date that claim inventions that are conceived
outside the course of the Target
1.1-7.
Validation Program or Antisense Drug Discovery Program that Cover the
practice of the Isis Standard Chemistry Manufacturing Process. The Isis
Manufacturing Patent Rights as of the date of this Agreement are listed in
SCHEDULE B.
"ISIS NON-COLLABORATION ASO PRODUCT" means any preparation in final
form for sale by prescription, over-the-counter or any other method for any
indication, including human or animal use, which contains one or more ASO
Compounds directed against a Target that not designated as a Validation Target
or Drug Discovery Target pursuant to this Agreement and that is developed by
Isis as permitted by this Agreement.
"ISIS PATENT RIGHTS" means the Isis Core Technology Patent Rights, the
Isis Manufacturing Patent Rights, the Isis Blocking Patent Rights and Isis ASO
Compound Patent Rights. To the extent Isis Controls Patent Rights as of the
Effective Date or during the Collaboration Term other than the Isis
Manufacturing Patents, Isis Core Technology Patent Rights, Isis Blocking Patent
Rights and the Isis ASO Compound Patent Rights, and such Patent Rights would
Cover a Lilly ASO Product, such Patent Rights will be included in the definition
of Isis Patent Rights automatically if they can be licensed to Lilly with no
obligation (financial or otherwise) to any Third Party with respect to a
particular Lilly ASO Product at the time the Lilly ASO Product is licensed from
Isis, or if the relevant invention is made subsequent to such license, at the
time such invention is made. To the extent Isis Controls Patent Rights as of the
Effective Date or during the Collaboration Term, other than the Isis
Manufacturing Patent Rights, the Isis Core Technology Patent Rights, Isis
Blocking Patent Rights and Isis ASO Compound Patent Rights that would Cover a
Lilly ASO Product, and such Patent Rights were acquired by Isis from a Third
Party and/or Isis has obligations (financial or otherwise) to a Third Party in
connection with the practice of such Patent Rights, such Patent Rights will only
be included in the definition of Isis Patent Rights if Isis and Lilly negotiate
an agreement to license such Patent Rights which includes (1) the assumption by
Lilly of all financial obligations of Isis arising from the grant to Lilly and
the practice by Lilly, its Affiliates of Sublicensees, of the Patent Rights, (2)
the compensation of an appropriate portion of any acquisition costs incurred by
Isis in connection with obtaining Control of such Patent Rights, and (3) an
agreement by Lilly to abide by all of the terms of the agreement under which
Isis has obtained Control of such Patent Right.
"ISIS PRODUCT" means an Isis Drug Discovery ASO Product, Isis
Non-Collaboration ASO Product, and/or an Isis Validation ASO Product.
"ISIS REAGENT ASO PRODUCT" means any preparation in final form for sale
by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more ASO Compounds directed
against a Reagent Target that is developed by Isis as permitted by Section
8.2.2(c).
"ISIS STANDARD CHEMISTRY" means "2'MOE Gapmers" or an antisense
phosphothioate oligonucleotide OF 15-30 nucleotides wherein all of the backbone
linkages are modified by adding a sulfur at the non-bridging oxygen
(phosphorothioate) and a stretch of at least 10 consecutive nucleotides remain
unmodified (deoxy sugars) and the remaining nucleotides contain an O'-methyl
O'-ethyl substitution at the 2' position (MOE).
1.1-8.
"ISIS STANDARD CHEMISTRY MANUFACTURING PROCESS" means the manufacturing
process as of the Effective Date represented by the batch record for Isis
113715. Manufacturing for this purpose includes synthesis, purification and
analysis.
"ISIS TECHNOLOGY" means Isis Know-How and Isis Patent Rights.
"ISIS VALIDATION ASO PRODUCT" means any preparation in final form for
sale by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more ASO Compounds directed
against a Validation Target that is developed by Isis as permitted Isis as
permitted by Section 8.2.2(c).
"JOINT COLLABORATION PATENT RIGHTS" has the meaning set forth in
Section 12.2.
"JOINT RESEARCH COMMITTEE" means the committee established pursuant to
Section 2.6.
