EXHIBIT 10.224
RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY
AND
LIGAND PHARMACEUTICALS INCORPORATED
DATED
MAY 19, 2000
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.......................................................1
ARTICLE 2 RESEARCH PROGRAM..................................................8
ARTICLE 3 MANAGEMENT OF THE RESEARCH PROGRAM...............................17
ARTICLE 4 DEVELOPMENT PROGRAM..............................................19
ARTICLE 5 LICENSES -- RESEARCH, DEVELOPMENT, MARKETING AND MANUFACTURING...23
ARTICLE 6 ROYALTIES, MILESTONES AND OTHER PAYMENTS.........................26
ARTICLE 7 INFRINGEMENT ACTIONS BY OR AGAINST THIRD PARTIES.................31
ARTICLE 8 CONFIDENTIALITY..................................................37
ARTICLE 9 PUBLICATION......................................................39
ARTICLE 10 PATENTS AND INVENTIONS...........................................39
ARTICLE 11 REPRESENTATIONS AND WARRANTIES...................................41
ARTICLE 12 TERM AND TERMINATION.............................................44
ARTICLE 13 FORCE MAJEURE....................................................49
ARTICLE 14 ASSIGNMENT.......................................................49
ARTICLE 15 REGULATORY MATTERS...............................................50
ARTICLE 16 SEVERABILITY.....................................................50
ARTICLE 17 INDEMNIFICATION..................................................51
ARTICLE 18 MISCELLANEOUS....................................................52
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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
THIS RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT, (this
"Agreement"), effective the 19th day of May, 2000 (the "Agreement Date"), is by
and between ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY (herein "BMS"), having a place of
business at ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and
LIGAND PHARMACEUTICALS INCORPORATED (herein "Ligand"), a Delaware corporation,
having its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. BMS and Ligand are sometimes referred to herein individually
as a "Party" or collectively as the "Parties".
R E C I T A L S
WHEREAS, Ligand has developed certain expertise and acquired
certain proprietary rights relating to the discovery and development of
pharmaceutical products for the treatment and prevention of diseases, which
products act through the mineralocorticoid receptor;
WHEREAS, BMS has certain expertise in the discovery, development,
marketing and sales of pharmaceutical products;
WHEREAS, BMS and Ligand desire to engage in a joint research and
development effort to discover and/or design small molecule compounds which act
as modulators of the mineralocorticoid receptor and to develop pharmaceutical
products from such compounds (the "Collaboration"); and
WHEREAS, in conjunction with such joint research and development,
BMS desires to sponsor certain research and development activities to be carried
out by Ligand, and Ligand and BMS desire that BMS commercialize products
resulting from the joint research and development;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, BMS and Ligand agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
"ACT" shall have the meaning set forth in Section 10.5.
"AFFILIATE" shall mean, with respect to a Party or other Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Party. As used in this definition of "Affiliate", the
term "control" shall mean the actual power, either directly or indirectly
through one or more intermediaries, to direct or cause the direction of the
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management and policies of such Person, whether by the ownership of at least ***
percent (***%) of the voting stock of such Person entitled to elect directors,
or by contract or otherwise.
"AFFILIATED CUSTOMER" shall mean, with respect to a Party, any Affiliate of
that Party or Sublicensee of that Party.
"ANDA" shall have the meaning set forth in Section 10.5.
"BACKGROUND TECHNOLOGY" shall mean all technology, inventions, information,
data, Know-How, and materials other than small molecule compounds (whether or
not patented or patentable) that are owned or controlled by a Party hereto and
(a) relate to the screening and assay testing of Collaboration Compounds,
Collaboration Lead Compounds or Products as modulators of the Designated Target
(herein "BACKGROUND ASSAY TECHNOLOGY"), (b) are not Background Assay Technology
and relate to the discovery, design, synthesis, delivery, development, testing,
use, manufacture or sale of Collaboration Compounds, Collaboration Lead
Compounds or Products for use in the Field, (c) exist as of the Commencement
Date, and (d) are necessary or helpful for the conduct of the Collaboration.
Background Technology owned or Controlled by Ligand shall be referred to herein
as "Ligand Background Technology". Background Technology owned or Controlled by
BMS shall be referred to herein as "BMS Background Technology".
"BACKGROUND COMPOUND" shall mean a compound owned or otherwise Controlled
by a Party at any time during the Research Term which such Party elects, upon
written notice given to the other Party, to enter into the Collaboration and
designate as a Background Compound pursuant to Section 2.13.
"BACKUP COMPOUND" shall have the meaning set forth in Section 6.10.2.
"CLAIM" shall have the meaning set forth in Article 17.
"CLINICAL DEVELOPMENT" shall mean the development of any Collaboration
Compound in the Field from and after the filing of an IND, through and including
product registration.
"COLLABORATION" shall have the meaning set forth in the third paragraph in
the Recitals.
"COLLABORATION COMPOUND" shall mean:
(1) any compound synthesized by or for either Party specifically for
testing against the Designated Target during the Research Term in the
performance of the Research Program, including without limitation
derivatives of any Background Compound or Collaboration Compound, in
any case as evidenced by lab notebooks or other written records; and
(2) any compound other than one covered by (1) above, including any
Background Compound, that is owned or Controlled by a Party, that is
(i) tested prior to or during the Research Term for its activity as a
modulator of the Designated Target,
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and (ii) which the Controlling Party then elects, during the Research
Term and thereafter until the end of the Exclusivity Period, to test
or have tested for cross-reactivity with any steroid or other nuclear
receptor other than the Designated Target utilizing an assay,
receptor, or assay component covered by a Valid Claim of a Ligand
Patent; provided, that for any compound provided by BMS to Ligand, BMS
must specifically have requested in writing (including e-mail
correspondence) that such compound be tested by Ligand for
cross-reactivity or any such testing conducted by Ligand with respect
to such compound without such written request shall not cause such
compound to become a Collaboration Compound; and PROVIDED, FURTHER,
that Ligand may test for cross-reactivity, during the *** *** ,
without such tested compound becoming a Collaboration Compound, if
such testing is in furtherance of research and development for
indications that are not reserved to BMS *** *** , as more fully set
forth in Section 2.8.4.5;
(3) any Background Compound owned or Controlled by a Party that such Party
in its discretion specifically designates as a Collaboration Compound
pursuant to Section 2.13;
(4) the Ligand compounds whose structures are set forth on Exhibit B
hereto; and
(5) any compound identified by BMS after the Research Program Term as a
modulator of the Designated Target, which (x) BMS elects to test or
have tested for cross-reactivity with any steroid or other nuclear
receptor other than the Designated Target utilizing an assay, receptor
or assay component covered by a Valid Claim of a Ligand Patent
(provided, that for any compound provided by BMS to Ligand, BMS must
specifically have requested in writing that such compound be tested by
Ligand for cross-reactivity or any such testing conducted by Ligand
with respect to such compound without such written request shall not
cause such compound to become a Collaboration Compound), or (y) is
identified by BMS during the exclusivity period set forth in Section
2.8.1 as a modulator of the Designated Target with an *** *** .
"COLLABORATION LEAD COMPOUND" shall mean a Collaboration Compound that is
selected by BMS for Pre-Clinical Development. Except where the context clearly
indicates otherwise, references to Collaboration Compounds shall cover
Collaboration Lead Compounds as well.
"COLLABORATION TECHNOLOGY" shall mean (a) all Collaboration Compounds and
information related thereto; (b) such technology, inventions, information, data,
Know-How and materials (whether or not patented or patentable) that (i) a Party
hereto owns or Controls, (ii) related to the Field and (iii) are conceived,
generated or reduced to practice during the Research Term pursuant to the
Research Program, including, without limitation, improvements to either
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Party's Background Technology; and (c) all patents, trade secrets and other
intellectual property rights covering any of (a) or (b).
"COMMENCEMENT DATE" shall mean May 5, 2000.
"COMPETING PRODUCT" shall mean, with respect to a specified Product, (a)
any other product marketed by Ligand, its Affiliates or a Third Party within the
Field, and (b) which product has been cleared or approved for marketing in at
least one indication that is the same as that as has been cleared or approved
for such Product.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 8.2
"CONTROL" or "CONTROLLED" shall mean possession of the ability to grant the
other party access, a license or sublicense (as applicable) as provided for
herein without violating the terms of any agreement or other arrangement with
any Third Party existing at the time such Party would be first required
hereunder to grant the other Party such access, license or sublicense.
"DESIGNATED TARGET" shall mean the mineralocorticoid receptor, including
any and all isoforms, subtypes, and other variants thereof.
"DILIGENT EFFORTS" means the carrying out of obligations or tasks in a
manner consistent with the efforts a Party devotes to a product or a research,
development or marketing project of similar market potential, profit potential
or strategic value resulting from its own research efforts, based on conditions
then prevailing.
"EUROPE" shall mean France, Germany, Great Britain, Italy and Spain.
"FDA" shall mean the United States Food and Drug Administration or any
successor entity thereto.
"FIELD" shall mean the discovery, characterization, design, development and
commercialization of small molecule compounds for the treatment or prevention of
diseases whose therapeutic, prophylactic or other beneficial effects are
mediated, in whole or in material part, through direct modulation of the
Designated Target.
"FTES" shall mean one or more researchers with appropriate qualifications
employed by Ligand or BMS and assigned to work on the Collaboration with such
time and effort to constitute one such researcher working on the Collaboration
on a full time basis for no less than *** .........*** (***) hours per year.
"IND" shall mean an Investigational New Drug Application as defined in the
United States Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or any corresponding foreign equivalent.
"INDEMNIFIED GROUP" shall have the meaning set forth in Article 17.
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"INVENTION" shall have the meaning set forth in Section 10.2.
"INVENTOR" shall have meaning set forth in Section 10.2.
"JOINT INVENTION" means any and all inventions, discoveries, and other
information that are made jointly by employees or agents of both Parties
pursuant to work conducted in the Collaboration.
"JOINT RESEARCH COMMITTEE" or "JRC" shall mean the joint research committee
composed of representatives of Ligand and BMS described in Section 3.1 hereof.
"KNOW-HOW" shall mean all technical information and know-how owned or
controlled by a Party, other than Patent Rights, which (a) is not in the public
domain, (b) is related to the discovery, screening, design, synthesis, delivery,
development, testing, use, manufacture or sale of Collaboration Compounds,
Collaboration Lead Compounds or Products for use in the Field, and (c) is
necessary or helpful for the conduct of research and development in the Field.
Know-How owned or Controlled by Ligand shall be referred to herein as "Ligand
Know-How". Know-How owned or Controlled by BMS shall be referred to herein as
"BMS Know-How".
"NDA" shall mean a New Drug Application as defined in the United States
Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any
corresponding foreign equivalent.
"NET SALES" shall mean, with respect to a Product, the amount invoiced or
otherwise billed by BMS or its Affiliate or licensee for the sale of a Product
to a purchaser that is not an Affiliate of BMS or its licensee, less the
following to the extent included in such billing or otherwise actually allowed
or incurred with respect to such sales: *** ......... *** ......... ***
......... *** ; provided that all of the foregoing deductions are calculated in
accordance with generally accepted accounting principles consistently applied
throughout the party's organization.
All sales of a Product between the selling Party and any of its Affiliated
Customers shall be disregarded for purposes of computing Net Sales and royalties
under Article 6, but in such instances royalties shall be payable only upon
sales of the selling Party and its Affiliated Customers to Non-Affiliated
Customers. For sake of clarity and avoidance of doubt, sales by BMS or any of
its Affiliated Customers of a Product to a Third Party distributor of such
Product in a given country shall be considered a sale to a Third Party customer.
Any Products used (but not sold for consideration) for promotional or
advertising purposes or used for clinical or other research purposes shall not
be considered in determining Net Sales hereunder.
In the event a Product is sold as an end-user product consisting of a
combination of active functional elements , Net Sales, for purposes of
determining royalty payments on such Product, shall be calculated by multiplying
the Net Sales of the end-user product by the fraction A over A+B, in which A is
the gross selling price of the Product portion of the end-user product when
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such Product is sold separately during the applicable accounting period in
which the sales of the end-user product were made, and B is the gross selling
price of the other active elements , as the case may be, of the end-user product
sold separately during the accounting period in question. All gross selling
prices of the elements of such end-user product shall be calculated as the
average gross selling price of the said elements during the applicable
accounting period for which the Net Sales are being calculated. In the event
that, in any country or countries, no separate sale of either such
above-designated Product or such above designated elements of the end-user
product are made during the accounting period in which the sale was made or if
gross retail selling price for an active functional element or component, as the
case may be, cannot be determined for an accounting period, Net Sales allocable
to the Product in each such country shall be determined by mutual agreement
reached in good faith by the Parties prior to the end of the accounting period
in question based on an equitable method of determining same that takes into
account, on a country by country basis, variations in potency, the relative
contribution of each active agent or component, as the case may be, in the
combination, and relative value to the end user of each active agent or
component, as the case may be.
Notwithstanding the foregoing, it is agreed that drug delivery vehicles,
adjuvants, and excipients shall not be deemed to be "active ingredients" or
"active functional elements," the presence of which in a Product would be deemed
to create a combination product subject to the terms of the preceding paragraph.
"NEW AFFILIATE" has the meaning set forth in Section 2.8.4.2 hereof.
"NON-AFFILIATED CUSTOMER" shall mean any purchaser of Product who is not an
Affiliated Customer.
"PARTY" means BMS or Ligand, as the case may be.
"PATENT RIGHTS" or "Patent" shall mean, (a) with respect to BMS or Ligand,
all patents and patent applications heretofore or hereafter filed in any country
within the Territory to the extent Controlled by Ligand or BMS (i) during the
Research Term, or (ii) which are directed to and cover inventions made during
the Research Term, or (b) with respect to BMS, all patents and patent
applications that are directed to and cover inventions relating to the
composition or use within the Field of any Collaboration Compound or Product
that are made following the Research Term until BMS' rights under Article 5
hereof shall have terminated, and (c) any and all United States and foreign
patents that have issued or in the future issue from (a) or (b), including all
divisionals, continuations, continuations-in-part, reexaminations, reissues,
renewals, substitutions, confirmation, registrations, revalidations, extensions
or additions to any such patents and patent applications and patents issuing
thereon.
"PERMITTED ACTIVITY" shall mean any bona fide activity of a Third Party,
whether carried out alone or in a collaboration with another Third Party, that
was begun before the date that such Third Party becomes an Affiliate of a Party,
merges or consolidates with a Party, acquires the assets of a Party relating to
this Agreement, or has all or substantially all of its business assets acquired
by a Party, and which activity, if it had been undertaken by such Party, would
otherwise violate the exclusivity covenant of Section 2.8.1, provided that such
activity does not require the grant of any rights committed to a Party under
this Agreement
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"PERSON" means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization, governmental
authority, or any other form of entity not specifically listed herein.
"PHASE I", "PHASE II", and "PHASE III" shall mean Phase I (or Phase I/II),
Phase II and Phase III clinical trials, respectively, in each case as prescribed
by the applicable Regulatory Agency's regulations.
"PRE-CLINICAL DEVELOPMENT" shall mean, after selection of a Collaboration
Lead Compound under Section 4.1, all activities undertaken by BMS to develop the
Collaboration Lead Compound in the Field up to and including the initiation of
Phase I clinical trials or filing of an IND on such Collaboration Lead Compound,
which are determined by BMS to be necessary or desirable to file an IND on such
Collaboration Lead Compound, including the preparation and filing of an IND.
"PRIMARY SCREENING" shall mean conducting any assay, screen or other test
on a compound under the Research Program to determine initially whether such
compound mediates the activity of the Designated Target, including without
limitation such assays, screens and other tests set forth in the Technical
Operating Plan.
"PRODUCT" shall mean a pharmaceutical product which has as one of its
active ingredients a Collaboration Lead Compound that has been approved by the
applicable Regulatory Agency for marketing in a country for treatment,
palliation or prevention of disease in the Field.
"PROJECT LEADER" shall have the meaning set forth in Section 3.3.
"REGULATORY AGENCY" shall mean the FDA and agencies of other governments of
other countries having similar jurisdiction over the development, manufacturing,
registration and marketing of pharmaceutical products.
"RESEARCH PROGRAM" shall mean the program of research in which Ligand and
BMS will participate and which is described generally in the Technical Operating
Plan.
"RESEARCH TERM" shall have the meaning set forth in Section 2.2.
"SECONDARY SCREENING" shall mean conducting any assay, screen or other test
using intracellular receptors with respect to a Collaboration Compound for the
purpose of confirming the results of the Primary Screening or to test such
Collaboration Compound for cross-reactivity with other than the Designated
Target.
"SUBLICENSEE" shall mean any Third Party who is granted the right to sell a
Product by a Party.
"TECHNICAL OPERATING PLAN" shall mean the research plan for the conduct of
the collaboration, which is initially as set forth in Exhibit C hereto and as
modified from time to time by the JRC.
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"TERM OF THIS AGREEMENT" shall mean the period from the Agreement Date
until, with respect to each Product, the expiration of the last royalty
obligation owed by one Party to the other with respect to such Product, or until
this Agreement is otherwise terminated pursuant to its terms.
"TERRITORY" shall mean the entire world.
"THIRD PARTY" shall mean any Person other than (x) BMS or Ligand or (y) an
Affiliate of either of them.
"TRIGGER EVENT" shall have the meaning set forth in Section 6.10.1.
