EXHIBIT 10.75
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Development and Commercialization Agreement ("AGREEMENT") is
entered into with effect from the 13th day of August, 2001 (the "EFFECTIVE
DATE") between QLT Inc. ("QLT"), a company incorporated in the Province of
British Columbia, Canada, and Xenova Limited ("XENOVA"), a company incorporated
in England and Wales.
R E C I T A L S
A. QLT and Xenova have entered into discussions with respect to
the development of a product incorporating Xenova's proprietary compound
currently known as XR9576 and have signed a Confidentiality Agreement dated
April 20, 2001 (the "CONFIDENTIALITY AGREEMENT") in that regard.
B. The parties wish to commence the development of the Product
and agree to enter into this binding interim Agreement to set out their
obligations with respect to development, manufacturing and commercialization of
the Product in the Field in the Development Territory and the Territory.
C. The parties agree to negotiate and settle a more definitive
comprehensive form of agreement consistent with and not in conflict with the
terms set out in this Agreement, as supplemented by such additional terms,
conditions and other provisions or amendments, to be settled in the manner
provided for in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
provided herein, the parties agree as follows:
1. DEFINITIONS. For the purposes of this Agreement and the
Definitive Agreement, the following terms will have the respective meanings set
forth below:
1.1 "ACT" shall mean the United States Food, Drug and Cosmetic
Act, as amended from time to time, and regulations promulgated thereunder.
1.2 "AFFILIATE" shall mean any corporation or other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the designated party, but only so
long as such relationship exists. For purposes of this definition, "control"
means ownership of at least 50% of the shares of stock entitled to vote for
directors in the case of a corporation and at least 50% of the interests in
profits in the case of a business entity other than a corporation.
1.3 "ASSERTING PARTY" shall have the meaning set out in SECTION
14.2.
1.4 "AVAILABLE XENOVA INDEPENDENT PROGRAM INFORMATION" shall have
the meaning set out in SECTION 7.3.
1.5 "CONFIDENTIAL INFORMATION" shall mean:
(a) In the case of Xenova, all Information disclosed by Xenova to QLT
concerning the Drug itself, or the use or manufacture
thereof, owned by or licensed to Xenova prior to the date of this
Agreement or developed by Xenova after the date of this Agreement
outside the Program and without reference to or use of any Program
Information or QLT Confidential Information;
(b) In the case of QLT, all Information disclosed by QLT to Xenova
concerning the Product (other than the Drug itself), or the
use or manufacture thereof, or otherwise useful to the Program, owned
by or licensed to QLT prior to the date of this Agreement or
developed by QLT after the date of this Agreement outside the Program
and without reference to or use of any Program Information or Xenova
Confidential Information.
Confidential Information will not include any information which is:
(i) Now in the public domain or subsequently enters the public
domain without fault on the part of the receiving party;
(ii) Known by the receiving party from its own sources, as
evidenced by the receiving party's written records made
prior to the date of the Confidentiality Agreement; or
(iii) Received from any third party not under any obligation to keep
such information confidential.
1.6 "CROSS-OVER USE" shall mean the use or sale in the Territory
of a compound, in whatever form, by Xenova (or by an Affiliate, licensee or
sub-licensee of Xenova or by a third party contracting with Xenova or an
Affiliate of Xenova) that can reasonably be seen as competing directly and in a
commercially significant way with the use or sale of the Product within the
Field in the Territory.
1.7 "CROSS-PRICING RISK" shall mean the use or sale in the
Territory of a compound that incorporates the Drug, in whatever form, that is
owned, controlled or licensed by Xenova or by an Affiliate of Xenova, that has
the same or substantially the same chemical structure, or similar performance
characteristics, to the Product so that the compound could reasonably be
considered to be substituted in medical practice and subject to commercially
significant competitive pricing in relation to the Product.
1.8 "DEFINITIVE AGREEMENT" shall mean the definitive
comprehensive form of agreement for the continued development and
commercialization of the Product in the Field in the Development Territory and
the Territory consistent with and not in conflict with the terms set out in
this Agreement, to be negotiated by parties and settled as provided in
SECTION 9.
1.9 "DEVELOPMENT COMMITTEE" shall mean the committee constituted
by the parties in accordance with SECTION 2.2.
-2-
1.10 "DEVELOPMENT TERRITORY" shall mean the Territory and Europe.
1.11 "DRUG" will mean Xenova's proprietary compound currently
known as XR9576 in its pure form (free base form and any pharmaceutically
acceptable salt form) and any formulations thereof or improvements thereto. The
parties will include the chemical structure of the Drug as an exhibit to the
Definitive Agreement.
1.12 "EUROPE" will mean the United Kingdom, Ireland, Germany,
France, Italy, Belgium, The Netherlands, Luxembourg, Liechtenstein, Monaco,
Switzerland, Austria, Spain, Portugal, Greece, Cyprus, Malta, Norway, Sweden,
Denmark, Finland, Greenland, Iceland and any other countries that join the
European Union during the term of this Agreement or the Definitive Agreement,
and any successor states thereto.
1.13 "FIELD" will mean any human therapeutic, diagnostic or
prophylactic use of the Drug in oncology, including oral uses thereof, but
excluding the ODD Field; provided that if, within [*] of the Effective Date,
Xenova does not complete a bona fide agreement with a third party that grants
rights to that third party to develop and commercialize the Drug in the ODD
Field in the Territory, then the Field shall include the ODD Field.
1.14 "GMPs" will mean current Good Manufacturing Practices as
defined from time to time by the Act and as related to regulations or any
successor laws or regulations governing the manufacturer, handling, storage and
control of the Drug in the United States.
1.15 "INFORMATION", for the purposes of this Agreement, shall mean
any know-how, ideas, trade secrets, inventions (including patents covering such
inventions), data, market research, technology and information, including
improvements and modifications to any thereof, processes and analytical
methodology used in development, testing and analysis, and medical, clinical,
toxicological and other scientific data developed or acquired by either party.
"INFORMATION" will be further defined in the Definitive Agreement.
1.16 "INITIAL DEVELOPMENT" shall have the meaning set out in
SECTION 4.2.
1.17 "INITIAL DEVELOPMENT PHASE" shall mean the period of time
from the Effective Date to the time of delivery by QLT to Xenova of the
Registration Package as more particularly set out in SECTION 4.2.
1.18 "MARKETING DEFAULT" shall have the meaning set out in SECTION
5.3(b).
1.19 "MARKETING DEFAULT NOTICE" shall have the meaning set out in
SECTION 5.3(d).
1.20 "NET PROCEEDS" shall mean, without duplication, all revenues,
receipts, monies and the fair market value of all other consideration received
or collected, directly or indirectly, by Xenova, or any Affiliate of Xenova,
from end users or any third parties as consideration for the commercialization
and sale of the Product in the Field outside the
*Material has been omitted and filed separately with the commission.
-0-
Xxxxxxxxx or, as applicable, the ODD Product in the Territory, provided however
that "NET PROCEEDS" shall not include, without duplication:
(a) Bona fide milestone payments, license and sublicense fees or equity
investments received or collected by Xenova, or any Affiliate of
Xenova, from any sub-licensee or other third party in exchange for
rights to exploit and commercialize the Product or ODD Product; or
(b) Any revenues, receipts or monies received by Xenova, or any Affiliate
of Xenova, on account of (as applicable) research, development or
manufacturing expenses including a commercially reasonable research,
development or manufacturing profit xxxx up, or on account of bona
fide commercially reasonable marketing and distribution expenses and
other bona fide third party expenses and financial obligations of
Xenova, or any Affiliate of Xenova, attributable to the research,
development, commercialization and/or sale of the Product or the ODD
Product.
For greater clarity, it is the intention of the parties that:
(i) In the event Xenova sublicenses to a third party the
marketing and distribution of the Product in any country
outside the Territory or the ODD Product in the Territory,
then "NET PROCEEDS" would comprise revenues received or
collected by Xenova in the nature of "running royalties",
after deduction (without duplication) of royalty obligations
to third parties with respect to the Product or the ODD
Product and any other third party expenditure directly
related to unit sales of the Product or the ODD Product;
(ii) In the event Xenova enters into a profit share collaboration
or similar arrangement with a third party in respect of the
marketing and distribution of the Product in any country
outside the Territory or the ODD Product in the Territory,
then "NET PROCEEDS" would comprise Xenova's share in the
profits from that profit share collaboration, after
deduction (without duplication, and to the extent not
already deducted in calculating Xenova's share in the
profits) of royalty obligations to third parties with
respect to the Product or ODD Product and any other third
party expenditure directly related to unit sales of the
Product or ODD Product; and
(iii) In the event Xenova directly markets and distributes the
Product in any country outside the Territory or the ODD
Product in the Territory, then "NET PROCEEDS" would also
include "NET SALES", after deduction of bona fide
commercially reasonable marketing and distribution expenses
and other bona fide commercially reasonable third party
expenses and financial obligations of Xenova, or any
Affiliate of Xenova, attributable to the commercialization
and sale of the Product or ODD Product in that country after
deduction (without duplication) of royalty obligations to
third parties with respect to the Product or ODD Product and
any other third party expenditure directly related to unit
sales
-4-
of the Product or ODD Product (including any royalties
paid to any third party in connection with such
commercialization and sale).
In any case, commercially reasonable manufacturing profits attributable to the
manufacturing of the Product or ODD Product are not intended to be included in
"NET PROCEEDS".
1.21 "NET SALES" shall mean the invoiced sales price of a
(Finished) Product in the Field in the Territory received by QLT, its Affiliates
and/or sub-licensees, from independent third parties in arm's length
transactions exclusively for money or, where the sale is not at arm's length,
the price that would have been so invoiced if it had been at arm's length, less:
(a) Credits or allowances, if any, given or made for purchase charge
backs, price reductions, returns, rebates, rejections, recall or
destruction of spoiled, damaged, out-dated, returned or otherwise
unacceptable product (voluntarily made or requested or made by an
appropriate governmental agency, subdivision or department),
quantity, trade, early-settlement and/or cash discounts, allowances
and/or incentives on account of or in relation to the invoiced sales
price of (Finished) Products;
(b) Any duty, tax, excise or governmental charge upon or measured by the
production, sale, transportation, delivery or use of (Finished)
Products related to or based upon sales of (Finished) Products
(including value added taxes);
(c) Transportation and handling charges or allowances (freight, postage,
shipping and insurance), if any, incurred on account of or in relation
to the invoiced sales price of (Finished) Products and provided the
amounts are separately charged on the relevant invoice; and
(d) Allowances for bad debts and unpaid accounts in respect of the sale of
(Finished) Products.
In no event will the total of these above-detailed deductions be greater than:
(i) In the first year of sales, [*], and
(ii) Thereafter, [*];
of the total invoice price; such limit to be calculated on a quarterly basis.
1.22 "ODD" shall mean oral drug delivery.
1.23 "ODD FIELD" shall mean the use of the Drug solely as an oral
drug delivery system in oncology in the Territory:
[*];
*Material has been omitted and filed separately with the Commission.
-5-
the combined product being referred to in this Agreement and the Definitive
Agreement as the "ODD PRODUCT".
1.24 "PRODUCT" shall mean any product for use in the Field in the
Territory which incorporates the Drug and any formulations thereof or
improvements thereto, including a product in a different strength (i.e., a
different amount of active ingredient delivered in the same pattern) or having
only cosmetic changes such as size, color, shape, etc., or similar
non-therapeutic changes.