"KNOW-HOW" means all tangible or intangible know-how, inventions
(whether patentable or not), discoveries, processes, formulas, data, clinical
and preclinical results, non-patented inventions, trade secrets, and any
physical, chemical, or biological material or any replication of any such
material in whole or in part.
"LILLY ASO PRODUCT" means a Reagent ASO Product, Validation ASO Product
or a Drug Discovery ASO Product that is developed and sold by Lilly.
"LILLY-BLOCKED TARGET" has the meaning set forth in Section 6.2.2.
"LILLY COLLABORATION ASO COMPOUND PATENT RIGHTS" means Patent Rights
Controlled by Lilly that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program that Cover the
composition of matter of an ASO Compound or the use of such ASO Compound.
"LILLY COLLABORATION BLOCKING PATENT RIGHTS" means Patent Rights
Controlled by Lilly that claim inventions conceived in the course of the Target
Validation Program or the Antisense Drug Discovery Program that Cover the method
of treating a condition by modulating a Target through the use of a non-ASO
Compound.
"LILLY COLLABORATION FTE" means an FTE that is applied by Lilly in
carrying out work in the course of the Target Validation Program or Antisense
Drug Discovery Program in accordance with the Collaborative Research Plan and
reimbursed with Collaboration Funds.
"LILLY COLLABORATION KNOW-HOW" means Know-How Controlled by Lilly that
is conceived in the course of the Target Validation Program or the Antisense
Drug Discovery Program.
"LILLY COLLABORATION PATENT RIGHTS" means the Lilly Collaboration ASO
Compound Patent Rights and the Lilly Collaboration Blocking Patent Rights.
"LILLY COLLABORATION TECHNOLOGY" means Lilly Collaboration Know-How and
Lilly Collaboration Patent Rights.
1.1-9.
"LILLY FIRST PASS IN VITRO ANALYSIS" means [*]
"LILLY NON-ASO PRODUCT" means a Validation Non-ASO Product, Drug
Discovery Non-ASO Product, or Reagent Non-ASO Product that is developed and sold
by Lilly.
"LILLY NON-COLLABORATION ASO PATENT RIGHT" means all Patent Rights that
are Controlled by Lilly, or any Sublicensees to whom Lilly provides data
generated from the use of a Reagent ASO Compound provided to Lilly by Isis
pursuant to this Agreement and that [*]
"LILLY PRODUCT" means a Lilly ASO Product or a Lilly Non-ASO Product.
"LILLY RIGHT OF FIRST NEGOTIATION" has the meaning set forth in Section
8.3.
"LOAN AGREEMENT" means that certain loan agreement by and between Lilly
and Isis signed concurrently with this Agreement.
"MAJOR MARKET COUNTRY" means the United States, Japan, Germany, the
United Kingdom, France, Spain or Italy.
"MANUFACTURING IMPROVEMENTS" means any and all scientific and technical
data, information, methods, techniques, protocols, and processes that are useful
in the manufacture of ASO Compounds developed by or coming under Control of a
Party outside the course of the Collaboration after the Effective Date.
"NDA" means a new drug application or other application filed with the
FDA to obtain approval for marketing a Lilly Product or Isis Product in the
United States, or any future equivalent process.
"NET ROYALTY" means [*]
"NET SALES" means, with respect to a Product, the gross amount invoiced
by a Party, its Affiliates or Sublicensees thereof to unrelated Third Parties,
excluding any Sublicensee, for the Product, less:
(a) Trade, quantity and cash discounts allowed;
(b) Commissions, discounts, refunds, rebates, chargebacks,
retroactive price adjustments, and any other allowances which effectively reduce
the net selling price;
(c) Product returns and allowances;
(d) That portion of the value associated with the cost of the drug
delivery systems;
(e) Any tax imposed on the production, sale, delivery or use of
the Product, including, without limitation, sales, use, excise or value added
taxes;
(f) Allowance for distribution expenses; and
(g) Any other similar and customary deductions.
1.1-10.