"VALID CLAIM" shall mean (i) a claim of an issued, unexpired, uncanceled,
and unabandoned patent included within the Patent Rights owned or Controlled by
a Party, which has not been held unenforceable or invalid by an unreversed and
unappealable decision of a court, tribunal, or other governmental agency of
competent jurisdiction, and which has not been disclaimed or admitted to be
invalid or unenforceable through reissue, disclaimer, or otherwise, and (ii) for
purposes of Section 2.13 only, pending applications for letters patent that are
being actively prosecuted and which have not been canceled, withdrawn from
consideration, finally determined to be unallowable by the applicable
governmental authority for whatever reason (and from which no appeal is or can
be taken), and/or abandoned in accordance with or as permitted by the terms of
this Agreement or by mutual written consent, including without limitation any
continuation, division or continuation-in-part thereof and any provisional
applications.
"WITHHELD PARTY" shall have the meaning set forth in Section 6.6.
"WITHHOLDING PARTY" shall have the meaning set forth in Section 6.6.
ARTICLE 2
RESEARCH PROGRAM
2.1 CONDUCT OF RESEARCH. Each Party shall diligently conduct the work
assigned to it in the Technical Operating Plan in a professional manner and in
compliance with all requirements of applicable laws and regulations and the
terms of this Agreement with the goal of achieving objectives efficiently and
expeditiously. Each Party agrees to commit the qualified and experienced
personnel, facilities, equipment, expertise and other resources necessary to
perform its obligations under the Research Program.
2.2 RESEARCH TERM. The term of the Research Program ("Research Term") shall
begin on the Commencement Date and shall terminate ***
***
*** .
2.3 ALLOCATION OF PERSONNEL. During the Research Term and any extension
thereof under Section 2.10.1 Ligand shall allocate *** (***) FTEs for the areas
of activity agreed to by the JRC and set forth in the Technical Operating Plan
(and allocated between chemistry and
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biology backgrounds as set forth in the Technical Operating Plan). BMS
shall allocate a sufficient number of personnel to conduct assigned activities
agreed to by the JRC and set forth in the Technical Operating Plan.
2.4 TRANSFER OF BACKGROUND TECHNOLOGY. Commencing after the Commencement
Date, and from time to time thereafter during the Research Term, each Party
shall disclose to the other Party such of its Background Technology (other than
Background Compounds which will be disclosed as provided in Section 2.13) then
Controlled by it and not previously disclosed to the other Party which it deems
to be relevant to the Field and which it deems to be necessary or helpful for
the other Party to perform the work set out in the Technical Operating Plan.
Each Party will provide the other Party with reasonable technical assistance
during the Research Term relating to the use and practice of such Party's
Background Technology, which use and practice shall be employed by the other
Party solely to the extent permitted under the licenses granted to the other
Party herein.
2.5 SUBCONTRACTS. Neither Ligand nor BMS shall subcontract to Third Parties
portions of the Technical Operating Plan to be performed by it or contract with
consultants to provide services specifically relating to the Technical Operating
Plan to any Third Party without the prior consent of the JRC, which consent
shall not be unreasonably withheld; PROVIDED that BMS shall not be required to
obtain Ligand's consent for subcontracting of development work following the
Research Term in furtherance of the development of any Collaboration Compound.
Each Party may, without the consent of the other Party but subject to applicable
terms of this Agreement, subcontract to its Affiliates to perform certain
activities as part of the Research Program. Any such subcontractor shall enter
into a confidentiality agreement with the contracting Party which shall require
such subcontractor to maintain Confidential Information in confidence and, to
the extent that the contracted work relates to pre-clinical work under the
Technical Operating Plan, to assign any inventions made by the subcontractor to
the contracting party to the extent that the invention relates to the
composition or use of any Collaboration Compound provided to such subcontractor.
Any such subcontractor shall be required to comply in all material respects with
all requirements of applicable laws and regulations, together with all
applicable good laboratory practices and good manufacturing practices, and to
abide by the terms of this Agreement, as they relate to such assigned duties, in
the same manner as a Party hereunder. The contracting Party shall negotiate and
execute the applicable agreement with such subcontractor, at its expense, and
shall supervise and be responsible under this Agreement for such subcontracted
work. All such subcontracts shall contain terms consistent with the terms of
this Agreement. A Party shall be jointly and severally liable with its
subcontractor for any breach of this Agreement or failure to perform such
delegated duties by such subcontractor, and hereby guarantees the performance by
its subcontractor of this Agreement in connection with such performance
delegated by such Party to such subcontractor.
2.6 INFORMATION AND REPORTS CONCERNING COLLABORATION TECHNOLOGY. All
Collaboration Technology (exclusive of Collaboration Compounds for which
disclosure is set forth in Section 2.13) made by either Party will be promptly
disclosed to the other Party (but not less frequently than monthly), with
significant discoveries or advances being communicated as soon as practical
after such information is obtained or its significance is appreciated. The
Parties will exchange at least monthly verbal and written reports presenting a
meaningful summary of their activities performed under this Agreement during the
preceding month. The Parties will
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exchange quarterly written reports presenting a meaningful summary of their
activities performed under this Agreement during the preceding quarter. Each
Party will provide the other Party with reasonable technical assistance during
the Research Term relating to the use and practice of such Party's Collaboration
Technology, which use and practice shall be employed by the other Party solely
to the extent permitted under the licenses granted to the other Party herein.
2.7 FUNDING OF THE RESEARCH PROGRAM. In consideration for Ligand's
performance of its obligations under the Research Program, BMS shall pay Ligand
an amount for the FTEs employed by Ligand in the Research Program according to
the following schedule:
*** ***
*** ***
*** ***
*** ***
***
***
***
During the Research Term, BMS shall pay Ligand quarterly in advance for services
to be performed by Ligand's FTEs under the Research Program. The first payment
shall be due and payable on the Commencement Date and shall include payment for
any services to be rendered between the Commencement and the next calendar
quarter. Subsequent payments shall be due and payable on the first day of each
calendar quarter starting with the calendar quarter starting on
*** . Ligand shall apply the research funding it receives from BMS under
this Agreement solely toward the conduct of research with the goal of achieving
the objectives of the Research Program.
2.8 EXCLUSIVITY.
2.8.1 EXCLUSIVITY COVENANT. Except as provided in Section 2.5 and in
Sections 2.8.3 and 2.8.4 below and subject to Section 2.8.5 below, during the
period of time that commences on the Agreement Date and until the earlier of:
(i) the date that is ***
***, or
(ii) such date as it is determined under Section 4.4.1 that BMS is
not using Diligent Efforts to develop or market at least one
Collaboration Compound,
each Party and its Affiliates shall not (and such Party shall cause its
Affiliates not to):
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2.8.1.1 conduct pre-clinical or clinical research testing, other
than the Research Program, whether on its own or as part of a collaborative
alliance with (or contracted services to) any Third Party, a goal of which is to
discover or develop any small molecule compound within the Field; PROVIDED, that
the foregoing shall not apply to Pre-Clinical and Clinical Development of any
Collaboration Lead Compound or Product by BMS in furtherance of this Agreement,
to the exercise by BMS of the rights granted to it under Article 5 following the
Research Term in furtherance of this Agreement, or to the exercise of any
sublicense rights granted to BMS under Article 5 hereof (and any collaboration
by BMS with any such sublicensee in connection with the grant of such rights)in
furtherance of this Agreement; and
2.8.1.2 grant any rights under any Background Technology, Patent
Rights, Know-How, or Collaboration Technology Controlled by such Party to any
Third Party or to any Affiliates of such Third Party a purpose of which is to
conduct research, development, use, manufacture, sale or commercialization of
any small molecule compound within the Field; PROVIDED, that the foregoing shall
not apply to the grant by BMS of such rights under the foregoing as BMS deems
appropriate in connection with the grant of a sublicense pursuant to Section
5.1.4 hereof; and
2.8.1.3 grant any rights under any Background Technology, Patent
Rights, Know-How or Collaboration Technology Controlled by such Party to any
Third Party or to any Affiliates of such Third Party for primary screening
against the Designated Target or for the purpose of identifying any small
molecule compound for use within the Field; PROVIDED, that the foregoing shall
not apply to the grant by BMS of such rights under the foregoing as BMS deems
appropriate in connection with the grant of a sublicense pursuant to Section
5.1.4 hereof; and
2.8.1.4 commercialize, whether on its own or as part of a
collaborative alliance with (or contracted services to) any Third Party, any
small molecule compound within the Field; PROVIDED, that the foregoing shall not
apply to Pre-Clinical and Clinical Development of any Collaboration Lead
Compound or Product by BMS in furtherance of this Agreement, to the exercise by
BMS of the rights granted to it under Article 5 following the Research Term, or
to the exercise of any sublicense rights granted to BMS under Article 5 hereof
(and any collaboration by BMS with any such sublicensee in connection with the
grant of such rights).
2.8.2 DEVELOPMENT AND COLLABORATIONS OUTSIDE THE FIELD. Nothing in
Section 2.8.1 shall preclude, or is intended to preclude, either Party or its
Affiliates from conducting, whether alone or in collaboration with Third
Parties, research or development of small molecule compounds or products for use
outside the Field.
2.8.3 ACADEMIC AND GOVERNMENTAL COLLABORATIONS. During the period of
time that BMS is subject to the restrictions set forth in Section 2.8.1, and
subject to BMS' obligations under other applicable terms of this Agreement, the
Parties agree and acknowledge that BMS shall be allowed to (i) enter into any
bona fide research collaboration with a non-commercial academic or medical
research institution or a governmental agency or instrumentality, a goal of
which is to discover, research, develop and/or clinically validate small
molecule compounds that modulate the Designated Target, and (ii) grant research
licenses to such institution for the purposes described in clause (i) above
under BMS' Background or BMS Collaboration
11
Technology, BMS Know-How or BMS Patent Rights; provided that, to the
extent that the collaboration or research license granted relates to
pre-clinical work, BMS must receive as part of its agreement with such
institution, agency, or instrumentality an exclusive or non-exclusive license or
a first option to negotiate an exclusive or non-exclusive license, under all
technology and Patent Rights developed by such institution in the collaboration
or under such license that relates to the composition or use of any
Collaboration Compound provided to such institution (such license and option
rights referred to as "Licensed Rights"); and provided, further, that BMS shall
only be required to use commercially reasonable efforts (which efforts shall not
include negotiation or execution of a CRADA) to obtain such Licensed Rights from
governmental instrumentalities or agencies.
2.8.4 EXCEPTIONS TO THE EXCLUSIVITY COVENANT.
2.8.4.1 ***
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2.8.4.2 ***
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2.8.4.3 ***
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2.8.4.3.1 ***
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2.8.4.3.2 ***
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2.8.4.4 ***
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2.8.4.5 During any extension of the exclusivity period pursuant
to Section 2.15 beyond the date that is *** following the end of the Research
Term, Section 2.8.1 shall only apply (although Section 2.13 shall continue to
apply in all respects) with respect to activities conducted by Ligand within the
Field where, and only to the extent that, such activities relate to the
discovery or development of compounds and products for the treatment or
prevention of diseases, conditions or disorders that are: ***
***
***
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2.8.5 Each Party acknowledges that a breach by it or its Affiliates of
Section 2.8.1 shall cause the other Party irreparable harm, for which monetary
damages are an inadequate remedy. Therefore, in the event of any such breach,
the other Party shall be entitled, in addition to any other remedy available
under this Agreement, at law or in equity, to injunctive relief, including an
accounting for profits, without the posting of bond or other security.
2.9 RECORDS.
2.9.1 RECORDS. Ligand and BMS each shall maintain records, in
sufficient detail and in accordance with recognized scientific practices
appropriate for patent and regulatory purposes, which shall be complete and
accurate and shall fully and properly reflect all work done and results achieved
in the performance of the Research Program (including all data in the form
required under all applicable laws and regulations). Such records shall include
books, records, raw data, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof, computer information storage means, samples of materials
and other graphic or written data generated in connection with the Research
Program including any data required to be maintained pursuant to all
requirements of applicable laws, rules and regulations.
2.9.2 INSPECTION OF RECORDS. During the Research Term and *** *** ,
Ligand and BMS each shall have the right, during normal business hours and upon
reasonable notice, to inspect all such records of the other Party to the extent
reasonably required for the performance of its obligations under this Agreement
(with the Party owning the records determining what is reasonably required).
Each Party shall maintain such records and the information of the other Party
contained therein in confidence in accordance with Article 8 and shall not use
such records or information except to the extent otherwise permitted by this
Agreement. Ligand shall maintain sufficient records to verify the calculation of
Ligand's allocation of Ligand FTEs to the Research Program as required under
Section 2.3. Ligand shall supply BMS with quarterly reports of the FTE
allocation to the Research Program. Not more than once each year during the
Research Term and *** , BMS shall have the right,
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13
during normal business hours and upon reasonable notice, to audit such
records to verify such allocation. BMS shall treat all financial information
subject to review under this Section 2.10 as confidential in accordance with the
terms of Article 8. Ligand shall promptly reimburse BMS for any overcharge for
services provided under the Research Program.
2.10 EXTENSION OF RESEARCH TERM.
2.10.1 *** . BMS shall have the right to extend the Research Term for
*** by giving Ligand written notice at least *** , provided that BMS has not
previously provided notice of early termination under Section 2.11. The amount
paid to Ligand per FTE during such extension shall be in accordance with Section
2.7 and the number of FTEs allocated by Ligand during such extension shall be in
accordance with Section 2.3.
2.10.2 *** . BMS shall have the right to further extend the Research
Term for *** beyond the extension period provided in Section 2.10.1 by giving
Ligand written notice at least *** . The amount paid to Ligand per FTE during
such extension shall be in accordance with Section 2.7 and the number of FTEs
allocated by Ligand during such extension shall be such number as may be
mutually agreed upon by the Parties in writing prior to such *** date (and if
not so mutually agreed upon, the Research Term shall not be extended).
2.11 EARLY TERMINATION OF THE RESEARCH PROGRAM. During the initial ***
Research Term, at any time after *** from the Commencement Date BMS shall have
the right to terminate the Research Program by giving written notice to Ligand
of its intention to do so. Notice of such early termination shall be effective
*** from the date upon which it is received by Ligand. In such event, the
Agreement shall continue in force, including the licenses granted under Sections
5.1.1 to 5.1.4 (whose duration and exclusivity is set forth in Section 5.1.5),
except that no further payment shall be due under Section 2.7 and, except as
provided in Section 4.5, Ligand shall have no further obligations to perform
with respect to the Research Program for any quarters after the effective date
of early termination of the Research Program.
2.12 ***
***
***
***.
2.13 USE AND TRANSFER OF BACKGROUND COMPOUNDS AND COLLABORATION COMPOUNDS.
2.13.1 Except for those compounds that become Background Compounds or
Collaboration Compounds in accordance with the terms of this Agreement, any
compounds that a Party provides to the other Party for screening or testing
pursuant to this Agreement shall be used only for the screening or testing
contemplated by the Technical Operating Plan or as otherwise approved in
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14
writing by the Party providing same. In no event shall a Party endeavor to
determine the structure of any compound provided to it by the other Party,
unless approved in writing by the Party providing such compound; provided, that
this sentence shall not apply to compounds that are designated by the providing
Party as Background Compounds and to Collaboration Compounds.
2.13.2 Each Party may, in its sole discretion, designate in writing
any compound owned or controlled by it as a "Background Compound", in which
event the structure of such compound shall be disclosed to the other Party at
such time. So long as the structure of a Background Compound remains
Confidential Information of the Party providing same or is covered by a Valid
Claim under Patent Rights controlled by such Party, the use of such Background
Compound shall remain controlled by the Party from which they originate (unless,
upon written notice to the other Party, such compound is designated as a
Collaboration Compound), and the other Party may use the providing Party's
Background Compound solely for (x) ***
*** , so long as they can be obtained
from such Party's compound inventory at such time without further synthesis, may
be tested for activity with respect to the Designated Target and with respect to
other receptors and other targets that do not utilize an assay, receptor, or
assay component covered by a Valid Claim of a Ligand Patent, and if so tested in
compliance with the foregoing, shall not be considered Collaboration Compounds)
and (y) synthesizing derivatives that are Collaboration Compounds for use within
the Field. Subject to applicable terms of this Agreement, each Party shall be
free to use its own Background Compounds (but not Collaboration Compounds
synthesized by it from its or the other Party's Background Compounds) outside
the Field for any business purpose during the Research Term and thereafter.
Also, any compound which is first identified, first confirmed or first
discovered by either Party during the Research Term or by BMS during the
exclusivity period set forth in Section 2.8.1 as a modulator of the Designated
Target with an *** ,
but which does not become a Collaboration Compound, shall not be used by a
Party during the Research Term and thereafter for any purpose within the Field.
2.13.3 During the Research Term, each Party shall disclose as part of
its monthly reports the structure of any Collaboration Compounds designated as
such by it or synthesized by it during the Research Term to the other Party.
Following the Research Term and during the Exclusivity Period, (x) subject to
subclause (y) that follows, BMS shall disclose to Ligand on a quarterly basis
the structure of any Collaboration Compound synthesized by it for which the
composition of matter is covered by a Valid Claim of a Ligand Patent Right known
to and licensed to BMS under this Agreement; and (y) may in its discretion
disclose to Ligand the structure of any Collaboration Compound first synthesized
by it during that quarter for which the composition of matter is or will be
covered, generically or specifically, by a patent application controlled by BMS
and its Affiliates or jointly by BMS and Ligand that has not published or issued
and that is either pending or will be filed by BMS based upon an invention
directed to such composition of matter (it being understood that once BMS
discloses a structure, BMS need not make another disclosure with respect to
further synthesis of the same structure). Such disclosure shall be treated as
Confidential Information of BMS.
