EXHIBIT 10.1
EXECUTION COPY
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
COLLABORATION AND LICENSE AGREEMENT
BY AND BETWEEN
MERCK & CO., INC.
AND
ALNYLAM PHARMACEUTICALS, INC.
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COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT, effective as of June 29, 2004 (the "EFFECTIVE DATE"), by
and between MERCK & CO., INC., a corporation organized and existing under the
laws of New Jersey ("MERCK"), and ALNYLAM Pharmaceuticals, Inc., a corporation
organized and existing under the laws of Delaware ("ALNYLAM").
RECITALS:
WHEREAS, ALNYLAM has developed technology useful for the discovery,
development, manufacture, characterization, or use of therapeutic products that
function through RNA interference ("RNAI"), and is developing capabilities to
develop and commercialize such therapeutic products;
WHEREAS, MERCK is engaged in the business of discovering, developing,
manufacturing and commercializing human therapeutic products, including
therapeutic products for ophthalmic indications;
WHEREAS, MERCK and ALNYLAM desire to enter into a collaboration to
research, develop and commercialize RNAi Products (as hereinafter defined) for
the treatment of Ocular Microvascular Disease (as hereinafter defined) in humans
upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:
1. DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings
set forth below:
1.1 "ADDITIONAL PROGRAM TARGET" means (a) a genomic locus other than
VEGF, (b) any portions of such locus, (c) all transcript variants
and allelic variants of such locus, (d) any RNA transcribed from
within or overlapping such locus and (e) any proteins encoded by any
such RNA transcripts; any of which is the target of an Ophthalmic
Product that the Parties mutually agree to develop in an Additional
Program pursuant to Section 2.4.
1.2 "AFFILIATE" means, with respect to a Party, (i) any corporation or
business entity of which fifty percent (50%) or more of the
securities or other ownership interests representing the equity, the
voting stock or general partnership interest are owned, controlled
or held, directly or indirectly, by such Party; (ii) any corporation
or business entity, which, directly or indirectly, owns, controls or
holds fifty percent (50%) (or the maximum ownership interest
permitted by law) or more of the securities or other ownership
interests representing the equity, the voting stock or, if
applicable, the general partnership interest, of such Party; or
(iii) any corporation or business entity, fifty percent (50%) or
more of the securities or other ownership interests representing the
equity of which is directly or indirectly owned, controlled or held
by the same corporation, business entity or security holders, or
holders of ownership interests, that
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own, control or hold fifty percent (50%) or more of the securities
or other ownership interests representing the equity or the voting
stock of such Party.
1.3 "ALNYLAM COLLABORATION IP" means (a) any improvement, discovery or
Know-How, patentable or otherwise, first identified, discovered or
developed solely by employees of ALNYLAM or its Affiliates or other
persons not employed by MERCK acting on behalf of ALNYLAM, under the
Ophthalmic Collaboration, and (b) any Patent Rights in the Territory
which claim, cover or relate to such improvements, discoveries or
Know-How and are Controlled by ALNYLAM at any time during the
Agreement Term. ALNYLAM Collaboration IP excludes ALNYLAM's interest
in Joint Collaboration IP.
1.4 "ALNYLAM IN-LICENSE" means an agreement between ALNYLAM and a Third
Party pursuant to which ALNYLAM has rights and obligations with
respect to, or which otherwise Cover, an Ophthalmic Product and
which is necessary to Develop, Commercialize and/or Manufacture
Ophthalmic Products in the Field in the Territory, including without
limitation the Existing ALNYLAM In-Licenses.
1.5 "ALNYLAM KNOW-HOW" means Know-How that is either (a) Controlled by
ALNYLAM on the Effective Date, or (b) comes within ALNYLAM's Control
during the Agreement Term (other than ALNYLAM's rights in Joint
Collaboration IP and ALNYLAM Collaboration IP).
1.6 "ALNYLAM PATENT RIGHTS" means Patent Rights that (a) claim (i)
ALNYLAM Know-How, or (ii) the identification, characterization,
optimization, construction, expression, use or production of an
Ophthalmic Product to a Program Target, and which ALNYLAM reasonably
determines to be useful or necessary to Develop, Commercialize
and/or Manufacture Ophthalmic Products in the Field in the
Territory, and (b) are Controlled by ALNYLAM at any time during the
Agreement Term. As of the Effective Date, ALNYLAM Patent Rights
include without limitation those listed on Schedule 1.6. ALNYLAM
Patent Rights shall not include Patent Rights included in ALNYLAM
Collaboration IP.
1.7 "ALNYLAM TECHNOLOGY" means, collectively, ALNYLAM Know-How, ALNYLAM
Patent Rights, ALNYLAM Collaboration IP and ALNYLAM's interest in
Joint Collaboration IP.
1.8 "BROAD RNAI TECHNOLOGY" means RNAi Technology arising from or
necessary for the performance of the Program Workplan which [**].
1.9 "BROAD RNAI TECHNOLOGY COLLABORATION IP" means Joint Collaboration
IP that constitutes Broad RNAi Technology.
1.10 "CALENDAR QUARTER" means the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September
30 and December 31.
1.11 "CALENDAR YEAR" means each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
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1.12 "CLINICAL STUDY" means a Phase I Study, Phase II Study, Phase III
Study or Post-Approval Study, as applicable.
1.13 "COMBINATION PRODUCT" means an Ophthalmic Product combined with any
other clinically active therapeutic, prophylactic or diagnostic
ingredient. All references to Ophthalmic Product in this Agreement
shall be deemed to include Combination Product, to the extent
applicable.
1.14 "COMMERCIALIZATION" or "COMMERCIALIZE" means any and all activities
directed to marketing, promoting, distributing, importing and
selling a product, including the conduct of Post-Approval Studies,
and activities directed to obtaining pricing and reimbursement
approvals, as applicable.
1.15 "COMMERCIALIZATION EXPENSES" means, with respect to each
Profit-Sharing Product, the following costs and expenses to the
extent incurred by the Parties and/or their Related Parties in the
Commercialization and Manufacturing of such Profit-Sharing Product
in or for the United States:
(a) Cost of Goods Sold;
(b) Manufacturing Development Expenses incurred after the First
Commercial Sale of such Profit-Sharing Product in the United
States;
(c) Distribution Expenses;
(d) Sales and Marketing Expenses;
(e) Losses arising out of Third Party product liability claims as
set forth in Section 10.5.3(c)(iii); and
(f) payments to Third Parties under In-Licenses of Necessary Third
Party IP pursuant to Section 8.3.6.1(b).
1.16 "COMMERCIALIZATION PLAN" means the multi-year business plan and
annual profit plan relating to each Profit-Sharing Product that is
mutually agreed between the Parties pursuant to Section 5.4.
1.17 "COMMERCIALLY REASONABLE EFFORTS" means the carrying out of
obligations in a diligent and sustained manner using such effort and
employing such resources as would normally be exerted or employed by
a similarly situated biopharmaceutical company for a product of
similar market potential at a similar stage of its product life.
1.18 "COMPLETION OF PHASE I" means, with respect to an Ophthalmic
Product, the completion of data analysis for those Phase I Studies
of such Ophthalmic Product that the Parties prospectively identify
in the applicable Program Workplan as the studies the data from
which would provide a sufficient basis to Initiate a Phase II Study.
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1.19 "COMPLETION OF PHASE II" means, with respect to an Ophthalmic
Product, the completion of data analysis for those Phase II Studies
of such Ophthalmic Product that the Parties prospectively identify
in the applicable Program Workplan as the studies the data from
which would provide a sufficient basis to Initiate a Phase III
Study.
1.20 "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any
(a) material, know-how or other information or (b) intellectual
property right, the possession of (whether by ownership or license,
other than pursuant to this Agreement), or the ability of a Party or
its Affiliates to grant access to, or a license or sublicense of,
such item or right 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 required hereunder to grant
the other Party such access or license or sublicense.
1.21 "COST OF GOODS SOLD" means, with respect to an Ophthalmic Product,
the reasonable internal and external costs of a Party incurred in
Manufacturing such Ophthalmic Product (including[**]to the extent
that such costs are reasonably allocated to the Manufacture of such
Ophthalmic Product, and [**]), including: (a) to the extent that
such Ophthalmic Product is sourced from a Party, fully allocated
cost of Manufacture of such Ophthalmic Product, consisting of [**]
(such reasonable allocation shall [**] to be provided for such
Ophthalmic Product, but excluding [**]), all calculated in
accordance with generally accepted accounting principles in the
United States consistently applied by the applicable Party, [**],
and (b) to the extent that such Ophthalmic Product is sourced from a
Third Party manufacturer, the actual price paid by a Party to the
Third Party for the Manufacture, supply and packaging of such
Ophthalmic Product plus any additional reasonable costs incurred by
the Party relating to managing the Third Party relationship. Cost of
Goods Sold shall not include royalties paid to Third Parties. [**]
the Cost of Goods Sold charged by the Manufacturing Party for such
Ophthalmic Product [**] that a Third Party manufacturer, or an
alternative Third Party manufacturer, [**] such Ophthalmic Product
[**] Cost of Goods Sold, then the Parties [**] the non-Manufacturing
Party's [**] and the non-Manufacturing Party shall [**] by the JSC
or JCC, as the case may be. The non-Manufacturing Party's [**] the
Cost of Goods [**] shall be [**]; provided, however, that the
non-Manufacturing Party may [**] in the event that the Manufacturing
Party [**] Cost of Goods Sold for an Ophthalmic Product that is
[**]for the equivalent period. If the JSC or JCC [**] shall provide
the non-Manufacturing Party [**].
1.22 "CO-PROMOTION" means the joint promotion of an Ophthalmic Product by
both Parties and/or their respective Affiliates under the same
product trademark(s). "CO-PROMOTE" when used as a verb shall mean to
engage in such Co-Promotion.
1.23 "COUNTRY SALES" means the Net Sales of a Royalty-Bearing Product in
a Calendar Year by a Party or its Related Parties in a particular
country, converted into United States dollars as set forth in
Section 8.5.
1.24 "COVER," "COVERING" OR "COVERS" means, with respect to an Ophthalmic
Product, that in the absence of a license granted under a Valid
Claim, the Development, Manufacture
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or Commercialization of the Ophthalmic Product would or is
reasonably likely to infringe such Valid Claim.
1.25 "DETAIL" OR "DETAILING" means a product presentation in a
face-to-face meeting in an individual or group practice setting
between a professional sales representative and a targeted
prescriber in which one or more key benefits of the Profit-Sharing
Product are verbally presented in a balanced manner.
1.26 "DEVELOPMENT," "DEVELOPING" or "DEVELOP" means the research and
development activities related to the generation, characterization,
optimization, construction, expression, use and production of
Ophthalmic Products directed to any Program Target, any other
research and development activities related to the clinical testing
and qualification of Ophthalmic Products for clinical testing, and
such other tests, studies and activities as may be required or
recommended from time to time by the JSC or any Regulatory Authority
to obtain Regulatory Approval of an Ophthalmic Product, including
toxicology studies, statistical analysis and report writing,
pre-clinical testing, clinical studies and regulatory affairs,
product approval and registration activities.
1.27 "DEVELOPMENT EXPENSES" means, with respect to each Program Workplan,
the internal and external costs and expenses incurred by the Parties
and/or their Related Parties in the Development of Ophthalmic
Products, in accordance with such Program Workplan and the related
budget for Development Expenses, including without limitation:
(a) all costs as set forth in the applicable Program Workplan that
are incurred in connection with the generation,
characterization and optimization of Ophthalmic Products
directed to the Program Target, and the subsequent
pre-clinical and clinical Development of such Ophthalmic
Products;
(b) all Development-related out-of-pocket costs and expenses as
set forth in the applicable Program Workplan that are
incurred, including without limitation payments to
investigators, contract research organizations (CROs), other
Third Party Development service providers and other contract
labor services relating to Development activities,
institutional study expenses, investigator meeting expenses,
central laboratory expenses, data management, statistical
designs and studies, and document preparation;
(c) fees incurred in connection with filings relating to
Regulatory Approvals;
(d) Cost of Goods Sold of Ophthalmic Product used in Development
activities, the costs and expenses incurred to purchase and/or
package comparator or combination drugs or devices, and costs
and expenses of disposal of clinical supplies;
(e) Manufacturing Development Expenses incurred with respect to an
Ophthalmic Product prior to the First Commercial Sale of such
Ophthalmic Product in the United States;
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(f) the costs of internal scientific, medical, technical or
managerial personnel engaged in such efforts, which costs
shall be determined based on the FTE Costs, unless another
basis is otherwise agreed by the Parties in writing;
(g) payments to Third Parties [**]pursuant to [**]
(h) Losses arising out of Third Party product liability claims as
set forth in Section 10.5.3(c)(ii);
(i) Patent Expenses as set forth in Section 11.3.7 and costs of
infringement suits as set forth in Section 11.4.4; and
(j) any other costs explicitly included in the budgets included in
the Program Workplan.
1.28 "DEVELOPMENT MATERIALS" means animal models, cell lines, tissue
samples, genes, plasmids, siRNAs, constructs, vectors, receptors and
other proteins, peptides, and other biological materials related to
Ophthalmic Products or Program Targets that in each case are used in
or that may be necessary or useful to conduct the Programs.
1.29 "DISTRIBUTION EXPENSES" means, with respect to a Profit-Sharing
Product, the expenses incurred by MERCK and its Related Parties in
the distribution of such Profit-Sharing Product in the United
States, calculated as [**]. The Parties will agree upon [**].
1.30 "EXISTING ALNYLAM IN-LICENSES" means the Third Party agreements
listed on Schedule 1.30, as such schedule may be amended pursuant to
Sections 2.15 or 7.5.
1.31 "FDA" means the United States Food and Drug Administration and any
successor governmental authority having substantially the same
function.
1.32 "FIELD" shall mean the treatment, prophylaxis and diagnosis of
Ocular Microvascular Disease in humans with RNAi Products.
1.33 "FIRST COMMERCIAL SALE" means, with respect to any Ophthalmic
Product, the first sale for end use or consumption of such
Ophthalmic Product in a country after all required Regulatory
Approvals have been granted by the Regulatory Authority of such
country. For the avoidance of doubt, sales for clinical study
purposes or compassionate, named patient or similar use, shall not
constitute a First Commercial Sale.
1.34 "FTE" means a full time equivalent person year (based on
consistently applied practices of the applicable party) of
scientific, medical, technical, quality control, quality assurance,
or managerial work performed by or on behalf of a Party on or
directly related to the Ophthalmic Collaboration.
1.35 "FTE COSTS" means the amount determined by multiplying the number of
FTEs allocated by a Party during the relevant time period, subject
to any limitations set forth in the applicable Program Workplan or
otherwise established by the JSC, times the FTE Rate. "FTE RATE"
means initially $[**] per FTE, which amount shall be increased or
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decreased on an annual basis as mutually agreed by the Parties, but
in no event more than [**] percent ([**]%) per Calendar Year.
1.36 "HEALTH SCIENCE ASSOCIATE" means an individual employed by a Party
who is responsible for providing scientific and medical information
to healthcare professionals regarding an Ophthalmic Product. Health
Science Associates do not engage in Detailing or other promotional
efforts.