*Confidential Treatment Requested
Net Sales will be calculated in U.S. Dollars. Such amounts shall be
determined from the books and records of a Party, its Affiliate or Sublicensee,
maintained in accordance with U.S. Generally Accepted Accounting Principles or,
in the case of Sublicensees, such similar accounting principles, consistently
applied. Each Party further agrees in determining such amounts, it will use its
then current standard procedures and methodology, including its then current
standard exchange rate methodology for the translation of foreign currency sales
into U.S. Dollars or, in the case of Sublicensees, such similar methodology,
consistently applied.
Net Sales excludes:
(i) The transfer of reasonable and customary quantities of free
samples of Product(s) and the transfer of Product(s) as clinical trial
materials, other than for subsequent resale;
(ii) Sales or transfers of Product(s) among a Party and its
Affiliates unless the receiving Party is the consumer or user of the Product(s);
and
(ii) Use by a Party or its Affiliates or Sublicensees of Product
for any use connected with the securing of regulatory approval or validating of
a manufacturing process or the obtaining of other necessary marketing approvals
for Product (unless such Product is subsequently sold).
In the event that the Product(s) is sold as part of a Combination
Product (where "COMBINATION PRODUCT" means any pharmaceutical product which
comprises the Product(s) and at least one other active compound(s) and/or
ingredients), the Net Sales of the Product(s), for the purposes of determining
royalty payments, shall be determined by multiplying the Net Sales of
Combination Product (as defined in the standard Net Sales definition) by the
fraction, A / (A+B) where A is the weighted average sale price of the Product(s)
when sold separately in finished form, and B is the weighted average sale price
of the other product(s) sold separately in finished form.
In the event that the weighted average sale price of the Product(s) can
be determined but the weighted average sale price of the other product(s) cannot
be determined, Net Sales for purposes of determining royalty payments shall be
calculated by multiplying the Net Sales of the Combination Product by the
fraction A / C where A is the weighted average sale price of the Product(s) when
sold separately in finished form and C is the weighted average selling price of
the Combination Product. In the event that the weighted average sale price of
the other product(s) can be determined but the weighted average sale price of
the Product cannot be determined, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the Combination
Product by the following formula: one (1) minus B / C where B is the weighted
average sale price of the other product(s) when sold separately in finished form
and C is the weighted average selling price of the Combination Product. In the
event that the weighted average sale price of both the Product(s) and the other
product(s) in the Combination Product cannot be determined, the Parties will
attempt to agree on an appropriate weighted average sale price of both the
Product(s) and the other product(s) in the Combination Product, and lacking such
agreement the Net Sales of the Product(s) shall be deemed to be equal to fifty
percent (50%) of the Net Sales of the Combination Product.
1.1-11.
The weighted average sale price for a Product, other product(s), or
Combination Product shall be calculated once each Calendar Year and such price
shall be used during all applicable royalty reporting periods for the entire
Calendar Year. When determining the weighted average sale price of a Product,
other product(s), or Combination Product, the weighted average sale price shall
be calculated by dividing the sales dollars (translated into U.S. Dollars) by
the units of active ingredient sold during the twelve (12) months (or the number
of months sold in a partial Calendar Year) for the respective Product(s), other
product(s), or Combination Product. In the initial Calendar Year, a forecasted
weighted average sale price will be used for Product(s), other product(s), or
Combination Product. Any over or under payment due to a difference between
forecasted and actual weighted average sale prices will be paid or credited in
the first royalty payment of the following Calendar Year.
"NON-ASO FIELD" means the research, development, manufacture and sale
of compounds other than ASO Compounds as therapeutic or prophylactic
pharmaceutical products.
"NOVARTIS AGREEMENT" means that certain agreement between Isis and
Ciba-Geigy Limited (now Novartis AG) effective June 3, 1996, and all amendments
thereto.
"OPERATING COMMITTEES" has the meaning provided in Section 2.7.
"PARTY" means Lilly or Isis. "PARTIES" means Lilly and Isis.
"PATENT RIGHTS" means: (a) patent applications (including provisional
applications and applications for certificates of invention); (b) any patents
issuing from such patent applications (including certificates of invention); (c)
all patents and patent applications based on, corresponding to, or claiming the
priority date(s) of any of the foregoing; (d) any reissues, substitutions,
confirmations, registrations, validations, re-examinations, additions,
continuations, continued prosecutions, continuations-in-part, or divisions of or
to any of the foregoing; and (e) term extension or other governmental action
which provide exclusive rights beyond the original patent expiration date.