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15
2.13.4 Subject to Section 8.1.1, the Parties agree that any
Collaboration Compounds, whether or not transferred from one Party to the other,
(x) will not be used during and following the Research Term within the Field for
any purpose other than in the development of Collaboration Lead Compounds and
Products in furtherance of the purposes of this Agreement as described herein,
and (y) will not transferred to any Third Party except as set forth in Section
2.5 or as permitted by this Section 2.13 or as permitted BMS pursuant to the
exercise of its rights in accordance with Article 5 in furtherance of this
Agreement. The restrictions set forth in this section 2.13.4 shall continue
*** *** ;
PROVIDED, that the lapse of such restrictions shall not imply or create a
license to a party under any patents or other intellectual property rights owned
or controlled by the other party.
2.13.5 Subject to Section 8.1.1, neither Party may use its or the
other Party's Collaboration Compounds for the discovery, synthesis, or
development of Products outside the Field (including without limitation for the
identification or discovery of compounds whose activity is mediated by any
steroid or other nuclear receptor other than the Designated Target); PROVIDED,
that
2.13.5.1 the restrictions set forth in this Section 2.13.5 on use
of Collaboration Compounds outside the Field shall continue following the
Research Term until the earlier of (i) *** or (ii) the date that it is
determined under Section 4.4.1 that BMS is not using Diligent Efforts to develop
or market at least one Collaboration Compound, at which point such restriction
shall lapse (it being understood that the lapse of such restrictions shall not
imply or create a license to a Party under any patents or other intellectual
property rights owned or controlled by the other Party); and
2.13.5.2 the restrictions set forth in this Section 2.13.5 on use
of Collaboration Compounds outside the Field shall not apply to any
Collaboration Compounds from and after the date that the structure for any such
Collaboration Compound enters the public domain (or is already in the public
domain) and the composition of such Collaboration Compound is not covered by a
Valid Claim of either Party.
2.13.6 Notwithstanding the restrictions set forth in Section 2.13.4,
BMS may transfer Collaboration Compounds to Third Parties:
2.13.6.1 subject to Section 2.5, for Pre-Clinical Development
work in the Field;
2.13.6.2 for clinical development of a Collaboration Lead
Compound in the Field during and following the Research Program; and
2.13.6.3 as permitted by the license rights granted to BMS under
Article 5 hereof.
2.13.7 The restrictions on use and transfer of Background and
Collaboration Compounds set forth in Sections 2.13.2, 2.13.4, and 2.13.5 (x)
shall not apply to any such
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Compound that is in the public domain and is not covered by a Valid Claim under
Patent Rights owned or controlled by BMS, Ligand or their respective Affiliates,
and (y) shall, where such compound was provided or licensed to a Party by a
Third Party, be subject to the terms and conditions imposed on such compound by
such Third Party agreement governing same.
2.14 TRANSFER OF COLLABORATION TECHNOLOGY. Subject to Section 5.3, neither
Party shall provide any Collaboration Technology (exclusive of Collaboration
Compounds) that is owned by the other Party to any Third Party and that remains
Confidential Information of such Party without the prior written consent of the
other Party or such other Party's members of the JRC.
2.15 EXTENSION OF EXCLUSIVITY PERIOD. BMS may elect to extend the
exclusivity covenant under Section 2.8.1 in ***
*** by:
(a) notifying Ligand, at least *** prior to the end of the then current
exclusivity covenant term, of its election to extend the exclusivity
period for *** ; and
(b) payment to Ligand of an extension fee of *** ( *** ) within *** of the
notification provided in (a);
PROVIDED, that BMS continues to use Diligent Efforts to discover, develop or
market *** Collaboration Compound, Collaboration Lead Compound or Product during
any such extension of the exclusivity period.
ARTICLE 3
MANAGEMENT OF THE RESEARCH PROGRAM
3.1 JOINT RESEARCH COMMITTEE.
3.1.1 COMPOSITION OF THE JRC. The Research Program and all
pre-clinical testing of Collaboration Compounds before commencing Pre-Clinical
Development shall be conducted under the direction of the JRC. The JRC shall be
composed of three (3) named representatives of BMS and three (3) named
representatives of Ligand. Each Party will identify its representatives to the
JRC within thirty (30) days after the Commencement Date and each Party shall
have the right to replace its representatives at any time in its sole discretion
after giving notice to the other Party.
3.1.2 RESPONSIBILITIES OF THE JRC. The purposes of the JRC shall be to
review, direct, supervise and coordinate all operational and scientific aspects
of the Research Program and all pre-clinical testing of Collaboration Compounds
before commencement of Pre-Clinical Development. As part of its
responsibilities, the JRC shall (a) promptly after the Commencement Date
establish criteria of safety and efficacy that Collaboration Compounds will need
to achieve before the JRC may recommend any such Compound to BMS for
consideration for advancement into Pre-Clinical Development as a Collaboration
Lead Compound (it being
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understood that the selection of whether a Collaboration Compounds will become a
Collaboration Lead Compound resides in BMS); (b) establish joint research teams
to carry out the Research Program, (c) review the research by Ligand and BMS
under the Research Program and the pre-clinical testing of Collaboration
Compounds before commencement of Pre-Clinical Development, (d) monitor the
progress of the Research Program and evaluate the work performed and the results
obtained in relation to the goals of the Research Program, (e) plan future
activities under, and make any necessary or desirable modifications to, the
Research Program and the Technical Operating Plan, (f) recommend Collaboration
Compounds for further evaluation by the Parties under the Research Program and
for Pre-Clinical Development and Development by BMS as a Collaboration Lead
Compound , and (g) perform such other Research Program-related functions to
which the Parties may agree in writing; provided, that any such writing that
assigns new functions to JRC the terms of which conflict with the terms of this
Agreement shall be null and void unless signed by a Senior Vice President (or
higher level employee) of both Parties. Unless otherwise agreed by the JRC, the
Party hosting each meeting of the JRC promptly shall prepare and deliver to the
other Party within fifteen (15) business days after the date of such meeting,
minutes of such meeting setting forth all decisions of the JRC relating to the
Research Program in form and content reasonably acceptable to the other Party.
The JRC shall have no functions or responsibilities following the end
of the Research Term, and, to the extent any functions or responsibilities are
assigned to the JRC under this Agreement following the Research Term, such
functions or responsibilities shall be performed by BMS. The JRC shall not have
any jurisdiction or responsibility with respect to resolving any dispute with
respect to (i) patent validity or inventorship, or (ii) the existence of
blocking Third Party intellectual property, or (iii) the filing, prosecution,
maintenance or defense of any Research Program Intellectual Property.
3.1.3 Meetings of the JRC. The JRC shall meet at least once each
quarter during the Research Term with the location alternating between
Princeton, New Jersey and San Diego, California or such other locations as the
Parties shall agree. Meetings of the JRC shall be in person, but may be held by
telephone or video conference if all members of the JRC so agree. The JRC
members will communicate regularly by telephone, facsimile and video conference.
Meetings and telephone and video conferences of the JRC may be attended by such
other directors, officers, employees, consultants and other agents of Ligand and
BMS as the Parties from time to time reasonably agree. Meetings of the JRC shall
be effective only if at least one representative of each Party is present or
participating. Each Party shall be responsible for all of its own expenses of
participating in the JRC meetings.
3.2 ACTIONS BY THE JRC; DISAGREEMENTS. All decisions of the JRC shall be
made by unanimous vote of all of the members; provided, that any actions
required by the JRC which are related to the conduct of the Research Program or
the JRC's duties and which cannot be agreed upon by unanimous vote of all
members shall be resolved by presenting the disagreement to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or
his successor as Chief Executive Officer on behalf of Ligand, and to the BMS
Senior Vice President for Applied Discovery and Exploratory Development, or
their designees (the "Executive Officers"), for good faith resolution, for a
period of *** . Each Executive Officer shall have the right to engage the
services of any number of independent
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experts in the field in question (each individual so engaged by each Executive
Officer to be engaged under obligations of confidentiality and with
consideration of competitive issues for the other Party) to assist the Executive
Officers in making a joint determination in the best interests of the
collaboration, and each Executive Officer shall be obligated to consider in good
faith the analyses and opinions of any such independent experts engaged by
either of them in making a determination.
If the Executive Officers are unable to resolve a matter referred to
them under this Section that relates to the duties and responsibilities of the
Joint Research Committee within *** after the matter is referred to them,
then BMS shall decide the disputed matter; provided that BMS shall not be
entitled to make any decision without the written consent of Ligand that would
materially increase or decrease the FTE commitments of Ligand, that would
otherwise modify or in any way materially adversely affect Ligand's rights or
obligations with respect to this Agreement, or that would otherwise conflict
with the terms of this Agreement.
3.3 PROJECT LEADERS. Ligand and BMS each shall appoint two individuals, one
of which shall be a Project Leader with responsibility for Chemistry and the
other shall be a Project Leader for Biology, to coordinate its part of the
Research Program. The Project Leaders shall be the primary contacts between the
Parties with respect to the Research Program. Each Party shall notify the other
within thirty (30) days of the date of the Commencement Date of the appointment
of its Project Leader and shall promptly notify the other Party upon changing
this appointment.
Unless otherwise mutually agreed, the Project Leaders shall meet in person
at least *** during the Research Term with the location alternating between
Princeton, New Jersey and San Diego, California or such other locations as the
Parties shall agree. The Project Leaders will communicate regularly by
telephone, facsimile, electronic communication (i.e. e-mail) and video
conference between such meetings. Each Party shall be responsible for all of its
own expenses of participating in such meetings.
ARTICLE 4
DEVELOPMENT PROGRAM
4.1 PRE-CLINICAL DEVELOPMENT. The JRC will review the characteristics of
the Collaboration Compounds identified under the Research Program, and the JRC
may select certain Collaboration Compounds to be recommended to BMS for further
work in the Field as a "Collaboration Lead Compound". Further, BMS shall have
the right in its sole discretion, but without the obligation, during the Term of
the Agreement to select Collaboration Compounds for such further work in the
Field. Upon a written recommendation by the JRC, BMS will use Diligent Efforts
to conduct all needed studies on such Collaboration Compound to determine if
such Collaboration Compound is one that would be considered for selection by BMS
as a Collaboration Lead Compound within *** of such recommendation by the JRC.
If so selected, BMS shall conduct Pre-Clinical Development of each such selected
Collaboration Lead Compound in such manner as BMS shall determine in its sole
discretion, and shall inform Ligand and the JRC of the progress and results
thereof. The procedure provided in this section
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4.1 for recommending Collaboration Compounds to be selected as Collaboration
Lead Compounds shall not preclude BMS from selecting a Collaboration Compound as
a Collaboration Lead Compound based on its own criteria for such selection.
4.2 CLINICAL DEVELOPMENT. BMS shall use Diligent Efforts to pursue the
Clinical Development and commercialization of each Collaboration Lead Compound
at its own expense and under its sole discretion. Notwithstanding anything else
in this Agreement, BMS shall have the sole discretion to determine (a) which
Products to develop or market or to continue to develop or market, (b) which
Products to seek regulatory approval for, and (c) when and where and how and on
what terms and conditions, to market such Products in the Territory.
4.3 DEVELOPMENT INFORMATION. BMS shall be the owner of any data,
information, inventions and discoveries generated as a result of the
Pre-Clinical Development, Clinical Development and commercialization of
Collaboration Lead Compounds and Products. Within *** following the commencement
of Preclinical Development by BMS of the first Collaboration Lead Compound, BMS
shall provide to Ligand a reasonably detailed written development report which
shall describe the progress of the Preclinical Development and/or Clinical
Development of the Collaboration Lead Compound or Product and the filing and
obtaining of the approvals necessary for marketing. The report shall contain not
less than the information identified in Exhibit A hereto.
4.4 ABANDONED COMPOUNDS.
4.4.1 If, at any time after the Research Term during the term of this
Agreement, if BMS determines that it will not *** use Diligent Efforts to
discover, develop or market *** Collaboration Compound or Product (taking into
account any sublicensing efforts made or being made by BMS permitted under any
sublicensing rights granted BMS under Article 5 hereof), it will notify Ligand
and Section 4.4.2 shall apply.
If Ligand believes that BMS is no longer using Diligent Efforts
to discover, develop or commercialize *** Collaboration Compound or Product
(taking into account any sublicensing efforts made or being made by BMS
permitted under any sublicensing rights granted BMS under Article 5 hereof),
Ligand shall notify BMS in writing of such belief and specify in reasonable
detail the reasons therefor. BMS shall have *** thereafter in which to provide a
written response to Ligand indicating whether BMS accepts such assertion or, if
not, specifying in reasonable detail the reason why it does not. If BMS does not
accept Ligand's assertion, the parties agree to meet and confer within ***
thereafter for the purpose of endeavoring to resolve their differences in a
mutually satisfactory manner.
If the parties cannot resolve such difference to their mutual
satisfaction within such *** (or such extended time period to which the
parties may mutually agree), then the dispute shall be referred for final and
binding arbitration in accordance with the provisions of Section 18.9 hereof for
a determination as to whether BMS has not used such Diligent Efforts. For the
purpose of such arbitration (i) BMS shall be presumed to have used Diligent
Efforts *** *** from the end of the Research Term, and Ligand shall
carry the burden of rebutting this presumption, and (ii) BMS shall be presumed
to have not used Diligent Efforts ***
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*** from the end of the Research Term, and BMS shall carry the burden of
rebutting this presumption.
If the arbitrator determines that BMS has not used Diligent
Efforts, then BMS shall have *** from such determination to provide Ligand
and the arbitrator with a proposal indicating the specific action(s) BMS is
willing to undertake ("Specific Action") in order to cure the failure to use
Diligent Efforts. The arbitrator will then determine whether BMS' proposal
adequately cures the failure to use Diligent Efforts. If the arbitrator
determines that the Specific Action, even if undertaken, would not adequately
cure the failure to use Diligent Efforts, Ligand shall be entitled, upon advance
written notice to BMS, to a license granted pursuant to Section 4.4.2 and to
terminate BMS' license rights under Sections 5.1.2, 5.1.3, and 5.1.4 hereof;
provided, that BMS shall be entitled to a reasonable period in which to sell any
finished Product inventory and to finish and sell bulk Product inventory then in
its control or possession. If the arbitrator determines that the Specific
Action, if undertaken, would adequately cure the failure to use Diligent
Efforts, then BMS shall be entitled to cure the failure to use Diligent Efforts
by undertaking the Specific Action.
4.4.2 Within *** of Ligand's receipt of a notice from BMS under
section 4.4.1, or within *** of the receipt of the arbitrator's decision in
Ligand's favor pursuant to section 4.4.1 and failure by BMS, where reasonably
practicable, to take the Specific Action determined by the arbitrator within ***
of the arbitrator giving his/her decision, BMS shall, subject to any obligations
as BMS may have to a Third Party on a Collaboration Compound provided or
licensed to BMS by such Third Party, grant to Ligand a license, *** *** , under
(i) any patent rights owned or controlled by BMS relating to the composition or
use or manufacture of any such abandoned Collaboration Compound or Product owned
or controlled by BMS or that was licensed by Ligand to BMS under Article 5
hereof, and (ii) to any regulatory filings, Pre-Clinical Data, and Clinical Data
owned or controlled by BMS relating to any such Collaboration Compound or
Product for development or use within the Field. Such license shall be *** as to
the commercialization of any Collaboration Compound or Product for use *** and
shall be *** for any *** (e.g., use of data and of Collaboration Compounds or
Products for research and development purposes). Ligand shall notify BMS in
writing of all such sublicenses, provided that Ligand may not sublicense such
rights to the extent relating to a Collaboration Compound for which the
composition is covered by a Valid Claim of an issued Patent owned or controlled
solely by BMS, except to Ligand's Affiliates, without the prior written notice
to BMS. *** *** according to
the following table, determined at the time thelicense is entered into:
- ***
- ***
- ***
- ***
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Ligand shall also be responsible for any royalties and other payments due, and
other obligations owed to, a Third Party by BMS with respect to the manufacture,
use or sale of a Collaboration Compound or Product by or for Ligand or any of
its Affiliates or licensees pursuant to such license grant from BMS. BMS shall
promptly notify Ligand of any such royalties, other payments and other
obligations, and provide Ligand with a copy of any such Third Party agreement
terms giving rise to such a royalty or other obligation.
All rights and obligations of BMS and all rights and obligations of
Ligand set forth herein with respect to the development of Collaboration
Compounds and commercialization of Products by BMS, its Affiliates or licensees
(including without limitation the indemnification provisions of Article 17
hereof) shall apply mutatis mutandis to Collaboration Compounds researched and
developed and to Products sold by Ligand, its Affiliates or licensees under the
license granted by BMS under this Section 4.4.2, subject to the following: (x)
no license granted to Ligand under Section 4.4.2 shall include rights under any
Trademarks owned or Controlled by BMS or under any manufacturing know-how owned
or controlled by BMS or its Affiliates, (y) all rights, Compounds and Products
licensed to Ligand under any this Section 4.4.2 shall be granted without any
warranty of any nature, express or implied, including without any implied
warranties as to fitness or merchantability of any type (other than that BMS has
the right to grant such a license) or infringement as to any Third Party
patents, and (z) ***
***.
Termination of BMS' rights to use and practice Ligand Intellectual
Property under Article 5 pursuant to this Section 4.4 hereunder shall be
Ligand's sole and exclusive remedy for any failure by BMS to use Diligent
Efforts to discover, develop or commercialize *** Collaboration Compound or
Product; PROVIDED, that the foregoing shall not relieve BMS of any obligation it
may have to make royalties or milestone payments hereunder based on events
occurring prior to such termination date.