1.37 "IND" means an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or
submission for approval to conduct human clinical investigations
filed with or submitted to a Regulatory Authority in conformance
with the requirements of such Regulatory Authority.
1.38 "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
toxicology, safety pharmacology, and sub-chronic toxicology studies
in species that satisfy applicable regulatory requirements using
applicable good laboratory practices which meet the standard
necessary for submission as part of an IND filing with a Regulatory
Authority.
1.39 "INFORMATION" means any and all information and data, including
without limitation all ALNYLAM Technology and MERCK Technology, and
all other scientific, pre-clinical, clinical, regulatory,
manufacturing, marketing, financial and commercial information or
data, whether communicated in writing or orally or by any other
method, which is provided by one Party to the other Party in
connection with this Agreement.
1.40 "INITIATE", "INITIATED" or "INITIATION" means, with respect to a
Clinical Study, the administration of the first dose to a subject in
such Clinical Study.
1.41 "IN-LICENSES" means collectively, the ALNYLAM In-Licenses and the
MERCK In-Licenses.
1.42 "JOINT COLLABORATION IP" means, collectively, (a) any improvement,
discovery or Know-How, patentable or otherwise, first identified,
discovered or developed jointly by the Parties or their Affiliates
or others acting on behalf of MERCK and ALNYLAM under the Ophthalmic
Collaboration, and (b) any Patent Rights in the Territory which
claim, cover or relate to such improvements, discoveries or
Know-How.
1.43 "JOINT STEERING COMMITTEE" or "JSC" means the joint steering
committee as more fully described in Section 3.1.
1.44 "KNOW-HOW" means, with respect to each Ophthalmic Product, all
biological materials and other tangible materials, inventions,
practices, methods, protocols, formulas, knowledge, know-how, trade
secrets, processes, assays, skills, experience, techniques and
results of experimentation and testing, including without limitation
pharmacological, toxicological and pre-clinical and clinical test
data and analytical and quality control data, patentable or
otherwise, which relates to the identification, characterization,
optimization, construction, expression, use or production of an
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Ophthalmic Product and which is reasonably useful or necessary to
Develop, Manufacture or Commercialize such Ophthalmic Product in the
Territory in the Field.
1.45 "MANUFACTURING" or "MANUFACTURE" means, as applicable, all
activities associated with the production, manufacture, processing,
filling, finishing, packaging, labeling, shipping, and storage of
Ophthalmic Products, including process and formulation development,
process validation, stability testing, manufacturing scale-up,
pre-clinical, clinical and commercial manufacture and analytical
development, product characterization, quality assurance and quality
control, whether such activities are conducted by (i) ALNYLAM, its
Affiliates or a Third Party contractor of ALNYLAM, or (ii) MERCK,
its Affiliates or a Third Party contractor of MERCK.
1.46 "MANUFACTURING DEVELOPMENT EXPENSES" means, with respect to an
Ophthalmic Product, to the extent not included in Development
Expenses or Cost of Goods Sold, the [**]. Manufacturing Development
Expenses shall be determined by a Party in accordance with generally
accepted accounting principles in the United States consistently
applied by such Party.
1.47 "MERCK COLLABORATION IP" means (a) any improvement, discovery or
Know-How, patentable or otherwise, first identified, discovered or
developed solely by employees of MERCK or its Affiliates or other
persons not employed by ALNYLAM acting on behalf of MERCK, under the
Ophthalmic Collaboration, and (b) any Patent Rights in the Territory
which claim, cover or relate to such improvements, discoveries or
Know-How and are Controlled by MERCK at any time during the
Agreement Term. MERCK Collaboration IP excludes MERCK's interest in
Joint Collaboration IP.
1.48 "MERCK IN-LICENSE" means an agreement between MERCK and a Third
Party pursuant to which MERCK has rights and obligations with
respect to, or which otherwise Cover, an Ophthalmic Product and is
necessary to Develop, Commercialize and/or Manufacture Ophthalmic
Products in the Field in the Territory.
1.49 "MERCK KNOW-HOW" means Know-How that is either (a) Controlled by
MERCK on the Effective Date, or (b) comes within MERCK's Control
during the Agreement Term (other than MERCK's rights in Joint
Collaboration IP and MERCK Collaboration IP).
1.50 "MERCK PATENT RIGHTS" means Patent Rights that (a) claim (i) MERCK
Know-How, or (ii) the identification, characterization,
optimization, construction, expression, use or production of an
Ophthalmic Product to a Program Target, and which MERCK reasonably
determines to be useful or necessary to Develop, Commercialize
and/or Manufacture Ophthalmic Products in the Field in the
Territory, and (b) are Controlled by MERCK at any time during the
Agreement Term. MERCK Patent Rights shall not include Patent Rights
included in MERCK Collaboration IP.
1.51 "MERCK TECHNOLOGY" means, collectively, MERCK Know-How, MERCK Patent
Rights, MERCK Collaboration IP and MERCK's interest in Joint
Collaboration IP.
1.52 "NDA" means a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Authorization
Application, Section 510(k) filing or
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similar application or submission filed with a Regulatory Authority
in a country or group of countries to obtain marketing approval for
a biological, pharmaceutical or other therapeutic, prophylactic or
diagnostic product in that country or in that group of countries.
1.53 "NDA FILING" means, with respect to an Ophthalmic Product, the
acceptance by a Regulatory Authority of an NDA for such Ophthalmic
Product for filing.
1.54 "NECESSARY THIRD PARTY IP" means, with respect to any country in the
Territory, on a country-by-country basis, Know-How or Patent Rights
in such country owned or controlled by a Third Party that Cover an
Ophthalmic Product.
1.55 "NET SALES" means, with respect to an Ophthalmic Product, the
aggregate gross invoice prices of all units of such Ophthalmic
Product sold by MERCK or its Related Parties or by ALNYLAM or its
Related Parties to Third Parties (other than a Sublicensee of a
Party) after deducting, if not previously deducted, from the amount
invoiced or received:
(a) trade and quantity discounts actually given other than early
pay cash discounts;
(b) returns, rebates, chargebacks and other allowances actually
given;
(c) retroactive price reductions that are actually granted; and
(d) a fixed amount equal to [**] to cover bad debt, sales or
excise taxes, early payment cash discounts, transportation and
insurance, custom duties, and other governmental charges.
With respect to sales of Combination Products, Net Sales shall be
calculated on the basis of the gross invoice price of the Ophthalmic
Product(s) containing the same composition and concentration of RNAi
Product sold without other clinically active ingredients.
In the event that the Ophthalmic Product is sold only as a
Combination Product and not sold without other clinically active
ingredients, the Parties shall negotiate in good faith another basis
on which to calculate Net Sales with respect to the Combination
Product that fairly reflects the value of the Ophthalmic Product
relative to the other clinically active ingredients in the
Combination Product, but in no event shall such calculation result
in the gross invoice price on which Net Sales are based being [**]of
the gross invoice price of such Combination Product.
A percentage of the deductions set forth in paragraphs (a) through
(d) above equal to the ratio of the Net Sales for the Ophthalmic
Product to the Net Sales of the entire Combination Product will be
applied in calculating Net Sales for a Combination Product.
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1.56 "OCULAR MICROVASCULAR DISEASE" means age-related macular
degeneration and [**], including without limitation [**], including
without limitation [**]; but specifically excluding [**], such as
(by way of example only) [**].
1.57 "OPHTHALMIC COLLABORATION" means the collaboration of the Parties in
the Development, Manufacture and Commercialization of Profit-Sharing
Products, and shall include, without limitation, the Pre-Clinical
Development Collaboration.
1.58 "OPHTHALMIC PRODUCT" means an RNAi Product which is directed at a
Program Target, that is (a) contributed by a Party to a Program in
the Ophthalmic Collaboration, including without limitation, the
Ophthalmic Product(s) identified on Schedule 2.3, or (b) discovered,
derived or developed by a Party or any person or entity acting on
behalf of a Party, including Affiliates, consultants and scientific
advisors thereof, in the course of the Ophthalmic Collaboration,
including, without limitation, any Combination Product,
Profit-Sharing Product and/or Royalty-Bearing Product.
1.59 "OPT-OUT RIGHTS" means, collectively, Target Opt-Out Rights and
Product Opt-Out Rights.
1.60 "PARTY" means MERCK and/or ALNYLAM.
1.61 "PATENT RIGHTS" means all patents (including all reissues,
extensions, substitutions, confirmations, re-registrations,
re-examinations, invalidations, supplementary protection
certificates and patents of addition) and patent applications
(including all provisional applications, continuations,
continuations-in-part and divisions).
1.62 "PHASE I STUDY" means a clinical study of an Ophthalmic Product in
human volunteers or patients the purpose of which is preliminary
determination of safety and tolerability of a dosing regime and for
which there are no primary endpoints (as understood by the FDA or
other Regulatory Authorities) in the protocol relating to efficacy.
1.63 "PHASE II STUDY" means (a) a dose exploration, dose response,
duration of effect, kinetics, dynamic relationship or preliminary
efficacy and safety study of an Ophthalmic Product in the target
patient population or (b) a controlled dose ranging clinical trial
to evaluate further the efficacy and safety of an Ophthalmic Product
in the target patient population and to define the optimal dosing
regimen.
1.64 "PHASE III STUDY" means a controlled pivotal clinical study of an
Ophthalmic Product that is prospectively designed to demonstrate
statistically whether such Ophthalmic Product is effective and safe
for use in a particular indication in a manner sufficient to obtain
Regulatory Approval to market such Ophthalmic Product.
1.65 "POST-APPROVAL STUDY" means a clinical study Initiated in a country
after receipt of Regulatory Approval for the Ophthalmic Product in
such country.
1.66 "PRE-CLINICAL DEVELOPMENT COLLABORATION" means the Development
activities undertaken by the Parties to (a) generate, characterize
and optimize Ophthalmic Products directed to Program Targets and (b)
support the filing of an IND for
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Ophthalmic Products, including without limitation, non-clinical
studies and Manufacturing development activities.
1.67 "PRODUCT TRADEMARKS" means the trademark(s), service xxxx(s),
accompanying logos, trade dress and/or indicia of origin used in
connection with the distribution, marketing, promotion and sale of
Ophthalmic Products in the Territory. For purposes of clarity, the
term Product Trademark(s) shall not include, without limitation, the
corporate names and logos of either Party, and shall include any
internet domain names incorporating such Product Trademarks.
1.68 "PROGRAM" means the VEGF Program or an Additional Program.
1.69 "PROGRAM TARGET" means VEGF or an Additional Program Target.
1.70 "PROGRAM WORKPLAN" means the detailed written workplan for each
Program that is mutually agreed between the Parties pursuant to
Sections 2.2 and 2.4 of this Agreement.
1.71 "REGULATORY APPROVAL" means any and all approvals (including pricing
and reimbursement approvals), licenses, registrations or
authorizations of any Regulatory Authority, necessary for the
Development, Commercialization and Manufacture of an Ophthalmic
Product, including the acceptance or non-rejection of INDs and the
approval of NDAs.
1.72 "REGULATORY AUTHORITY" means any applicable government regulatory
authority involved in granting approvals for the Development,
Manufacturing, Commercialization, reimbursement and/or pricing of an
Ophthalmic Product in the Territory, including without limitation
the FDA.
1.73 "RELATED PARTY" means a Party's Affiliates and permitted
Sublicensees, which term does not include wholesale distributors of
the Party or its Affiliates who purchase Ophthalmic Products from
such Party or its Affiliates in an arm's length transaction and who
have no other obligation, including without limitation a reporting
obligation, to such Party or its Affiliates. For purposes of
clarity, such wholesale distributors do not include those
distributors whose obligations to such Party or Affiliate include
responsibility for sales and/or marketing efforts in a country or
sharing of costs and expenses with respect to sales and/or marketing
on behalf of a Party or its Affiliates, which distributors shall be
deemed to be permitted Sublicensees for purposes of this definition.
1.74 "RNAI PRODUCT" means a therapeutic, prophylactic or diagnostic
product containing, comprised of or based on siRNAs or siRNA
derivatives or other moieties effective in gene function modulation
and designed to modulate the function of particular genes or gene
products through RNA interference.
1.75 "RNAI TECHNOLOGY" means any and all Know-How, whether or not
patentable, that is useful for the identification, characterization,
optimization, construction, expression, discovery, development,
production, manufacture, or use of RNAi Products.
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1.76 "ROYALTY PAYOR" means, in relation to a Royalty-Bearing Product, the
Party obligated to pay royalties to the other Party under the terms
and conditions of this Agreement.
1.77 "ROYALTY RECIPIENT" means, in relation to a Royalty-Bearing Product,
the Party entitled to receive royalties from the other Party under
the terms and conditions of this Agreement.
1.78 "SALES AND MARKETING EXPENSES" means, with respect to a
Profit-Sharing Product, the internal and external costs and expenses
incurred by the Parties and their Related Parties in connection with
the pre-launch market development, and the promotion, marketing,
selling and product support of such Profit-Sharing Product in the
United States, in accordance with the Commercialization Plan for
such Profit-Sharing Product and the related budget for Sales and
Marketing Expenses, including without limitation:
(a) promotional and training materials for the sales
representatives;
(b) patient support program costs;
(c) disease management programs specifically developed for such
Profit-Sharing Product;
(d) outcomes and pharmacoeconomic studies and Post-Approval
Studies for Profit-Sharing Product;
(e) costs incurred in conducting joint meetings relating to
Commercialization of such Profit-Sharing Product (excluding
JCC meetings) prior to the date of First Commercial Sale of
such Profit-Sharing Product in the United States (including
lodging expenses and travel expenses associated with such a
meeting);
(f) costs associated with Detailing to physicians;
(g) costs associated with market development activities and other
similar pre-launch activities;
(h) Cost of Goods Sold of samples of such Profit-Sharing Product
distributed in accordance with the Commercialization Plan;
(i) the costs of internal scientific, medical, technical, quality
assurance, quality control or managerial personnel engaged in
Commercialization efforts (including without limitation Health
Science Associates fielded by the Parties), which costs shall
be determined based on the FTE Costs, unless another basis is
otherwise agreed by the Parties in writing;
(j) other out-of-pocket costs and expenses related to promotion,
marketing, selling and product support of such Profit-Sharing
Product, including without limitation costs and expenses
associated with symposia, seminars, media advertising, market
research and direct mailing, that are incurred in accordance
with the applicable Commercialization Plan and the related
budget; and
13
(k) any other costs explicitly included in the budget for the
Commercialization Plan.
1.79 "SMALL INTERFERING RNA" or "SIRNA" means a double-stranded
ribonucleic acid (RNA) composition designed to act primarily through
an RNA interference mechanism that consists of either (a) two
separate oligomers of native or chemically modified RNA that are
hybridized to one another along a substantial portion of their
lengths, or (b) a single oligomer of native or chemically modified
RNA that is hybridized to itself by self-complementary base-pairing
along a substantial portion of its length to form a hairpin.
1.80 "SUBLICENSEE" means a Third Party to whom a Party grants a
sublicense under any ALNYLAM Technology, MERCK Technology or Joint
Collaboration IP, as the case may be, to Develop, Manufacture or
Commercialize an Ophthalmic Product in the Field in the Territory
subject to Section 7.2.5 or otherwise grants rights to distribute,
promote or sell an Ophthalmic Product.
1.81 "TERRITORY" means all of the countries in the world, and their
territories and possessions.