1.25 "PROGRAM" shall mean all activities undertaken by either or
both parties in accordance with the terms hereof for the development of the
Product in the Development Territory, including regulatory and clinical
activities. A draft summary of the Program activities as identified to date is
set forth on EXHIBIT B hereto.
1.26 "PROGRAM Information" shall mean any Information developed or
acquired by or on behalf of either party under, or as a result of the Program or
by Xenova as contemplated under this SECTION 1.26. Notwithstanding the
foregoing, Program Information will not include trademarks. For greater clarity,
the parties acknowledge that, subject to the provisions and restrictions set out
in SECTION 6, contemporaneously with the Program, Xenova may be conducting
activities relating to:
(a) Development and/or commercialization of the Drug outside the Field
whether inside or outside the Territory;
(b) Development of the Drug inside the Field and outside the Development
Territory; or
(c) Commercialization of the Drug inside the Field and outside the
Territory.
and in that regard, Program Information shall not include any information
developed or acquired by Xenova under any Xenova Independent Program and
without reference to or use of any Confidential Information or Program
Information owned by QLT, but shall include Available Xenova Independent
Program Information.
1.27 "QLT PATENTS", for the purposes of this Agreement, shall have
the meaning set out in SECTION 8.4(G). QLT Patents will be further defined in
the Definitive Agreement.
1.28 "REGISTRATION PACKAGE" shall mean:
(a) The standard dossier for a NDA for oncology products, the Table of
Contents summary of which is attached as EXHIBIT D for illustrative
purposes; and
(b) As supplemented by data generated from the studies specified by the
FDA during Xenova's meeting with the FDA on 25 April, 2001 (and
summarized at the end of EXHIBIT D), unless the FDA later determines
that any of the studies specified by the FDA during this meeting are
not required.
1.29 "SPECIFIC ACTION" shall have the meaning set out in SECTION
5.2.
-6-
1.30 "SPENDING CAP" shall have the meaning set out in SECTION 4.3.
1.31 "TERRITORY" shall mean the United States of America, Canada
and Mexico.
1.32 "XENOVA INDEPENDENT PROGRAM" shall have the meaning set out
in SECTION 7.3.
1.33 "XENOVA PATENTS", for the purposes of this Agreement, shall
have the meaning set out in SECTION 8.4(A). Xenova Patents will be further
defined in the Definitive Agreement.
1.34 Words defined elsewhere in this Agreement shall have the
meaning assigned thereto.
1.35 The Definitive Agreement will contain additional definitions
as are appropriate for a Definitive Agreement of this nature, including
definitions of Combination Products, EMEA, FDA, Finished Products, First Line
Approval, ICH, Marketing Plan, NDA, Second Line Approval, Valid Claim, etc.
2. PRODUCT DEVELOPMENT.
2.1 PROGRAM COMMENCEMENT - Promptly after:
(a) Execution of this Agreement by both parties;
(b) Payment by QLT of the upfront payment set out in SECTION 9.2; and
(c) Delivery by Xenova to QLT of the Drug and Product as more specifically
set out in SECTION 3.2;
the parties will commence the Program all as more specifically set out in this
Agreement and the Definitive Agreement, including a transition phase.
2.2 DEVELOPMENT COMMITTEE - At the time of commencement of the
Program, the parties will establish the Development Committee consisting of an
equal number of members from each party. Each member shall have one vote. If
the Development Committee has a tie vote with respect to any manner properly
before it, either party may refer the matter to the Chief Executive Officers of
each party for resolution. Except as provided in SECTION 4.2 of this Agreement,
QLT shall have the tie-breaking vote with respect to all development activities
(in the Development Territory) and commercialization activities (in the
Territory, except in relation to Xenova's rights (if any) under SECTION 5.3(d))
for the Product in the Field. When QLT has the tie-breaking vote, it shall be
exercised by the Chief Executive Officer of QLT (or another Executive Officer
of QLT as his or her designee). The meetings and other procedures of the
Development Committee shall be set forth in more detail in the Definitive
Agreement, but shall consist of at least the following:
(a) MANDATE -
-7-
(i) Pooling of expertise and information exchange by the
parties with respect to the Product.
(ii) Strategic overview of clinical, regulatory and
manufacturing issues in the Development Territory
(including overview of the selection of initial and
alternative third party contract manufacturers in
the Development Territory).
(iii) Receive reports of marketing matters from QLT on the
Territory and from Xenova on Europe (to the extent
that Xenova is not restricted by any obligation
under an agreement with a third party).
(iv) Consider matters and make decisions on material
matters set out in this Agreement and in the
Definitive Agreement for consideration and
decisions by the Development Committee.
(b) NUMBER OF MEMBERS - Each party shall have an equal number of members
on the Development Committee, each of these members to have the
appropriate background and expertise to contribute to the Development
Committee. Each party may change its members on the Development
Committee from time to time.
(c) MEETINGS - The Development Committee shall meet at a minimum four
times per year, at least once in person and otherwise by
videoconference.
(d) SUB-COMMITTEES - From time to time the Development Committee will form
sub-committees (standing or ad hoc) to consider and/or to provide
guidance and oversight on specific matters (for example, the
Development Committee will set up a European development sub-committee
to consider the European aspects of the Program).
3. CMC, MANUFACTURING AND SUPPLY.
3.1 OVERVIEW - In connection with the rights and licenses granted
by Xenova to QLT under this Agreement and the Definitive Agreement, Xenova will
transfer or otherwise make available to QLT the Drug, the Product,
manufacturing processes, analytical methods, reference standards and other
documents and information as are and to the extent necessary for QLT to carry
out its activities as contemplated by this SECTION 3.
3.2 DEVELOPMENT SUPPLY - Xenova grants to QLT and QLT shall have
the exclusive rights and be responsible for manufacture and supply of Drug and
Product for Initial Development of the Product in the Field in the Development
Territory. In connection therewith, the parties agree as follows:
(a) DRUG - Xenova shall transfer to QLT approximately [*]of Drug in its
possession or control (including Drug not yet released by [*]). Xenova
will supply this Drug to QLT at no charge to QLT.
(b) PRODUCT - Xenova shall transfer to QLT at least [*] of Product in its
possession or control (including any Product not yet released by [*])
and any other ampoules not
*Material has been omitted and filed separately with the Commission.
-8-
required inside or outside the Program. Xenova will supply this
Product to QLT at no charge to QLT.
(c) QUALITY - Xenova has provided QLT with a Material Safety Data Sheet
for the Drug. Xenova has also provided QLT with all relevant
information available and known to Xenova concerning the safety,
handling, use, disposal and environmental effects of the Drug or as
may be necessary to conduct the Program.
The parties agree that there will be a transition period during which they will
work together on the CMC (Chemistry, Manufacturing and Control) aspects of
development of the Drug and the Product in order to ensure a smooth and
efficient transfer from Xenova to QLT of manufacturing and supply
responsibility during and for the purposes of Initial Development and for
further development and commercialization in the Territory.
3.3 COMMERCIAL SUPPLY IN THE TERRITORY - Except as otherwise set
out in this Agreement (including where Xenova exercises its rights under
SECTION 5.3(d)) and the Definitive Agreement, Xenova grants to QLT and QLT
shall have the exclusive rights and be responsible for the manufacture and
supply of Drug and Product (with the right to sub-contract the manufacture and
supply to QLT of Drug and Product) for commercialization of the Product in the
Field in the Territory. Xenova will not grant any other rights to manufacture
and supply the Product in the Field in the Territory, except that Xenova or its
licensee(s) may manufacture Product or have it manufactured in the Territory
for use:
(a) Inside the Field but outside the Territory; or
(b) Outside the Field in the Territory.
3.4 XENOVA RETAINS ALL OTHER MANUFACTURING RIGHTS - Except as set
forth above in this XXXXXXX 0, Xxxxxx will retain all manufacturing and supply
rights for the Drug and the Product.
3.5 MANUFACTURING FACILITIES -
(a) ENSURING MANUFACTURING QUALITY -
(i) The parties acknowledge and agree that, notwithstanding that
each has manufacturing and supply rights and
responsibilities under this Agreement and the Definitive
Agreement, it is their intention to minimize unnecessary
costs and time delays in the worldwide development and
commercialization of the Drug and the Product, and in
particular in the manufacturing and supply aspects of the
worldwide development and commercialization of the Drug and
the Product.
(ii) In connection with this intention, the parties agree that in
the Development Territory they will work together [*]:
(A) Is appropriately qualified (from a regulatory,
quality and standards perspective) in the
appointing party's territory;
*Material has been omitted and filed separately with the Commission
-9-
(B) Is competent to (and has been approved by the
relevant regulatory bod(ies) in the appointing
party's territory) to provide Drug or Product (as
the case may be) to an appropriate quality;
(C) Has the ongoing manufacturing capacity to provide
Drug or Product (as the case may be) in the
appointing party's territory; and
(D) Can manufacture the Drug or Product (as the case may
be) at a similar or better quality or upon similar
or better commercial terms than an alternate site
identified by the appointing party.
[*].
(iii) Following any acquisition of all or substantially all of [*]
assets or business relating to the subject matter of this
Agreement or the Definitive Agreement [*], if QLT's (or QLT
in its acquired form) initial manufacturer is in material
breach of its MANUFACTURING AND SUPPLY REQUIREMENTS (as
defined below), Xenova may so notify QLT. Such manufacturer
shall then be given a period of up to six months to cure such
breach [adopt a Section 13.3 procedure; start cure within one
month (within six month period)], failing which Xenova shall
(at Xenova's discretion):
[*].
If the parties disagree over whether Xenova is entitled to
exercise either of the rights stated in paragraphs (A) and
(B) above, either party may refer its claim to expedited
arbitration under SECTION 14.2.
(b) DRUG
(i) Xenova shall provide an introduction for QLT to [*] so that
QLT may set up its own relationship and agreement with [*]
for the manufacture and supply of Drug for QLT for
development of the Product in the Field in the Development
Territory and for QLT for commercialization of the Product in
the Field in the Territory.
(ii) The parties will consider including in the Definitive
Agreement a provision whereby if QLT is the first to validate
[*] for commercial production of Drug, and Xenova also wishes
to make use of [*] as a Drug manufacturing site, Xenova would
[*].
(c) PRODUCT - QLT and Xenova will each be responsible for the
qualification of their own Product manufacturer and the associated
costs of this activity. Both parties agree that they will use
reasonable commercial efforts to ensure that the manufacturing
processes, in-process analytical methods, release analytical methods
and specifications for the Product are as similar as possible.
*Material has been omitted and filed separately with the Commission.
-10-
3.6 EQUIVALENCY - QLT and Xenova will work together to ensure
equivalency between Product manufactured and used for Initial Development in
Europe and the Territory (by QLT and/or its third party contractors) and Product
manufactured and used for commercial supply in Europe (by Xenova and/or its
third party contractors) and Product manufactured and used for commercial supply
in the Territory (by QLT and/or its third party contractors) and to ensure that
the Product meets mutually agreed upon regulatory specifications.
3.7 RECIPROCAL RIGHT OF INSPECTION - Each of Xenova and QLT shall
have the right, on reasonable written notice to the other, to periodically
inspect:
(a) FACILITIES - The facilities used by the other to manufacture the Drug
and/or the Product, and to the extent possible with the other's
assistance, the facilities of any third party manufacturer of the Drug
and/or the Product; and
(b) RECORDS - The other's records relating to manufacture with respect to
the Drug and/or the Product so that the inspecting party may audit the
other's compliance with GMP and its contractual obligations with
respect to the Drug and the Product.