4.5 CONDUCT OF SECONDARY SCREENING.
4.5.1 During the Research Term, Ligand will perform such Secondary
Screening against nuclear and other intracellular receptors in accordance with
the Technical Operating Plan and as part of its FTE commitment. Following the
Research Term and for the period of exclusivity between the Parties according to
Sections 2.8.1 and 2.15, Ligand will, if requested by BMS and so long as BMS is
using Diligent Efforts to discover or develop Collaboration Compounds, perform
such Secondary Screening of Collaboration Compounds against
***
*** and to use
Diligent Efforts to perform same within a reasonable period of such request from
BMS. Ligand's commitment for providing Secondary Screening under this provision
shall not exceed *** . All data, information, inventions and discoveries
generated or made as a result of such work conducted by Ligand following the
Research Program Term shall belong exclusively to BMS. Ligand shall not
determine or endeavor to determine the structure of any such compound provided
to it by BMS or any other biological or chemical properties of any such compound
other than those required
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22
by the testing to be performed for BMS; provided, that BMS shall disclose the
structure of any compound provided by it to Ligand for such testing the
composition of which falls within a Valid Claim of a Ligand Patent.
In the event that Ligand no longer wishes to perform such work, it shall
give BMS at least *** written notice of same, in which event BMS shall be
granted a *** right and license, *** except to BMS' Affiliates, under any
Know-How and Patent Rights owned or otherwise controlled by Ligand at such time
(or as may be developed by Ligand thereafter) solely in order to perform such
Secondary Screening for the purpose of discovering and developing compounds
within the Field and Ligand shall assist BMS in developing the necessary screens
by transferring to BMS, at its *** , such clones and other biomaterials,
reagents, cell lines, and screens as may be needed by BMS initially to develop
such Secondary Screening capacity, and, if requested by BMS will provide to BMS
bulk reagents required by BMS therefor (that BMS cannot reasonably obtain from
Third Parties) at *** . Such *** under this Section 4.5 shall be determined in
accordance with *** .
4.5.2 Nothing in this Section 4.5 or elsewhere in the Agreement shall
limit or preclude BMS' ability to test or have tested any compound for
cross-reactivity with any steroid or other nuclear receptor other than the
Designated Target without triggering such compound inclusion as a Collaboration
Compound under this Agreement as the result thereof, so long as such testing is
conducted in a manner that does not infringe a Valid Claim of a Ligand Patent.
4.6 Trademarks. BMS shall be the owner of all trademarks used, filed or
registered anywhere in the world for use with a Product.
ARTICLE 5
LICENSES -- RESEARCH, DEVELOPMENT,
MARKETING AND MANUFACTURING
5.1 BMS RIGHTS AND LIMITATIONS
5.1.1 LICENSE TO LIGAND KNOW-HOW AND BACKGROUND TECHNOLOGY. Ligand
hereby grants to BMS a worldwide right and license, without the right to grant
sublicenses except to BMS' Affiliates, to use and practice Ligand Know-How and
Ligand Background Technology, other than Ligand Background Assay Technology,
solely to the extent necessary for BMS to perform its obligations under the
Research Program and, during and following the Research Term, to develop and
commercialize Collaboration Compounds and Products in the Field.
5.1.2 LICENSE TO LIGAND BACKGROUND ASSAY TECHNOLOGY. Ligand hereby
grants to BMS a worldwide right and license, without the right to grant
sublicenses except to BMS' Affiliates, to use and practice Ligand Background
Assay Technology solely to the extent necessary for BMS to perform its
obligations under the Research Program and, during and
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23
following the Research Term, to discover and develop Collaboration Compounds and
Products in the Field.
5.1.3 LICENSE GRANT TO LIGAND COLLABORATION TECHNOLOGY. Ligand hereby
grants to BMS a worldwide right and license, without the right to grant
sublicenses except to BMS' Affiliates, to use and practice Ligand Collaboration
Technology, including Ligand's interest in any jointly-owned Collaboration
Technology but excluding its interests in Collaboration Compounds, solely to the
extent necessary for BMS to perform its obligations under the Research Program
and, during and following the Research Term, to develop Products in the Field.
5.1.4 LICENSE GRANT FOR COLLABORATION COMPOUNDS AND PRODUCTS. Ligand
hereby grants to BMS a worldwide right and license, with the right to
sublicense, under Ligand's Patent Rights, Background Technology, and
Collaboration Technology owned or Controlled by Ligand, including Ligand's
rights in any jointly owned Patent Rights and jointly-owned Collaboration
Technology, to the extent necessary, to research, develop, make, have made, use,
manufacture, have manufactured, import, promote, offer for sale, sell,
distribute, market and commercialize any Collaboration Compounds and Products in
the Field, subject to the following:
5.1.4.1 Ligand reserves the right under Ligand's Patent Rights,
Background Technology, and Collaboration Technology owned or Controlled by
Ligand to perform its duties under the Research Program or Section 4.5 hereof
with respect to any Collaboration Compounds and Products, and with respect to
any Abandoned Compounds under Section 4.4.2; and
5.1.4.2 In the event that BMS elects not to provide Ligand with
the structure of *** pursuant to Section 2.13.3(y), the license rights granted
to BMS under Section 5.1.4 shall be *** *** only, in which event Ligand may,
without liability to BMS and if used and granted in accordance with the
remaining terms of this Agreement, use itself or grant a non-exclusive license
to a Third Party under Patent Rights, Background Technology, and Collaboration
Technology owned or Controlled by Ligand, including Ligand's rights in any
jointly owned Patent Rights and jointly-owned Collaboration Technology, to the
extent necessary, to research, develop, make, have made, use, manufacture, have
manufactured, import, promote, offer for sale, sell, distribute, market and
commercialize any such non-disclosed Collaboration Compound(s) if the same
should be independently identified or discovered by Ligand or such Third Party;
provided, that the foregoing shall not prevent BMS from enforcing its rights
under, or create or imply the grant of any right or license under, any Patent
Rights owned or controlled by BMS and its Affiliates covering the composition,
manufacture, use or sale of such non-disclosed Collaboration compound.
5.1.5 DURATION AND EXCLUSIVITY OF LICENSED RIGHTS.
5.1.5.1 With respect to the rights licensed to BMS under Sections
5.1.1, 5.1.2, and 5.1.3 hereof, such grant of rights shall be *** ***
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24
***
***
*** . Unless sooner terminated pursuant
to Article 12, such license rights shall continue during the Research Term and
for so long thereafter until it is determined pursuant to Section 4.4.1 that BMS
is not using Diligent Efforts to discover, develop, or commercialize at least
one Collaboration Compound or Product within the Field.
5.1.5.2 With respect to the rights licensed to BMS under Section
5.1.4 hereof, such grant of rights shall be *** *** that BMS is not using
Diligent Efforts to discover, develop, or commercialize *** Collaboration
Compound or Product within the Field; provided, that, during the Research Term,
the foregoing rights shall be *** to the extent required for Ligand to perform
its duties under the Technical Operating Plan with respect to any Collaboration
Compounds. Unless sooner terminated pursuant to Article 12, such license rights
shall continue during the Research Term and for so long thereafter until it is
determined pursuant to Article 4.4.1 that BMS is not using Diligent Efforts to
discover, develop, or commercialize *** Collaboration Compound or Product within
the Field.
5.1.5.3 During any extension of the exclusivity period pursuant
to Section 2.15 beyond the date that is *** following the end of the Research
Term, the rights licensed to BMS under Sections 5.1.1, 5.1.2, and 5.1.3 hereof
shall be *** *** where, and only to the extent that, such activities
relate to the discovery or development of compounds and products for the
treatment or prevention of diseases, conditions or disorders that are: ***
*** *** .
5.1.6 USE OF RETAINED RIGHTS; USE OF LICENSED RIGHTS. Any Technology,
Know-How or Patent Rights not specifically licensed by a Party (the "Controlling
Party") to the other Party under this Agreement shall be retained by the
Controlling Party, and, subject to applicable terms of this Agreement (including
without limitation the restrictions set forth in Sections 2.8, 2.13, 2.14 and
2.15 hereof), may be used by the Controlling Party for any business purpose that
is not otherwise inconsistent with the purposes of this Agreement. The other
Party agrees to use the rights licensed to it by the Controlling Party solely in
accordance with the terms of Article 5 and Section 4.4.2 hereof.
5.2 LIGAND RIGHTS.
5.2.1 LICENSE TO BMS BACKGROUND TECHNOLOGY. During the Research Term,
BMS hereby grants to Ligand a worldwide, nonexclusive, royalty free license to
use and practice BMS Background Technology solely to the extent necessary to for
Ligand to perform its obligations under the Research Program.
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25
5.3 USE OF NON-RESTRICTED TECHNOLOGY AND KNOW-HOW. Subject to Sections 2.8
and 2.13 of this Agreement, nothing in any other provisions of this Agreement is
intended to prevent or restrict a Party or its Affiliates from practicing or
using for any purpose any Collaboration Technology, Background Technology, or
other technology or Know-How Controlled by the other Party or its Affiliates
that is no longer Confidential Information of such other Party under this
Agreement and for which such practice or use would not infringe a Patent Right,
copyright, or trademark Controlled by such other Party or its Affiliates.
5.4 MAINTENANCE OF CERTAIN LICENSES. Each Party agrees that, with respect
to any rights or licenses granted to it by a Third Party relating to the
Designated Target or any Background Assays incorporating the Designated Target
that, in turn, are licensed or extended (including by way of non-suit) to the
other Party pursuant to this Article 5, it shall perform and observe in all
material respects all duties and covenants under any agreements with such Third
Party required to maintain in effect such licenses or rights, and shall
otherwise use commercially reasonable efforts to maintain and enforce such
agreements, licenses and rights with respect to such Third Party, PROVIDED THAT
the foregoing shall not be construed to require that such Party maintain in
effect any agreement with a Third Party if such Party determines, in its
reasonable business judgment, that such maintenance is not in the best interests
of such Party.
5.5 SUBLICENSE RIGHTS. Wherever in this Agreement either Party is granted
the right to grant sublicenses subject to this Article 5, such Party may
exercise such right ***
***
***
***
***
*** . Each Party shall be jointly and severally responsible with its
sublicensees for failure by its sublicensees to comply with, and each Party
guarantees the compliance by each of its sublicensees with, all such applicable
restrictions and limitations in accordance with the terms and conditions of this
Agreement.
ARTICLE 6
ROYALTIES, MILESTONES AND OTHER PAYMENTS
6.1 UP-FRONT PAYMENTS.
6.1.1 FEE FOR LICENSE TO LIGAND BACKGROUND TECHNOLOGY. BMS shall pay
Ligand a fee of *** due and payable within *** following the Agreement Date for
the license granted under Section.5.1.1 for Ligand Background Technology other
than Ligand Background Assay Technology.
6.1.2 FEE FOR LICENSE TO LIGAND KNOW-HOW. BMS shall pay Ligand a fee
of *** due and payable within *** following the Agreement Date for the license
to Ligand Know-How granted under Article 5.
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26
6.1.3 FEE FOR LICENSE TO LIGAND BACKGROUND ASSAY TECHNOLOGY. BMS shall
pay Ligand a fee of *** due and payable within *** following the Agreement Date
for the license to Ligand Background Assay Technology included in the license
granted under Section 5.1.2.
6.2 ROYALTIES PAYABLE BY BMS.
6.2.1 Subject to Section 6.2.2, in consideration for the Know-How to
be provided by Ligand to the Research Program and for the licenses granted to
BMS herein under Section 5.1.5, BMS shall pay to Ligand a royalty on worldwide
sales of Products by BMS and Affiliated Customers to Non-Affiliated Customers of
BMS equal to a percentage of the annual Net Sales of such Products, where the
percentage rate applicable to a particular sale shall be determined based on the
total, worldwide annual Net Sales of Products according to the following rate
schedule:
Annual Net Sales (in millions)
ROYALTY PERCENTAGE OF EACH PRODUCT IN THE TERRITORY
------------------ --------------------------------
***% on Net Sales up to ***
***% on those Net Sales in excess of *** and up to ***
***% on those Net Sales in excess of ***
By way of clarification, the royalty on annual Net Sales of *** million would be
***% for the first *** million, ***% for the second *** million and ***% for the
remaining *** million. The royalties shall be payable with respect to a
particular Product, on a country-by-country basis, until the later of:
(a) expiration in the particular country of the last to expire Valid Claim
owned or Controlled by Ligand or jointly owned by Ligand and BMS that
is necessary to make, use, import for sale or sell such Product in
such country, or
(b) *** from the date of the first sale of such Product to a Third Party
in such country, provided that such royalty obligation shall terminate
upon ***
***
*** .
6.2.2 In the event that:
(i) Ligand or a Ligand Affiliate, or a Third Party with whom Ligand had
collaborated with respect to the development of a Competing Product,
with whom Ligand has licensed a Collaboration Compound or the right to
use the Designated Target to discover or develop compounds that
modulate the Target, or who has paid or is
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27
paying Ligand a license fee, milestone, or royalty (or any other
sales-based compensation) with respect to the research, development,
manufacture, use or sale of Competing Product should, either through
itself, its (sub)licensees or distributors, sell such Competing
Product in any country in the Territory in which BMS, its Affiliates
or licensees is then marketing a Product, or
(ii) a product containing a Pre-Existing New Ligand Affiliate Compound
should be developed or marketed by Ligand or a Ligand Affiliate, or a
Third Party in a given country within the Field, and such product is a
Competing Product,
then (x) all royalty rates payable by BMS in each such country shall be reduced
by *** during the period that both such products are marketed in such country,
and (y) BMS shall not owe *** hereunder after the first such event with
respect to the development or approval of any Product in any country. In the
event that a royalty paid to Ligand by a Third Party arises as a result of a
compulsory license under the law of the country in which the Competing Product
is sold, and provided that the particular Competing Product is not one that was
identified, discovered, researched, and/or developed by Ligand or its
Affiliates, then the royalty offset to be taken by BMS shall not ***
*** . Any royalty rates reduced in accordance with this Section 6.2.2 shall not
be subject to further reduction pursuant to Section 6.3 or Section 7.1.3.
6.3 LIMITED ROYALTY OFFSET. ***
***
***
*** . In the event that BMS obtains a license to any other Third
Party Patents in a country in order to use or sell a Collaboration Compound or
Product, pursuant to Section 7.1.3 or otherwise, BMS shall be entitled to
offset, on a country-by-country basis, *** percent (***%) of all license fees,
royalties and similarly-structured sales-based compensation actually paid to
such Third Party(ies) by BMS for such license rights in order to use or sell
such Product in such country(ies), provided, that Ligand's royalty in such
country shall not be reduced below *** (***%) of the amount it would otherwise
have received in the absence of the foregoing offset.
6.4 CURRENCY OF PAYMENT. All payments to be made under this Agreement shall
be made in United States dollars in the United States by wire transfer to a bank
account designated by the Party to be paid. Royalties earned shall first be
determined in the currency of the country in which they are earned and then
converted to its equivalent in United States currency. The buying rates of
exchange for the currencies involved into the currency of the United States
quoted by Citibank (or its successor in interest) in New York, New York at the
close of business on the last business day of the quarterly period in which the
royalties were earned shall be used to determine any such conversion.
6.5 PAYMENT AND REPORTING. The royalties due under Section 6.2 shall be
paid quarterly, within three (3) months after the close of each calendar
quarter, or earlier if practical (i.e., on or before the last day of each of the
months of June, September, December and March),
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28
immediately following each quarterly period in which such royalties are earned.
With each such quarterly payment, the payer shall furnish the payee a royalty
statement setting forth on a country-by-country basis the total number of units,
gross amount invoiced, deductions taken according to each category listed in the
Net Sales definition, and Net Sales of each Product sold hereunder for the
quarterly period for which the royalties are due.
6.6 TAXES WITHHELD. Any income or other tax that one Party hereunder, its
Affiliates or Sublicensees is required to withhold (the "Withholding Party") and
pay on behalf of the other Party hereunder (the "Withheld Party") with respect
to the royalties payable under this Agreement shall be deducted from and offset
against said royalties prior to remittance to the Withheld Party; provided,
however, that in regard to any tax so deducted, the Withholding Party shall give
or cause to be given to the Withheld Party such assistance as may reasonably be
necessary to enable the Withheld Party to claim exemption therefrom or credit
therefor, and in each case shall furnish the Withheld Party proper evidence of
the taxes paid on its behalf.
6.7 COMPUTATION OF ROYALTIES. Nothing herein contained shall obligate
either Party to pay the other Party more than one royalty on any unit of a
Product.