1.82 "THIRD PARTY" means an entity other than a Party and its Affiliates.
1.83 "UNITED STATES" means the United States of America and its
territories, possessions and commonwealths.
1.84 "VALID CLAIM" means a claim of: (a) an issued and unexpired Patent
Right, which claim has not been revoked or held unenforceable,
unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, which is not
appealable or has not been appealed within the time allowed for
appeal, and which has not been abandoned, disclaimed, denied or
admitted to be invalid or unenforceable through reissue,
re-examination or disclaimer or otherwise, or (b) a patent
application for a patent included within the Patent Rights that has
[**] from the earliest date on which such patent application claims
priority and which claim has not been cancelled, withdrawn or
abandoned or finally rejected by an administrative agency action
from which no appeal can be taken.
1.85 "VEGF" means (a) the genomic locus encoding vascular endothelial
growth factor (LocusLink ID# 7422, Unigene ID# Hs.73793, OMIM ID#
192240), [**]
1.86 "VEGF PRODUCT" means an Ophthalmic Product developed in the VEGF
Program.
1.87 "VEGF PROGRAM" means the Program to research and develop Ophthalmic
Product(s) whose target is VEGF, as more fully described in Section
2.2 of this Agreement. The VEGF Program is not an Additional
Program.
1.88 "WORLDWIDE SALES" means aggregate worldwide Net Sales of a
Royalty-Bearing Product in a Calendar Year by a Party or its Related
Parties.
ADDITIONAL DEFINITIONS. The following terms have the meanings set forth in the
corresponding Sections of this Agreement:
14
TERM SECTION
---- -------
"AAA" 13.6.1
"ACQUIRED PARTY" 13.2.2
"ADDITIONAL PROGRAM" 2.4
"ALNYLAM INDEMNITEES" 10.5.1
"AGREEMENT TERM" 12.1.2
"BANKRUPT PARTY" 12.2.2(c)
"BREACHING PARTY" 12.2.1(a)
"CHANGE OF CONTROL" 13.2.2.4
"CHANGE OF CONTROL NOTICE" 13.2.2
"CODE" 12.2.2(c)
"COLLABORATION IP" 7.1.3
"COLLABORATION MANAGER" 3.2
"CONTINUING PARTY" 4.2
"CO-PROMOTION AGREEMENT" 5.5
"CO-PROMOTION OPTION EXERCISE DATE" 5.5
"CRT AGREEMENT" 7.5
"DEFENDING PARTY" 11.5.4
"DISPUTE" 13.6.1
"DIVESTING PARTY" 13.2.2.3(c)
"EFFECTIVE DATE" Preamble
"EXCLUDED CLAIM" 13.6.1
"EXPENSE SHARE REDUCTION OPTION" 2.11.1
"GRANTING PARTY" 7.1.3
"HUMAN MATERIALS" 10.1.5
"INDEMNITEES" 10.5.4
"INFRINGEMENT CLAIM" 11.5.1
"INITIAL ENFORCEMENT RIGHTS PARTY" 11.4.3
"INITIAL NOTICE" 2.14
"JCC" 5.1
"JSC CHAIRPERSON" 3.1.2
"LEAD VEGF PRODUCT" 2.5
"LEAD ROYALTY-BEARING PRODUCT" 8.3.2.4
"LOSSES" 10.5.1
"MERCK INDEMNITEES" 10.5.1
"NON-ACQUIRED PARTY" 13.2.2
"NON-BANKRUPT PARTY" 12.2.2(c)
"NON-BREACHING PARTY" 12.2.1(a)
"OPT-OUT PARTY" 4.2
"OPT-OUT PERIOD" AND "OPT-OUT PERIODS" 4.4.1
"OPT-OUT POINT" 4.2
"PARALLEL PROGRAM" 2.14
"PARALLEL PROGRAM INFORMATION" 2.14
"PATENT EXPENSES" 11.3.7
"PHASE I COMPLETION OPT-OUT PERIOD" 4.4.1(b)
"PHASE II COMPLETION OPT-OUT PERIOD" 4.4.1(c)
15
"PRE-CLINICAL DEVELOPMENT COLLABORATION TERM" 2.12.1
"PRE-IND FILING OPT-OUT PERIOD" 4.4.1(a)
"PRODUCT OPT-OUT RIGHT" 4.4
"PRODUCT OPT-OUT POINT" 4.4.2(a)
"PROFIT-SHARING PRODUCT" 4.1
"PROSECUTING PARTY" 11.3.5
"PROVIDERS" 10.1.5
"RECEIVING PARTY" 12.3.1
"REGION" 12.2.2(d)
"REQUESTED PARTY" 2.9
"ROYALTY-BEARING PRODUCT" 4.2
"SECONDARY ENFORCEMENT RIGHTS PARTY" 11.4.3
"SIGNIFICANT PHARMACEUTICAL COMPANY" 13.2.2.4
"SOLE COMMERCIALIZATION PARTY" 13.2.2.3(c)
"SPC" 11.8
"STANFORD AGREEMENT" 7.5
"TARGET OPT-OUT RIGHT" 4.3
"TARGET OPT-OUT POINT" 4.3(i)
"TRANSFERRING PARTY" 12.3.1
"U.S. CO-PROMOTION OPTION" 5.5
"U.S. DEVELOPMENT EXPENSES" 2.11.1
"U.S. OPERATING PROFIT/LOSS" 8.2
2. DEVELOPMENT COLLABORATION
2.1 OVERVIEW. The Parties shall collaborate in carrying out the
Ophthalmic Collaboration with the objective of Developing Ophthalmic
Products in the Field. The Parties anticipate that there will be
[**] Programs in the Ophthalmic Collaboration, each focused on
Developing Ophthalmic Products directed to different Program
Targets. The Development of each Ophthalmic Product shall be
governed by the applicable Program Workplan and the Parties agree to
conduct all their Development activities relating to the Ophthalmic
Products in accordance with the applicable Program Workplan.
2.2 INITIAL DEVELOPMENT PROGRAM. The first Program in the Ophthalmic
Collaboration will be the VEGF Program. The activities to be
undertaken in the course of the VEGF Program are set forth in the
Program Workplan attached hereto as Schedule 2.2, which may be
amended from time to time upon the mutual written agreement of
authorized representatives of the Parties. The focus of the Program
Workplan for the VEGF Program will be on the further
characterization, optimization and development of Ophthalmic
Products directed to VEGF as candidates for Clinical Studies, and as
appropriate, the conduct of these studies.
2.3 INITIAL CONTRIBUTION OF OPHTHALMIC PRODUCTS. On the Effective Date,
ALNYLAM shall contribute to the VEGF Program any Ophthalmic Products
that are directed to VEGF that have been generated by ALNYLAM and
its Affiliates prior to the Effective Date, including without
limitation those identified on Schedule 2.3.
16
2.4 ADDITIONAL DEVELOPMENT PROGRAMS. Within [**] after the Effective
Date, the JSC will select [**] Additional Program Targets. Within
[**] after the selection of each Additional Program Target, the JSC
will agree upon a Program Workplan for a Program to research and
develop one or more Ophthalmic Products directed to each such
Additional Program Target (each such Program, an "Additional
Program"). The focus of the Program Workplans for the Additional
Programs will be on generating, characterizing and optimizing
Ophthalmic Products directed to the Additional Program Targets for
further Development in the Field, including Clinical Studies, and as
appropriate, the conduct of these studies. Each Party will
contribute to each Additional Program any Ophthalmic Products
directed to the applicable Additional Program Target that have been
generated by such Party prior to the selection of the applicable
Additional Program Target. The Program Workplan for each Additional
Program will identify such Ophthalmic Products (if any) and Schedule
2.3 will be updated to include such Ophthalmic Products.
2.5 COLLABORATION ACTIVITIES. The Program Workplans shall allocate
Development tasks between the Parties consistent with their
respective capabilities and, to the extent possible and
scientifically sound, in a manner to maximize the expeditious and
cost-effective Development and Manufacture of Ophthalmic Products.
With respect to each Ophthalmic Product and Program, ALNYLAM will be
responsible for the following activities under the applicable
Program Workplan: (a) [**] activities, and (b) [**] studies [**]. In
addition, with respect to the VEGF Product that is at the most
advanced stage of Development (the "Lead VEGF Product"), ALNYLAM
will be primarily responsible for [**] activities and pursuant to
Section 2.10.2 below, [**]. With respect to each Ophthalmic Product
and Program, MERCK shall be responsible for the following activities
under the applicable Program Workplan: (i) [**] Products [**], (ii)
[**] activities [**] and (iii) [**] Products [**] (including,
without limitation, [**] in accordance with the applicable Program
Workplan).
2.6 THIRD PARTIES.
2.6.1 PERFORMANCE OF COLLABORATION ACTIVITIES. The Parties shall be
entitled to utilize the services of Third Parties (including Third
Party contract research organizations) to perform their respective
Development and Manufacturing activities under the Program
Workplans; provided that each Party shall remain at all times fully
liable for its respective responsibilities under the Program
Workplans. Neither Party shall use Third Party contract resources to
conduct part or all of its obligations under the Ophthalmic
Collaboration unless the non-contracting Party's rights under the
agreement with the Third Party contract research organization
guarantee the non-contracting Party the same rights under this
Agreement as if the contracting Party had done the work itself, and
any such Third Party agreement shall include confidentiality and
non-use provisions which are no less stringent than those set forth
in Article 9 of this Agreement.
2.6.2 COLLABORATIONS. In addition, the Parties agree that it may be
necessary or useful to enter into Third Party collaborations which
provide technology, information, data or know-how, patentable or
otherwise, which is necessary or useful for MERCK and/or ALNYLAM to
perform its obligations under the Ophthalmic Collaboration. Such
Third
17
Party collaborations shall not conflict with the terms and
conditions of this Agreement. In the event that any such Third
Party collaborations are contemplated in connection with the
Ophthalmic Collaboration, the JSC shall discuss, subject to Third
Party confidentiality obligations, and agree upon entering into
such Third Party collaborations, and the applicable Program
Workplan shall be amended to include such Third Party
collaborations. The Parties shall use good faith efforts to ensure
that, to the extent possible, all such Third Party collaborations
shall provide that any and all data and results, discoveries and
inventions, whether patentable or not, arising out of the Third
Party collaboration may be used by bona fide collaborators of the
Party entering into the Third Party collaboration agreement and
shall include confidentiality and non-use provisions which are no
less stringent than those set forth in Article 9 of this Agreement.
In addition, the Party entering into such Third Party
collaborations shall use reasonable efforts to obtain a right to
sublicense to the other Party and its Related Parties any
intellectual property arising out of the Third Party collaboration
for use in connection with the Ophthalmic Collaboration.
2.7 DILIGENCE. Each Party shall use Commercially Reasonable Efforts to
perform its respective Development and Manufacturing activities
under the Program Workplans in accordance with this Agreement
according to the priorities established by the Program Workplans
and the JSC.
2.8 RECORDS. Each Party shall maintain scientific records, in
sufficient detail and in good scientific manner appropriate for
patent and regulatory purposes, which shall fully and properly
reflect all work done and results achieved in the performance of
the Ophthalmic Collaboration by such Party. Each Party shall have
the right, during normal business hours and upon reasonable notice,
to inspect and copy (or request the other Party to copy) all
records of the other Party maintained in connection with the work
done and results achieved in the performance of the Programs, but
solely to the extent to which such records relate to a
Profit-Sharing Product or to the extent access to such records is
necessary for a Party to exercise its rights under this Agreement.
All such records and the information disclosed therein shall be
maintained in confidence by the recipient in accordance with
Article 9.
2.9 AVAILABILITY OF EMPLOYEES. Each Party (the "Requested Party") shall
make available its employees engaged in the Programs upon
reasonable notice during normal business hours and at their
respective places of employment to consult with the other Party on
the progress of the Programs, as coordinated through the Requested
Party's Collaboration Manager or such other individual as may be
designated by the Requested Party.
2.10 REGULATORY MATTERS AND COMPLIANCE FOR PROFIT-SHARING PRODUCTS.
2.10.1 OWNERSHIP AND REFERENCE RIGHT. Subject to Section 2.10.2, [**] the
Regulatory Approvals and related regulatory documents submitted to
the applicable Regulatory Authorities for all Profit-Sharing
Products. The Party owning any Regulatory Approval and related
regulatory documents shall license, including for cross-reference
purposes, transfer, provide a letter of reference with respect to,
or take other action necessary to make available such Regulatory
Approvals and related regulatory documents to the
18
other Party as may be reasonably necessary to enable such other
Party to fulfill its obligations under the applicable Program
Workplan and/or Commercialization Plan and exercise its rights
under this Agreement with respect to the Development and
Commercialization of such Profit-Sharing Products in the Field in
the Territory.
2.10.2 VEGF PRODUCT IND. Notwithstanding the general provisions of Section
2.10.1, [**] filing the IND for the Lead VEGF Product. [**]
preparing and promptly supplying the [**] information for such IND
and [**] preparing and promptly supplying [**], including without
limitation, the [**]. Promptly after acceptance of such IND by the
applicable Regulatory Authority, [**].
2.10.3 REGULATORY COORDINATION. Except as otherwise provided in Section
2.10.2, Section 2.10.4, Section 5.7 or the applicable Program
Workplan, [**] (a) [**], (b) be responsible for [**], and (c) [**]
under this Section 2.10, and to comply with its disclosure
requirements under applicable securities laws. Except as otherwise
provided in Section 2.10.2, Section 2.10.4 or Section 5.7, [**]
shall have the right [**] with respect to Profit-Sharing Products.
2.10.4 MANUFACTURING REGULATORY COMMUNICATIONS. Notwithstanding any
provisions of Section 2.10.3 to the contrary, with respect to all
regulatory issues related to the Manufacture of Profit-Sharing
Products, including all matters relating to cGMP compliance, (a) in
the case of supply of a Profit-Sharing Product [**], and (b) in the
case of supply of a Profit-Sharing Product for [**]:
(i) be primarily responsible for [**], each Regulatory
Authority;
(ii) be primarily responsible for [**] each Regulatory Authority;
(iii) be responsible for [**];
(iv) notify [**] a Regulatory Authority [**]; and
(v) provide to the [**] Regulatory Authority [**].
2.10.5 REPORTING ADVERSE EXPERIENCES. The Parties will develop and agree
upon safety data exchange procedures governing the coordination of
collection, investigation, reporting, and exchange of information
concerning any adverse experiences, and any product quality and
product complaints involving adverse experiences, related to a
Profit-Sharing Product, sufficient to permit each Party to comply
with its legal obligations.
2.10.6 COMPLIANCE. Each Party shall conduct the Ophthalmic Collaboration
and the Development, Manufacture and Commercialization of
Profit-Sharing Products in accordance with all applicable laws,
rules and regulations, including without limitation current
governmental regulations concerning good laboratory practices, good
clinical practices and good manufacturing practices.