3.8 DEFINITIVE AGREEMENT - The parties agree that the CMC,
manufacturing and supply provisions set out in this SECTION 3 shall be expanded
upon in the Definitive Agreement, including provisions for:
(a) Manufacture and supply agreement requirements including diligence and
quality requirements and requirements to meet market demand
(collectively "MANUFACTURING AND SUPPLY REQUIREMENTS");
(b) Recalls; and
(c) Reciprocal product liability indemnities according to the respective
manufacturing and marketing responsibilities;
but agree that the provisions of this SECTION 3 set out the parties general
agreement with respect to these matters as they apply to the Drug and the
Product in the Field and in the Development Territory and the Territory.
4. CLINICAL AND REGULATORY DEVELOPMENT.
4.1 GRANT OF RIGHTS - Xenova grants to QLT and QLT shall have the
exclusive rights (without the right to sub-license but with the right to
sub-contract) and be responsible for clinical and other development of the
Product in the Field in the Development Territory as more specifically set out
in this SECTION 4.
4.2 INITIAL DEVELOPMENT IN THE DEVELOPMENT TERRITORY - QLT will
be responsible for conducting clinical and other studies for the development of
the Product and
-11-
for the costs thereof (subject to SECTION 4.8) in the Field in the Development
Territory. The parties agree that QLT's responsibilities under this provision
will require QLT to work diligently and utilize sound and reasonable
scientific, business and medical practice and judgment to:
(a) Carry out the Program in the Development Territory in accordance with
the Development Plan (summary attached as EXHIBIT B; full Plan
including timelines to be delivered to Xenova at the time of signing
the Definitive Agreement);
(b) File with the FDA an NDA for the Product in the Field in the United
States in a timely manner; and
(c) Deliver to Xenova the Registration Package for use by Xenova for
registration purposes in Europe;
(collectively, "INITIAL DEVELOPMENT").
On the earlier to occur of:
(i) QLT spending the amount of the Spending Cap in the Program
and declining to spend further amounts in the Program; and
(ii) The later of:
(A) Delivery by QLT to Xenova of the Registration
Package as set out above; or
(B) Receipt by QLT of first NDA approval for the Product
in the Field;
QLT's rights with respect to Initial Development in Europe shall cease and QLT's
tie-breaking vote on matters to be decided at the Development Committee shall
cease. Other than the spending and diligence provisions set out below, QLT will
have no further obligations to Xenova for development of the Product in the
Field in the Development Territory.
4.3 QLT's CONTRIBUTIONS - Xenova acknowledges and agrees that
QLT, in performing its obligations under this Agreement and the Definitive
Agreement, will not be obligated to expend in excess of [*] (the "SPENDING
CAP") on Initial Development. If QLT exceeds the Spending Cap on Initial
Development, the parties will reasonably discuss in good faith, having regard
to the contributions of each party, some form of cut-back in the Program,
resource re-allocation, alterations in the development exclusivity provisions
for Europe, cost sharing or other arrangement for the continuation of the
Program. This provision will not be subject to (expedited or traditional)
arbitration in the event that the parties do not in good faith come to any
solution hereunder.
4.4 PRIOR PROGRAM COMMITMENTS - Xenova shall be responsible for
and shall satisfy all obligations, liabilities and commitments pertaining to
the development of the Drug
*Material has been omitted and filed separately with the commission.
-12-
and Product existing or arising before the Effective Date. In addition, Xenova
shall be responsible, at its own cost, to complete the following
contractually-committed activities which are ongoing as of the Effective Date:
(a) Finish all ongoing clinical and non-clinical studies (including
completion of the study reports) except the Phase IIb study being
conducted at MD Xxxxxxxx Medical Centre; and
[*].
The parties acknowledge that after the Effective Date they will also consider
the following:
(i) Within 30 days of the Effective Date the parties will discuss
ongoing responsibility for ongoing stability and analytical
studies for the Drug/Product being conducted at [*],
including whether QLT needs or wants to take over the cost
and responsibility for these studies. If appropriate, more
definitive provisions dealing with these studies will be
included in the Definitive Agreement. In any event Xenova
shall not be required to bear any costs incurred in the [*]
studies after the period of 45 days from the Effective Date;
and
(ii) Between the Effective Date and the time of signing the
Definitive Agreement, the parties will review and determine
ongoing academic relationships/collaborations for the
Drug/Product and whether one or both will continue these
academic relationships/collaborations.
4.5 REGULATORY RESPONSIBILITY IN THE TERRITORY
(a) RESPONSIBILITY - During the term of this Agreement and the Definitive
Agreement, QLT will be fully responsible for and shall have the
exclusive right to conduct (whether itself or through one or more
sub-contractors) all regulatory activities and costs with respect to
the development and commercialization of the Product in the Field in
the Territory, including all communication with and responding to the
FDA and other regulatory authorities regarding filings for the
Product in the Field in the Territory.
(b) TRANSFER - In connection with this QLT regulatory responsibility,
Xenova agrees that promptly after the commencement of the Program it
will commence working with QLT to:
(i) Assign and transfer to QLT all regulatory applications,
filings and correspondence in the Field in the Territory for
the Drug and the Product (including the IND in the United
States); and
(ii) Give QLT access to all regulatory applications, filings and
correspondence outside the Field in the Territory for the
Drug and the Product (including the IND in the United
States). QLT will retain ownership of all regulatory
applications and
*Material has been omitted and filed separately with the commission.
-13-
filings for the Drug and the Product in the Field in the
Territory after completion of development of the Product in
the Field in the Territory.
The parties will work together and assist each to effect this assignment and
transfer as quickly as possible. Each party will bear its own cost of this
assignment and transfer.
(c) XENOVA REVIEW - Xenova will have the right to review and comment upon
(but not delay):
(i) The CMC section (or equivalent) of the regulatory filings to
be made by QLT throughout the Territory; and
(ii) Material regulatory filings to be made by QLT throughout the
Territory.
QLT shall consider such comments by Xenova but shall have no
obligation to revise the filings.
(d) XENOVA OBSERVER ROLE - Xenova shall have the right to participate at
Xenova's cost in an observer role in any material meetings to be held
with the FDA and other regulatory authorities in the Territory with
respect to the Product in the Field during the term of this Agreement
and the term of the Definitive Agreement, to the extent that QLT is
not restricted from providing such access by regulatory authorities in
the Territory or by the terms of any licence granted by QLT in respect
of the Territory.
(e) CORRESPONDENCE - Each party will promptly provide the other party with
copies of all material correspondence from or to the FDA and other
regulatory authorities in the Territory concerning the Product.
4.6 REGULATORY RESPONSIBILITY IN EUROPE
(a) RESPONSIBILITY - During the term of this Agreement and the Definitive
Agreement, Xenova will be fully responsible for and shall have the
exclusive right (whether itself or through one or more contractors and
licensees) to conduct all regulatory activities and costs with respect
to applications for marketing approval for the Product in the Field in
Europe, including all communication with and responding to the EMEA
and other regulatory authorities regarding such applications for the
Product in the Field in Europe and establishing sources of commercial
manufacture, marketing and supply of the Product in the Field for the
European market.
(b) QLT ASSISTANCE - Notwithstanding the Xenova responsibility noted
above, QLT agrees that it will:
(i) Cooperate with and assist Xenova (or its licensee) at QLT's
cost (provided that these costs are not unreasonable) in
preparation of the regulatory filings in Europe and will (if
desired by Xenova) participate with Xenova in any meetings
with the EMEA or other European regulatory agencies, such
regulatory filings,
-14-
meetings and other procedures to be at Xenova's cost (unless
requested by QLT); and
(ii) Provide to Xenova the required letter(s) of authorization
with respect to Xenova (or its licensee) having the right to
use and/or access clinical and other data generated by or on
behalf of QLT for the purposes of registration and
commercialization of the Product in the Field in Europe.
(c) ACCESS TO EUROPEAN FILINGS - In order for QLT to carry out its
development responsibilities in Europe as more specifically set out
in SECTION 4.2, Xenova will grant to QLT such access to Xenova's
regulatory applications and filings in Europe for the Drug and the
Product (including the equivalent of the US IND with the EMEA) as is
reasonable and necessary for QLT to carry out the clinical
development contemplated by SECTION 4.2.
(d) QLT OBSERVER ROLE - In the event that Xenova does not invite QLT's
assistance and participation with the regulatory process for the
Product in the Field in Europe, QLT shall have the right to
participate in an observer role at QLT's cost in any material
meetings to be held with the EMEA and other regulatory authorities in
Europe with respect to the Product in the Field during the term of
this Agreement and the term of the Definitive Agreement, to the
extent that Xenova is not restricted from providing such access by
regulatory authorities in Europe or by the terms of any licence
granted by Xenova in respect of the European Territory.
(e) CORRESPONDENCE - Each party will promptly provide the other party with
copies of all material correspondence from or to the EMEA and other
regulatory authorities in Europe concerning the Product.
4.7 NOTICE OF AE REPORTS, ETC. - Xenova and QLT each agree that
it (or its sub-licensee) will promptly notify the other of any information that
it obtains or develops regarding the efficacy or safety of the Drug or the
Product. QLT and Xenova agree to exchange adverse drug reaction reports in a
manner and time frame that will allow compliance with regulatory reporting
requirements, including any requirements of the Act and regulations promulgated
thereunder (and, if applicable, the ICH guidelines) and ongoing safety review
of the Drug and Product. The parties will agree in writing upon standard
operating procedures for reporting these events to regulatory authorities and
to each other.
4.8 PERSONNEL - In connection with the Program, the parties will
make available appropriate scientific, clinical, regulatory, manufacturing,
engineering, executive and other personnel to perform activities under the
Program.
4.9 XENOVA CONTRIBUTION - Xenova will contribute [*].
4.10 DEVELOPMENT COMMITTEE - The Development Committee shall
review and oversee all material activities to be undertaken by the parties
pursuant to the Program.
*Material has been omitted and filed separately with the Commission.
-15-
5. COMMERCIALIZATION AND MARKETING.
5.1 GRANT OF RIGHTS - Xenova grants to QLT and QLT shall have the
exclusive rights and be responsible for commercialization, marketing and sale of
the Product in the Field in the Territory as more specifically set out in this
SECTION 5.
5.2 COMMERCIALIZATION DILIGENCE -
(a) GENERAL STATEMENT - QLT shall work diligently and utilize sound and
reasonable scientific, business and medical practice and judgment in
the commercialization, marketing and sale of the Product in the Field
as appropriate throughout the Territory.
(b) EXCEPTION - In accordance with SECTION 5.2(a) and the other provisions
of this Agreement and the Definitive Agreement, QLT will endeavour to
maximize the overall potential of the Product in the Territory as a
whole. According, and notwithstanding the diligence provision in
SECTION 5.2(a), Xenova acknowledges and agrees that QLT will not be
obligated to file for regulatory approval or launch the Product in
[*] if to do so would adversely affect QLT's efforts in maximizing
Net Sales in the Territory as a whole. If the parties disagree over
whether QLT should file for regulatory approval or launch the Product
in [*], either party may refer the disagreement to expedited
arbitration in accordance with SECTION 14.2. If the arbitrator
determines that launch of the Product in [*] would not adversely
affect QLT's efforts in maximizing Net Sales as a whole, QLT shall
promptly file for approval (if not pending) and launch the Product in
such country within [*] of obtaining regulatory approval, failing
which Xenova may notify QLT at any time within [*] following the [*]
period, that such country is deleted from the list of countries set
out in the definition of "Territory" set out in SECTION 1.31 and this
Agreement and the Definitive Agreement shall be deemed to be amended
accordingly.