"PHASE I STUDY INITIATION" means the first human clinical trial
conducted on normal volunteers and designed to evaluate safety of a product.
"PHASE II STUDY INITIATION" means the first human clinical trial
conducted in patients and designed to indicate a statistically significant level
of efficacy for product in the desired indication, as well as to obtain some
indication of the dosage regimen required.
"PHASE III STUDY INITIATION" means the first human clinical trial
conducted in patients and designed to establish Product safety and efficacy and
required to obtain clinical registration of a product with health regulatory
authorities such as the FDA.
"PRODUCT" shall mean a Lilly Product or an Isis Product, as applicable.
"PROGRAM SANCTION APPROVAL" means [*]
"PROJECT SANCTION APPROVAL" means [*]
1.1-12.
*Confidential Treatment Requested
"PROPOSED VALIDATION TARGET" has the meaning set forth in Section 5.2.
"PROTECTED REAGENT TARGET" has the meaning set forth in Section 4.4.
"REAGENT ASO COMPOUND" means all ASO Compounds that selectively
modulate protein synthesis of a Reagent Target.
"REAGENT ASO PRODUCT" means any preparation in final form for sale by
prescription, over-the-counter or any other method for any indication, including
human or animal use, which contains one or more Reagent ASO Compounds.
"REAGENT NON-ASO COMPOUND" means a compound that (a) is developed by
Lilly through the use of Collaboration Know-How and (b) is not an ASO Compound
and (c) is either (i) an agonist or antagonist of a Reagent Target or (ii) is a
Reagent Target.
"REAGENT NON-ASO PRODUCT" means any preparation in final form for sale
by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more Reagent Non-ASO
Compounds.
"REAGENT PROVISION PROGRAM" means the program of identification, and
delivery to Lilly, of ASO Compounds directed to Targets identified by Lilly
under this Agreement, as described in Section 2.2, Article 4 and the
Collaborative Research Plan.
"REAGENT PROVISION TERM" means the term of the Reagent Provision
Program carried out pursuant to this Agreement and any extension thereof.
"REAGENT TARGET" means a Target that is designated a Reagent Target by
Lilly; PROVIDED, HOWEVER, that a Reagent Target that is later designated a
Validation Target or a Drug Discovery Target shall not be considered a Reagent
Target after the date of such designation.
"REGISTRATION" means (a) in the United States, approval by the FDA of
an NDA, or similar application for marketing approval, and satisfaction of any
related applicable FDA registration and notification requirements (if any), and
(b) in any Major Market Country other than the United States, approval by
regulatory authorities having jurisdiction over such country of a single
application or set of applications comparable to an NDA and satisfaction of any
related applicable regulatory and notification requirements, if any, together
with any other approval necessary to make and sell pharmaceuticals and medical
devices commercially in such country.
"REJECTED VALIDATION TARGET" has the meaning provided in Section 5.4.
"RESERVED TARGET" has the meaning set forth in Section 6.8.
"RTS STANDARD COST" for any Reagent ASO Compound for any year of the
Collaboration Term means [*]
"STAGE I DRUG DISCOVERY TARGET" means a Target that is designated a
Drug Discovery Target under Section 6.3 that (i) has not reached the status of a
Stage II Drug Discovery Target
1.1-13.
*Confidential Treatment Requested
or Stage III Drug Discovery Target outside the course of the Collaboration
prior to the designation of such target as a Drug Discovery Target or (ii)
any Accepted Validation Target that enters the Antisense Drug Discovery
Program under Section 6.3.
"STAGE II DRUG DISCOVERY TARGET" means a Target that Isis moves to the
status that is equivalent to Accepted Validation Target outside the course of
the Collaboration (but that has not reached the status of a Stage III Drug
Discovery Target) prior to the designation of such Target as a Drug Discovery
Target.
"STAGE III DRUG DISCOVERY TARGET" means a Target for which Isis has
developed ASO Compounds and has analyzed such ASO Compounds in at least one (1)
animal model in two (2) different species outside the course of the
Collaboration and prior to the designation of such Target as a Drug Discovery
Target.