2.11 FUNDING OF THE DEVELOPMENT COLLABORATION.
2.11.1 From the Effective Date, with respect to each Profit-Sharing
Product, the Parties will each bear fifty percent (50%) of all
Development Expenses incurred in the conduct of
19
the Program Workplan for such Profit-Sharing Product in order to
generate data primarily to support Regulatory Approval of such
Profit-Sharing Product in the United States ("U.S. Development
Expenses"). For the avoidance of doubt, U.S. Development Expenses
may include expenses related to Clinical Studies performed outside
of the United States in support of Regulatory Approval in the
United States. The applicable Program Workplan will identify each
Clinical Study that is primarily in support of Regulatory Approval
of a Profit-Sharing Product in the United States. Prior to the
Initiation of the first Phase III Study with respect to each
Profit-Sharing Product, each Party has a one-time option to reduce
its percentage share of U.S. Development Expenses related to such
Profit-Sharing Product ("Expense Share Reduction Option");
provided, however, that in no event will such percentage share be
less than [**] percent ([**]%). A Party may exercise such option by
providing [**] prior written notice to the other Party of such
exercise and the percentage share of U.S. Development Expenses to
be borne by such Party. In the event that [**] exercises its
Expense Share Reduction Option with respect to any Profit-Sharing
Product, [**] over the Development, Manufacturing and
Commercialization activities for such Profit-Sharing Product with
respect to the United States and the appropriate changes will be
made to the provisions of this Agreement to reflect [**], including
without limitation, the reallocation of responsibility for [**]
with respect to the United States.
2.11.2 From the Effective Date, with respect to each Profit-Sharing
Product, MERCK will bear one hundred percent (100%) of the
Development Expenses incurred in the conduct of the Program
Workplan for such Profit-Sharing Product in order to generate data
primarily to support Regulatory Approval of such Profit-Sharing
Product in the Territory outside the United States.
2.11.3 Each Program Workplan under the Ophthalmic Collaboration shall be
accompanied by a budget prepared by the Parties setting forth the
projected Development Expenses for such Program relating to the
United States. Such Program Workplan budgets shall be reviewed and
approved at least annually by the JSC pursuant to Section 3.1.4.
U.S. Development Expenses identified within the budget for the
applicable Program Workplan approved by the JSC shall initially be
borne by the Party incurring the cost or expense, subject to
reimbursement as provided in Section 2.11.4. ALNYLAM and MERCK
shall report quarterly to each other on their U.S. Development
Expenses with respect to the immediately preceding Calendar
Quarter, if any, with such reports to be submitted within thirty
(30) days after the end of each Calendar Quarter. The Parties shall
seek to resolve any questions related to such U.S. Development
Expenses within fifteen (15) days following receipt.
2.11.4 The Party that incurs more than its share of the total actual U.S.
Development Expenses for a Profit-Sharing Product shall be paid by
the other Party an amount sufficient to reconcile to its agreed
percentage of actual U.S. Development Expenses in each Calendar
Quarter; provided that total actual U.S. Development Expenses for
both Parties for the Calendar Year to date have not exceeded [**]%
of budgeted U.S. Development Expenses for such Profit-Sharing
Product for the Calendar Year to date. If total actual U.S.
Development Expenses exceeded budgeted U.S. Development Expenses by
more than [**]% for the Calendar Year to date, the reimbursing
Party shall
20
first pay the other Party an amount sufficient to cause the
reimbursing Party to have borne its stated percentage of [**]% of
the budgeted U.S. Development Costs. Actual U.S. Development
Expenses in excess of [**]% of budgeted U.S. Development Expenses
shall also be reimbursed if (i) both Parties approve the additional
U.S. Development Expenses in advance or (ii) such excess U.S.
Development Expenses are the result of work carried out in response
to a governmental requirement to do such work and the Party
incurring such excess U.S. Development Expenses has notified the
other Party prior to incurring such excess U.S. Development
Expenses. Subject to the foregoing clause (ii), any proposal to
increase U.S. Development Expense for any Calendar Year by more
than [**]% of the U.S. Development Expenses budgeted for such
Calendar Year, if the Parties are unable to reach consensus on such
issue, after referral to the executive officers of the Parties
pursuant to Section 13.6.1, shall not be approved. Reconciling
payments under this Section 2.11.4 shall be made within thirty (30)
days of receipt of the other Party's quarterly report.
2.12 PRE-CLINICAL DEVELOPMENT COLLABORATION TERM.
2.12.1 TERM. Except as otherwise provided herein, the term of the
Pre-Clinical Development Collaboration shall commence on the
Effective Date and continue until the[**]anniversary of the
Effective Date (the "Pre-Clinical Development Collaboration Term");
provided, however, that the Parties will cooperate in the orderly
cessation of any Clinical Studies of the Ophthalmic Products that
are ongoing at the end of the Pre-Clinical Development
Collaboration Term and mutually agree on sharing any associated
expenses. The Parties may extend the Pre-Clinical Development
Collaboration Term by mutual written agreement of authorized
representatives of the Parties.
2.12.2 EFFECT OF EXPIRATION. No later than [**] prior to expiration of the
Pre-Clinical Development Collaboration Term, the Parties, through
the JSC, shall discuss any Ophthalmic Products that are not
Royalty-Bearing Products and have not yet advanced to the Pre-IND
Filing Opt-Out Period and shall mutually agree which Party shall be
the Continuing Party for such Ophthalmic Product. Following the
expiration of the Pre-Clinical Development Collaboration Term, such
Ophthalmic Product shall be deemed a Royalty-Bearing Product under
this Agreement. The Continuing Party shall be free to Develop,
Manufacture and Commercialize such Royalty-Bearing Product in the
Territory, with or without a partner or collaborator and without
any further obligation to the other Party with respect to such
activities under this Agreement, except for (a) the continuing
obligations of the Parties set forth in Article 6 and (b) the
obligation of the Continuing Party to pay the other Party
[**]percent ([**]%) of the royalties that would be payable by the
Continuing Party to the other Party under Section 8.3.2 had such
Continuing Party exercised its Product Opt-Out Right with respect
to such Royalty-Bearing Product during the Pre-IND Filing Opt-Out
Period; provided, however, that if MERCK is the Continuing Party,
in no event shall the royalties payable by MERCK to ALNYLAM with
respect to Net Sales in a country for any Calendar Quarter be less
than the amount of any royalties and any portions of milestones or
other payments under the Existing ALNYLAM In-Licenses that are
reasonably allocable to the Commercialization or Manufacture of
such Royalty-Bearing Product in or for such country in the Field.
21
2.13 EXCLUSIVITY. Except as provided in Section 2.6 of this Agreement and
the Research Collaboration and License Agreement dated September 8,
2003 among MERCK, ALNYLAM (formerly Alnylam Holding Co.) and Alnylam
U.S. Inc. (formerly Alnylam Pharmaceuticals, Inc.),
(a) During the Pre-Clinical Development Collaboration Term,
neither Party nor any of its Affiliates shall, alone or with a
Third Party, [**]in the Field in the Territory;
(b) Until the [**] anniversary of the date of First Commercial
Sale of the first Ophthalmic Product directed to a Program
Target, neither Party nor any of its Affiliates shall, alone
or with a Third Party, [**] in the Field in the Territory,
provided that this obligation shall terminate in the event
that no Ophthalmic Product directed to such Program Target is
being Developed or Commercialized;
(c) Following the exercise by a Party of its Target Opt-Out Right
with respect to a Program Target, the rights of each Party to
research, develop, manufacture or commercialize with Third
Parties RNAi Products directed to the applicable Program
Target shall be governed by Section 4.3(e).
2.14 RIGHT OF FIRST NEGOTIATION. During the Pre-Clinical Development
Collaboration Term, [**] (a) commencing the research, development
and/or commercialization of any RNAi Product (i) within the Field
and directed to a target gene or gene product [**]; or [**] shall
include material information relating to [**] shall have [**], then
the Parties shall [**] in an effort to [**] within such [**] within
such [**].
2.15 IN-LICENSES. With respect to each Profit-Sharing Product, if either
Party identifies any Necessary Third Party IP that at the time of
identification is not Controlled by a Party, such Party shall notify
the JSC and include in such notification a summary of such Necessary
Third Party IP, the anticipated commercial terms of the necessary
license and any other relevant information. The JSC shall discuss
whether a license to such Necessary Third Party IP should then be
obtained by taking into consideration any commercial advantages
associated with the timing of licensing such Necessary Third Party
IP, the usefulness or necessity of such Necessary Third Party IP to
the success of the Development, Manufacture or Commercialization of
the applicable Profit-Sharing Product and any other factors the JSC
deems relevant. If the JSC determines that a license to such
Necessary Third Party IP should be obtained, the JSC shall determine
which Party shall be responsible for negotiating and entering into
such license and such license, if executed, shall be an "In-License"
of that Party; provided, however, that ALNYLAM shall be responsible
for negotiating and entering into any licenses of Broad RNAi
Technology that constitute Necessary Third Party IP. Prior to
execution of any such license, the negotiating party shall present
the license in substantially final form to the JSC for review and
approval. If the JSC does not approve such license, such license
shall not constitute an "In-License" under this Agreement. Each
Party shall comply with all applicable terms and conditions of the
In-Licenses of the other Party and shall take such actions as may be
required to allow such Party to comply with its obligations
22
thereunder, including obligations relating to patent matters,
confidentiality, indemnification and diligence. The Parties agree
that this Section 2.15 shall not apply to any In-Licenses entered
into by either Party or its Affiliates prior to the Effective Date
of this Agreement. [**].
2.16 TRANSFER OF KNOW-HOW.
2.17 GENERAL. Each Party shall provide to the other Party, at such other
Party's request, any and all Know-How related to Program Targets
and Profit-Sharing Products directed to such Program Targets that
is Controlled by such Party, or in the absence of such request,
such Know-How Controlled by such Party as the providing Party
reasonably believes is necessary for the other Party to perform its
obligations or exploit its rights under this Agreement, including
without limitation in the Development, Manufacture and
Commercialization of Profit-Sharing Products. In particular, but
without limiting the generality of the foregoing, each Party shall
provide to the other all Know-How Controlled by such Party that it
reasonably believes will assist the Parties in evaluating and
selecting the Additional Program Targets. Each Party shall use such
Know-How solely for the purposes of performing its obligations or
exploiting its rights under this Agreement with respect to such
Program Targets and Profit-Sharing Products.
2.17.1 DEVELOPMENT MATERIALS. With respect to Know-How that consists of
Development Materials, each Party may provide to the other Party
Development Materials Controlled by the supplying Party for use by
the other Party in furtherance of the Programs. Except as otherwise
provided under this Agreement or explicitly authorized in writing
by the supplying Party, all such Development Materials delivered to
the receiving Party shall remain the sole property of the supplying
Party, shall be used only in furtherance of the applicable Program
and solely under the control of the receiving Party and shall not
be used or delivered to or for the benefit of any Third Party
without the prior written consent of the supplying Party. The
Development Materials supplied under this Section 2.16.2 must be
used with prudence and appropriate caution in any experimental
work, since not all their characteristics may be known; however,
the supplying Party shall notify the receiving Party of any health
hazards of which it is or becomes aware relating to the use or
handling of the Development Materials. THE DEVELOPMENT MATERIALS
ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTY OF SATISFACTORY QUALITY, MERCHANTABILITY OR OF FITNESS FOR
ANY PARTICULAR PURPOSE, OR SAVE AS SPECIFICALLY PROVIDED IN THIS
AGREEMENT, ANY WARRANTY THAT THE USE OF THE DEVELOPMENT MATERIALS
WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS
OF ANY THIRD PARTY.
3. COLLABORATION MANAGEMENT
3.1 JOINT STEERING COMMITTEE. The Parties hereby establish a committee
to facilitate the Ophthalmic Collaboration as follows:
23
3.1.1 COMPOSITION OF THE JOINT STEERING COMMITTEE. The Ophthalmic
Collaboration shall be conducted under the direction of a joint
steering committee (the "JSC") comprised of three (3) named
representatives of MERCK and three (3) named representatives of
ALNYLAM. Each Party shall appoint its respective representatives to
the JSC from time to time, and may substitute one or more of its
representatives, in its sole discretion, effective upon notice to
the other Party of such change. Each Party shall have at least one
JSC representative who is a senior employee (director level or
above), and all JSC representatives shall have appropriate research,
preclinical, manufacturing, clinical development or
commercialization expertise and ongoing familiarity with the
Ophthalmic Collaboration. Additional representatives or consultants
may from time to time, by mutual consent of the Parties, be invited
to attend JSC meetings, subject to such representatives' and
consultants' written agreement to comply with the requirements of
Section 9.1. Each Party shall bear its own expenses relating to
attendance at such meetings by its representatives.
3.1.2 JSC CHAIRPERSON. The "JSC Chairperson" shall rotate every twelve
(12) months between ALNYLAM and MERCK. The initial JSC Chairperson
shall be a representative of ALNYLAM. The JSC Chairperson's
responsibilities shall include (a) scheduling meetings at least once
per Calendar Quarter, but more frequently if the JSC determines it
necessary; (b) setting agenda for meetings with solicited input from
other members; (c) confirming and delivering minutes to the JSC for
review and final approval; and (d) conducting effective meetings,
including ensuring that objectives for each meeting are set and
achieved.
3.1.3 MEETINGS. The JSC shall meet in accordance with a schedule
established by mutual written agreement of the Parties, but no less
frequently than once per Calendar Quarter, with the location for
such meetings alternating between ALNYLAM and MERCK facilities (or
such other locations as are determined by the JSC). Alternatively,
the JSC may meet by means of teleconference, videoconference or
other similar communications equipment, but at least two meetings
per year shall be conducted in person.
3.1.4 JSC RESPONSIBILITIES. The JSC shall have the following
responsibilities with respect to the Ophthalmic Collaboration:
(a) determining the overall Development strategy for the Programs
and the Ophthalmic Products in the Field in the Territory;
(b) evaluating and selecting [**] Additional Program Targets by no
later than [**] following the Effective Date;
(c) reviewing for approval the Program Workplans for the
Additional Programs (including without limitation, identifying
each Clinical Study in such Program Workplans that is
primarily in support of Regulatory Approval of a
Profit-Sharing Product in the United States) within sixty (60)
days after the selection of the Additional Program Targets by
the JSC, and reviewing for approval the related Development
Expense budgets described in Section 2.11.3 within ninety
24
(90) days after the selection of the Additional Program
Targets by the JSC, in each case with appropriate input from
ALNYLAM and MERCK senior management;
(d) reviewing for approval (i) an annual update to each Program
Workplan and the related Development Expense budgets described
in Section 2.11.3, no later than December 31 of each Calendar
Year, and (ii) any modifications to such Program Workplans and
Development Expense budgets within thirty (30) days of each
submission to the JSC (including without limitation,
identifying each Clinical Study in such updates and
modifications to such Program Workplans that is primarily in
support of Regulatory Approval of a Profit-Sharing Product in
the United States);
(e) determining each Party's responsibilities under the Program
Workplans consistent with Section 2.5;
(f) facilitating the transfer of Know-How and Information between
the Parties for purposes of conducting the Program Workplans;
(g) regularly assessing the progress of the Parties in their
conduct of the Program Workplans and against the timelines and
budgets contained therein, reviewing relevant data,
considering issues of priority, and determining which
Profit-Sharing Products to advance into clinical development;
(h) reviewing for approval any Manufacturing plans for
Profit-Sharing Products and overseeing activities conducted
thereunder;
(i) reviewing for approval, within the Parties' regular business
cycles, but no later than [**] days after a proposal is made
to the JSC by either Party, the entry of any Profit-Sharing
Product into IND-Enabling GLP Toxicology Studies;
(j) reviewing for approval, within the Parties' regular business
cycles, but no later than [**] days after a proposal is made
to the JSC by either Party, the submission of an IND with
respect to any Profit-Sharing Product;
(k) reviewing for approval the terms of any In-License under
Section 2.15;
(l) reviewing for approval proposed Third Party collaborations in
accordance with Section 2.6; and
(m) performing such other activities as are contemplated under
this Agreement or that the Parties agree shall be the
responsibility of the JSC.