(c) COMMERCIALIZATION DILIGENCE ARBITRABLE - If at any time during the
term of the Definitive Agreement Xenova considers that QLT has
without legitimate reason failed to work diligently and utilize sound
and reasonable scientific, business and medical practice and judgment
in the commercialization, marketing and sale of the Product in the
Field as appropriate throughout the Territory, Xenova shall be
entitled to refer the following to expedited arbitration as set out
in SECTION 14.2:
(i) Whether QLT has complied with its obligations under SECTION
5.2(a); and if not
(ii) What specific action QLT should have taken ("SPECIFIC
ACTION") in order to have so complied.
(d) CONSEQUENCES OF COMMERCIALIZATION DEFAULT - If the expedited
arbitration decision determines that QLT has failed to comply with
its obligations under this SECTION 5.2, and if QLT fails to take the
Specific Action within [*] of the arbitration decision,
*Material has been omitted and filed separately with the Commission.
-16-
Xenova will be entitled, by giving written notice to QLT at any time
within the [*] period after the end of the [*] period, to terminate
the Definitive Agreement. Termination by Xenova under this provision
will be termination by Xenova for material breach by QLT under
SECTION 13.3, provided that QLT shall not have any further
opportunity to cure or commence the cure of such breach as described
in that Section.
5.3 MARKETING DILIGENCE -
(a) SUMMARY MARKETING PLAN - Without limiting the diligence provisions in
SECTION 5.2, QLT shall provide to Xenova at least annually during the
term of the Definitive Agreement (in approximately [*] of each year,
commencing in [*]) an updated, written Marketing Plan, describing
past, current and projected activities taken or to be taken by QLT to
bring Product to market in the Field in the Territory and to maximize
the sale of the Product in the Field in the Territory. The parties
acknowledge and agree that QLT has the right and responsibility for
commercialization, marketing and sale of the Product in the Field in
the Territory and therefore QLT shall be entitled from time to time
and at any time to update and amend the Marketing Plan using sound
and reasonable scientific, business, medical and marketing practice
and judgment and also taking into account the prospects for the
Product. Xenova's receipt of or comments (or failure to comment) on
the Marketing Plan shall not be taken as a satisfaction with or a
waiver of QLT's diligence obligations under SECTION 5.2.
(b) DEFINITION OF MARKETING DEFAULT - For the purposes of this SECTION
5.3, "MARKETING DEFAULT" by QLT in the marketing of the Product in
the Field in the Territory during the term of the Definitive
Agreement means:
(i) [*] - Provided that since the Effective Date there has not
been a significant change in oncology marketing practices:
(A) If QLT does not promptly commence and actively
pursue the [*] of a [*] for the Product promptly
after the time of receipt of [*] data that is
supportive of the [*]; or
(B) If after first [*] QLT does not promptly commence
and actively pursue the [*] of [*] for the Product;
or
(C) If following a positive [*] QLT does not promptly
commence and actively pursue the [*] of a [*] for
the Product in accordance with the [*].
(ii) [*] - Provided that since the Effective Date there has not
been a significant change in oncology marketing practices:
(A) If QLT does not have at least [*] who are [*] at the
time of [*] of the Product following [*]; or
*Material has been omitted and filed separately with the Commission.
-17-
(B) If QLT does not [*] or
(C) QLT has failed to conduct any [*] provided for in
the [*] within the [*] provided for in [*]; or
(D) Xenova otherwise considers that QLT has not worked
diligently and utilized sound and reasonable
scientific, business and medical practice and
judgment in its marketing of the Product in the
Field as appropriate throughout the Territory.
(c) MARKETING DILIGENCE ARBITRABLE - If Xenova, acting reasonably,
considers that QLT has committed a Marketing Default, Xenova may
assume the co-promote and manufacture rights more specifically set
out in SECTION 5.3(d) below. If there is any disagreement between the
parties as to whether Xenova is entitled to assume such rights,
either party refer its claim with respect to the Marketing Default to
expedited arbitration under SECTION 14.2.
(d) CONSEQUENCES OF MARKETING DEFAULT - If the arbitration decision
determines that QLT has committed a Marketing Default, Xenova shall
have the right to give written notice (the "MARKETING DEFAULT
NOTICE") to QLT that it wishes to exercise the following rights:
(i) Xenova will have the right (by itself or through any
licensee(s) or sub-contractor(s)) to co-promote and sell the
Product in the Field in the Territory; and
(ii) Xenova will have the right to manufacture and supply Product
for sale by its (or its licensees') representatives in the
Field in the Territory.
The parties agree that if Xenova exercises this co-promote and
manufacture right, they will reasonably negotiate revised financial
terms under the Definitive Agreement and for the Xenova
co-promotion and manufacturing activities (including the
amount of royalties due by QLT, a cost and profit share,
etc.). If the parties are not able to reach agreement on the
revised financial terms under the Definitive Agreement and
for the Xenova co-promotion and manufacturing activities
within 45 days of delivery of the Marketing Default Notice by
Xenova to QLT, the matter shall immediately be submitted to
expedited arbitration as set out in SECTION 14.2.
(e) CO-PROMOTION AND MARKETING RIGHTS - In the event the arbitrator
decides that QLT has committed a Marketing Default, Xenova's
sole remedy shall be limited to its right to exercise the
co-promote and manufacturing right under this SECTION 5.
5.4 ARBITRATION RIGHTS ALTERNATIVE - The parties acknowledge and
agree that the rights to refer a claim to arbitration under SECTIONS 5.2 and
5.3 shall be alternative and not cumulative with respect to the same or
substantially the same set of facts or circumstances (but not any subsequent
occurrence of such facts and circumstances).
*Material has been omitted and filed separately with the commission.
-18-
5.5 COMMERCIALIZATION BY XENOVA
(a) GENERAL - Xenova shall work diligently and utilize sound and reasonable
scientific, business and medical practice and judgment in the
commercialization of the Product in the Field as appropriate outside
the Territory and the ODD Product in the ODD Field as appropriate in
the Territory.
(b) SUB-LICENSE REVENUES - Xenova agrees that in entering into any
relationships for the marketing and distribution of the Product in the
Field in any country outside the Territory and the ODD Product in the
ODD Field in the Territory, it will not use unusual efforts to
structure the marketing and distribution relationship to reduce or
avoid post commercialization payments.
6. ACTIVITIES, NON-COMPETITION, GLOBAL FRANCHISE AND FURTHER
OPPORTUNITIES.
6.1 XENOVA ACTIVITIES - Xenova will not develop or commercialize
the Drug in the ODD Field in the Territory except in conformity with the
provisions set out in SECTION 1.25.
6.2 OTHER XENOVA ACTIVITIES - For the purpose of protecting the
development of the Product in the Field in the Development Territory, Xenova
agrees as follows:
(a) INSIDE FIELD/ROW - For a period of [*] from the Effective Date, Xenova
will not, without the consent of QLT (such consent not to be
unreasonably withheld or delayed), conduct (itself or with or through a
third party or parties) any [*] development activities [*] with respect
to the Drug or the Product for use inside the Field outside the
Development Territory.
(b) OUTSIDE FIELD/INSIDE DEVELOPMENT TERRITORY - For a period of [*] from
the Effective Date, Xenova will not, without the consent of QLT (such
consent not to be unreasonably withheld or delayed), conduct (itself
or with or through a third party or parties) any [*] development
activities [*] with respect to the Drug or the Product for use outside
the Field in the Territory or in the Development Territory. However,
the restrictions set out in this SECTION 6.2(b) shall not apply to the
ODD Field (including outside the Territory) or any ODD activities
outside the Field.
(c) OUTSIDE FIELD/ ROW - For a period of [*] from the Effective Date,
Xenova will not, without the consent of QLT (such consent not to be
unreasonably withheld or delayed), conduct (itself or with or through a
third party or parties) any [*]) development activities [*] with
respect to the Drug or the Product outside the Field outside the
Development Territory. However, the restrictions set out in this
SECTION 6.2(c) shall not apply to the ODD Field (including outside the
Territory) or any ODD activities outside the Field.
*Material has been omitted and filed separately with the Commission.
-19-
6.3 RECIPROCAL NON-COMPETE - During the term of this Agreement
and the Definitive Agreement, neither QLT nor Xenova will conduct (itself or
with or through a third party or parties) any material development or
commercialization activities in the Territory with respect to any [*] for use
in cancer other than the Drug or the Product.
6.4 GLOBAL FRANCHISE - The parties acknowledge that in the
development and commercialization of the Product in accordance with this
Agreement and the Definitive Agreement, the parties will endeavor to maximize
the overall global potential of the Product and will endeavor to ensure that
any sub-licenses or third party contracts entered into by the parties will
also have this same goal of maximization of the overall global franchise
for the Product.
6.5 NOTICE AND DISCUSSION OF OTHER OPPORTUNITIES - If Xenova
intends at any time after the Effective Date to develop the Drug or Product
outside the Field (on its own or with or through a third party or parties), it
will give written notice of this intention to QLT and discuss with QLT the
possibility of a relationship with QLT for this additional development and use
of the Drug or Product.
6.6 CROSS-OVER USE AND CROSS PRICING PROTECTION - Except as set
out in SECTION 6.2 and below in this SECTION 6.6, subject to giving notice as
described in SECTION 6.5 above, Xenova shall be free to pursue development and
commercialization opportunities for the Drug or the Product outside the Field
(on its own or with or through its licensees, sub-licensees, or any third party
or parties appointed by Xenova) it being intended that any such development and
commercialization shall not result in or otherwise cause Cross-Over Use or
Cross-Pricing Risk. Where either party in good faith believes that any such
development and commercialization (whether commenced or proposed) have resulted
or caused or would result in or cause Cross-Over Use or Cross-Pricing Risk, the
parties agree to discuss and seek to resolve any such issues in a
mutually-acceptable manner. If the parties disagree as to whether there exists
or may be potential Cross-Over Use or Cross Pricing Risk or they can not
otherwise resolve these issues so as to avoid the Cross-Over Use or Cross
Pricing Risk in a mutually acceptable manner, then either:
[*]
6.7 CONSEQUENCES OF ARBITRATION - If the arbitration decision
under SECTION 6.6(a) determines that the additional development and
commercialization does or would result (as the case may be) in Cross-Over Use
or Cross-Pricing Risk then Xenova shall cease pursuing or not pursue, as the
case may be, the additional development and commercialization opportunity.
7. CONFIDENTIALITY AND USE OF INFORMATION.
7.1 CONFIDENTIALITY - Each party will, for the term of this
Agreement (and for the term of the Definitive Agreement) and for ten years after
its expiration or termination for any
*Material has been omitted and filed separately with the Commission.