"SUBLICENSE INCOME" means all consideration received by Lilly from a
Sublicensee of Lilly pursuant to a sublicense agreement permitted under Section
9.3.5 excluding (a) payments made by such Sublicensee in consideration for the
issuance of equity or debt securities of Lilly at fair market value, and (b)
payments made by such Sublicensee to support or fund research activities to be
undertaken by Lilly at cost.
"SUBLICENSEES" means any Third Party to which Lilly or any of its
Affiliates or Isis or any of its Affiliates grants any right to manufacture,
market and sell a Lilly Product or an Isis Product, as applicable. A Third Party
who is granted only the right to sell a Lilly Product or an Isis Product (such
as a wholesaler) will not be considered a Sublicensee.
"TARGET" means a transcriptional unit of a gene, and any protein
product of such transcriptional unit, including all splice variants.
"TARGET VALIDATION PROGRAM" means the program of Target
functionalization and validation under this Agreement, as described in Section
2.3, Article 5 and the Collaborative Research Plan.
"TARGET VALIDATION PROGRAM TERM" means the term of the Target
Validation Program any extensions thereof.
"TERRITORY" means the entire world.
"THIRD PARTY" means any Party other than Isis or Lilly and their
respective Affiliates.
"VALID CLAIM" means any claim in an issued and unexpired patent which
has not been held unenforceable, unpatentable or invalid by a decision of a
court or other governmental agency of competent jurisdiction following
exhaustion of all possible appeal processes and which has not been admitted to
be invalid or unenforceable through reissue, reexamination or disclaimer, or
otherwise.
"VALIDATION ASO COMPOUND" means all ASO Compounds that selectively
modulate protein synthesis of a Validation Target.
1.1-14.
"VALIDATION ASO PRODUCT" means any preparation in final form for sale
by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more Validation ASO
Compounds.
"VALIDATION NON-ASO COMPOUND" means a compound that (a) is developed by
Lilly through the use of Collaboration Know-How and (b) is not an ASO Compound
and (c) is either (i) an agonist or antagonist of a Validation Target or (ii) is
a Validation Target.
"VALIDATION NON-ASO PRODUCT" means any preparation in final form for
sale by prescription, over-the-counter or any other method for any indication,
including human or animal use, which contains one or more Validation Non-ASO
Compounds.
"VALIDATION TARGET" means any Target designated by Lilly for inclusion
in the Target Validation Program; PROVIDED, HOWEVER, that a Validation Target
that is later designated a Drug Discovery Target, shall be considered a Drug
Discovery Target and not a Validation Target. Validation Targets includes
Accepted Validation Targets and Rejected Validation Targets.
1.1-15.
SCHEDULE 2.2
COLLABORATIVE RESEARCH PLAN
DELETE IN ENTIRETY
2.2
SCHEDULE 2.5
INITIAL MEMBERS OF THE EXECUTIVE COMMITTEE
LILLY ISIS
--- ------------------------------- ------------------------------------
[*]
2.5 *Confidential Treatment Requested
SCHEDULE 2.6
INITIAL MEMBERS OF THE JOINT RESEARCH COMMITTEE
LILLY ISIS
--- ------------------------------- ------------------------------------
[*]
2.6 *Confidential Treatment Requested
SCHEDULE 2.9
INITIAL ALLIANCE MANAGERS
LILLY ISIS
--- ------------------------------- ------------------------------------
[*]
2.9 *Confidential Treatment Requested
SCHEDULE 8.7
GENETROVE DATABASE SUBSCRIPTION TERMS
DELETED IN ENTIRETY
8.7
SCHEDULE 8.8
TECHNOLOGY TRANSFER TERMS
DELETED IN ENTIRETY
8.8
SCHEDULE A
EXISTING ISIS INTERNAL PROGRAMS
DELETED IN ENTIRETY
A-1
SCHEDULE B
ISIS MANUFACTURING PATENT RIGHTS
DELETED IN ENTIRETY
B-1
SCHEDULE C
ISIS CORE TECHNOLOGY PATENT RIGHTS
DELETED IN ENTIRETY
B-2