3.2 APPOINTMENT OF SUBCOMMITTEES, PROJECT TEAMS AND COLLABORATION
MANAGERS. The JSC shall be empowered to create such subcommittees of
itself and additional project teams as it may deem appropriate or
necessary. Each such subcommittee and project team shall report to
the JSC, which shall have authority to approve or reject
recommendations or actions proposed thereby subject to the terms of
this Agreement.
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Each Party shall also designate a "Collaboration Manager." The
Collaboration Managers will be responsible for the day-to-day
worldwide coordination of the Ophthalmic Collaboration and will
serve to facilitate communication between the Parties. Each Party
may change its designated Collaboration Manager from time to time
upon written notice to the other Party.
3.3 REPORTS AND MINUTES. Each Party will provide the members of the JSC
with written copies of all materials they intend to present at the
JSC meeting. The JSC may also request at any time specific data or
information related to Development activities or that a written
report be prepared in advance of any meeting summarizing certain
material data and information arising out of the conduct of the
Development activities and the Party or appropriate committee to
whom such request is made shall promptly provide to the other Party
or JSC such report, data or information. A secretary shall be
appointed for each meeting and shall prepare minutes of the meeting,
which shall provide a description in reasonable detail of the
discussions held at the meeting and a list of any actions, decisions
or determinations approved by the JSC.
3.4 DECISION MAKING.
3.4.1 FINAL DECISION-MAKING. The JSC shall operate by consensus; provided,
however, that the JSC shall not have final decision-making authority
regarding issues relating to the following matters for each
Profit-Sharing Product:
(a) [**];
(b) [**]; and
(c) [**];
provided, however, that if [**] with respect to any Profit-Sharing
Product[**] such Profit-Sharing Product [**].
3.4.2 BUDGETS. As set forth in Sections 3.1.4(c) and (d), for
Profit-Sharing Products, the JSC shall have primary responsibility
to review and approve Development Expense budgets for Program
Workplans, including budgets related to Development activities over
which one Party has final decision-making authority pursuant to
Section 3.4.1. In recognition of the importance of budgets, each
Party shall have the full opportunity to review and comment on
budgets before final approval. Any disputes related to budgets shall
be resolved in accordance with Section 3.5.2.
3.4.3 VOTING. With respect to decisions of the JSC, the representatives of
each Party shall have collectively one vote on behalf of such Party.
For each meeting of the JSC, at least two (2) representatives of
each Party shall constitute a quorum. Action on any matter may be
taken at a meeting, by teleconference, videoconference or by written
agreement.
3.5 DISPUTES. The JSC shall attempt to resolve any and all disputes
relating to the Ophthalmic Collaboration by unanimous consensus.
[**].
26
3.5.1 With respect to a dispute concerning a matter provided for in
Section 3.4.1, [**]; provided, however, that the [**] by the JSC
[**] the JSC shall provide the [**] decision.
3.5.2 With respect to a dispute concerning a matter provided for in
Section 3.4.2, [**]; provided, however, that [**] consideration by
the JSC, [**] the JSC shall provide the [**] decision.
3.5.3 With respect to all other matters except those relating to the Cost
of Goods Sold of an Ophthalmic Product as described in Section 1.21,
if the JSC is unable to resolve such dispute, and the dispute is
material, then the dispute shall be submitted to escalating levels
of MERCK and ALNYLAM senior management for review. If the dispute
cannot be resolved despite escalation, then the dispute resolution
provisions of Section 13.6 shall apply.
3.6 DISSOLUTION OF JSC. The JSC shall be dissolved at the end of the
Ophthalmic Collaboration.
4. OPT-OUT RIGHTS.
4.1 JOINT DEVELOPMENT AND COMMERCIALIZATION. Each Ophthalmic Product
being jointly Developed and Commercialized by the Parties under this
Agreement shall be referred to as a "Profit-Sharing Product", unless
and until a Party exercises its Opt-Out Rights with respect to such
Profit-Sharing Product.
4.2 SOLE PARTY DEVELOPMENT AND COMMERCIALIZATION. If either Party (the
"Opt-Out Party") exercises its Opt-Out Rights with respect to a
Profit-Sharing Product or a Program Target, and the other Party
elects, by notice to the Opt-Out Party within [**] after the Target
Opt-Out Point or the Product Opt-Out Point, as the case may be
(each, an "Opt-Out Point"), to continue the Development and
Commercialization of such product (such other Party after such
election, a "Continuing Party"), such Profit-Sharing Product will
thereafter be referred to as a "Royalty-Bearing Product."
4.3 TARGET OPT-OUT RIGHTS. Each Party shall have the right to narrow the
Parties' collaboration hereunder to exclude a Program Target and all
Ophthalmic Products directed to such Program Target (a "Target
Opt-Out Right"), subject to the following terms and conditions:
(i) a party may exercise its Target Opt-Out Right with respect to
a Program by giving the other Party [**] prior written notice
of the Opt-Out Party's intent to exercise its Target Opt-Out
Right; provided, however, that a Party may not exercise its
Target Opt-Out Right with respect to a Program until after
completion of the final IND-Enabling GLP Toxicology Study for
the most advanced Ophthalmic Product in such Program, and such
Target Opt-Out Right shall not apply to any Ophthalmic Product
in such Program after the expiration of the End of Phase II
Completion Opt-Out Period for such Product. On the effective
date of the exercise of such Target Opt-Out Right (the "Target
Opt-Out Point"):
27
(a) the definition of Program Targets shall thereafter be narrowed
to exclude the applicable Program Target, the definition of
Programs shall thereafter be narrowed to exclude the Program
for such Program Target, and if the Party that is not the
Opt-Out Party does not elect to become the Continuing Party
for any Ophthalmic Products in the Program, the definition of
Ophthalmic Product shall thereafter be narrowed to exclude any
such Ophthalmic Products;
(b) if the Party that is not the Opt-Out Party elects to become
the Continuing Party for one or more Ophthalmic Products in
such Program, then such Ophthalmic Products will be deemed
Royalty-Bearing Products and the provisions of Section 12.3
shall apply to each such Royalty-Bearing Product;
(c) if the Party that is not the Opt-Out Party does not elect to
become the Continuing Party for any Ophthalmic Products in
such Program, then except for the provisions of this Agreement
that survive termination of this Agreement pursuant to Section
12.4 and this Section 4.3, the financial, license and other
terms of this Agreement shall no longer apply to such Program
Target or Program or the Development, Manufacture and
Commercialization of Ophthalmic Products in such Program;
(d) the Continuing Party shall be free to Develop, Manufacture and
Commercialize the Royalty-Bearing Products directed against
such Program Target, in the Field in the Territory, with or
without a partner or collaborator and without any further
obligation to the Opt-Out Party with respect to such
activities under this Agreement, subject to the continuing
obligations of the Parties with respect to Royalty-Bearing
Products set forth in Article 6 and Sections 8.1.3.2 and
8.3.2;
(e) provided that the Party that is not the Opt-Out Party elects
to become the Continuing Party for one or more Ophthalmic
Products in such Program, for a period of two (2) years after
the Target Opt-Out Point neither the Opt-Out Party nor any of
its Affiliates shall, alone or with a Third Party, research,
develop, manufacture or commercialize RNAi Products directed
to such Program Target in the Field in the Territory; and
(f) the licenses granted to the Opt-Out Party by the Continuing
Party with respect to such Ophthalmic Product set forth in
Article 7 shall terminate and the licenses granted to the
Continuing Party by the Opt-Out Party with respect to such
Ophthalmic Product set forth in Article 7 shall continue in
full force and effect.
4.4 PRODUCT OPT-OUT RIGHTS. Each Party shall have the right to elect not
to participate in the Development and Commercialization of any
Ophthalmic Product (a "Product Opt-Out Right") subject to the
following terms and conditions:
4.4.1 A Party may exercise its Product Opt-Out Right with respect to a
Profit-Sharing Product by giving the other Party [**] prior written
notice of such exercise during any of the following periods:
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(a) after [**] such Profit-Sharing Product, [**] for such
Profit-Sharing Product [**] Opt-Out Period");
(b) within [**] such Profit-Sharing Product ("[**] Opt-Out
Period"); or
(c) within [**] such Profit-Sharing Product ("[**] Opt-Out
Period").
The [**] Opt-Out Period, [**] Opt-Out Period and [**] Opt-Out Period
are each referred to as an "Opt-Out Period" and collectively as the
"Opt-Out Periods."
4.4.2 Upon the exercise by a Party of its Product Opt-Out Rights with
respect to a Profit-Sharing Product,
(a) the effective date of such exercise shall be deemed the
"Product Opt-Out Point" for such Profit-Sharing Product;
(b) if the Party that is not the Opt-Out Party elects to become
the Continuing Party for such Profit-Sharing Product, such
Profit-Sharing Product will be deemed a Royalty-Bearing
Product, the provisions of Section 12.3 shall apply to such
Royalty-Bearing Product, and the Continuing Party shall be
free to Develop, Manufacture and Commercialize such
Royalty-Bearing Product in the Field in the Territory, with or
without a partner or collaborator and without any further
obligation to the Opt-Out Party with respect to such
activities under this Agreement, subject to the continuing
obligations of the Parties with respect to Royalty-Bearing
Products set forth in Article 6 and Sections 8.1.3.2 and
8.3.2;
(c) if the Party that is not the Opt-Out Party does not elect to
become the Continuing Party for such Profit-Sharing Product,
the definition of Ophthalmic Product shall thereafter be
narrowed to exclude such product and the financial, license
and other terms of this Agreement shall no longer apply to
such product or the Development, Manufacture and
Commercialization of such product;
(d) the exclusivity provisions of Section 2.13 shall continue to
apply to the applicable Program Target for such product (but
not the product itself) until a Party has exercised its Target
Opt-Out Right with respect to such Program Target, or the
Parties have exercised their Product Opt-Out Rights with
respect to each Ophthalmic Product in the Program for such
Program Target; and
(e) the licenses granted to the Opt-Out Party by the Continuing
Party with respect to such Ophthalmic Product set forth in
Article 7 shall terminate and the licenses granted to the
Continuing Party by the Opt-Out Party with respect to such
Ophthalmic Product set forth in Article 7 shall continue in
full force and effect.
5. COMMERCIALIZATION AND MANUFACTURE OF PROFIT-SHARING PRODUCTS
The rights and obligations set forth in this Article 5 shall apply to both
Parties, as applicable, in respect of each Profit-Sharing Product.
29
5.1 JOINT COMMERCIALIZATION COMMITTEE. Within [**]following the earliest
Co-Promotion Option Exercise Date, the Parties will establish a
Joint Commercialization Committee ("JCC") to oversee
Commercialization activities in the United States relating to
Profit-Sharing Products. The JCC will be chaired by MERCK and shall
be comprised of three (3) named representatives of MERCK and three
(3) named representatives of ALNYLAM. Each Party shall appoint its
respective representatives to the JCC from time to time, and may
substitute one or more of its representatives, in its sole
discretion, effective upon notice to the other Party of such change.
All JCC representatives shall have appropriate marketing or
commercialization expertise and ongoing familiarity with the
Profit-Sharing Products. Each Party shall bear its own expenses
relating to attendance at such meetings by its representatives. The
responsibilities of the JCC shall include overseeing the
Commercialization of the Profit-Sharing Product, reviewing the
Commercialization Plan and related budget for each Profit-Sharing
Product and facilitating implementation of such Commercialization
Plans and other related activities; provided, however, that [**];
provided, further, that [**]. Any disputes related to
Commercialization budgets shall be resolved as described in Section
3.5.2, but with the substitution of the JCC for the JSC. The meeting
schedule and additional responsibilities of the JCC shall be
determined upon establishment of the JCC.
5.2 DILIGENCE. MERCK agrees to use Commercially Reasonable Efforts to
Commercialize each Profit-Sharing Product in the Territory. Upon
exercise by ALNYLAM of its U.S. Co-Promotion Option with respect to
a Profit-Sharing Product, (a) the Parties agree to diligently
collaborate in the Commercialization of such Profit-Sharing Product
in the Field in the United States and (b) ALNYLAM agrees to use
Commercially Reasonable Efforts to Commercialize such Profit-Sharing
Product in the United States. Except as otherwise set forth in this
Article 5, all activities shall be undertaken by the Parties in
accordance with the Commercialization Plan developed under Section
5.4 and all sales shall be made under Product Trademark(s) selected
by MERCK and approved by the JSC, using only professional sales
representatives who are employees of the Parties, in the United
States, or outside the United States, using professional sales
representatives who are employees or direct independent contractors
of MERCK.
5.3 LEAD COMMERCIALIZATION PARTY; CERTAIN ALNYLAM RIGHTS. MERCK shall be
responsible for developing a suitable global marketing strategy for
each Profit-Sharing Product in the Territory and for sales
activities, the development of marketing materials and the
implementation of operational matters related to such activities
including marketing, sales, supply and distribution of each
Profit-Sharing Product in the Territory. MERCK shall be responsible
for booking sales and shall warehouse and distribute the
Profit-Sharing Product in the Territory. In the event that ALNYLAM
exercises its U.S. Co-Promotion Option pursuant to Section 5.5,
ALNYLAM shall have the right (but not the obligation) to field
Health Science Associates in support of Profit-Sharing Products. The
number and deployment of such Health Science Associates shall be
detailed in the Commercialization Plan for each Profit-Sharing
Product, and any Health Science Associates fielded by ALNYLAM shall
be fully integrated into the efforts of MERCK's Health Science
Associates. Regardless of whether ALNYLAM has exercised its U.S.
Co-Promotion Option, the Parties shall mutually agree (such
agreement not to be
30
unreasonably withheld) upon the participation of key opinion leaders
and/or investigators from time to time in meetings with investors
sponsored by ALNYLAM.
5.4 COMMERCIALIZATION PLAN. Prior to [**] a Profit-Sharing Product,
MERCK shall prepare a statement of interest with respect to such
Profit-Sharing Product for submission to the JSC. The statement of
interest shall provide general marketing guidance, and shall contain
[**]in the therapeutic area targeted by such Profit-Sharing Product.
After submission of the statement of interest, but prior to
submission of the marketing needs report to the JSC as described
below, routine documents prepared by MERCK's marketing group to
support the Development of such Profit-Sharing Product shall be
submitted to the JSC as they become available. [**] with respect to
such Profit-Sharing Product, MERCK shall prepare a marketing needs
report for submission to the JSC. The marketing needs report will
highlight the [**] for such Profit-Sharing Product and outline
[**]such Profit-Sharing Product. Thereafter on an annual basis
(until such time as such responsibility shifts to the JCC pursuant
to Section 5.1), MERCK shall prepare a rolling multiyear (not less
than [**] year) plan (a "Commercialization Plan") for
Commercializing such Profit-Sharing Product in the Field in the
United States. The initial Commercialization Plan for such
Profit-Sharing Product shall include [**] The subsequent
Commercialization Plan will contain greater detail with respect to
Commercialization activities in the United States with respect to
such Profit-Sharing Product and shall contain increasing levels of
detail regarding the foregoing matters in each yearly update. Such
subsequent Commercialization Plan is expected to include, without
limitation, [**] for the Profit-Sharing Product. The
Commercialization Plan shall also include, as an appendix, a budget
for [**] in and for the United States after the First Commercial
Sale of the relevant Profit-Sharing Product in the United States.