-20-
reason (or the expiration or termination of the Definitive Agreement for any
reason), keep confidential and not disclose to others, and use only as
permitted hereunder in connection with the Program or as otherwise permitted
under this Agreement or the Definitive Agreement, all of the other party's
Confidential Information and all Program Information that is owned by the other
party. Notwithstanding the foregoing, such information may be:
(a) REQUIRED FOR REGULATORY FILINGS - Disclosed to government agencies and
others where such information may be required to be included in
regulatory filings permitted under the terms of this Agreement or the
Definitive Agreement;
(b) UNDER CONFIDENTIALITY - Provided to third parties under agreements
including appropriate confidentiality provisions for consulting, market
research, manufacturing, development, and clinical testing with respect
to the Product and similar activities under the Program;
(c) PUBLISHED IF APPROVED - Published if and to the extent such
publication has been approved in writing by QLT and Xenova; or
(d) REQUIRED BY LAW - Disclosed to the extent required by applicable laws
or regulations or as ordered by a court or other regulatory body having
competent jurisdiction.
In each of the foregoing cases, the other party will use diligent efforts to
limit the disclosure and maintain confidentiality to the extent possible and to
inform the other party in good time of any intended or actual disclosure.
7.2 XENOVA USE OF INFORMATION - Subject to SECTION 6.6, QLT shall
provide to Xenova and Xenova shall have the right to use and cross-reference
QLT's regulatory filings and clinical data (including Phase IV data) for the
Drug and the Product as well as all Program Information and any other data
which would enable Xenova to increase the Net Proceeds obtained from
commercialization of the Drug or the Product outside the Territory for the sole
purpose of developing and/or commercializing the Drug and/or the Product:
(a) Inside the Field but outside the Territory (subject to QLT's exclusive
rights under SECTION 4, for as long as those rights continue); and/or
(b) Outside the Field, including inside or outside of the Territory;
whether by itself or through any licensee(s). Xenova shall provide compensation
to QLT for the use of QLT's Program Information as described in SECTION 9.7.
7.3 QLT USE OF XENOVA INFORMATION - If Xenova conducts any
studies (to the extent not restricted pursuant to SECTION 6):
(a) Inside the Field but outside the Territory; or
(b) Outside the Field, whether inside or outside of the Territory;
-21-
in relation to the Drug or the Product or the use or manufacture thereof
including in the field of oral drug delivery ("XENOVA INDEPENDENT PROGRAM"), to
the extent that Xenova is not restricted by any third party agreements, QLT
shall have the right to use and to cross-reference, whether by itself or
through any licensee(s) or subcontractor(s), and Xenova shall provide to QLT,
Xenova's clinical data (including Phase IV data) and regulatory filings for the
Drug and the Product, as well as Program Information developed or acquired by
Xenova under any Xenova Independent Program and any other data which would
enable QLT to increase the Net Sales obtained from commercialization of the
Product inside the Field inside the Territory (collectively, "AVAILABLE XENOVA
INDEPENDENT PROGRAM INFORMATION") for the purpose of commercialization of the
Drug or the Product in the Field in the Territory.
7.4 THIRD PARTY ACCESS - Each of QLT and Xenova will use
reasonable endeavors to ensure that any licensee or third party or parties that
it contracts with (where the licensee or third party may control the clinical
data, filings, Program Information and Information from any Xenova Independent
Program) will allow QLT or Xenova, as the case may be, to share these data,
filings, Program Information and Information with the other party as
contemplated by SECTIONS 7.3 and 7.4.
7.5 USE OF QLT INFORMATION IN ODD - Notwithstanding any provision
of this Agreement and the Definitive Agreement, and in recognition of the ODD
Field:
(a) QLT shall have no obligation to provide to Xenova, for the purpose of
development and commercialization of the ODD Product, QLT's regulatory
filings and clinical data (including Phase IV data) for the Drug and
the Product as well as any or all QLT Program Information; and
(b) Xenova shall not have any right of access or right to use or
cross-reference, for the purpose of development and commercialization
of the ODD Product, QLT's regulatory filings and clinical data
(including Phase IV data) for the Drug and the Product as well as any
or all QLT Program Information.
However the provisions of this SECTION 7.5 shall not entitle QLT to withhold
from Xenova any regulatory filings and clinical data (including Phase IV data)
for the Drug and the Product as well as any or all QLT Program Information
which in the absence of this SECTION 7.5 QLT would be obliged to provide to
Xenova and which Xenova requires for the purpose of development and
commercialization of Drug and Product in the fields and territories described
in SECTION 7.2(a) and (b).
8. OWNERSHIP; ADDITIONAL TECHNOLOGY; LICENSES.
8.1 OWNERSHIP -
(a) DRUG and MANUFACTURING INFORMATION - Except as set out below at this
SECTION 8.1(a), Program Information will be the property of Xenova if
and to the extent related
-22-
solely to the Drug itself, or the manufacture or use thereof. As
between Xenova and QLT, Available Xenova Independent Program
Information shall be the property of Xenova. Notwithstanding the
foregoing, if manufacturing processes having application to the Drug
and/or the Product are discovered or invented by QLT under this
Agreement and the Definitive Agreement, QLT shall own the Program
Information, but (subject to SECTION 6) will grant to Xenova a
non-exclusive license (if the manufacturing processes also have
application beyond the Drug and/or the Product or an exclusive license
(otherwise) to use the discovery or invention with the Drug and
Product:
(i) Inside the Field, but outside the Territory; and
(ii) Outside the Field including inside or outside the Territory.
(b) OWNERSHIP OF OTHER PROGRAM INFORMATION - All other Program Information
will be the property of the party that generated it but will be made
available to the other Party in accordance with the provisions of this
Agreement or the Definitive Agreement.
8.2 ADDITIONAL USEFUL TECHNOLOGY - The Definitive Agreement shall
include provisions to be agreed relating to the situation where either party
wishes to in-license additional technology.
8.3 COMPULSORY LICENSES - If appropriate, the parties agree that
the Definitive Agreement will contain provisions dealing with compulsory license
situations that would require an equitable adjustment in royalties.
8.4 GRANT OF LICENSES -
(a) LICENSE FOR THE TERRITORY - Xenova hereby grants to QLT an exclusive
license (including as against Xenova) for the Territory, to develop,
make, have made, use, sell, have sold, offer for sale, export (from one
part of the Territory to another) or import the Product (including the
Drug) in the Field, including an exclusive license in the Field and in
the Territory in respect of the Drug and Product under the patents
listed in Exhibit A (the "XENOVA PATENTS") and Program Information
owned or controlled by Xenova (as at the Effective Date and developed
inside or outside the Territory during the term of this Agreement and
the Definitive Agreement) to the extent necessary or useful for such
purpose, all on the terms set forth in this Agreement and in the
Definitive Agreement. Certain exceptions to this exclusive license
(for example, on a Marketing Default by QLT), will be set out in the
Definitive Agreement. For greater clarity, nothing in this Agreement
shall prevent Xenova from applying for or prosecuting patents, or
entering into agreements with third parties, in relation to the Drug or
Product (a) outside the Territory, or (b) outside the Field, provided
that any activities conducted under such agreements shall not be in
breach of any license granted by Xenova under this Agreement or the
Definitive Agreement.
-23-
(b) RIGHT TO SUB-LICENSE IN THE TERRITORY - QLT shall have the right to
sublicense the rights granted hereby (without the right to sub-license
for development but with the right to sub-contract development) on the
terms and conditions upon notice to Xenova and subject to the
provisions set out below in SECTIONS 8.4(c) and (d).
(c) RIGHT TO SUB-LICENSE MARKETING
(i) If QLT intends to sub-license its marketing rights under this
Agreement and the Definitive Agreement, QLT shall give written
notice of this intention to Xenova and [*]; and
(ii) Otherwise, provided QLT has given written notice to and discussed
with Xenova as set out in clause (i) above, QLT may sublicense
its rights hereunder to a non-Affiliate third party with the
consent of Xenova, which consent shall not be unreasonably
withheld or delayed. The criteria to be considered by Xenova
when determining whether to give such consent shall include
whether the third party is appropriately qualified,
experienced and competent in oncology marketing in the Territory
and has the necessary resources to do so
(iii) If there is any disagreement between the parties in relation to
the withholding of such consent, the disagreement may be referred
to expedited arbitration in accordance with SECTION 14.2.
(d) RIGHT TO SUB-LICENSE MANUFACTURING - At any time during the term of
this Agreement and the term of the Definitive Agreement that QLT has
manufacturing and supply rights, QLT may sub-license those rights to a
third party selected by QLT, subject to consent by Xenova, which
consent shall not be unreasonably withheld or delayed. The criteria to
be considered by Xenova when determining whether to give such consent
shall include whether the third party:
(i) Is appropriately qualified in the Territory;
(ii) Is competent to (and has been approved by the relevant regulatory
body in the appointing party's territory) to provide Drug and
Product (as the case may be) to an appropriate quality; and
(iii) Has the manufacturing capacity to provide Drug or Product (as the
case may be).
If there is any disagreement between the parties in relation to the withholding
of such consent, the disagreement may be referred to expedited arbitration in
accordance with SECTION 14.2.
(e) SUB-LICENSING - The Definitive Agreement will include further terms for
sub-licensing.
(f) EUROPE - Xenova hereby grants to QLT an exclusive license (except as
otherwise set out in this Agreement, and including as against Xenova)
during the Initial
*Material has been omitted and filed separately with the commission.
-24-
Development Phase for Europe, to develop, make, have
made and use the Product (including the Drug) in the Field to the
extent necessary for Initial Development, including an exclusive
license in the Field and in Europe under the Xenova Patents, all on the
terms set forth in this Agreement and in the Definitive Agreement.
(g) QLT LICENSE - QLT hereby grants to Xenova an exclusive license (except
as otherwise set out in this Agreement, and including as against QLT)
for (i) outside the Territory whether inside or outside the Field, and
(ii) inside the Territory, for use outside the Field (and inside the
Field if Xenova exercises its rights (if any) under SECTION 5.3(d)),
to develop, make, have made, use, sell, have sold, offer for sale,
import or export the Product (including the Drug), including an
exclusive license under any and all patents (the "QLT PATENTS"),
know-how and Program Information owned or controlled by QLT (as at the
Effective Date and during the term of this Agreement and the Definitive
Agreement) which are necessary or useful for such purpose, all on the
terms set forth in this Agreement and in the Definitive Agreement.
9. DEFINITIVE AGREEMENT.
9.1 DEFINITIVE AGREEMENT -
(a) NEGOTIATIONS - Following the Effective Date, the parties agree to
enter promptly into good faith negotiations to settle the Definitive
Agreement, consistent with the terms and conditions of this
Agreement, as supplemented by such additional terms, conditions and
other provisions or amendments to this Agreement as may be mutually
agreed upon by the parties. All of the terms, conditions and other
provisions of the Definitive Agreement, whether settled by the
parties or by expedited arbitration, shall be consistent with and not
in conflict with any of the terms and conditions of this Agreement.
QLT will not be required to pay any additional consideration for any
rights granted under this Agreement or the Definitive Agreement,
other than as set forth in this Agreement.
(b) XENOVA TEAM - Xenova agrees that [*] from Xenova, as well as [*]
(Xenova's solicitor) will comprise the Xenova negotiating team to
negotiate and settle the Definitive Agreement.
(c) QLT TEAM - QLT agrees that [*] from QLT, as well as [*] (QLT's
solicitor) will comprise the QLT negotiating team to negotiate and
settle the Definitive Agreement.
(d) ARBITRATION - The parties will endeavor to negotiate, settle and
sign the Definitive Agreement within [*] after the Effective Date.