6.8 LICENSES TO AFFILIATES AND SUBLICENSEES. Each Party shall, at the other
Party's reasonable request, enter into license and/or royalty agreements
directly with the other Party's Affiliates and permitted Sublicensees, in lieu
of the license grant to or royalty obligation of the requesting Party; provided
such agreements would not decrease the amount of royalties which would be owed
hereunder. Such agreements shall contain the same language as contained herein
with appropriate changes in parties and territory, and this Agreement shall be
amended as appropriate. No such license and/or royalty agreement will relieve
BMS or Ligand, as the case may be, of its obligations hereunder, and such Party
will guarantee the obligations of its Affiliate or sublicense in any such
agreement. Royalties received directly from one Party's Affiliates and
Sublicensees shall be credited towards such Party's royalty obligations under
this Agreement, as applicable.
6.9 RESTRICTIONS ON PAYMENTS. Payment of royalties under this Agreement
shall be adjusted or excused to the extent necessary to comply with statutes,
laws, codes or government regulations in a particular country which restrict or
prevent such royalty payments by the seller of Products.
6.10 MILESTONE PAYMENTS.
6.10.1 TRIGGER EVENTS: As consideration for Ligand's participation in
the Research Program except to the extent provided in subpart a of this Section
6.10.1, BMS shall pay Ligand, within *** following achievement of the milestones
set forth below, milestone payments with respect to each Collaboration Lead
Compound to achieve such milestone, except as set forth in Section 6.10.2 and
6.10.3:
a. ***
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29
b. ***
***
***
c. ***
***
***
d. ***
***
e. ***
***
***
***
For convenience of reference, each of the events described in clauses (a)
through (e) above is referred to herein as a "Trigger Event".
6.10.2 BACKUP COMPOUNDS. Except as provided in this Section 6.10.2,
***
***
***. If development of the more advanced
Collaboration Lead Compound is abandoned prior to occurrence of a Trigger Event
described in Section 6.10.1, BMS will ***
*** . If the Backup Compound reaches
a Trigger Event before the Collaboration Lead Compound for which it is a Backup
Compound, BMS will make the milestone payment for that and each subsequent
Trigger Event reached by the Backup Compound but shall not be required to make
milestone payment for that and each subsequent Trigger Event realized by the
Collaboration Lead Compound as long as its Backup Compound remains in a more
developmentally advanced stage. Milestones which have not been paid for any
Backup Compound or Collaboration Lead Compound in accordance with this provision
shall become due and payable in full upon achievement of Trigger Event 6.10.1
(e) for such Backup Compound or Collaboration lead Compound.
6.10.3 SECOND GENERATION COMPOUNDS. After all milestone payments
described in Section 6.10.1 have been paid once, *** (***%) of the aggregate
milestone payments under 6.10.1(a) through (c) for any other Collaboration Lead
Compound or Backup Compound shall be due and payable within *** following
achievement by such Compound of milestone 6.10.1(c); *** percent (***%) of the
milestone payment under 6.10.1(d) shall be due and payable within *** after such
Compound achieves milestone 6.10.1(d); and the remainder of the milestone
payments for such Compound, including full payment of the last milestone, shall
be due and payable in one lump sum within *** following achievement of milestone
6.10.1(e).
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30
6.11 AUDITS.
6.11.1 Upon the written request of Ligand and reasonable (not less
than *** ) advance notice and not more than once in each calendar year, BMS
shall permit an independent certified public accounting firm of nationally
recognized standing, selected by Ligand and reasonably acceptable to BMS, at
Ligand's expense, to have access during normal business hours to such of the
records of BMS as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder for *** quarters prior to the date of such request.
The accounting firm shall be bound by confidentiality obligations and, if
requested by BMS, shall first execute an appropriate confidentiality agreement
with BMS reasonably acceptable to BMS. The accounting firm shall disclose to
Ligand (and shall provide a copy of any such report to BMS at the same time)
only whether the records are correct or not and, if applicable, the amount of
any discrepancies.
6.11.2 If such accounting firm concludes that additional royalties
were owed during such period, BMS shall pay the additional royalties within ***
of the date Ligand delivers to BMS such accounting firm's written report so
concluding. The fees charged by such accounting firm shall be paid by Ligand;
PROVIDED, HOWEVER, if the audit discloses that the royalties payable by BMS for
the audited period are more than *** percent (***%) of the royalties actually
paid for such period, then BMS shall pay the reasonable fees and expenses
charged by such accounting firm.
6.11.3 BMS shall include in each permitted sublicense granted by it
pursuant to the Agreement a provision requiring the Sublicensee to make reports
to BMS, to keep and maintain records of sales made pursuant to such sublicense
and to grant access to such records by Ligand's accounting firm to the same
extent required of BMS under the Agreement. Upon the expiration of *** following
the end of any year, the calculation of royalties payable with respect to such
year shall be binding and conclusive upon Ligand, BMS and its Sublicensees, and
such Sublicensees shall be released from any liability or accountability with
respect to royalties for such year.
ARTICLE 7
INFRINGEMENT ACTIONS BY OR AGAINST THIRD PARTIES
7.1 INFRINGEMENT OF THIRD PARTY PATENTS. In the event that a Third Party
asserts in writing or files an action against a Party alleging that such Party's
activities under this Agreement infringe such Third Party's patent rights by
reason of the research, design, synthesis, screening, development, use, sale,
import, or commercialization of any compounds under this Agreement or any
Background or Collaboration Technology under this Agreement, such Party shall
give written notice to the other Party, and the Parties will consult and
cooperate on the best course of action, subject to the following:
7.1.1 Subject to Article 17, BMS shall have the first right, but not
the obligation, to control the defense of any claim, allegation, suit, action or
proceeding (a "Claim") against Ligand, any Ligand Affiliate, BMS, any BMS
Affiliate, or any BMS sublicensee alleging the
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31
infringement of the intellectual property rights of a Third Party (other than
claims asserted by reason of the duties performed by Ligand under this Agreement
or by reason of the making or expression or use by Ligand or BMS pursuant to
this Agreement of the Designated Target to conduct Primary Screening or testing
or of any other molecular target or nuclear receptor in the conduct Secondary
Screening) by reason of (i) the research, development, manufacture, use or sale
of a Collaboration Compound or Product by or on behalf of BMS, any BMS
Affiliate, or any BMS sublicensee; or (ii) any other tasks or activities
performed by BMS under the Research Program; PROVIDED, that the foregoing shall
not in any way prevent Ligand at its expense from asserting a defense against
any such Claim asserted against it until such time as BMS has undertaken defense
of such Claim, and provided that Ligand may not settle or compromise any such
Claim asserted against it without BMS' prior written consent (and without first
giving BMS at least thirty (30) days' written notice of any proposed settlement
by Ligand of any such Claim), except in the circumstance where such settlement
is without prejudice to BMS and provided that any such defense, settlement or
compromise by Ligand shall also be in compliance with section 7.1.1.2 hereof. If
BMS undertakes such defense, then Ligand may not settle or compromise such Claim
that was asserted against it without BMS' prior written consent, subject to the
following:
7.1.1.1 BMS will consult with Ligand as to any significant
actions that BMS proposes to take with respect to such defense. Ligand will
provide BMS reasonable assistance necessary to defend or settle such Claim, and
BMS shall reimburse Ligand for any out-of-pocket costs incurred by it to Third
Parties at BMS' request in providing such cooperation and assistance;
7.1.1.2 BMS will have the right to exclusive control of the
defense of such Claim and the exclusive right to compromise, litigate, settle or
otherwise dispose of such Claim, including the sole discretion to determine
actions to be taken or not taken in connection therewith and the terms of any
settlement; provided that BMS may not settle such Claim in any manner that would
require payment by Ligand, or would materially adversely affect Ligand's rights
in the Ligand Background or Collaboration Technology (it being understood that
the foregoing shall not preclude BMS' sublicensing without Ligand's consent any
such rights if permitted by, and in accordance with, the terms of this
Agreement), or would conflict with the terms of this Agreement, or would require
an admission of wrongdoing on Ligand's part, without first obtaining Ligand's
written consent, not to be unreasonably withheld;
7.1.1.3 Ligand shall execute all documents, provide pertinent
records, and take all other actions, at BMS' expense, including taking
reasonable efforts to have persons within its control to give testimony, which
may be reasonably required in connection with such defense of such Claim and to
provide BMS with the authority to conduct the defense as provided above; and
7.1.1.4 If BMS notifies Ligand in writing that BMS will not
defend Ligand against any such Claim asserted against Ligand, or if BMS fails to
timely and fully defend any such Claim asserted against Ligand or its
Affiliates, Ligand shall have the right, but not the obligation, to defend or
take other reasonable action to defend its interests in such proceedings, and
shall have the right to litigate, settle or otherwise dispose of any such Claim;
PROVIDED, however, that Ligand shall not have the right to settle such Claim in
a manner that would materially diminish or materially adversely affect the
scope, exclusivity, or duration of the
32
Ligand Background Technology, Ligand Collaboration Technology or Ligand Patent
Rights or Know-How covering any Collaboration Compounds licensed to BMS
hereunder, or would conflict with this Agreement, or would require a payment by
BMS to such Third Party, or would require an admission of legal wrongdoing on
BMS' part, without the prior written consent of BMS. BMS agrees to provide
reasonable assistance, at Ligand's request and expense, in connection with
Ligand's defense of such Claim.
7.1.2 Subject to Article 17, Ligand shall have the first right, but
not the obligation, to control the defense of any Claim against Ligand, any
Ligand Affiliate, BMS, any BMS Affiliate, or any Ligand sublicensee alleging the
infringement of the intellectual property rights of a Third Party by reason of
(i) the duties performed by Ligand under this Agreement or by reason of the
composition or use by Ligand or BMS pursuant to this Agreement of the Designated
Target to conduct Primary Screening or testing or of any other molecular target
or nuclear receptor in the conduct Secondary Screening, or (ii) the manufacture,
use or sale of a Collaboration Compound or Product by or on behalf of Ligand,
any Ligand Affiliate, or any Ligand sublicensee; PROVIDED, that the foregoing
shall not in any way prevent BMS at its expense from asserting a defense against
any such Claim asserted against it until such time as Ligand has undertaken
defense of such Claim, and provided that BMS may not settle or compromise any
such Claim asserted against it without Ligand's prior written consent (and
without first giving Ligand at least thirty (30) days' written notice of any
proposed settlement by BMS of any such Claim). Any such defense, settlement or
compromise by Ligand shall also be in compliance with section 7.1.2.2 hereof. If
Ligand undertakes such defense, then BMS may not settle or compromise such Claim
that was asserted against it without Ligand's prior written consent, subject to
the following:
7.1.2.1 Ligand will consult with BMS as to any significant
actions that Ligand proposes to take with respect to such defense. BMS will
provide Ligand reasonable assistance necessary to defend or settle such Claim,
and Ligand shall reimburse BMS for any out-of-pocket costs incurred by it to
Third Parties at Ligand's request in providing such cooperation and assistance;
7.1.2.2 Ligand will have the right to exclusive control of the
defense of such Claim and the exclusive right to compromise, litigate, settle or
otherwise dispose of such Claim, including the sole discretion to determine
actions to be taken or not taken in connection therewith and the terms of any
settlement; provided that Ligand may not settle such Claim in any manner that
would require payment by BMS, or would materially adversely affect BMS' rights
in the Ligand Background or Collaboration Technology (except that Ligand may
sublicense such rights if in accordance with this Agreement without the consent
of BMS), or would conflict with the terms of this Agreement, or would require an
admission of wrongdoing on BMS' part, without first obtaining BMS' written
consent, not to be unreasonably withheld;
7.1.2.3 BMS shall execute all documents, provide pertinent
records, and take all other actions, at Ligand's expense, including taking
reasonable efforts to have persons within its control to give testimony, which
may be reasonably required in connection with such defense of such Claim and to
provide Ligand with the authority to conduct the defense as provided above; and
33
7.1.2.4 If Ligand notifies BMS in writing that Ligand will not
defend BMS against any such Claim asserted against BMS, or if Ligand fails to
timely and fully defend any such Claim asserted against BMS or its Affiliates,
BMS shall have the right, but not the obligation, to defend or take other
reasonable action to defend its interests in such proceedings, and shall have
the right to litigate, settle or otherwise dispose of any such Claim; PROVIDED,
however, that BMS shall not have the right to settle such Claim in a manner that
would materially diminish or materially adversely affect the scope, exclusivity,
or duration of the BMS Background Technology, BMS Collaboration Technology or
BMS Patent Rights or Know-How covering any Collaboration Compounds licensed to
Ligand hereunder, or would conflict with this Agreement, or would require a
payment by Ligand to such Third Party, or would require an admission of legal
wrongdoing on Ligand's part, without the prior written consent of Ligand. Ligand
agrees to provide reasonable assistance, at BMS' request and expense, in
connection with BMS' defense of such Claim.
7.1.3 Any judgments, settlements or damages payable with respect to
legal proceedings covered by this Article 7 shall be paid by *** ,
subject to any claims against the other Party for breach of this Agreement or
otherwise available at law or in equity. ***
*** subject to any
claims against the other Party for breach of this Agreement or otherwise
available at law or in equity; PROVIDED, HOWEVER, ***
***
***
***
*** .
7.2 INFRINGEMENT OF PATENTS WITHIN THE FIELD. If a Party becomes aware that
a Third Party is infringing any rights in the other Party's Patents or
Technology or Joint Patents or Joint Technology owned or Controlled by such
other Party hereunder (the "IP Controlling Party") by reasons of actions by such
Third Party in the Field (a "Field Infringement"), such Party shall give written
notice to the other Party describing in detail the nature of such infringement.
For Joint Patents or Joint Technology relating to compounds or Products in the
Field, BMS shall be considered the IP Controlling Party for purposes of this
Section 7.2. For Joint Patents or Joint Technology relating to research tools
and assay technology relating to the Designated Target that are used to identify
or characterize compounds in the Field, Ligand shall be considered the IP
Controlling Party for purposes of this Section 7.2 Both Parties shall use all
reasonable efforts in cooperating with each other to terminate such Field
Infringement without litigation. If such reasonable efforts are unsuccessful,
the Parties shall then proceed as follows:
7.2.1 The Party whose Patents or Technology are being infringed or
misappropriated shall have the first right to control and to take any action or
bring any proceeding with respect to such Field Infringement at its own expense
and by counsel of its own choice as to any such Patents or Technology owned or
controlled by it, and, subject to the foregoing, the non-IP Controlling Party
shall have the right, at its own expense, to be represented
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34
in any proceeding involving any Technology or Patents licensed to it hereunder
for use within the Field at such time using counsel of its own choice. If the IP
Controlling Party fails to take any action or bring any proceeding as to such
Field Infringement within (i) *** *** following receipt of written notice from
the non-IP Controlling Party with respect to such alleged infringement (and
which references the commencement of said *** in such notice) or (ii) *** before
the time limit, if any, set forth in the appropriate laws and regulations for
the filing of such actions, whichever comes first, then the non-IP Controlling
Party shall, to the extent relating to any Technology or Patents semi- or
exclusively licensed to it hereunder for use within the Field at such time, have
the right, to bring and control any such action at its own expense and by
counsel of its own choice, and, subject to the foregoing, the Controlling
Technology Party shall have the right, at its own expense, to be represented in
any such action by counsel of its own choice
7.2.2 If a Party brings an infringement action under Section 7.2.1
with respect to a Field Infringement, the other Party shall cooperate fully,
including if required to bring such action, the furnishing of a power of
attorney and/or joining as a plaintiff. The IP Controlling Party will consult
with the non-IP controlling Party as to any significant actions that the IP
Controlling Party proposes to take with respect to same. The non-IP Controlling
Party shall give the IP Controlling Party the exclusive control of the
prosecution of such action and the exclusive right to compromise, litigate,
settle or otherwise dispose of such action. The non-IP Controlling Party also
will provide reasonable assistance as necessary to prosecute or settle such
action. The IP Controlling Party shall have sole discretion to determine actions
to be taken or not taken in connection therewith and the terms of any
settlement; provided, however, that the IP Controlling Party shall not have the
right to settle any patent infringement litigation under Section 7.2.1 without
the prior written consent of the other Party (not to be unreasonably withheld or
delayed) in a manner that materially diminishes or materially adversely affects
the scope, exclusivity, or duration of any Patent Rights or Technology then
licensed to the non-IP Controlling Party hereunder (except that the Controlling
Technology Party may sublicense such rights if in accordance with this Agreement
without the consent of the other Party), which would conflict with this
Agreement, which would require a payment by the other Party hereunder to such
Third Party infringer, or which would require an admission of legal wrongdoing
by the other Party. Except as otherwise provided in a cost sharing arrangement
between the Parties, ***
***
***
***
***
***
***
*** .
7.3 INFRINGEMENT OF PATENTS OUTSIDE THE FIELD. If a Party becomes aware
that a Third Party is infringing any rights in Technology or Patents owned or
Controlled solely by the other Party (the "IP Controlling Party") by actions of
such Third Party outside the Field, such Party shall give written notice to the
IP Controlling Party describing in detail the nature of such
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Confidential Treatment and filed separately with the Commission.
35
infringement. The IP Controlling Party shall have the sole right to enforce its
Technology and Patents against such Third Party infringer's uses outside the
Field. The other Party agrees to provide the IP Controlling Party all reasonable
assistance, at the IP Controlling Party's expense, in such enforcement. The IP
Controlling Party will have the right to exclusive control of all proceedings
relating to such infringement and the exclusive right to compromise, litigate,
settle or otherwise dispose of any such infringement claim, cause of action,
suit or other proceeding, including the sole discretion to determine actions to
be taken or not taken in connection therewith and the terms of any settlement;
provided that the IP Controlling Party may not, without first obtaining the
other Party's prior written consent settle or compromise any such claim, cause
of action, suit or other proceedings in any manner that would require a payment
by the other Party, or would materially adversely affect any rights or interests
of the other Party or in the Field in the Controlling Party's Patent Rights or
Technology, or would conflict with the terms of this Agreement.