5.5 U.S. CO-PROMOTION OPTION FOR PROFIT-SHARING PRODUCTS. Except in the
event that ALNYLAM has exercised its Expense Share Reduction Option
with respect to a Profit-Sharing Product, ALNYLAM shall have the
option to Co-Promote such Profit-Sharing Product with MERCK in the
United States (the "U.S. Co-Promotion Option"), which option shall
be exercisable at any time (the "Co-Promotion Option Exercise
Date"), but no later than [**] prior to the target launch date for
such Profit-Sharing Product in the United States. If ALNYLAM
exercises the U.S. Co-Promotion Option, the Parties' respective
Co-Promotion responsibilities in the United States shall be [**]
prior to the target launch date for such Profit-Sharing Product in
the United States. Such [**] terms substantially similar to those
set forth in Schedule 5.5.
5.6 MANUFACTURE. [**] shall be responsible for the Manufacture and
supply of each Profit-Sharing Product for Commercialization
purposes. [**] shall have the right to Manufacture the
Profit-Sharing Product or have the Profit-Sharing Product
Manufactured by an Affiliate or Third Party; provided that [**]
shall remain at all times fully liable for the Manufacture of the
Profit-Sharing Product. In the event that [**] uses a Third Party to
fulfill its obligations hereunder, such Third Party shall be bound
by confidentiality and non-use obligations which are no less
stringent than those set forth in Article 9 of this Agreement.
31
5.7 MANUFACTURING REGULATORY COMMUNICATIONS RELATING TO SUPPLY OF
PROFIT-SHARING PRODUCTS [**]. Notwithstanding any provisions of
Section 2.10.3 to the contrary, with respect to all regulatory
issues related to the Manufacture of Profit-Sharing Products [**],
including all matters relating to cGMP compliance, [**] (i) oversee,
monitor and coordinate all regulatory actions, communications and
filings with, and submissions to, each Regulatory Authority, (ii) be
responsible for interfacing, corresponding and meeting with each
Regulatory Authority, (iii) be responsible for maintaining all
regulatory filings, (iv) [**] as soon as possible, but in any event
within [**] business days, of any action by a Regulatory Authority
in Canada, the European Union, Japan or the United States that would
prohibit the marketing or the continued marketing of such
Profit-Sharing Product or that would result in any shortage or
projected shortage of such Profit-Sharing Product and (v) [**] a
written report once per Calendar Quarter of all material
communications with any Regulatory Authority in Canada, the European
Union, Japan and the United States.
5.8 REGULATORY COORDINATION; REPORTING ADVERSE EXPERIENCES; COMPLIANCE.
The Commercialization and Manufacture of Profit-Sharing Products
shall be subject to the provisions of Sections 2.10.5 and 2.10.6. In
addition, except with respect to regulatory issues related to the
Manufacture of Profit-Sharing Products for Phase III Study,
Post-Approval Study or Commercialization purposes, which are the
subject of Section 5.7, the Commercialization of Profit-Sharing
Products shall be subject to the provisions of Section 2.10.3.
6. DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF ROYALTY-BEARING
PRODUCTS.
The rights and obligations set forth in this Article 6 shall apply to the
Continuing Party with respect to the Development, Manufacture and
Commercialization of each Royalty-Bearing Product.
6.1 DEVELOPMENT AND COMMERCIALIZATION. Upon designation of a
Royalty-Bearing Product pursuant to Section 4.2, the Continuing
Party shall be solely responsible for all Development and
Commercialization activities relating to such Royalty-Bearing
Product and shall bear one hundred percent (100%) of all expenses
for the Development, Manufacture and Commercialization of such
Royalty-Bearing Product incurred after the Opt-Out Point and the JSC
and JCC shall cease to have oversight or management responsibility
with respect to such Royalty-Bearing Product.
6.2 DEVELOPMENT AND DILIGENCE BY THE CONTINUING PARTY. After the Opt-Out
Point, the Continuing Party shall use Commercially Reasonable
Efforts to Develop and Commercialize the Royalty-Bearing Product.
All Development and Commercialization activities with respect to
such Royalty-Bearing Product shall be conducted at the Continuing
Party's sole cost and expense and in accordance with all applicable
laws, rules and regulations, including without limitation current
governmental regulations concerning good laboratory practices, good
clinical practices and good manufacturing practices.
32
6.3 REPORTS FOR ROYALTY-BEARING PRODUCTS. After the Opt-Out Point, the
Continuing Party shall prepare and deliver to the Opt-Out Party, by
no later than each November 1, a written plan that describes the
Development and Commercialization activities to be undertaken in the
next Calendar Year and the dates by which such activities are
targeted to be accomplished. In addition, the Continuing Party shall
prepare and deliver to the Opt-Out Party, by no later than each
February 28 (for the period ending December 31 of the prior Calendar
Year), written reports which shall update any prior report filed
hereunder, including a summary of the Continuing Party's Development
and Commercialization activities performed to date, as applicable.
The Continuing Party shall provide the Opt-Out Party with written
notice of (i) all filings and submissions for Regulatory Approval
regarding Royalty-Bearing Products in a timely manner; and (ii) all
Regulatory Approvals obtained or denied within [**] days of receipt
of written notice of such obtaining or denial; provided, however,
that for filings and submissions for Regulatory Approval, and
Regulatory Approvals obtained or denied, in the United States, the
European Union, Japan, and Canada, the Continuing Party will notify
the Opt-Out Party as soon as reasonably possible, but in any event
within [**] business days of the Continuing Party's receipt of
notice of such filing or submission for Regulatory Approval, or of
the obtaining or denial of such Regulatory Approval, as the case may
be. At the Opt-Out Party's reasonable request from time to time and
without unduly burdening the Continuing Party, the Continuing Party
shall also provide such other information and shall agree to meet
with the Opt-Out Party as needed (but not more than once each year)
to keep the Opt-Out Party reasonably informed of the Continuing
Party's Development and Commercialization activities.
6.4 CLINICAL AND COMMERCIAL SUPPLY. In the event that [**] with respect
to a Royalty-Bearing Product [**] Manufacture and supply such
Royalty-Bearing Product [**] after the applicable Opt-Out Point or
such earlier time as may be agreed[**]. In the event that [**] with
respect to a Royalty-Bearing Product [**] Manufacture and supply
such Royalty-Bearing Product to [**] for [**] after such Opt-Out
Point or such earlier time as may be agreed[**]; provided that [**]
such Royalty-Bearing Product [**]The Continuing Party shall
pay[**]the Opt-Out Party for any such Royalty-Bearing Product
supplied pursuant to this Section 6.4 at the Cost of Goods Sold of
such Royalty-Bearing Product.
6.5 REGULATORY APPROVALS. Notwithstanding anything to the contrary
contained in Section 2.10, after the Opt-Out Point for a
Royalty-Bearing Product, the Continuing Party shall be the holder of
all Regulatory Approvals (including IND and NDA submissions) for
such Royalty-Bearing Product. To the extent permitted by law, the
Opt-Out Party will assign to the Continuing Party, as soon as
practical after the Opt-Out Point, all regulatory filings related to
such Royalty-Bearing Product to the extent requested by the
Continuing Party, including any draft IND documents, and copies of
all correspondence and notes of any oral communication with
Regulatory Authorities regarding such Royalty-Bearing Product. The
Opt-Out Party will execute such further instruments, documents or
certificates, as may be required to more effectively assign the
regulatory filings to the Continuing Party. To the extent the
Opt-Out Party cannot transfer all such Regulatory Approvals, the
Opt-Out Party shall permit the Continuing Party to use and
cross-reference such regulatory filings.
33
6.6 MANUFACTURING REGULATORY COMMUNICATIONS RELATING TO
ROYALTY-BEARING PRODUCTS. Notwithstanding any provisions of
Section 2.10.3 or Section 2.10.4 to the contrary, with respect to
all Manufacturing issues related to Royalty-Bearing Products,
including all matters relating to cGMP compliance, the Continuing
Party shall (i) oversee, monitor and coordinate all regulatory
actions, communications and filings with, and submissions to, each
Regulatory Authority, (ii) be responsible for interfacing,
corresponding and meeting with each Regulatory Authority and (iii)
be responsible for maintaining all regulatory filings.
6.7 CONTINUATION OF LICENSES GRANTED UNDER IN-LICENSES. With respect
to In-Licenses of the Opt-Out Party that Cover the applicable
Royalty-Bearing Product, the Opt-Out Party will determine whether
(i) such In-Licenses may be assigned to the Continuing Party
subject to Third Party consent(s) and (ii) the Opt-Out Party's
interest in retaining certain rights to exploit products other
than such Royalty-Bearing Product. If the Opt-Out Party determines
that such In-Licenses are assignable, the Opt-Out Party will
assign such In-Licenses to the Continuing Party subject to any
Third Party consents. With respect to such In-Licenses which are
not assignable, the Opt-Out Party shall maintain these licenses
for the duration of the sublicense granted by the Opt-Out Party to
the Continuing Party under this Agreement. All amounts payable
with respect to such non-assignable In-Licenses shall be shared by
the Opt-Out Party and the Continuing Party in proportion to the
rights being utilized by the Opt-Out Party and the Continuing
Party under such In-Licenses; provided that all amounts allocable
to the rights sublicensed to the Continuing Party shall be paid by
the Opt-Out Party subject to reimbursement by the Continuing Party
pursuant to Section 8.3.6. Such sublicense shall remain in full
force and effect under the terms of this Agreement so long as the
Continuing Party complies with all obligations relevant to such
In-Licenses.
6.8 TECHNOLOGY TRANSFER. For a period of [**] the applicable Opt-Out
Point, each Party shall provide to the other Party, at such other
Party's request, any and all Know-How related to the
Royalty-Bearing Products necessary for the other Party to perform
its obligations or exploit its rights under this Agreement. Such
technology transfer shall include, but not be limited to,
technical assistance. The costs and expenses directly related to
such provision of Know-How and technical assistance shall be
calculated in accordance with the provisions related to
Development Expenses and Commercialization Expenses, as
applicable, and shall be borne equally by the Opt-Out Party and
the Continuing Party. Each Party shall use such Know-How of the
other Party solely for the purposes of performing its obligations
or exploiting its rights under this Agreement with respect to the
Royalty-Bearing Products.
7. LICENSES
7.1 LICENSE GRANTS.
7.1.1 PROFIT-SHARING PRODUCTS.
7.1.1.1 DEVELOPMENT LICENSES. Subject to the terms and conditions of this
Agreement, solely for the purpose of conducting each Program,
ALNYLAM hereby grants MERCK a co-
34
exclusive (with ALNYLAM), royalty-free license under ALNYLAM
Technology to Develop Profit-Sharing Products in the Field in the
Territory. Subject to the terms and conditions of this Agreement,
solely for the purpose of conducting each Program, MERCK hereby
grants ALNYLAM a co-exclusive (with MERCK), royalty-free license
under MERCK Technology to Develop Profit-Sharing Products in the
Field in the Territory. Such licenses shall include the right for
both Parties to grant sublicenses and licenses as provided in
Section 7.2 below.
7.1.1.2 COMMERCIALIZATION LICENSES. Subject to the terms and conditions of
this Agreement, including without limitation ALNYLAM's U.S.
Co-Promotion Option set forth in Section 5.5, ALNYLAM hereby
grants MERCK a license under ALNYLAM Technology to Commercialize
Profit-Sharing Products in the Field. Such license shall be
exclusive in the United States with respect to each Profit-Sharing
Product, unless ALNYLAM exercises its U.S. Co-Promotion Option, in
which case such license shall be co-exclusive (with ALNYLAM). Such
license shall be exclusive and royalty-bearing in the Territory
outside the United States. Subject to the terms and conditions of
this Agreement, upon ALNYLAM's exercise of its U.S. Co-Promotion
Option, MERCK hereby grants ALNYLAM a co-exclusive (with MERCK)
license under MERCK Technology to Commercialize Profit-Sharing
Products in the Field in the United States. Such licenses shall
include the right for both Parties to grant sublicenses and
licenses as provided in Section 7.2 below.
7.1.1.3 MANUFACTURING LICENSES. Subject to the terms and conditions of
this Agreement, only as permitted and solely for the purposes set
forth in Sections [**] ALNYLAM hereby grants MERCK a non-exclusive
license under ALNYLAM Technology to Manufacture Profit-Sharing
Products in the Field for the Territory. Subject to the terms and
conditions of this Agreement, only as permitted and solely for the
purposes set forth in Sections [**] MERCK hereby grants ALNYLAM a
non-exclusive license under MERCK Technology to Manufacture
Profit-Sharing Products in the Field for the Territory. Such
licenses shall include the right for both Parties to grant
sublicenses and licenses as provided in Section 7.2 below.
7.1.1.4 PRODUCT TRADEMARK LICENSES. Subject to the terms and conditions of
this Agreement, upon ALNYLAM's exercise of its U.S. Co-Promotion
Option with respect to a Profit-Sharing Product, MERCK hereby
grants ALNYLAM a co-exclusive license (with MERCK) to use the
Product Trademark(s) selected by MERCK and approved by the JSC for
such Profit-Sharing Product to Commercialize such Profit-Sharing
Product in the Field in the United States. Furthermore, in the
event that MERCK makes public use of Product Trademark(s) in the
Development of a Profit-Sharing Product, MERCK shall grant ALNYLAM
a co-exclusive license (with MERCK) to use such Product
Trademark(s) to perform its Development obligations under this
Agreement with respect to such Profit-Sharing Product. Such
licenses shall include the right for both Parties to grant
sublicenses and licenses as provided in Section 7.2 below.
7.1.2 ROYALTY-BEARING PRODUCTS. Subject to the terms and conditions of
this Agreement, in relation to each Royalty-Bearing Product, the
Opt-Out Party hereby grants the Continuing Party a license under
ALNYLAM Technology or MERCK Technology, as
35
the case may be, to Develop, Manufacture and Commercialize such
Royalty-Bearing Product in the Field in the Territory. Such license
shall be exclusive and royalty-bearing for the royalty term of such
Royalty-Bearing Product as set forth in Section 8.3.3 in each
country in the Territory, and shall thereafter be a non-exclusive,
royalty-free license to Develop, Manufacture and Commercialize such
Royalty-Bearing Product in the Field in such country. Such licenses
shall include the right to grant sublicenses and licenses as
provided in Section 7.2 below.