However, if the parties have not settled and signed the Definitive
Agreement within [*] after Effective Date, either party may assert to
the other that it desires that one or more of the terms being
negotiated in accordance with this SECTION 9.1 be resolved by
expedited arbitration pursuant to SECTION 14.2. Such party shall do
so by giving the other party written notice to that effect and
specifying those issues. As set out in SECTION 14.2(b), the process
for resolution will commence with the Chief Executive Officers (or
another member of
*Material has been omitted and filed separately with the Commission.
-25-
senior management) of each party and if not resolved at that level,
shall be resolved by binding expedited arbitration as set out in
SECTION 14.2. The decision of the arbitrator shall bind both parties
as fully as though such terms and conditions were included in this
Agreement, provided that the arbitrator specifies that he/she has
concluded such terms, conditions, provisions or amendments are
consistent with and do not conflict with any of the terms and
conditions of this Agreement.
9.2 UPFRONT PAYMENT - In partial consideration for Xenova's
commitments under this Agreement and the Definitive Agreement, QLT will pay
Xenova an upfront nonrefundable, non-creditable fee of US$10 MILLION (by wire
transfer into an account designated by Xenova within ten business days after
the Effective Date
9.3 MILESTONE EVENTS AND PAYMENTS - The Definitive Agreement will
contain the following provisions with respect to milestone events and payments,
with total milestone payments capped at US$50 MILLION:
(a) First US NDA filing - [*].
(b) US FDA Approval -
(i) First indication - [*]; and
(ii) Subsequent indications - [*] per approval (if first line
approval) and [*] per approval ([*]).
9.4 CURRENCY OF PAYMENT -
(a) AGREEMENT - The upfront and milestone payments set out in this
Agreement and the Definitive Agreement are and shall be respectively
denominated in US dollars.
(b) CURRENCY CHOICE - At least 10 days prior to the due date of the upfront
or any milestone payments to be made by QLT to Xenova under this
Agreement and the Definitive Agreement, Xenova may give written notice
to QLT as to whether Xenova may wish to receive the payment in US
dollars or British pounds sterling (or a combination thereof). If
Xenova does not give this currency choice notice to QLT, QLT will make
the payment in US dollars.
(c) FOREIGN EXCHANGE - If Xenova elects to receive the upfront or any
milestone payment or part thereof in British pounds sterling, Xenova
shall notify QLT in writing on the day it wishes to receive the payment
(no earlier than the due date) and QLT shall make that payment to
Xenova in British pounds sterling, where the exchange rate for US
dollars to British pounds sterling will be the buying rate for
British pounds sterling quoted by QLT's primary banker.
*Material has been omitted and filed separately with the Commission.
-26-
9.5 ROYALTIES - The Definitive Agreement will contain the
following provisions for the payment of royalties on cumulative annual sales of
(Finished) Products in the Field in the Territory:
(a) Annual Net Sales under [*] - 15% of Net Sales.
(b) Annual Net Sales between [*] - [*] of incremental Net Sales.
(c) Annual Net Sales over [*] - 22% of incremental Net Sales.
(d) All royalties under this SECTION 9.4 will be paid in US dollars.
9.6 TERM FOR THE PAYMENT OF ROYALTIES - During the term of this
Agreement and the Definitive Agreement, the term for payment of royalties shall
be:
(a) If there is a valid claim in the country of sale at the date of first
commercial sale, royalties are due for the life of the valid claim.
(b) If there is no valid claim in the country of sale at the date of first
commercial sale, royalties are due for 10 years from the date of first
commercial sale.
(c) [*].
9.7 COMPENSATION FOR USE OF PROGRAM INFORMATION - Xenova will
provide compensation to QLT for use of "Program Information" as follows:
(a) EUROPE - Xenova will pay to QLT [*] that Xenova receives from the sale
of Products in the Field in Europe after regulatory approval has been
obtained;
(b) ROW - Xenova will pay to QLT [*] that Xenova receives from the sale of
Products in the Field outside the Development Territory after
regulatory approval has been obtained; and
(c) ODD - Xenova will pay to QLT [*] that Xenova receives from the sale of
the Drug in the ODD Field in the Territory after regulatory approval
has been obtained.
9.8 REPORTS AND AUDITS - The Definitive Agreement will contain
reporting and audit provisions typical of license agreements of the nature of
the Definitive Agreement, including:
(a) QLT DEVELOPMENT PROGRESS REPORTS - During the term of the Definitive
Agreement, QLT will deliver annual progress reports to Xenova on
development of the Drug and Product in the Development Territory (in
addition to the discussions and review at the Development Committee),
such annual reports to summarize QLT's progress with development of the
Drug and the Product in the past year and its plans and budgets for the
Product in the Field in the Territory in the coming year as they become
available.
*Material has been omitted and filed separately with the Commission.
-27-
(b) QLT MILESTONE AND ROYALTY REPORTS - After first NDA approval of the
Product in the Field in the Territory and for the remainder of the term
of the Definitive Agreement, QLT shall submit quarterly payment reports
to Xenova, such reports to include:
(i) A report of milestone payments owing to Xenova; and
(ii) An accounting of Net Sales (where reasonably available on a
country-by-country basis) and a calculation of the royalties
owing to Xenova.
(c) XENOVA NET PROCEEDS REPORTS - After first regulatory approval of the
Product in the Field outside the Territory and, after first regulatory
approval of the ODD Product in the ODD Field in the Territory, as the
case may be, and for the remainder of the term of the Definitive
Agreement, Xenova shall submit quarterly payment reports to QLT, such
reports to include an accounting of Net Proceeds (where reasonably
available on a country-by-country basis) and a calculation of monies
owing to QLT under SECTION 9.7.
(d) RECIPROCAL AUDIT RIGHTS - Not more than once per year during the term
of the Definitive Agreement, each of QLT and Xenova shall have the
right to audit (through independent auditors) the other's books and
records to determine the completeness and accuracy of the reports and
payments required to be made under the Definitive Agreement.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS.
10.1 XENOVA - Xenova represents, warrants and covenants to QLT
that:
(a) AUTHORITY - Xenova has full right, power and authority to enter into
this Agreement and the Definitive Agreement and to grant the licenses
set forth herein;
(b) NO CONFLICTING AGREEMENTS - Xenova has not entered and during the term
of this Agreement (and the term of Definitive Agreement) will not enter
into any agreement, arrangement or commitment regarding the Drug or the
Product that is inconsistent with this Agreement;
(c) OWNERSHIP AND RIGHTS - Except as set forth on EXHIBIT C hereto, Xenova
holds all right, title and interest in and to the patents listed in
EXHIBIT A, free of any rights or encumbrances of third parties which
would impact QLT's rights hereunder; and
(d) SUFFICIENCY OF GRANTS - As far as Xenova is aware (but without
necessarily having conducted any searches or investigations), and
except as set forth on EXHIBIT C hereto, no further rights of Xenova
other than those granted to QLT hereunder are required for and no
third party patent or other proprietary right would be infringed by
the development and commercialization of the Drug or the Product in
the Territory as contemplated by this Agreement.
10.2 QLT - QLT represents, warrants and covenants to Xenova that:
-28-
(a) AUTHORITY - QLT has full right, power and authority to enter into this
Agreement and the Definitive Agreement and to grant the licenses set
forth herein; and
(b) NO CONFLICTING AGREEMENTS - QLT has not entered and during the term of
this Agreement (and the term of Definitive Agreement) will not enter
into any agreement, arrangement or commitment regarding the Product
that is inconsistent with this Agreement and the Definitive Agreement.
10.3 OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS - The parties
will negotiate to include in the Definitive Agreement such other
representations, warranties and covenants from each of the parties as are
reasonable and standard for a license of the nature of the Definitive Agreement.
11. PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT.
11.1 XENOVA PATENTS - PROSECUTION AND MAINTENANCE -
(a) XENOVA'S RESPONSIBILITY - During the term of this Agreement and the
Definitive Agreement, except as set out below, Xenova shall be
responsible for, in its sole discretion and at its sole expense,
prosecution and maintenance of the Xenova Patents.
(b) REVIEW - QLT shall have the right to:
(i) Review all pending applications, patents, other proceedings,
communications, reports and observations relating to the Xenova
Patents; and
(ii) Make recommendations to Xenova concerning the Xenova Patents.
Xenova shall reasonably consider such comments but shall have no
obligation to revise the filings or other communications.
(c) DISCLOSURE - Xenova shall promptly disclose to QLT and keep QLT fully
informed and/or supply QLT in a timely fashion with:
(i) The complete texts of all Xenova Patents and all relevant patent
applications filed and/or controlled by Xenova; and
(ii) All information received concerning:
(A) The institution or possible institution of any
interference, opposition, re-examination, reissue,
revocation, nullification or any official proceeding
involving any Xenova Patents; and
(B) The course of patent prosecution or other proceedings
related to any Xenova Patents;
-29-
including by providing QLT with copies of substantive communications, search
reports and third-party observations submitted to or received from patent
offices.
(d) NOTICE TO QLT -
(i) Xenova shall notify QLT in writing of its intentions with regard
to ceasing prosecution or maintenance of patent protection for
any Xenova Patent in any country in the Territory in reasonable
time for QLT to continue prosecuting or maintaining the patent
protection at its own discretion and expense, with a rebuttable
presumption that less than 45 days notice is not sufficient
notice; and
(ii) Xenova will execute such documents and otherwise cooperate with
QLT as may be necessary (but without significant expense to
Xenova) to perfect and maintain the patent protection that Xenova
is ceasing and QLT elects to continue pursuant to clause (i)
above.
(e) NO ROYALTY - In the event that QLT elects to continue prosecution or
maintenance of a patent or patent application forming part of the
Xenova Patents in any country of the Territory, no royalty obligations
shall accrue with respect to sales of Products in that country unless
Xenova agrees to pay the costs of such prosecution or maintenance.
11.2 QLT PATENTS - PROSECUTION AND MAINTENANCE -
(a) QLT'S RESPONSIBILITY - During the term of this Agreement and the
Definitive Agreement, except as set out below, QLT shall be responsible
for, in its sole discretion and at its sole expense, prosecution and
maintenance of the QLT Patents.
(b) REVIEW - Xenova shall have the right to:
Review all pending applications, patents, other proceedings,
communications, reports and observations relating to the QLT Patents; and
Make recommendations to QLT concerning the QLT Patents. QLT shall
reasonably consider such comments but shall have no obligation to revise the
filings or other communications.
(c) DISCLOSURE - QLT shall promptly disclose to Xenova and keep Xenova
fully informed, and/or supply Xenova in a timely fashion with:
(i) The complete texts of all QLT Patents, and
(ii) All information received concerning:
(A) The institution or possible institution of any
interference, opposition, re-examination, reissue,
revocation, nullification or any official proceeding
involving any QLT Patents; and
-30-
(B) The course of patent prosecution or other proceedings related
to any QLT Patents;
including by providing Xenova with copies of substantive communications, search
reports and third party observations submitted to or received from Patent
offices.
(d) NOTICE TO XENOVA -
(i) QLT shall notify Xenova in writing of its intentions with regard
to ceasing prosecution or maintenance of patent protection for any
QLT Patent in any country in the Territory in reasonable time for
Xenova to continue prosecuting or maintaining the patent
protection at its own discretion and expense, with a rebuttable
presumption that less than 45 days notice is not sufficient
notice; and
(ii) QLT will execute such documents and otherwise cooperate with
Xenova as may be necessary (but without significant expense to
QLT) to perfect and maintain the patent protection that QLT is
ceasing and Xenova elects to continue pursuant to clause (i)
above.