7.4 INFRINGEMENT OF JOINT PATENTS AND TECHNOLOGY OUTSIDE THE FIELD.
7.4.1 Except as provided in Section 7.4.2, each Party shall have the
right to independently enforce the Patent Rights and Technology jointly owned by
both Parties against Third Party infringers outside the Field. The Party not
bringing the enforcement action shall provide all reasonable assistance to the
Party bringing the action, at the expense of the Party bringing the action.
However, the controlling Party shall not have the right to settle any patent
infringement litigation under this Section 7.4 without the prior written consent
of the other Party (not to be unreasonably withheld or delayed) in a manner that
materially diminishes or materially adversely affects the scope, exclusivity, or
duration of the Joint Patents or Technology then licensed to the non-controlling
Party hereunder (except that the controlling Party may sublicense such rights if
in accordance with this Agreement without the consent of the other Party), which
would conflict with this Agreement, which would require a payment by the other
Party hereunder to such Third Party infringer, or which would require an
admission of legal wrongdoing by the other Party. Regardless of which Party
brings such enforcement action, the Party not bringing the action shall have the
right to participate in such action at its own expense with its own counsel. Any
damages or other recovery, whether by settlement or otherwise, from an action
hereunder to enforce the Joint Patents shall ***
***
*** .
7.4.2 Jointly-owned Patents and Technology licensed to a Party
pursuant to Article 5 shall be enforced against a Third Party infringing same
outside the Field in the same manner as any other Patent Rights or Technology
solely owned or controlled by such Party that is subject to, and in accordance
with, the terms and conditions of this Article 7. Any damages or other recovery,
whether by settlement or otherwise, from an action hereunder to enforce such
Joint Patents against an infringer outside the Field shall ***
***
*** .
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Confidential Treatment and filed separately with the Commission.
36
7.5 PATENT MARKING. BMS, its Affiliates and sublicensees shall ▇▇▇▇ all
Products manufactured, used or sold under the terms of this Agreement, or their
containers, in accordance with the applicable patent marking laws.
7.6 LICENSED PATENTS. For Patents which are licensed by the IP Controlling
Party from a Third Party, the rights granted to the non-IP Controlling Party
under this Article 7 are subordinate to the rights of the Third Party licensor
and, to the extent sublicensed to the non-IP Controlling Party hereunder, the
non-IP Controlling Party shall comply with applicable terms and conditions of
such license.
ARTICLE 8
CONFIDENTIALITY
8.1 NONDISCLOSURE OBLIGATIONS.
8.1.1 Except as otherwise provided in this Article 8 and subject to
Article 9 hereof, during the Research Term and for a period of *** thereafter,
(a) both Parties shall use commercially reasonable efforts to maintain in
confidence all Collaboration Technology and information and data developed
pursuant to the Collaboration and solely owned by the disclosing Party or
jointly owned by the Parties; and (b) a Party shall also use commercially
reasonable efforts to maintain in confidence and use only for purposes of this
-Agreement all Background Technology supplied by the other Party under this
Agreement. The foregoing restrictions are not intended to preclude a Party or
its Affiliates from using in internal research and development only outside the
Field, but subject to Section 2.13 hereof, such Know-How of the other Party
disclosed to it under this Agreement that relates to *** and that is not subject
to a Valid Claim of a Patent Right solely owned or Controlled by the other
Party.
8.1.2 Except as otherwise provided in this Article 8 and subject to
Article 9 hereof, during the Term of this Agreement and for a period of ***
thereafter, Ligand shall use commercially reasonable efforts to maintain in
confidence and shall not use except in furtherance of this Agreement: (a) all
technology, information (including without limitation, reports, business and
research plans and strategies, compounds in development) and data (including
without limitation pre-clinical and clinical data, customer information, and
sales and marketing data) supplied to it by BMS following the Research Term in
furtherance of this Agreement and (b) all Secondary Screening information and
data developed by Ligand for BMS pursuant to Section 4.5.
8.2 PERMITTED DISCLOSURES. For purposes of this Article 8, information and
data described in clauses (a) or (b) of Sections 8.1 and 8.2 above shall be
referred to as "Confidential Information". To the extent it is reasonably
necessary or appropriate to fulfill its obligations or exercise its rights under
this Agreement, (a) a Party may disclose Confidential Information it is
otherwise obligated not to disclose under this Article 8 to its Affiliates,
Sublicensees, consultants, outside contractors, clinical investigators, agent,
suppliers and other Third Parties in
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
37
furtherance of this Agreement on a need-to-know basis on condition that such
persons or entities agree to keep the Confidential Information confidential for
the same time periods and to the same extent as such Party is required to keep
the Confidential Information confidential; (b) a Party or its Affiliates or
Sublicensees may disclose such Confidential Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to conduct Pre-Clinical Development, Clinical Development or
commercialization of Collaboration Lead Compounds or Products or to obtain
patents on Collaboration Technology, Collaboration Compounds, or Products; (c) a
Party may disclose Confidential Information as required by applicable law,
regulation or judicial process, provided that, where practicable, such Party
shall give the other Party prior written notice thereof and adequate opportunity
to object to any such disclosure or to request confidential treatment thereof;
and (d) a Party may disclose Confidential Information as permitted under Article
9.
The obligation not to disclose or use the Confidential
Information shall not apply to any part of the Confidential Information that (i)
is or becomes patented, published or otherwise part of the public domain other
than by acts of the Party obligated not to disclose such Confidential
Information or its Affiliates or Sublicensees in contravention of this
Agreement; or (ii) is disclosed to the receiving Party or its Affiliates or
Sublicensees by a Third Party without obligation as to confidentiality or
restriction as to use, provided such Confidential Information was not obtained
by such Third Party directly or indirectly from the other Party on a
confidential basis; or (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving Party or any of its Affiliates or
Sublicensees, provided such Confidential Information was not obtained directly
or indirectly from the other Party on a confidential basis; (iv) is
independently developed by the employees or contractors of the receiving Party
or any of its Affiliates or sublicenses without aid or use of the Confidential
Information; or (v) is disclosed in a press release agreed to by both Parties
under Section 8.3 below; PROVIDED, that the foregoing exceptions (i)-(v) shall
not create or imply any right or license under any patent rights, copyrights,
trademarks owned or controlled by a Party or its Affiliates.
8.3 PUBLICITY. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby (other than
publications by BMS of results of Pre-Clinical Development, Clinical Development
or post-marketing research) shall be reviewed in advance by, and shall be
subject to the approval of, both Parties; provided, however, that either Party
may (a) publicize the existence and general subject matter of this Agreement
without the other Party's approval, (b) disclose the terms of this Agreement
only to the extent required to comply with applicable securities laws and in the
case of (b), the non-disclosing Party shall have the right to review and comment
on such disclosure prior to its submission and the disclosing Party shall
cooperate to minimize the scope and content of such disclosure, and (c) disclose
the terms of this Agreement to prospective lenders, investment bankers and other
financial institutions of its choice (and their advisors) solely for purposes of
financing the business operations of such Party or to prospective entities (and
their advisors) with which it may merge, purchase or consolidate, but only if
the disclosing Party obtains a signed confidentiality agreement with such entity
upon terms similar to those contained in this Article 8.
38
ARTICLE 9
PUBLICATION
9.1 PUBLICATION GENERALLY. Subject to Section 9.2:
The Parties shall cooperate in appropriate publication of the results
of the Research Program, but subject to the predominating interest to obtain
patent protection for any patentable subject matter. To this end, it is agreed
that prior to any public disclosure of such results, the Party proposing
disclosure shall send the other Party a copy of the information to be disclosed,
and shall allow the other Party ***......from the date of receipt in which to
determine whether the information to be disclosed contains subject matter for
which patent protection should be sought prior to disclosure, or otherwise
contains Confidential Information of the reviewing Party which such Party
desires to maintain as a trade secret. If notification is not received during
the *** period, the Party proposing disclosure shall be free to proceed with the
disclosure. If due to a valid business reason or a belief by the non-disclosing
Party that the disclosure contains subject matter for which a patentable
invention should be sought, then prior to the expiration of the *** period, the
non-disclosing Party shall so notify the disclosing Party, who shall then delay
public disclosure of the information for an additional period of up to *** to
permit the preparation and filing of a patent application on the subject matter
to be disclosed or other action to be taken. The Party proposing disclosure
shall thereafter be free to publish or disclose the information. The
determination of authorship for any paper shall be in accordance with accepted
scientific practice.
9.2 RESTRICTIONS ON PUBLICATION. In no event may any publication or other
disclosure contain a Party's Confidential Information without such Party's prior
written consent. Ligand shall not publish the results of the Research Program or
the results of the Pre-Clinical Development or the Clinical Development of any
Collaboration Lead Compound or any other information or data relating to a
Collaboration Compound, Collaboration Lead Compound or Product without BMS'
prior written consent. BMS may publish the results of the Pre-Clinical
Development and Clinical Development without Ligand's prior written consent
provided that no such publication shall contain Confidential Information solely
owned by Ligand.
ARTICLE 10
PATENTS AND INVENTIONS
10.1 OWNERSHIP OF BACKGROUND TECHNOLOGY. Except as otherwise set forth
herein, each Party shall retain ownership or Control, as the case may be, over
its Background Technology. The owner of any patentable Background Technology
shall have the right, at its option and expense, to prepare, file and prosecute
(including without limitation in administrative proceedings such as oppositions
and interferences) in its own name any patent applications with respect to such
Background Technology and to maintain any patents issued.
10.2 OWNERSHIP OF COLLABORATION TECHNOLOGY. Except as otherwise set forth
herein, ownership of Collaboration Technology (whether or not patentable) shall
be owned by the Party(ies) whose employee(s) are determined to be inventors in
accordance with United States
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Confidential Treatment and filed separately with the Commission.
39
laws of inventorship. Subject to Section 10.3, the owner (the "Inventor") of any
patentable Collaboration Technology (an "Invention") shall have the right, at
its option and expense and through attorneys and agents of its choice, to
prepare, file and prosecute (including any proceedings relating to reissues,
reexaminations, protests, interferences and requests for patent extensions or
supplementary protection certificates) in its own name any patent applications
with respect to any Invention owned by it and to maintain any patents issued. In
connection therewith, the non-Inventor Party agrees to cooperate with the
Inventor at the Inventor's expense in the preparation and prosecution of all
such patent applications and in the maintenance of any patents issued. The
obligations set forth in this Section 10.2 shall survive the expiration or
termination of this Agreement.
10.3 JOINT INVENTIONS. Collaboration Technology jointly invented by Ligand
and BMS will be jointly owned by Ligand and BMS; however, subject to Section
10.2, BMS will have the rights and responsibilities of the Inventor as described
in this Section 10 with respect to the preparation, filing, prosecution and
maintenance of patent applications in the name of both owners for any such
patentable, jointly owned Collaboration Technology and Ligand shall have the
rights and responsibilities of a non-Inventor therein. BMS shall have the right
but not the obligation to pay all expenses in connection with the preparation,
filing and prosecution of patent applications that claim patentable, jointly
owned Inventions. BMS shall from time to time notify Ligand of the amount of
such expenses, and Ligand shall promptly thereafter pay BMS *** percent (***%)
of its out-of-pocket expenses. As used in the preceding sentence "out-of-pocket
expenses" means direct costs, excluding internal labor costs. Ligand may elect
in writing to disclaim all interest in any jointly invented Invention, in which
case (a) such Invention will be solely owned by BMS, and Ligand will cooperate
to assure BMS' sole ownership, (b) Ligand will have no further interest in such
Invention, by ownership, license or otherwise, and (c) Ligand will not be
responsible for reimbursing BMS for any expenses incurred by BMS from and after
the date that BMS receives Ligand's written disclaimer. BMS may elect in writing
to disclaim all interest in any jointly invented Inventions, in which case (i)
such Invention will be solely owned by Ligand and Ligand shall be solely liable
for any expenses incurred with respect to such Invention after BMS' disclaimer,
and BMS will cooperate to assure Ligand's sole ownership, (ii) BMS will have no
further interest in such Invention, by ownership, license or otherwise, and
(iii) BMS will, at Ligand's cost and request, continue the preparation, filing
and prosecution of the relevant patent application(s) for up to *** following
BMS' delivery of written disclaimer, if failure to so continue would have a
material adverse impact on such patent application(s). Subject to the terms of
this Agreement, each Party may freely exploit any of its own Inventions or any
Joint Inventions, without obligation or accounting to the other Party.
10.4 PROTECTION OF PATENT RIGHTS.
10.4.1 The Inventor shall prepare, prosecute and maintain (and shall
use reasonable efforts to keep the other Party currently informed of all steps
to be taken in such preparation, prosecution and maintenance) all of its Patent
Rights which claim an Invention and upon request shall furnish the other Party
with copies of such Patent Rights and other related correspondence relating to
such Invention to and from patent offices and permit the other Party to offer
its comments thereon before the Inventor makes a submission to a patent office
which
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40
could materially affect the scope or validity of the patent coverage that may
result. The non-Inventor Party shall offer its comments promptly. Ligand and BMS
shall each promptly notify the other of any infringement or unauthorized use of
an Invention which comes to its attention.
10.4.2 If the Inventor fails to (i) fulfill its obligations under this
Article 10, or (ii) protect against abandonment of a Patent Right which claims
an Invention, the Inventor shall permit the non-Inventor Party, at its option
and expense, to undertake such obligations, and thereafter such Patent Rights
shall be deemed to be assigned to such non-Inventor Party. The Party not
undertaking such actions shall fully cooperate with the other Party and shall
provide to the other Party whatever assignments and other documents that may be
needed in connection therewith.
10.5 NOTIFICATION OF PATENT TERM RESTORATION AND THIRD PARTY ABBREVIATED
NEW DRUG APPLICATIONS. Ligand or BMS, as the case may be, shall notify the other
Party of (a) the issuance of each U.S. patent, or foreign patent where extension
is possible, included within the Patent Rights which claim an Invention, giving
the date of issue and patent number for each such patent, and (b) each notice
pertaining to any patent included within the Patent Rights which claim an
Invention which it receives as patent owner pursuant to the Drug Price
Competition and Patent Term Restoration Act of 1984 (hereinafter called the
"Act") or equivalent foreign laws, including notices pursuant to 21 U.S.C.
ss.355(b)(3) and ss.355(j)(2)(B) from persons who have filed an abbreviated NDA
("ANDA"). Such notices shall be given promptly, but in any event within five
calendar days of each such patent's date of issue or receipt of each such notice
pursuant to the Act, whichever is applicable.
10.6 DISPUTES REGARDING INVENTORSHIP. Any dispute between the Parties
regarding the inventorship of an Invention or Joint Invention made under the
Research Program shall be resolved through appointment of an independent patent
counsel, mutually acceptable to the Parties, after consideration of all evidence
submitted by the Parties. The expense of the independent patent counsel shall be
borne equally by Ligand and BMS. Prior to the selection of such counsel, each
Party shall disclose to the other the dollar volume of work performed by such
patent counsel (and/or his law firm) for such Party and its Affiliates over the
preceding five (5) years.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents
and warrants to the other Party, as of the Agreement Date, as follows:
11.1.1 CORPORATE EXISTENCE AND POWER. Such Party (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
state in which it is incorporated, (b) has the corporate power and authority and
the legal right to own and operate its property and assets, to lease the
property and assets it operates under lease, and to carry on its business as it
is now being conducted, and (c) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not have a
material adverse effect on such Party's ability to perform its obligations under
this Agreement.
41
11.1.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such Party (a)
has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such Party, and
constitutes a legal, valid, binding obligation, enforceable against such Party
in accordance with its terms.
11.1.3 CONSENTS. All necessary consents, approvals and authorizations
of all governmental authorities and other Third Parties required to be obtained
by such Party in connection with the execution, delivery and performance of this
Agreement have been and shall be obtained.
11.1.4 Notwithstanding anything to the contrary in this Agreement, the
execution and delivery of this Agreement and the performance of such Party's
obligations hereunder do not conflict with or violate any requirement of
applicable laws or regulations or any of the terms of its certificate of
incorporation or by-laws. Each Party represents and warrants to the other Party
that, notwithstanding anything to the contrary in this Agreement, the execution
and delivery of this Agreement, the performance of such Party's obligations in
the conduct of the Research Program under this Agreement and the licenses and
sublicenses to be granted pursuant to this Agreement (a) do not and will not
conflict with or violate any requirement of applicable laws or regulations
existing as of the Effective Date, and (b) do not and will not conflict with,
violate, breach or constitute a default or require any consent under, any
contractual obligations of such Party or any of its Affiliates existing as of
the Effective Date, except for such consents as shall have been obtained prior
to the Effective Date.