7.1.3 BROAD RNAI TECHNOLOGY LICENSE. Subject to the rights granted each
Party under this Agreement and the obligations set forth in Section
2.13, each Party (the "Granting Party") hereby grants the other
Party a non-exclusive, royalty-free license, with the right to grant
sublicenses, under ALNYLAM Collaboration IP or MERCK Collaboration
IP (collectively, "Collaboration IP") Controlled by the Granting
Party comprising Broad RNAi Technology for the purpose of research,
development, manufacture, use, import, or sale of RNAi Products;
provided, that with respect to target validation and/or target
identification research, neither Party shall have the right to
provide any Third Party as part of a research collaboration with
Collaboration IP Controlled by the other Party comprising Broad RNAi
Technology, nor to use such Collaboration IP Controlled by the other
Party comprising Broad RNAi Technology on behalf of any Third Party
except in a collaboration whose primary purpose is the development
of RNAi Products, and if Broad RNAi Technology is developed within
such collaboration for use in target validation and/or target
identification, then it may only be developed in the course of
developing such RNAi Products.
7.2 SUBLICENSES AND LICENSES OF JOINT COLLABORATION IP.
7.2.1 AFFILIATES. Each Party shall be entitled to grant sublicenses of its
rights under this Agreement (and licenses under any Joint
Collaboration IP) to its Affiliates for so long as such entity
remains an Affiliate.
7.2.2 PROFIT-SHARING PRODUCTS. With respect to Profit-Sharing Products,
each Party shall be entitled to grant sublicenses of its rights
under Section 7.1.1 (and licenses under any Joint Collaboration IP)
in connection with its activities under a Program Workplan or
Commercialization Plan to academic collaborators, and contract
service organizations, that in each case are approved by the JSC in
accordance with Section 2.6 to perform its obligations under such
Program Workplan or Commercialization Plan.
7.2.3 ROYALTY-BEARING PRODUCTS. Subject to the terms of Section 7.2.5, the
Continuing Party shall be entitled to grant sublicenses of its
rights under this Agreement (and licenses under any Joint
Collaboration IP) with respect to Royalty-Bearing Products to Third
Parties to Develop and Commercialize such Royalty-Bearing Products.
The Continuing Party shall notify the Opt-Out Party following the
grant of any such sublicense or license, as the case may be.
7.2.4 MANUFACTURING SUBLICENSES. Subject to the terms of Section 7.2.5,
each Party entitled to Manufacture Ophthalmic Products under the
terms and conditions of this Agreement shall be entitled to grant
sublicenses of its rights under this Agreement (and licenses
36
under any Joint Collaboration IP) to Third Parties to Manufacture
such Ophthalmic Products; provided, that such Party shall remain
primarily responsible with respect to such sublicense. Each such
sublicense with respect to a Profit-Sharing Product shall require
the approval of the JSC or JCC, as applicable. Each such sublicense
with respect to a Royalty-Bearing Product shall be discussed between
the Parties for a period of up to [**]; provided, however, that the
Continuing Party may thereafter grant such sublicense in its sole
discretion.
7.2.5 TERMS. Each sublicense granted by a Party pursuant to Section 7.2.3
or Section 7.2.4 shall be subject and subordinate to the terms and
conditions of this Agreement and shall contain terms and conditions
consistent with those in this Agreement. Agreements with any
Commercializing Sublicensee shall contain the following provisions:
(a) a requirement that such Sublicensee submit applicable sales or
other reports consistent with those required hereunder; (b) an audit
requirement similar to the requirement set forth in Section 8.4; and
(c) a requirement that such Sublicensee comply with the
confidentiality and non-use provisions of Article 9 with respect to
both Parties' Information.
7.2.6 LIABILITY. Each Party shall at all times be responsible for the
performance of its Sublicensees under this Agreement.
7.3 JOINT COLLABORATION IP. Subject to the rights granted each Party
under this Agreement and the obligations set forth in Section 2.13,
each Party shall have the right to use, sell, keep, license or
assign its interest in Joint Collaboration IP and otherwise
undertake all activities a sole owner might undertake with respect
to such Joint Collaboration IP without the consent of and without
accounting to the other Party.
7.4 IN-LICENSES. All licenses and other rights granted MERCK under this
Article 7 are subject to the rights granted ALNYLAM under the
ALNYLAM In-Licenses. All licenses and other rights granted ALNYLAM
under this Article 7 are subject to the rights granted MERCK under
the MERCK In-Licenses.
7.5 CERTAIN PATENT RIGHTS. Notwithstanding anything to the contrary
herein, the licenses[**]to ALNYLAM Patent Rights hereunder initially
shall[**]provided that if any such Patent Rights in-licensed
by[**]ALNYLAM[**], as the case may be, [**] shall be amended
accordingly.
7.6 NO OTHER RIGHTS. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a Party hereto, as a result
of this Agreement, obtain any ownership interest or other right in
any Know-How or Patent Rights of the other Party, including items
owned, controlled or developed by the other Party, or provided by
the other Party to the receiving Party at any time pursuant to this
Agreement.
8. PAYMENTS; ROYALTIES AND REPORTS
8.1 PAYMENTS.
37
8.1.1 INITIAL PAYMENT. Within fifteen (15) business days following the
Effective Date, MERCK shall pay ALNYLAM a non-refundable,
non-creditable initial payment of [**] Dollars ($[**]).
8.1.2 DEVELOPMENT EXPENSE REIMBURSEMENT. Within fifteen (15) business
days following the Effective Date, MERCK shall pay ALNYLAM a
non-refundable, non-creditable payment of [**] Dollars ($[**]) as
reimbursement for development expenses incurred by ALNYLAM prior
to the Effective Date with respect to the VEGF Program.
8.1.3 MILESTONE FEES.
8.1.3.1 PROFIT-SHARING PRODUCTS. MERCK shall make the non-refundable,
non-creditable milestone payments to ALNYLAM set forth below no
later than thirty (30) calendar days after the earliest date on
which the corresponding milestone event has been achieved with
respect to the first Profit-Sharing Product in each Program to
achieve such milestone event.
Milestone Event Payment
--------------- -------
Initiation of IND-Enabling GLP Toxicology Studies $[**]
Submission of IND $[**]
8.1.3.2 ROYALTY-BEARING PRODUCTS.
(a) If (i) MERCK has exercised its Product Opt-Out Right during
the [**] Opt-Out Period with respect to an Ophthalmic
Product [**] and ALNYLAM is the Continuing Party with
respect to such Royalty-Bearing Product, or (ii) ALNYLAM has
exercised its Product Opt-Out Right during the [**] Opt-Out
Period with respect to an Ophthalmic Product [**] and MERCK
is the Continuing Party with respect to such Royalty-Bearing
Product, then the Continuing Party shall make a
non-refundable, non-creditable milestone payment to the
Opt-Out Party in the amount of $[**] no later than twenty
(20) business days after the earliest date on which the
first NDA Filing for such Royalty-Bearing Product has been
achieved.
(b) If either Party has exercised its Product Opt-Out Right with
respect to an Ophthalmic Product in any Program during the
[**] Opt-Out Period and the other Party is the Continuing
Party with respect to such Royalty-Bearing Product, then the
Continuing Party shall make the non-refundable,
non-creditable milestone payments to the Opt-Out Party set
forth below no later than twenty (20) business days after
the earliest date on which the corresponding milestone event
has been achieved for the first time with respect to such
Royalty-Bearing Product.
38
MILESTONE EVENT PAYMENT
--------------- -------
Initiation of Phase III Study $[**]
First NDA Filing $[**]
8.2 U.S. OPERATING PROFIT/LOSS FOR PROFIT-SHARING PRODUCTS. The Parties
shall share equally the U.S. Operating Profit/Loss for all
Profit-Sharing Products; provided, however, that if a Party
exercises its Expense Share Reduction Option pursuant to Section
2.11.1 to reduce its percentage share of U.S. Development Expenses
with respect to a Profit-Sharing Product, the Parties' percentage
shares of the U.S. Operating Profit/Loss for such Profit-Sharing
Product shall be the same as their respective percentage shares of
U.S. Development Expenses as adjusted pursuant to the Expense Share
Reduction Option.
"U.S. Operating Profit/Loss" shall be calculated for each
Profit-Sharing Product by determining Net Sales of such
Profit-Sharing Product in the relevant time period in the United
States and by then subtracting the Commercialization Expenses
accrued by either Party in respect of such Profit-Sharing Product in
the relevant time period in the United States.
Within sixty (60) days after submission of the first
Commercialization Plan for such Profit-Sharing Product to the JCC,
the Parties will discuss and agree upon the procedures for
reporting, reconciliation and payments with respect to U.S.
Operating Profit/Loss.
8.3 ROYALTIES.
8.3.1 ROYALTIES PAYABLE ON PROFIT-SHARING PRODUCTS. Subject to the terms
and conditions of this Agreement, MERCK shall pay to ALNYLAM
royalties on aggregate Net Sales in the Territory outside the United
States of each Profit-Sharing Product by MERCK or its Related
Parties as follows:
CALENDAR YEAR NET SALES OF THE
PROFIT-SHARING PRODUCT IN THE TERRITORY OUTSIDE THE ROYALTY
UNITED STATES (AS A PERCENTAGE OF NET SALES)
------------- ------------------------------
$0 - $[**] [**]%
$[**] - $[**] [**]%
$[**] - $[**] [**]%
Greater than $[**] [**]%
39
Royalties on aggregate Net Sales of the Profit-Sharing Products in
the Territory outside the United States in a Calendar Year shall
be paid at the rate applicable to the portion of Net Sales within
each of the Net Sales levels above during such Calendar Year.
8.3.2 ROYALTIES PAYABLE ON ROYALTY-BEARING PRODUCTS. Subject to the
terms and conditions of this Agreement, the Royalty Payor shall
pay to the Royalty Recipient royalties on a country-by-country
basis for Worldwide Sales of each Royalty-Bearing Product, such
royalties to be calculated as set forth in Section 8.3.2.1.
8.3.2.1 GENERAL PROCEDURE FOR CALCULATION OF ROYALTIES. For each scenario
under which royalties are due from one Party to the other,
Sections 8.3.2.2 and 8.3.2.3 set forth values for the following
parameters: Sublicense Revenue Fraction (expressed as a
percentage), Royalty Rate One, Royalty Rate Two, Royalty Rate
Three and Royalty Rate Four. The values set forth for these
parameters in Sections 8.3.2.2 and 8.3.2.3 shall be used to
calculate the royalties due under each scenario in relation to
each Royalty-Bearing Product, as follows:
(a) In the event that all of the Worldwide Sales for the
Royalty-Bearing Product are made by the Royalty Payor or its
Related Parties, the Royalty Payor shall pay the Royalty
Recipient royalties on Worldwide Sales as follows:
ROYALTY
WORLDWIDE SALES (AS A PERCENTAGE OF WORLDWIDE SALES)
--------------- ------------------------------------
$0 to $[**] Royalty Rate One
$[**] to $[**] Royalty Rate Two
$[**] to $[**] Royalty Rate Three
Greater than $[**] Royalty Rate Four
Royalties on Worldwide Sales in a Calendar Year shall be
paid at the rate applicable to the portion of Worldwide
Sales within each of the Worldwide Sales levels above. For
example, if, during a Calendar Year, Worldwide Sales were
equal to $[**], the royalties payable by the Royalty Payor
would be calculated by adding (i) the royalties with respect
to the first $[**] at Royalty Rate One, (ii) the royalties
with respect to the next $[**] at Royalty Rate Two, and
(iii) the royalties with respect to the final $[**] at
Royalty Rate Three.
(b) In the event that all of the Worldwide Sales for the
Royalty-Bearing Product are made through one or more
Sublicensees of the Royalty Payor, the Royalty Payor shall
pay the Royalty Recipient the lesser of (i) an amount equal
to the Sublicense Revenue Fraction multiplied by the
revenues received by the Royalty Payor from its Sublicensees
in relation to such Worldwide Sales, and (ii) the amounts
that would be due pursuant to Section 8.3.2.1(a) if all
Worldwide Sales had been made directly by the Royalty Payor
or its Related Parties, without a Sublicensee.
40
(c) In the event that some of the Worldwide Sales for the
Royalty-Bearing Product are made directly by the Royalty
Payor or its Related Parties, and some of the Worldwide
Sales for the Royalty-Bearing Product, in one or more
countries, are made through one or more Sublicensee(s), the
royalties to be paid by the Royalty Payor to the Royalty
Recipient shall be calculated as follows:
(i) The fraction of Worldwide Sales that were made in each
country shall be determined by dividing Country Sales
in such country by Worldwide Sales (such fraction, the
"Country Fraction" for such country).
(ii) For each country:
a. "Level One Limit" shall be calculated by
multiplying the Country Fraction for such country by
$[**];
b. "Level Two Threshold" shall be calculated by adding
one dollar to "Level One Limit";
c. "Level Two Limit" shall be calculated by
multiplying the Country Fraction for such country by
$[**];
d. Level Three Threshold" shall be calculated by
adding one dollar to "Level Two Limit"; and
e. "Level Three Limit" shall be calculated by
multiplying the Country Fraction for such country by
$[**].
(iii) For each country in the Territory in which Country
Sales are made by the Royalty Payor or its Related
Parties and not by a Sublicensee, the Royalty Payor
shall pay the Royalty Recipient royalties as follows:
ROYALTY
(AS A PERCENTAGE OF COUNTRY
COUNTRY SALES IN COUNTRY IN THE TERRITORY SALES)
----------------------------------------- ------
$0 to Level One Limit for such country Royalty Rate One
Level Two Threshold to Level Two Limit for such Royalty Rate Two
country
Level Three Threshold to Level Three Limit for such Royalty Rate Three
country
Greater than Level Three Limit for such country Royalty Rate Four
Royalties on Country Sales of the Royalty-Bearing
Products in each country in the Territory in a
Calendar Year shall be paid at the rate applicable to
the portion of Country Sales within each of the
Country Sales levels above during such Calendar Year.
For example, if, during a
41
Calendar Year, Country Sales of a Royalty-Bearing
Product were equal to $[**], and the Level One Limit
is $[**], the Level Two Limit is $[**], and the Level
Three Limit is $[**], then the royalties payable by
the Royalty Payor would be calculated by adding (i)
the royalties with respect to the first $[**] at
Royalty Rate One, (ii) the royalties with respect to
the next $[**] at Royalty Rate Two, (iii) the
royalties with respect to the next $[**] at Royalty
Rate Three, and (iv) the royalties with respect to the
final $[**] at Royalty Rate Four.
(iv) For each country in which Country Sales are made
through one or more Sublicensees of the Royalty-Payor,
the Royalty Payor shall pay the Royalty Recipient the
lesser of (x) an amount equal to the Sublicense
Revenue Fraction multiplied by the revenues received
by the Royalty Payor from its Sublicensees in relation
to such Country Sales, and (y) the amounts that would
be due pursuant to Section 8.3.2.1(c)(iii) if such
Country Sales had been made directly by the Royalty
Payor or its Related Parties, without a Sublicensee.