11.3 XENOVA PATENTS - INFRINGEMENT -
(a) NOTICE - Each of QLT and Xenova agrees that during the term of this
Agreement and the Definitive Agreement it will promptly notify the
other in the event that it becomes aware of any potential infringement
of the Xenova Patents.
(b) QLT TO PROSECUTE - QLT agrees that during the term of this Agreement
and the Definitive Agreement it will prosecute infringers of the Xenova
Patents or otherwise act to eliminate infringement of the Xenova
Patents by third parties in the Territory when, in the sole judgment
and discretion of QLT, such action is necessary, proper and justified
in relation to the Product in the Field in the Territory. In the event
litigation is initiated, the costs of litigation shall be funded as
follows:
(i) Subject to clause (ii) below [*] of the costs of litigation shall
be borne by QLT; and
(ii) [*] of the costs of litigation shall be borne by Xenova, subject
to the following:
(A) Xenova's funding obligations will be satisfied by QLT
withholding royalties otherwise due to be paid to Xenova
under the Definitive Agreement (and Xenova will not be
obligated to make out-of-pocket expenditures to satisfy this
funding obligation); and
(B) In no event will Xenova's funding obligations under this
SECTION 11.3(B) exceed [*] in any year.
(c) The costs of the litigation shall be deemed to be QLT's actual third
party expenses directly related to or incurred in connection with the
alleged infringement. At such
*Material has been omitted and filed separately with the Commission.
-31-
time as the infringement ceases (whether voluntarily, by settlement or
by court order), QLT's full royalty obligations shall resume. Any
recovery, lump-sum settlement or royalty payment made to QLT by the
alleged infringer shall be treated as follows:
(i) XENOVA REIMBURSED - First, Xenova shall be reimbursed in the
amount of any withheld royalties;
(ii) QLT REIMBURSED - Second, QLT shall be reimbursed for all actual
third party expenses directly related to or incurred in connection
with the alleged infringement for which royalty payments were not
withheld; and
(iii) REMAINDER - Third, any remaining amount shall be treated as if it
were sales of Product, with Xenova receiving a royalty on the
remaining amount as set out in this Agreement and QLT retaining
the balance.
(d) QLT DOES NOT PROSECUTE - If QLT elects not to bring or prosecute
infringement litigation pursuant to this SECTION 11.3 it will promptly
notify Xenova and Xenova may elect to bring suit against the alleged
infringer at its sole expense, and in its sole discretion. In this
case, any recovery, lump-sum settlement or royalty payment made by
the alleged infringer shall be retained by Xenova.
11.4 QLT PATENTS - INFRINGEMENT -
(a) QLT'S RESPONSIBILITY - QLT agrees that during the term of this
Agreement and the Definitive Agreement, it will, at QLT's sole cost
and expense, protect its interests in the QLT Patents from
infringement by third parties and that it will prosecute infringers
or otherwise act to eliminate infringement when, in the sole judgment
and discretion of QLT, such action is necessary, proper and justified.
(b) XENOVA'S ASSISTANCE - Xenova agrees that during the term of this
Agreement and the Definitive Agreement it will notify QLT if it becomes
aware of any infringement of the QLT Patents and agrees that it will,
at QLT's request and expense, reasonably assist QLT to prevent or
discontinue the infringement.
11.5 THIRD PARTY PATENTS - Notwithstanding any other royalty
payment provision of this Agreement or the Definitive Agreement, in
the event that any activities licensed under this Agreement or the
Definitive Agreement are found to infringe the intellectual property
rights of a third party, and result in the payment of royalties or
other compensation by QLT (or a QLT sub-licensee) to the third party,
QLT may reduce its royalty payments to Xenova, the reduction to be in
the amount of the royalties or other compensation paid to the third
party, up to a maximum of [*] of the royalties payable to Xenova
under the Definitive Agreement with respect to the country(ies) in
the Territory for which payments are being made to the third party.
Provided that such reductions shall only be made where the third
party liability arises from the use of the inventions claimed in the
Xenova Patents and shall not be made in respect of any other
inventions, improvements or other features that QLT
*Material has been omitted and filed separately with the Commission.
-32-
chooses to incorporate into the Product.
12. TRADEMARK.
12.1 During the term of this Agreement and the Definitive
Agreement, QLT shall be responsible for, in its sole discretion and at its sole
expense, origination, selection, application, prosecution, registration and
maintenance of one or more trademarks and trade-names under which the Product
will be sold and distributed in the Field in the Territory. QLT will at
Xenova's request add, or cause to be added, a marking in a form proposed by
Xenova and reasonably acceptable to QLT on the packaging of all Products sold
by QLT, its Affiliates or sub-licensees hereunder, to indicate the connection of
Xenova as licensor of the Product, provided that such marking shall not cause
any contravention of labeling or packaging laws or regulations.
13. TERM AND TERMINATION.
13.1 TERM - This Agreement will come into effect on the Effective
Date and will remain in effect until superseded by the executed Definitive
Agreement. The term of the Definitive Agreement shall be, in respect of each
country in the Territory, the life of the patents in such country or 10 years
from first commercial sale of the Product in such country, whichever is longer.
13.2 EARLY TERMINATION BY QLT -
(a) BEFORE FIRST COMMERCIAL SALE - At any time before the first commercial
sale of Product in the Territory, QLT may terminate this Agreement and
the Definitive Agreement upon not less than 90 days' written notice to
Xenova; provided, however, that before delivering any such termination
notice within the [*] after the Effective Date, QLT shall first offer
to discuss with Xenova QLT's intention to terminate and the reasons
therefore.
(b) AFTER FIRST COMMERCIAL SALE - At any time after the first commercial
sale of Product in the Territory, QLT may terminate this Agreement and
the Definitive Agreement upon not less than 180 days' written notice to
Xenova.
(c) ADVERSE CHANGE - Notwithstanding the foregoing, if there is a
significant adverse change or event in the safety or efficacy profile
of the Drug or Product, QLT may terminate this Agreement and the
Definitive Agreement at any time upon 60 days' written notice to
Xenova.
(d) MATERIAL BREACH - At any time during the term of this Agreement and the
Definitive Agreement, QLT may terminate this Agreement and the
Definitive Agreement due to Xenova's material breach of any of its
material obligations upon not less than 45 days' written notice to
Xenova. Xenova shall have the opportunity to:
*Material has been omitted and filed separately with the Commission.
-33-
(i) Cure the breach within the 45-day period; or
(ii) If the breach is not capable of cure within the 45-day cure
period, to commence to diligently pursue a cure within this 45-day
cure period;
to avoid termination of this Agreement and the Definitive Agreement (unless the
material breach, by its nature, is incurable, in which case this Agreement and
the Definitive Agreement may be terminated immediately).
13.3 EARLY TERMINATION BY XENOVA -
(a) MATERIAL BREACH - At any time during the term of this Agreement and the
Definitive Agreement, Xenova may terminate this Agreement and the
Definitive Agreement due to QLT's material breach of any of its
material obligations upon not less than 45 days' written notice to
QLT. QLT shall have the opportunity to:
(i) Cure the breach within the 45-day period; or
(ii) If the breach is not capable of cure within the 45-day cure
period, to commence to diligently pursue a cure within this 45-day
cure period;
to avoid termination of this Agreement and the Definitive Agreement (unless the
material breach, by its nature, is incurable, in which case this Agreement and
the Definitive Agreement may be terminated immediately).
(b) MARKETING DEFAULT - The parties acknowledge and agree that a Marketing
Default does not, of itself, constitute a material breach by QLT of a
material obligation under the Definitive Agreement and that the
consequences of a Marketing Default are as set out in SECTION 5.3(d).
13.4 BANKRUPTCY - If during the term of this Agreement and the
Definitive Agreement either party becomes bankrupt or insolvent, petitions any
judicial body under any bankruptcy or insolvency laws, or has any proceeding
commenced against it for insolvency, bankruptcy or liquidation (or any analogous
action occurs in any jurisdiction) the other party may terminate this Agreement
and the Definitive Agreement by providing 10 days written notice to the other.
13.5 XENOVA LICENSES IN THE CASE OF CERTAIN EARLY TERMINATIONS -
If:
(a) CONVENIENCE - QLT terminates this Agreement and the Definitive
Agreement under any of SECTIONS 13.2 (a) TO (c); or
(b) MATERIAL BREACH - Xenova terminates this Agreement and the Definitive
Agreement under SECTION 13.3(a) due to a material breach by QLT (which
is not cured or commenced to be cured by QLT or is not capable of cure,
as applicable) or default by QLT under SECTION 13.4;
-34-
then the following shall occur:
(i) If the termination is pre-first NDA approval of the Product in the
Field in the Territory, QLT will grant to Xenova an
irrevocable, royalty-free, worldwide, exclusive license (or
non-exclusive license in the case of any QLT manufacturing
processes if Xenova's license to such processes prior to
termination was non-exclusive under SECTION 8.1(a)), with the
right to sublicense, to any Program Information owned by QLT,
the QLT Patents, solely to develop and commercialize the Drug
and/or Product in the Field and will assign and transfer to
Xenova the trademarks and trade-names (including all goodwill
associated therewith) and regulatory filings in connection with
Drug and/or Product in the Field; and
(ii) If the termination is post-first NDA approval of the Product in
the Field in the Territory, QLT will grant to Xenova an
irrevocable, royalty bearing, worldwide, exclusive license, with
the right to sublicense, to any Program Information owned by QLT,
the QLT Patents, solely to develop and commercialize the Drug
and/or Product in the Field and will assign and transfer to Xenova
the trademarks and trade-names (including all goodwill associated
therewith) and regulatory filings in connection with Drug and/or
Product in the Field. In this case the royalty to be paid by
Xenova to QLT in consideration for the work done by QLT prior to
the effective date of termination will be agreed to by the parties
negotiating in good faith, provided that if the parties do not
agree to a new lower royalty rate within 45 days after the
effective date of termination, the matter will be referred to
expedited arbitration under this Agreement and the Definitive
Agreement and provided further that if the termination arises from
QLT's failure to perform its diligence obligations underthis
Agreement and the Definitive Agreement, the above royalty back to
QLT will be capped at an amount equal to QLT's development and
commercialization costs with respect to the Product in the Field.
13.6 QLT LICENSE IN THE CASE OF CERTAIN EARLY TERMINATIONS - If QLT
terminates this Agreement or the Definitive Agreement due to material breach by
Xenova of a material provision of this Agreement or the Definitive Agreement,
all rights and licenses granted by Xenova to QLT under this Agreement and the
Definitive Agreement shall continue as exclusive (or non-exclusive, as the case
may be) royalty bearing licenses from Xenova to QLT on the terms and conditions
set out in this Agreement and the Definitive Agreement, except that the royalty
rates set out therein shall be reduced, as agreed to by the parties negotiating
in good faith, with the royalty rates set out in this Agreement and the
Definitive Agreement being the maximum royalty rates available, provided that if
the parties do not agree to a new lower royalty rate within 45 days after the
effective date of termination, the matter will be referred to expedited
arbitration under this Agreement and the Definitive Agreement.