11.1.5 INTELLECTUAL PROPERTY. Such Party (a) owns or is the licensee
in good standing of all Patent Rights presently contemplated to be used by it in
connection with the Research Program, except to the extent that such use is to
be based upon patents, trademarks and other intellectual property furnished by
the other Party; (b) is not in default with respect to any license agreement
related to the Research Program; and (c) has received no notice of infringement
or misappropriation of any alleged rights asserted by any Third Party in
relation to any Background Technology to be used by it, or with respect to the
use of the Designated Target, in connection with the conduct of the Research
Program or the research, development or commercialization of Collaboration
Compounds or Products within the Field. Such Party agrees to immediately notify
the other Party in writing in the event such Party hereafter becomes in default
under any license agreement referred to in (b) above, or receives a notice of
the type referred to in (c) above. Each Party further represents and warrants to
the other Party that the Background Technology Controlled by such Party that is
expected to be utilized by such Party or the other Party in the Research Program
(based on the duties expected to be performed by it under the Technical
Operating Plan as of the Effective Date) has not been developed or obtained by
such Party or its Affiliates in violation of any contractual obligation to any
Third Party nor has it been misappropriated from any Third Party.
11.1.6 NO SUITS. Each Party represents and warrants to the other Party
that, as of the Effective Date, there is no action, suit or proceeding which is
pending or, to the knowledge of such Party, no written claim or demand of any
Third Party that has been received, that challenges or would materially
adversely affect (i) the right of such Party to use (or to permit the Third
42
Party to use) in the conduct of the Research Program and development and
commercialization of any Collaboration Compounds or Products any Patent Rights,
any Background Technology, any Background Compounds (to the extent known and
designated as such as of the Agreement Date), and the Designated Target that are
Controlled by such Party that are reasonably expected to be utilized by such
Party or the other Party to fulfill its duties under the Research Program that
it expects to perform as of the Effective Date, or (ii) the right of such Party
to grant to the other Party the rights and licenses to use such Patent Rights or
Technology granted as of the Effective Date hereunder.
11.1.7 NO BREACH OF SECTION 2.8. Each Party is not now party to any
agreement that, if entered into after the Agreement Date, would be a violation
of Section 2.8 of this Agreement.
11.1.8 COMPLIANCE UNDER THIRD PARTY AGREEMENTS. Each Party is in
compliance in all material respects with any agreements with Third Parties which
comprise any of the Background Technology and Background Compounds to be
provided or granted to each other herein.
11.2 LIGAND REPRESENTATIONS AND WARRANTIES. Ligand represents and warrants
to BMS that as of the Agreement Date:
11.2.1 The Patent Rights and Background Technology Controlled by
Ligand relating to the composition or use of the Designated Target, to any
Background Assays, and to any Background Compounds existing as of the Agreement
Date have not been licensed or made available to any Third Party as of the
Agreement Date in order to discover, identify, research, develop or
commercialize compounds within the Field.
11.2.2 There are no contractual restrictions imposed on Ligand or any
of its Affiliates that would materially adversely affect (x) the right of Ligand
to use in the conduct of the Research Program the Patent Rights, the Background
Technology, the Designated Target, and the Background Compounds (designated as
such hereunder as of the Effective Date) to the extent owned by or licensed to
Ligand as of the Effective Date that would be necessary or useful to the conduct
of the Research Program (based on the duties expected to be performed by each
Party under the Research Program as of the Effective Date), or (y) the right of
Ligand to grant to BMS the rights and licenses to use such Patent Rights,
Background Compounds, Designated Target, or Background Technology granted
hereunder to discover, develop and commercialize Collaboration Compounds and
Products in the Field; and
11.2.3 The use in the conduct of the Research Program of the Patent
Rights or Technology Controlled by Ligand as of the Effective Date to the extent
they are utilized by Ligand in the Research Program (based on the duties
expected to be performed by Ligand under the Research Program as of the
Effective Date) will not result in the imposition of any financial obligations
on BMS in connection with BMS' exploitation of the rights and licenses granted
to it hereunder by Ligand to use such Patent Rights or Technology, except for
the financial obligations of BMS to Ligand set forth in this Agreement.
43
11.2.4 During the term of this Agreement, Ligand will use commercially
reasonable efforts not to diminish the rights under its Background Technology,
Collaboration Technology, and Background Compounds and Collaboration Compounds
granted to BMS herein, including without limitation by not committing or
permitting any acts or omissions which would cause the breach of any agreements
between itself and Third Parties which provide for intellectual property rights
applicable to the development, composition, manufacture, use or sale of
Collaboration Compounds and Products. Ligand agrees to provide promptly BMS with
notice of any such alleged breach.
11.3 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY LIGAND OR BMS (A) THAT ANY
PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE PATENT
RIGHTS, (B) THAT ANY PATENT WITHIN THE PATENT RIGHTS WHICH ISSUES WILL BE VALID,
OR (C) THAT, EXCEPT FOR THE PROVISIONS OF SECTIONS 11.1 AND 11.2 HEREIN WHICH
SHALL NOT BE AFFECTED BY THIS SECTION 11.3, THE USE OF ANY LICENSE GRANTED
HEREUNDER OR THE USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR
PROPRIETARY RIGHTS OF ANY THIRD PARTY. FURTHERMORE, NEITHER LIGAND NOR BMS MAKES
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PATENT RIGHTS EXCEPT AS PROVIDED IN THIS ARTICLE 11. LIGAND AND BMS EACH
SPECIFICALLY DISCLAIM THAT THE RESEARCH PROGRAM OR THE PRE-CLINICAL DEVELOPMENT
OR CLINICAL DEVELOPMENT WILL BE SUCCESSFUL, IN WHOLE OR IN PART, OR THAT ANY
CLINICAL OR OTHER STUDIES UNDERTAKEN BY IT WILL BE SUCCESSFUL. BMS DOES NOT
WARRANT THAT ITS EFFORTS TO RESEARCH, DEVELOP OR COMMERCIALIZE ANY COLLABORATION
COMPOUND, COLLABORATION LEAD COMPOUND OR PRODUCT WILL RESULT IN REGULATORY
APPROVAL OF ANY PRODUCT, NOR DOES BMS WARRANT THAT ANY SUCH PRODUCT WILL ACHIEVE
ANY LEVEL OF NET SALES OR BE CONTINUED IF IT OBTAINS REGULATORY APPROVAL. EXCEPT
AS OTHERWISE EXPRESSLY STATED HEREIN, EACH PARTY HEREBY DISCLAIMS ANY WARRANTY,
EXPRESSED OR IMPLIED, AS TO ANY PRODUCT SOLD OR PLACED IN COMMERCE BY OR ON
BEHALF OF BMS OR ITS AFFILIATES OR SUBLICENSEES.
ARTICLE 12
TERM AND TERMINATION
12.1 EXPIRATION. Unless terminated earlier by agreement of the Parties or
pursuant to this Article 12, this Agreement shall expire on the expiration of
the last to expire of all obligations to pay royalties under this Agreement.
Upon the expiration of BMS' obligations to make payments to Ligand under Article
6 with respect to each Product in each country, the applicable licenses set
forth in Article 5 shall be deemed to be perpetual and fully paid up with
respect to such Product in such country.
44
12.2 TERMINATION BY BMS OTHER THAN FOR BREACH.
12.2.1 BMS shall have the right to terminate, upon not less than ***
written notice to Ligand during the Research Term or upon not less than ***
written notice to Ligand following the Research Term, all further Diligent
Efforts to research, develop or commercialize *** Collaboration Compound or
Product. In such event: (i) each Party shall then return to the other Party the
Background Technology of such other Party that is in its possession; (ii) each
Party shall retain such ownership interest in the Collaboration Technology as it
shall hold on the date of the termination; (iii) if applicable, no further
payment shall be due under Section 2.7 with respect to any quarters after the
date of termination; (iv) all licenses granted to Party by the other Party under
this Agreement shall immediately terminate; (v) each Party shall immediately
cease to use all Confidential Information of the Non-Breaching Party; and (vi)
all Collaboration Compounds and Products shall be deemed abandoned by BMS in
accordance with the provisions of Section 4.4.1 and BMS shall grant to Ligand
the license rights, and in accordance with the terms, set forth in Section 4.4.2
.
12.2.2 If, during the Research Term, Ligand or any Ligand Affiliate
controlling Ligand, experiences a "pharmaceutical change in control" (as defined
below), then BMS shall have the right to terminate the Research Program at
anytime thereafter, effective upon not less than *** prior written notice to
Ligand (or its successor). Ligand shall continue to perform its duties under the
Research Program and this Agreement during such notice period. If BMS terminates
the Research Program pursuant to this Section 12.2.3, then, other than such
Research Program payments under Section 2.7 that are due with respect to any
quarter prior to the date of termination, BMS shall have no further payment
obligations or liability to Ligand with respect to the termination of the
Research Term, except for such milestone and royalty obligations as BMS may
otherwise have thereafter under this Agreement with respect to the development
and commercialization of Collaboration Compounds and Products. In the event of
such termination of the Research Program, all license rights granted by Ligand
to BMS under this Agreement prior to such termination of the Research Term shall
continue subject to this Agreement, BMS shall be immediately granted the ***
rights to conduct Secondary Screening set forth in Section 4.5 (and Ligand shall
cooperate with respect to the supply of reagents, cell lines and other
biomaterials as set forth therein), and BMS' Diligent Efforts obligations under
this Agreement shall continue. For purposes of this Agreement, the term
"pharmaceutical change in control" shall mean any sale of voting securities, any
sale of assets, or any merger, consolidation or similar transaction which,
directly or indirectly, (i) transfers over *** percent (***%) of the assets of
Ligand which relate to the subject matter of this Agreement to any "Qualifying
Pharmaceutical Entity" (as defined below) or any of its Affiliates, or (ii)
results in any Qualifying Pharmaceutical Entity or any of its Affiliates
becoming the beneficial owner, directly or indirectly, of more than *** percent
(***%) of those securities of Ligand entitled to vote for the election of the
directors of Ligand or otherwise possessing the power, directly or indirectly,
to direct or cause the direction of the management and policies of Ligand. A
"Qualifying Pharmaceutical Entity" means a company with annual consolidated
worldwide net sales from the sale of *** , in excess of ***.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
45
12.2.3 BMS may also terminate the Research Program pursuant to Section
2.11, in which event this Agreement shall continue.
12.3 CONSEQUENCES OF BREACH. Subject to Sections 18.9 and 12.3.3 hereof, if
either Party (in such capacity, the "Non-Breaching Party") believes that the
other Party (in such capacity, the "Breaching Party") is in material breach of
this Agreement (including without limitation any material breach of a
representation or warranty made in this Agreement), then the Non-Breaching Party
may deliver notice of such breach to the other Party. In any such notice, the
Non-Breaching Party shall identify in detail the basis for breach and identify
the actions or conduct that such Party would consider an acceptable cure of such
breach. The allegedly Breaching Party shall have *** to either cure such breach
or, if cure cannot be reasonably effected within such *** period, to deliver to
the other Party a plan for curing such breach which is reasonably sufficient to
effect a cure. Such a plan shall set forth a program for achieving cure.
Following delivery of such plan, the Breaching Party shall use Diligent Efforts
to carry out the plan and cure the breach as rapidly as reasonably practicable.
The Parties shall use reasonable efforts to work together to cure any breach. In
the event of a dispute concerning whether a material breach has occurred, such
dispute shall be resolved in accordance with the provisions of Section 18.9, and
the *** cure period specified above shall not commence until final resolution of
the dispute under such Section 18.9.
Except where such material breach, by its nature, is incurable (in
which case the Non-Breaching Party may exercise the rights below immediately),
if (a) the Party receiving notice of breach fails to cure such breach within the
*** period, or (b) the Party providing the notice reasonably determines that the
proposed corrective plan or the actions being taken to carry it out is not
commercially practicable, or (c) if such breach is not susceptible to cure
within *** of the receipt of written notice of the breach, and the Breaching
Party fails to use Diligent Efforts to pursue a cure as promptly as reasonably
possible, the Non-Breaching Party may declare a material breach hereunder upon
*** advance written notice and, subject to Section 12.3.3, the following shall
apply:
12.3.1 If such material breach occurs during the Research Term,
(i) no further payment shall be due under Section 2.7, and
Ligand shall have no futher obligation to perform under
the Research Program with respect to any quarters after
the effective date of termination;
(ii) the Breaching Party shall, to the extent not already
licensed to the Non-Breaching Party hereunder, grant a
*** license to the Non-Breaching Party, subject to
payment of applicable milestones and royalties, to use
Patent Rights, Background Technology and Collaboration
Technology (but not any compounds) owned or Controlled
by such Breaching Party, as shall be necessary to
permit the Non-Breaching Party to finish
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Confidential Treatment and filed separately with the Commission.
46
the conduct of the Research Program in accordance
with the Technical Operating Plan; and
(iii) the Breaching Party shall forfeit all rights to
develop and commercialize all Collaboration Compounds
and Products licensed to it by the Non-Breaching Party.
12.3.2 Whether such material breach occurs during or following the
Research Term:
(i) each Party shall retain such ownership interest in the
Collaboration Technology as it shall hold on the date
of the termination,
(ii) the Breaching Party shall forfeit all rights to develop
and commercialize all Collaboration Compounds and
Products licensed to it by the Non-Breaching Party, and
all licenses granted to such Breaching Party under this
Agreement may be immediately terminated by the
Non-Breaching Party;
(iii) the licenses granted to the Non-Breaching Party under
Article 5 and Section 4.4.2 shall remain in full force
and effect, subject to the payment of applicable
milestones and royalties;
(iv) the Breaching Party shall not conduct any further
research in the Field for a period of *** from the
effective date of such early termination;
(v) if Ligand is the Breaching Party, it shall provide a
*** license to BMS, and provide BMS with biomaterials,
cell lines and reagents, in accordance with Section 4.5
hereof for use by BMS in the development of Products in
the Field;
(vii) The Breaching Party shall immediately cease to use all
Confidential Information of the Non-Breaching Party.
12.3.3 .Notwithstanding the provisions of Sections 12.3.1-12.3.2
above, in the event that the material breach:
(i) relates to the exercise of specific rights licensed to
a Party under Article 5 hereof and occurs after the end
of the Research Term, the Non-Breaching Party may, with
respect to Section 12.3.3(ii) hereof, terminate only
such license rights, Collaboration Compounds and
Products for which rights are granted hereunder
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Confidential Treatment and filed separately with the Commission.
47
to the Breaching Party that directly and specifically
pertain to such breach;
(ii) involves an alleged failure to pay a milestone payment
or royalty amount believed by a Party to be owed by the
other, but the other Party in good faith disputes such
payment obligations, a material breach may not be
deemed to have occurred with respect to such
non-payment unless and until the Breaching Party fails
to pay such amount as is finally determined to be
finally owed by it under the procedures set forth in
Section 18.9 hereof, which amount shall be paid within
*** after such determination under Section 18.9; and,
if not paid, termination shall only be as to the rights
granted to such Party related to the Product applicable
to such nonpayments; and
(iii) relates to a specific Collaboration Lead Compound or
Product, this Agreement may only be terminated as it
relates to such Collaboration Lead Compound or Product
and shall remain in full force and effect as it relates
to all other Collaboration Compounds and Products.
***
***
*** .
12.4 TERMINATION OF AGREEMENT BY BMS. BMS shall have the right to terminate
this Agreement by giving written notice to Ligand of its intention to do so in
the event that neither Ligand nor BMS is able to obtain a license for technology
that is necessary for the conduct of the Research Program and that is claimed in
Third Party patents, or other intellectual property. Notice of termination
cannot be effective less than *** from the date upon which BMS advises Ligand in
writing that such technology is necessary for the conduct of the Research
Program. The termination shall be effective *** after the giving of the notice,
and no further payment shall be due under Section 2.7 with respect to any
quarters following the date that notice of termination is given. Upon
termination: (i) each Party shall return to the other Party the Background
Technology of such other Party that is in its possession; (ii) each Party shall
retain such ownership interest in the Collaboration Technology as it shall hold
on the date of the termination; (iii) if applicable, no further payment shall be
due under Section 2.7 with respect to any quarters after the date of
termination; (iv) all licenses granted to Party by the other Party under this
Agreement (except those licenses granted by Ligand to BMS hereunder with respect
to any Collaboration Lead Compound selected by BMS prior to termination) shall
immediately terminate; and (v) each Party shall immediately cease to use all
Confidential Information of the other Party. If BMS has selected a Collaboration
Lead Compound prior to termination under this section it shall be required to
pay Ligand milestones and royalties for its development and commercialization of
the Collaboration Lead Compound as a Product as if this Agreement remains in
full force and effect.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
48
12.5 EFFECT OF EXPIRATION OR TERMINATION. Expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior to such
expiration or termination. The representations and warranties contained in this
Agreement as well as those rights and obligations contained in the terms of this
Agreement which by their intent or meaning have validity beyond the Term of this
Agreement (including without limitation Sections 2.8.5, 2.9, 2.12, 2.13.1,
2.13.2, 2.13.5, 2.13.7, 2.14, 4.4, 4.6, 5.1.6, 5.3, 5.4, 5.5, 7.1, 7.6, 12.2,
12.3, 12.4 and Articles 6, 8, 9, 10, 11, 16, 17 and 18 hereof) shall survive the
termination or expiration of this Agreement. Any rights and obligations which
have accrued prior to termination or expiration of this Agreement in any respect
shall survive such termination or expiration.
12.6 BANKRUPTCY. Either Party shall have the right to terminate this
Agreement effective immediately in the event the other Party files a voluntary
petition in bankruptcy, is adjudicated as bankrupt, makes a general assignment
for the benefit of creditors, admits in writing that it is insolvent or fails to
discharge within ninety (90) days an involuntary petition in bankruptcy filed
against it (an "Insolvency Event"). In the event of any such termination, the
rights and obligations of the Parties shall be the same as though the Party
subject to the Insolvency Event were considered a Breaching Party under Section
12.3 and the other Party were the Non-Breaching Party.