13.7 DEFINITIVE AGREEMENT - The Definitive Agreement will include
further conventional provisions, not inconsistent or in conflict with any of the
terms and conditions
-35-
of this Agreement, to be agreed, as to the consequences of termination or
expiry in relation to the sale and commercialization of Product. Except as
expressly provided in this Agreement or the Definitive Agreement, the existence
or exercise of a right of termination under this Agreement and the Definitive
Agreement shall be without prejudice to any other rights or remedies that the
terminating party may have.
14. MISCELLANEOUS.
14.1 GOVERNING LAW - This Agreement will be governed by and
construed in accordance with the laws of England, excluding any choice of law
rules that may direct the application of the laws of another jurisdiction.
14.2 EXPEDITED ARBITRATION -
(a) NOTICE - In the event that the matter in dispute relates to:
(i) The matters described in SECTION 3.5(a)(iii) (manufacturing
default);
(ii) Disagreement as to whether to file and launch in [*] as set out
in SECTION 5.2(b);
(iii) Commercial diligence default as set out in SECTION 5.2;
(iv) Xenova's belief, acting reasonably, that QLT has committed a
Marketing Default and Xenova wishes to exercise its co-promote
and manufacture rights under SECTION 5.3 or the parties'
inability to agree revised financial terms under SECTION 5.3(d);
(v) The determination of a claim pertaining to Cross-Over Use or
Cross-Pricing Risk under SECTION 6.6 (where the arbitrator shall
be instructed to attempt to find a mutually-acceptable solution
to avoid the Cross-Over Use or Cross-Pricing Risk whilst giving
reasonable protection to each party's commercial interests);
(vi) The determination of a claim pertaining to sub-licensing under
SECTION 8.4(c) OR (d);
(vii) The settling of the form of the Definitive Agreement as provided
for under SECTION 9; or
(viii) Settlement of revised financial terms under SECTIONS
13.5 OR 13.6;
the party asserting the claim (the "ASSERTING PARTY") shall first inform the
other party, in writing, of the specific nature of the controversy, dispute or
matter, the pertinent provisions of this Agreement or the Definitive Agreement,
and its proposed resolution.
(b) SUBMISSION TO ARBITRATION - If the executive resolution efforts set
out above are not successful, the claim shall be submitted to
arbitration in accordance with the
*Material has been omitted and filed separately with the Commission.
-36-
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA") by a panel of one arbitrator (unless the parties agree otherwise)
knowledgeable as to the subject matter of the claim, and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. If necessary, the Definitive Agreement will provide for
the express adoption of the International Arbitration Treaty in respect of
enforcement of Awards.
(c) AAA EXPEDITED AND OPTIONAL EMERGENCY RULES TO APPLY - The parties agree
that the AAA Expedited Procedures and Optional Rules for Emergency
Measures of Protection shall apply to the proceedings under this
SECTION 14.2, notwithstanding the amount or complexity of any claims
made. The parties will consider including further or alternative
provisions in the Definitive Agreement to ensure that expedited
arbitration is a quick and effective means of dispute resolution.
(d) PROCEDURES - The arbitrator shall have the right to order discovery as
he/she deems appropriate, and to order injunctive relief and the
payment of attorney's fees, costs and other damages, excluding
punitive damages.
(e) PLACE OF ARBITRATION - Any arbitration conducted under this provision
shall take place in New York City, New York, USA.
(f) APPOINTING AUTHORITY - The AAA shall be the appointing authority.
(g) TIMING FOR SETTLEMENT OF THE DEFINITIVE AGREEMENT - The parties agree
that the award for the settling of the Definitive Agreement shall be
rendered no later than December 31, 2001.
14.3 TRADITIONAL ARBITRATION - Except for:
(a) Applications for injunctions for the protection of the Xenova Patents,
the QLT Patents, Program Information or Confidential Information (all
of which are not subject to arbitration but which may be submitted to
the courts for resolution); and
(b) Matters subject to expedited arbitration as set out in SECTION 14.2;
disputes which may arise under, out of or in connection with the Definitive
Agreement or relating to or concerning the subject matter of the Definitive
Agreement, shall be settled by arbitration as set out in SECTION 14.2 except
that there shall be a panel of three arbitrators rather than one and SECTION
14.2(c) shall not apply
14.4 AMENDMENT - Neither this Agreement nor the Definitive
Agreement will be amended or modified except in writing signed by each of the
parties hereto.
14.5 INTERPRETATION - The parties agree that whenever the phrase
"including" is used in this Agreement that it means including, without
limitation.
-37-
14.6 NOTICE - All notices, requests and other communications
required or permitted to be given hereunder or with respect hereto will be in
writing, and may be given by:
(a) Personal delivery;
(b) Registered first-class Canada or United Kingdom mail, postage prepaid
by the sender, return receipt requested;
(c) Overnight delivery service, charges prepaid by the sender; or
(d) Via facsimile (confirmed by delivery by one of the three methods
stated above);
and, in each case, addressed to the other party at the address for such party as
set forth below, and will be effective one business day after receipt in the
case of (a) (c) or (d) above, and five days after mailing in the case of (b)
above.
If TO QLT: QLT INC.
000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Fax #: x0 000 000-0000
Attention: Chief Executive Officer
With a copy to: FARRIS, VAUGHAN, XXXXX & XXXXXX
X.X. Xxx 00000, Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Dominion Bank Tower
000 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0 CANADA
Attention: R. Xxxxxx XxxXxx-Xxxx
Fax #: x0 000 000-0000
If to Xenova: XENOVA LIMITED
000 Xxxxxxxxxx Xxxxxx
Xxxxxx
Xxxxxxxxx, XX0 0XX
Xxxxxxx
Fax #: x00 0000 000000
Attention: Chief Executive Officer
Any party may change its address at which notice is to be received by written
notice provided pursuant to this SECTION 14.6.
14.7 COMPLIANCE WITH LAWS - Each party will be responsible for
assuring that all applicable rules, laws and regulations are met in the
performance of its duties hereunder.
-38-
14.8 ENTIRE AGREEMENT - This Agreement, together with the exhibits
hereto, sets forth the entire agreement and understanding between the parties
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings between the parties with respect to the subject matter
hereof, whether oral or in writing
14.8 PRESS RELEASES -
(a) INITIAL PRESS RELEASES - QLT and Xenova will work together to prepare a
individual but mutually acceptable press releases disclosing the
transaction contemplated by this Agreement for public release after
execution of this Agreement by both parties, and such release shall be
approved by both parties in writing prior to its release.
(b) SUBSEQUENT PUBLICITY - After the initial press releases, each party
agrees that it will not, without the prior consent of the other
party, originate any publicity, news release or public announcement,
written or oral, whether to the public, the press, stockholders or
otherwise, referring to the existence or terms of this Agreement,
including its existence, the subject matter to which it relates, the
performance under it or any of its specific terms and conditions,
except for disclosures that are substantially the same as the
disclosure in the initial press releases or such announcements, as in
the opinion of the counsel for the party making such announcement,
are required by law, including Canadian, United Kingdom and United
States securities laws, rules or regulations, and the regulations of
the London Stock Exchange or the Toronto Stock Exchange, or NASDAQ,
without the prior written consent of the other party. If a party
decides to make an announcement it believes to be required by law
with respect to this Agreement or the Definitive Agreement, it will
give the other party such notice as is reasonably practicable and an
opportunity to comment upon the announcement. In addition, neither
party will disclose the existence of this Agreement, any of the
subject matter hereof, or any of the terms hereof to any third party
without the prior written consent of the other party, except as
otherwise provided in this Agreement.
14.9 SURVIVAL - The Definitive Agreement will include provisions
stating which provisions survive termination. Termination shall not affect any
accrued rights or liabilities of either party arising prior to termination.
-39-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
QLT INC. XENOVA LIMITED
By: /s/ Xxxxx Xxxx By: /s/ Xxxxx X. Oxlade
-------------------------- ------------------------------
Title: President and Title: Chief Executive Officer
Chief Executive Officer
-40-
EXHIBIT A
LIST OF XENOVA PATENTS
US Patent Number [*].
[*].
*Material has been omitted and filed separately with the Commission.
-41-
EXHIBIT B
DRAFT SUMMARY OF PROGRAM ACTIVITIES
The following summarizes the proposed Development Plan for the Product. This
Development Plan as it relates to the primary indication is subject to change
at the discretion of the Development Committee or as a result of any
requirements of the FDA.
Primary (Initial) Indication to be Pursued
- First line therapy of advanced NSCLC (Stage IIIb/IV NSCLC) in
combination with chemotherapy.
Clinical Development
QLT will conduct two international [*] randomized placebo-controlled trials of
chemotherapy plus placebo versus chemotherapy plus the Product, as follows:
- Each study to investigate a different chemotherapy regimen [*]
- European involvement will include a [*] European sites for the two
combined trials in [*] countries.
- Approximately [*] patients per trial (a total of [*]) for the two
combined trials.
- [*].
CMC
- Establish product monographs for the Drug and the Product.
- Produce final validated form of the Product in [*].
- Establish scaled up manufacturing process capable of supplying
commercial requirements.
Preclinical Toxicology
- Perform additional tox studies required to file NDA ([*] briefing
document).
Regulatory
- [*].
- Manage all ongoing interactions with FDA during the Program.
*Material has been omitted and filed separately with the Commission.
-42-
- Assemble NDA filing to take through FDA review to approval.
- Provide NDA dossier to support Xenova's registration in Europe.
Other Studies in the Primary Indication and Other Indications
- [*].
- Any additional studies required by the FDA for registration in the
primary indication will be conducted after a [*] decision.
- Other additional studies in the primary or subsequent indications
will be reviewed and approved, if appropriate, by the Development
Committee before commencement.
*Material has been omitted and filed separately with the Commission.
-43-
EXHIBIT C
(see Section 10.1)
(1) All matters that would be shown by searches of publicly available
patent prosecution files in respect of Xenova's patents covering the
Drug, held at Patent Offices in the Territory, are disclosed or
deemed to be disclosed to QLT.
(2) Xenova has not conducted searches or inquiries in relation to the
existence of third party patents or other proprietary rights, and makes
no representation and gives no warranty in relation to any third party
patents and other proprietary rights not known to it.
(3) [*]
*Material has been omitted and filed separately with the Commission.
-44-
EXHIBIT D
DEFINITION OF REGISTRATION PACKAGE
(a) Table of Contents for a standard dossier for a NDA for oncology
products:
________________________________________________________________________________________________________
(PRODUCT NAME) NDA XX-XXX (Indication) TABLE OF CONTENTS
________________________________________________________________________________________________________
NDA LOCATION
________________________________________________________________________________________________________
VOLUME PAGE
________________________________________________________________________________________________________
Covering Letter
________________________________________________________________________________________________________
[*]
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
________________________________________________________________________________________________________
*Material has been omitted and filed separately with the Commission.
-45-
(b) List of additional studies required by the FDA prior to NDA submission
for the Product:
(1) NON-CLINICAL: The following table lists the planned non-clinical
studies that have been identified by Xenova as necessary prior to
a NDA submission. These studies were presented to the FDA in the
briefing document that was sent prior to the end of Phase II
meeting. It is anticipated that these studies would not need to
be initiated until the results from the [*] are known.
______________________________________________________________________
[*]
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. CLINICAL STUDIES: In the clinical section of the minutes to the end of
Phase II meeting with the FDA, the FDA requested:
- [*].
*Material has been omitted and filed separately with the Commission.
-46-