ARTICLE 13
FORCE MAJEURE
Neither Party shall be held liable or responsible to the other Party
nor be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement when such failure
or delay is caused by or results from causes beyond the reasonable control of
the affected Party including but not limited to fire, floods, embargoes, war,
acts of war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the other Party,
provided that the Party so affected shall use its best efforts to avoid or
remove such causes of non-performance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed.
ARTICLE 14
ASSIGNMENT
This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations hereunder be assigned
or transferred *** *** . Any permitted assignee of the rights or
obligations of a Party hereunder shall execute a writing with the assignor of
the rights and obligations so assumed, and, unless otherwise agreed in writing
by *** , the assignor remains jointly and severally responsible and
liable with the assignee for the performance of this Agreement thereafter.
Notwithstanding the foregoing, either Party may, without such consent, assign
this Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business pertaining to this
Agreement, or in the event of its merger or
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
49
consolidation or change in control or similar transaction; provided, that such
assignee is bound by all the rights and obligations of the assignor hereunder
and, in the case of a sale or transfer of assets, the assignor remains jointly
and severally responsible and liable with the assignee for the performance of
this Agreement thereafter. This Agreement shall be binding upon and, subject to
the terms of the foregoing sentence, inure to the benefit of the Parties'
successors, legal representatives and assigns.
ARTICLE 15
REGULATORY MATTERS
15.1 SIDE EFFECTS AND ADVERSE EVENTS. Ligand shall advise BMS within the
time limits required by applicable FDA laws and regulations (or similar foreign
laws and regulations) by telefax or overnight delivery service addressed to the
attention of its Vice President, Medical Affairs of any unexpected side effect,
adverse reaction or injury which has been brought to Ligand's attention at any
place and which is alleged to have been caused by a Product. BMS shall have all
rights and responsibilities to report such side effect, adverse reaction or
injury to the appropriate regulatory authorities as required by applicable law.
15.2 PRODUCT RECALL. In the event that BMS determines that an event,
incident or circumstance has occurred which may result in the need for a recall
or other removal of any Product, or any lot or lots thereof, from the market, it
shall notify Ligand with respect thereto. BMS shall, in its sole discretion,
have the right to order any such recall or other removal and Ligand shall
cooperate with such recall.
15.3 REGULATORY MATTERS. From and after the Commencement Date, the
preparation, filing and prosecution of INDs, NDAs and other regulatory filings
required to be filed with any Regulatory Agency in respect of a Product will be
in the name of, under sole control of, and at the responsibility of BMS and its
Affiliates. Further, BMS and/or its Affiliates shall own all regulatory
documentation relating to such filings. The costs of preparation, filing and
prosecution of regulatory filings with regard to Products incurred on or after
the Commencement Date shall be borne ***
*** . BMS shall be solely responsible
for all contacts and communications with governmental and regulatory authorities
with respect to all matters relating to any Product (including reporting adverse
drug reactions). Unless required by law, Ligand shall have no contacts or
communications with any governmental or regulatory authority regarding any
Product without the prior written consent of BMS. Ligand shall provide BMS with
copies of all communications received from any governmental or regulatory
authority relating to any Product and shall allow BMS at its discretion to
control and/or participate in any further contacts or communications in
connection therewith.
ARTICLE 16
SEVERABILITY
If any term or provision of this Agreement is held to be invalid,
illegal or unenforceable by a court or other governmental authority of competent
jurisdiction, such invalidity, illegality or
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
50
unenforceability shall not affect any other term or provision of this Agreement,
which shall remain in full force and effect. The holding of a term or provision
to be invalid, illegal or unenforceable in a jurisdiction shall not have any
effect on the application of the term or provision in any other jurisdiction.
The Parties shall make a good faith effort to replace any invalid or
unenforceable provision with a valid and enforceable one such that the
objectives contemplated by the Parties when entering this Agreement may be
realized.
ARTICLE 17
INDEMNIFICATION
Each of BMS and Ligand (each an "Indemnifying Party" where such
obligation arises hereunder) agrees to indemnify, hold harmless, and defend the
other Party and its Affiliates and their respective employees, agents, officers,
directors and permitted assigns (such Party's "Indemnified Groups") from and
against ***
***
***
***.
It shall be a condition precedent of an Indemnifying Party's
indemnification and hold harmless obligations that each member of the
Indemnified Group:
(i) Whenever a member of the Indemnified Group has information from
which it may reasonably conclude an incident has occurred which
could give rise to a Claim, such indemnified Party shall give
written notice to the Indemnifying Party of all pertinent data
surrounding such incident as soon as reasonably practicable
thereafter (but not later than the date that failure to do so
would materially adversely affect the Indemnifying Party's
ability to defend such Claim) and, in the event a Claim is made,
all members of the Indemnified Group shall assist the
Indemnifying Party and cooperate in the gathering of information
with respect to the time, place and circumstances and in
obtaining the names and addresses of any injured Parties and
available witnesses (including providing access to and copies of
pertinent records and making available for testimony relevant
individuals subject to its control as reasonably requested by the
Indemnifying Party in the defense of the Claim); and
(ii) shall, if the Indemnifying Party acknowledges that such Claim
falls within the scope of its indemnification obligations
hereunder, permit the Indemnifying Party to assume direction and
control of the defense, litigation, settlement, appeal or other
disposition of the Claim (including the right to settle the claim
solely for monetary consideration); provided, that the
Indemnifying Party shall seek the prior written consent (not to
be unreasonably withheld or delayed) of any affected member of
the Indemnified Group as to any settlement which would materially
diminish or materially adversely affect the scope, exclusivity or
duration of any rights licensed to the Indemnified Party under
this Agreement (except that BMS may sublicense such rights if in
accordance with this Agreement without such
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Confidential Treatment and filed separately with the Commission.
51
consent), would require any payment by any such
affected member of the Indemnified Group, would require an
admission of legal wrongdoing in any way on the part of any
affected member of the Indemnified Group, or would conflict
with this Agreement; and
(iii) No member of the Indemnified Group may, without the prior
written consent of the Indemnifying Party make any payment or
incur any expense in connection with any such Claim or settle or
compromise any Claim for which it/he/she intends to seek
indemnification from the Indemnifying Party hereunder, or the
indemnification provided under this Article as to such Claim for
the Indemnified Party and all members of the Indemnified Group
shall be null and void, provided, however, that a member of the
Indemnified Group may take any reasonably appropriate action that
is necessary to preserve or avoid prejudice to its interests
after the Indemnifying Party has been notified of the Claim if
the Indemnifying Party states that it does not believe that the
indemnification obligations described herein apply to such Claim
or if the Indemnifying Party does not or cannot perform its
indemnity obligations hereunder.
The Indemnifying Party shall have the right, but not the obligation, to control
any such action. Subject to the foregoing, an Indemnified Party or any member of
the Indemnified Group may participate in any proceedings involving such Claim
using attorneys of its/his/her choice and at its/his/her expense. The
obligations set forth in this Article 17 shall survive the expiration or
termination of this Agreement.
ARTICLE 18
MISCELLANEOUS
18.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, or U.S. overnight courier), U.S. overnight
courier, postage prepaid (where applicable), or delivered by certified mail,
postage prepaid, return receipt requested to the address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.
If to Ligand: Ligand Pharmaceuticals Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to: Ligand Pharmaceuticals Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Scientific Officer
52
If to BMS: ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Pharmaceutical Research Institute
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and Senior Counsel - BMSPRI
With a copy to:...
If relating to the
Research Program or the
research or development
of any Collaboration
Compound or Product:
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Pharmaceutical Research Institute
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President - BMSPRI
If relating to the
commercialization
of any Product:
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President -Worldwide Medicines Group
18.2 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to its
conflicts of law provisions, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.
18.3 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the Parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both Parties hereto.
18.4 HEADINGS. The captions to the several Articles and Sections hereof are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
18.5 INDEPENDENT CONTRACTORS. Each of BMS and Ligand acknowledges and
agrees that neither it nor any of its employees are employees of the other Party
and that neither it nor any of its employees are eligible to participate in any
employee benefit plans of such other Party. Each of BMS and Ligand further
acknowledges that neither it nor any of its employees are eligible to
participate in any such benefit plans even if it is later determined that its or
any of its employees' status during the period of this Agreement was that of an
employee of the other Party. In addition, each of BMS and Ligand waives any
claim that it may have under the terms
53
of any such benefit plans or under any law for participation in or benefits
under any of the other Party's benefit plans.
18.6 WAIVER. The waiver by either Party hereto of any right hereunder or of
the failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise on such occasion or any
succeeding occasion.
18.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18.8 BANKRUPTCY.
18.8.1 All rights and licenses granted under or pursuant to this
Agreement, including amendments hereto, by each Party to the other Party are,
for all purposes of Section 365(n) of Title 11 of the U.S. Code ("Title 11"),
licenses of rights to intellectual property as defined in Title 11. Each Party
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property. If a
case is commenced by or against either Party (the "Bankrupt Party") under Title
11, then, unless and until this Agreement is rejected as provided in Title 11,
the Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, a Title 11 Trustee)
shall, at the election of the Bankrupt Party made within sixty (60) days after
the commencement of the case (or, if no such election is made, immediately upon
the request of the non-Bankrupt Party) either (i) perform all of the obligations
provided in this Agreement to be performed by the Bankrupt Party including,
where applicable and without limitation, providing to the non-Bankrupt Party
portions of such intellectual property (including embodiments thereof) held by
the Bankrupt Party and such successors and assigns or otherwise available to
them as to which the non-Bankrupt Party has rights or (ii) provide to the
non-Bankrupt Party all such intellectual property (including all embodiments
thereof) held by the Bankrupt Party and such successors and assigns or otherwise
available to them as to which the non-Bankrupt Party has rights.
18.8.2 If a Title 11 case is commenced by or against the Bankrupt
Party and this Agreement is rejected as provided in Title 11 and the
non-Bankrupt Party elects to retain its rights hereunder as provided in Title
11, then the Bankrupt Party (in any capacity, including debtor-in-possession)
and its successors and assigns (including, without limitations, a Title 11
Trustee) shall provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them as to which the
non-Bankrupt Party has rights immediately upon the non-Bankrupt Party's written
request therefor. Whenever the Bankrupt Party or any of its successors or
assigns provides to the non-Bankrupt Party any of the intellectual property
licensed hereunder (or any embodiment thereof) pursuant to this Section 18.8,
the non-Bankrupt Party shall have the right to perform the obligations of the
Bankrupt Party hereunder with respect to such intellectual property, but neither
such provision nor such performance by the non-Bankrupt Party shall release the
Bankrupt Party from any such obligation or liability for failing to perform it.
54
18.8.3 All rights, powers and remedies of the non-Bankrupt Party
provided herein are in addition to and not in substitution for any and all other
rights, powers and remedies now or hereafter existing at law or in equity
(including, without limitation, Title 11) in the event of the commencement of a
Title 11 case by or against the Bankrupt Party. The non-Bankrupt Party, in
addition to the rights, power and remedies expressly provided herein, shall be
entitled to exercise all other such rights and powers and resort to all other
such remedies as may now or hereafter exist at law or in equity (including,
without limitation, under Title 11) in such event. The Parties agree that they
intend the foregoing non-Bankrupt Party rights to extend to the maximum extent
permitted by law and any provisions of applicable contracts with Third Parties.
Any intellectual property provided pursuant to the provisions of this Section
18.8 shall be subject to the licenses set forth elsewhere in this Agreement and
the payment obligations of this Agreement, which shall be deemed to be royalties
for purposes of Title 11.
18.9 DISPUTE RESOLUTION
18.9.1 In the event of any controversy or claim arising out of,
relating to or in connection with Section 4.4 or pursuant to Section 12.3, other
than disputes relating to the infringement or validity of a Valid Claim which
shall not be subject to Section 18.9.2 unless agreed to in writing by the
Parties, the Parties shall try to settle their differences amicably between
themselves first, by referring the disputed matter to the respective Chief
Executive Officer of Ligand and the President - Worldwide Medicines Group of
BMS. Either Party may initiate such informal dispute resolution by sending
written notice of the dispute to the other Party, and, within *** after such
notice, such representatives of the Parties shall meet for attempted resolution
by good faith negotiations. If such personnel are unable to resolve such dispute
within *** of initiating such negotiations, such dispute shall be finally
resolved by binding arbitration under Section 18.9.2.
18.9.2 Any such arbitration shall be held in New York, New York
according to the Commercial Arbitration Rules (the "Rules") of the American
Arbitration Association. Any arbitration herewith shall be conducted in the
English language. The arbitration shall be conducted by one arbitrator who is
knowledgeable in the subject matter which is at issue in the dispute and who is
selected by mutual agreement of the Parties or, failing such agreement, shall be
selected according to the AAA rules. For arbitrations relating to Section 4.4,
the arbitration shall be conducted by an arbitrator who is knowledgeable in
pharmaceutical development. The Parties shall have such discovery rights as the
arbitrator may allow, consistent with the goal of limiting the cost and time
which the Parties must expend for discovery (and provided that the arbitrator
shall permit such discovery he/she deems necessary to permit an equitable
resolution of the dispute), but in no event broader than that discovery
permitted under the Federal Rules of Civil Procedure. During the arbitration
live testimony shall be taken before the arbitrator as decided by the
arbitrator; each Party may also present direct testimony in the form of
affidavits or declarations under penalty of perjury subject to cross-examination
by way of deposition. In conducting the arbitration, the arbitrator shall apply
the New York Rules of Evidence with the assistance of a legal expert at any
hearings, depositions, or other proceedings where evidentiary rulings may be
made. The arbitrator's authority shall be limited, with respect to issues
arising under Section 4.4, to determinations (x) as to whether BMS has not used
and/or is no longer
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55
using Diligent Efforts to discover, develop or market *** Collaboration Compound
or Product (taking into account any sublicensing efforts made or being made by
BMS permitted under any sublicensing rights granted BMS under Article 5 hereof),
and (y) as to whether a Specific Action proposed by BMS would, if undertaken,
cure a failure to use Diligent Efforts. The reasonable fees and expenses of the
arbitrator, along with the reasonable legal fees and expenses of the prevailing
Party (including all expert witness fees and expenses), the fees and expenses of
a court reporter, and any expenses for a hearing room, shall be paid as follows:
If the arbitrator rules in favor of one Party on all disputed issues in the
arbitration, the losing Party shall pay one hundred percent (100%) of such fees
and expenses; if the arbitrator rules in favor of one Party on some issues and
the other Party on other issues, the arbitrator shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the Parties. The arbitrator shall allocate fees and expenses in a way
that bears a reasonable relationship to the outcome of the arbitration, with the
Party prevailing on more issues, or on issues of greater value or gravity,
recovering a relatively larger share of its legal fees and expenses. The
decision of the arbitrator shall be final and may be entered, sued on or
enforced by the Party in whose favor it runs in any court of competent
jurisdiction at the option of such Party. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of limitations,
which statute of limitations also shall apply to any claim or disputes subject
to arbitration under this Section, shall be determined by binding arbitration
pursuant to this Section.
18.10 Electronic Communications. If both Parties elect to facilitate
business or research activities hereunder by electronically sending and
receiving information in agreed formats (also referred to as Electronic Data
Interchange or "EDI") in substitution for conventional paper-based documents,
the terms and conditions of this Agreement shall apply to such EDI activities.
18.11 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
18.12 Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Parties have executed this Research, Development
and License Agreement as of the date first set forth above.
▇▇▇▇▇▇▇-▇▇▇▇▇ LIGAND PHARMACEUTICALS
SQUIBB COMPANY INCORPORATED
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- ---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Title: EXTERNAL SCIENCE & TECHNOLOGY Title: Senior Vice President,
----------------------------- General Counsel and
May 19, 2000 Secretary
LIGAND PHARMACEUTICALS
INCORPORATED
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, President and CEO
57
EXHIBIT A
REPORTING REQUIREMENTS
Each report required under Section 4.3 will include the following:
1. ***
2. ***
3. ***
4. ***
5. ***
6. ***
7. ***
8. ***
9. ***
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Confidential Treatment and filed separately with the Commission.
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EXHIBIT B
STRUCTURES FOR LIGAND COMPOUNDS
59
Exhibit B: Ligand's Mineralocorticoid Antagonist Leads
***
***
***
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Confidential Treatment and filed separately with the Commission.
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EXHIBIT C
TECHNICAL OPERATING PLAN
I. OVERVIEW OF PROJECT (TECHNICAL OPERATING PLAN)
A........Overview
The research collaboration will be an integrated drug discovery
program focusing on the identification and development of compounds as
mineralocorticoid receptor modulators. The Alliance will be composed
of a research period of *** . This period can be extended for an
additional ***.
B. Goal, Rationale, and Product Profile
1. Goal
***
***
***
2. Rationale
***
***
***
3. Product Profile
***
***
***
I ***
II ***
III ***
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C. Headcount Requirements
1. Resource Allocations in ***
***
***
***
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Confidential Treatment and filed separately with the Commission.
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D. Research Plan
1. Activities During Research Phase ***
***
***
***
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Confidential Treatment and filed separately with the Commission.
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***
***
***
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Confidential Treatment and filed separately with the Commission.
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***
***
***
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Confidential Treatment and filed separately with the Commission.
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E. Deliverables
1. ***
***
***
***
2. ***
***
***
***
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Confidential Treatment and filed separately with the Commission.
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