8.3.2.2 ALNYLAM IS THE CONTINUING PARTY FOR [**]. If MERCK has exercised
its Product Opt-Out Right with respect to [**] and ALNYLAM is the
Continuing Party with respect to such Royalty-Bearing Product that
is [**] then ALNYLAM shall be the Royalty Payor, MERCK shall be
the Royalty Recipient, and
(a) If such exercise by MERCK of its Product Opt-Out Right
occurred during the [**] Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
(b) If such exercise by MERCK of its Product Opt-Out Right
occurred during the [**] Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
42
(c) If such exercise by MERCK of its Product Opt-Out Right
occurred during the [**] Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
8.3.2.3 ALNYLAM IS THE CONTINUING PARTY FOR AN OPHTHALMIC PRODUCT [**] OR
MERCK IS THE CONTINUING PARTY FOR AN OPHTHALMIC PRODUCT [**] If
(x) MERCK has exercised its Product Opt-Out Right with respect to
an Ophthalmic Product [**] and ALNYLAM is the Continuing Party
with respect to such Royalty-Bearing Product, or (y) ALNYLAM has
exercised its Product Opt-Out Right with respect to an Ophthalmic
Product [**] and MERCK is the Continuing Party with respect to
such Royalty-Bearing Product, then the Continuing Party shall be
the Royalty Payor and the Opt-Out Party shall be the Royalty
Recipient, and
(a) If such exercise by MERCK or ALNYLAM of its Product Opt-Out
Right occurred during the [**] Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
(40%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
(b) If such exercise by MERCK or ALNYLAM of its Product Opt-Out
Right occurred during the [**] Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
(c) If such exercise by MERCK or ALNYLAM of its Product Opt-Out
Right occurred during the [**] Opt-Out Period, then
43
(i) The Sublicense Revenue Fraction shall be [**]percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
8.3.2.4 EITHER PARTY IS CONTINUING PARTY AFTER EXERCISE OF TARGET OPT-OUT
RIGHTS. If either Party exercises its Target Opt-Out Right with
respect to a Program Target, and the other Party elects to be the
Continuing Party with respect to any Ophthalmic Product in the
Program for such Program Target, then such Ophthalmic Product
shall be deemed to be a Royalty-Bearing Product and (a) with
respect to the Royalty-Bearing Product in such Program that is at
the most advanced stage of Development (the "Lead Royalty-Bearing
Product"), the Royalty Payor shall pay the Royalty Recipient
royalties calculated as set forth in Section 8.3.2.3 for Product
Opt-Out Rights exercised during the Opt-Out Period in which the
Target Opt-Out Point occurred, or if the Target Opt-Out Point did
not occur in an Opt-Out Period, then for the exercise of Product
Opt-Out Rights during the Opt-Out Period most recently preceding
the Target Opt-Out Point; and (b) with respect to all other
Royalty-Bearing Products in such Program, the Royalty Payor shall
pay the Royalty Recipient [**] percent ([**]%) of the amount of
royalties calculated as set forth in Section 8.3.2.3 for the
exercise of Product Opt-Out Rights during the [**]Opt-Out Period;
provided, however, that if ALNYLAM is the Opt-Out Party, in no
event shall the royalties payable to ALNYLAM with respect to Net
Sales in a country for any Calendar Quarter be less than the
amount of any royalties and any portions of milestones or other
payments under the Existing ALNYLAM In-Licenses that are
reasonably allocable to the Commercialization or Manufacture of
the Profit-Sharing Product in or for such country in the Field.
8.3.3 ROYALTY TERM. Royalties on each Ophthalmic Product at the rates
set forth in Section 8.3.1 and 8.3.2 shall be effective as of the
date of First Commercial Sale of such Ophthalmic Product in a
country and shall continue until the later of (a) the expiration
of the last Valid Claim covering the Manufacture or
Commercialization of the Ophthalmic Product in the country of
sale, or (b) [**] anniversary of the First Commercial Sale in
such country, subject to the following conditions:
(a) only one royalty shall be due with respect to the same unit
of Ophthalmic Product;
(b) no royalties shall be due upon the sale or other transfer
among a Party or its Related Parties, but in such cases the
royalty shall be due and calculated upon the Party's or its
Related Party's Net Sales to the first independent Third
Party;
(c) no royalties shall accrue on the sale or other disposition
of the Ophthalmic Product by the Parties or their Related
Parties for use in a Clinical Trial; and
44
(d) no royalties shall accrue on the disposition of Ophthalmic
Product in reasonable quantities by a Party or its Related
Parties as samples (promotion or otherwise) or as donations
(for example, to non-profit institutions or government
agencies for a non-commercial purpose).
8.3.4 CHANGE IN SALES PRACTICES. The Parties acknowledge that during
the Agreement Term, a Royalty Payor's sales practices for the
marketing and distribution of an Ophthalmic Product may change to
the extent to which the calculation of the payment for royalties
on Net Sales may become impractical or even impossible. In such
event the Parties agree to meet and discuss in good faith new
ways of compensating the Royalty Recipient to the extent
currently contemplated under this Section 8.3.
8.3.5 COMPULSORY LICENSES. If a compulsory license is granted to a
Third Party with respect to an Ophthalmic Product in any country
in the Territory with a royalty rate lower than the applicable
royalty rate set forth in this Section 8.3, then the royalty rate
to be paid by the Royalty Payor on Net Sales in that country
under this Section 8.3 shall be reduced to the rate paid by the
compulsory licensee.
8.3.6 NECESSARY THIRD PARTY IP.
8.3.6.1 PROFIT-SHARING PRODUCTS. If the Development, Manufacture or
Commercialization of a Profit-Sharing Product by a Party in
accordance with this Agreement infringes Necessary Third Party IP
then:
(a) The amount of any portions of milestones or other payments
paid by either Party under all In-Licenses of such
Necessary Third Party IP that are reasonably allocable to
the Development of the Profit-Sharing Product in the Field
(i) in the United States, shall be included in the U.S.
Development Expenses for such Profit-Sharing Product and
shared by the Parties pursuant to Section 2.11, and (ii) in
the Territory outside the United States, shall be borne by
MERCK.
(b) The amount of any royalties and any portions of milestones
or other payments paid by either Party under all
In-Licenses of such Necessary Third Party IP that are
reasonably allocable to the Commercialization or
Manufacture of the Profit-Sharing Product in or for the
United States in the Field, shall be Commercialization
Expenses for purposes of calculating U.S. Operating
Profit/Loss for such Profit-Sharing Product pursuant to
Section 8.2.
(c) The applicable royalties in each country in the Territory
outside the United States payable by MERCK to ALNYLAM
pursuant to Section 8.3.1 will be (i) reduced by [**]
percent ([**]%) of the amount paid by MERCK and (ii)
increased by [**] percent ([**]%) of the amount paid by
ALNYLAM, in each case, of any royalties and any portions of
milestones or other payments under all In-Licenses of such
Necessary Third Party IP that are reasonably allocable to
the Commercialization or Manufacture of the Profit-Sharing
Product in or for such country in the Field; provided,
however, that, on a country-by-country basis, in no event
shall the royalties payable to ALNYLAM with respect to Net
Sales in a
45
country for any Calendar Quarter be reduced below the
greater of (x) [**]percent ([**]%) of the royalties
otherwise payable by MERCK to ALNYLAM for such Calendar
Quarter as calculated pursuant to Section 8.3.1 or (y) the
amount of any royalties and any portions of milestones or
other payments under the Existing ALNYLAM In-Licenses that
are reasonably allocable to the Commercialization or
Manufacture of the Profit-Sharing Product in or for such
country in the Field.
8.3.6.2 ROYALTY-BEARING PRODUCTS. If the Development, Manufacture or
Commercialization of a Royalty-Bearing Product by a Continuing
Party in accordance with this Agreement infringes Necessary Third
Party IP, the applicable royalties in each country in the
Territory payable to the Opt-Out Party pursuant to Section
8.3.2.1 will be (a) reduced by [**] percent ([**]%) of the amount
paid by the Continuing Party and (b) increased by [**] percent
([**]%) of the amount paid by the Opt-Out Party (and not already
reimbursed by the Continuing Party pursuant to Section 6.7), in
each case, of any royalties and any portions of milestones or
other payments under all In-Licenses of such Necessary Third
Party IP that are reasonably allocable to the Development,
Manufacture and Commercialization of the Royalty-Bearing Product
in or for such country in the Field; provided, however, that, on
a country-by-country basis, in no event shall the royalties
payable to the Opt-Out Party with respect to Net Sales in a
country for any Calendar Quarter be reduced below the greater of
(i) [**] percent ([**]%) of the royalties otherwise payable by
the Continuing Party to the Opt-Out Party for such Calendar
Quarter as calculated pursuant to Section 8.3.2 or (ii) if
ALNYLAM is the Opt-Out Party, the amount of any royalties and any
portions of milestones or other payments under the Existing
ALNYLAM In-Licenses that are reasonably allocable to the
Commercialization or Manufacture of the Profit-Sharing Product in
or for such country in the Field.
8.3.7 BLENDED ROYALTY RATES. The Parties acknowledge and agree that the
Patent Rights and Know-How licensed pursuant to this Agreement
justify royalty rates of differing amounts with respect to the
sales of Ophthalmic Products, which rates could be applied
separately to Ophthalmic Products involving the exercise of such
Patent Rights and/or the incorporation of such Know-How, and
that, if such royalties were calculated separately, royalties
relating to Patent Rights and royalties relating to Know-How
would last for different terms. Notwithstanding the foregoing,
the Parties have determined, for reasons of convenience, that
blended royalty rates for the Patent Rights and the Know-How
licensed hereunder, as set forth above, will apply during a
single royalty term. The Parties acknowledge and agree that
nothing in this Agreement (including without limitation any
exhibits or attachments hereto) shall be construed as
representing an estimate or projection of either (a) the number
of Ophthalmic Products that will or may be successfully Developed
or Commercialized or (b) anticipated sales or the actual value of
any Ophthalmic Product, and that the figures set forth in this
Section 8.3 or elsewhere in this Agreement or that have otherwise
been discussed by the Parties are merely intended to define the
Parties' royalty payment obligations to each other in the event
such sales performance is achieved.
46
8.3.8 REPORTS; PAYMENT OF ROYALTY. During the Agreement Term, commencing
upon the First Commercial Sale of each Ophthalmic Product, the
Royalty Payor shall furnish to the Royalty Recipient (a) a monthly
written report showing the estimated quantity of each Ophthalmic
Product sold in each country (as measured in grams of active
pharmaceutical ingredient or saleable units of product, as the
Parties may agree) and the Net Sales of such Ophthalmic Product in
each country (and any other detail reasonably available through the
Royalty Payor's internal sales reporting system) for the previous
month, in each case on an unaudited basis; and (b) a quarterly
written report showing the quantity of each Ophthalmic Product sold
in each country (as measured in grams of active pharmaceutical
ingredient or saleable units of product, as the Parties may agree),
the gross sales of such Ophthalmic Product in each country, total
deductions for such Ophthalmic Product for each country included in
the calculation of Net Sales, the Net Sales in each country of such
Ophthalmic Product subject to royalty payments sold by the Royalty
Payor or its Related Parties during the reporting period and the
royalties payable under this Agreement. Quarterly reports shall be
due no later than [**] following the close of each Calendar Quarter.
Royalties shown to have accrued by each royalty report shall be due
and payable on the date such royalty report is due. Each Party shall
keep complete and accurate records in sufficient detail to enable
the royalties and other payments payable hereunder to be determined,
including without limitation records of the items underlying U.S.
Development Expenses and U.S. Operating Profit/Loss.
8.4 AUDITS.
8.4.1 Upon the written request of a Party and not more than once in each
Calendar Year, the other Party and/or its Related Parties shall
permit an independent certified public accounting firm of
nationally-recognized standing selected by the requesting Party and
reasonably acceptable to the other Party, at the requesting Party's
expense except as set forth below, to have access during normal
business hours to such of the records of the other Party as may be
reasonably necessary to verify the accuracy of the royalty and other
reports hereunder for any year ending not more than [**] months
prior to the date of such request for the sole purpose of verifying
the basis and accuracy of payments made under Sections 2.11 and 13.2
and this Article 8.
8.4.2 If such accounting firm identifies a discrepancy made during such
period, the appropriate Party shall pay the other Party the amount
of the discrepancy within twenty (20) business days of the date the
requesting Party delivers to the other Party such accounting firm's
written report so concluding, or as otherwise agreed by the Parties
in writing. Such written report shall be binding upon the Parties.
The fees charged by such accounting firm shall be paid by the
requesting Party, unless such discrepancy represents an underpayment
by the other Party of the lesser of [**] U.S. dollars ($[**]) or
[**] percent ([**]%) of the total amounts due hereunder, in which
case such fees shall be paid by the other Party.
8.4.3 The Royalty Payor shall include in each sublicense granted by it
pursuant to this Agreement a provision requiring the sublicensee to
make reports to the Royalty Payor, to keep and maintain records of
sales made pursuant to such sublicense and to grant
47
access to such records by the Royalty Recipient's independent
accountant to the same extent required of the Royalty Payor under
this Agreement.
8.4.4 Unless an audit for such year has been commenced upon the expiration
of [**] months following the end of any year, the calculation of
royalties and other payments payable with respect to such year shall
be binding and conclusive upon both Parties, and the Royalty Payor
and its Related Parties shall be released from any further liability
or accountability with respect to royalties for such year.
8.4.5 Each Party shall treat all financial information subject to review
under this Section 8.4 or under any sublicense agreement in
accordance with the confidentiality and non-use provisions of this
Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with the other Party and/or its
Related Parties obligating it to retain all such information in
confidence pursuant to such confidentiality agreement.
8.5 PAYMENT EXCHANGE RATE. All payments to be made under this Agreement
shall be made in United States dollars and shall be paid by bank
wire transfer in immediately available funds to such bank account in
the United States as may be designated in writing by the receiving
Party from time to time. In the case of sales outside the United
States by each Party and its Related Parties, the rate of exchange
to be used in computing the amount of currency equivalent in United
States dollars due shall be made at the rate of exchange utilized by
such Party in its worldwide accounting system, prevailing on the
third to the last business day of the month preceding the month in
which such sales are recorded.
8.6 INCOME TAX WITHHOLDING. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set
forth in this Article 8, the paying Party shall make such
withholding payments as required and subtract such withholding
payments from the payments set forth in this Article 8. The paying
Party shall submit appropriate proof of payment of the withholding
taxes to the receiving Party within a reasonable period of time. At
the request of the receiving Party, the paying Party shall, at its
cost, give the receiving Party such reasonable assistance, which
shall include the provision of appropriate certificates of such
deductions made together with other supporting documentation as may
be required by the relevant tax authority, to enable the receiving
Party to claim exemption from such withholding or other tax imposed
or obtain a repayment thereof or reduction thereof and shall upon
request provide such additional documentation from time to time as
is reasonably required to confirm the payment of tax.
9. CONFIDENTIALITY AND PUBLICATION
9.1 NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to
the other Party hereunder shall be maintained in confidence by the
receiving Party and shall not be disclosed to a non-Party or used
for any purpose except as set forth herein without the prior written
consent of the disclosing Party, except to the extent that such
Information:
48
(a) is known by the receiving Party at the time of its receipt,
and not through a prior disclosure by the disclosing Party, as
documented by the receiving Party's business records;
(b) is in the public domain by use and/or publication before its
receipt from the disclosing Party, or thereafter enters the
public domain through no fault of the receiving Party;
(c) is subsequently disclosed to the receiving Party by a Third
Party who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party;
(d) is developed by the receiving Party independently of
Information received from the disclosing Party, as documented
by the receiving Party's business records;
(e) is deemed necessary by counsel to the receiving Party to be
disclosed to such Party's attorneys or independent accountants
for the sole purpose of enabling such attorneys or independent
accountants to provide advice to the receiving Party, on the
condition that such attorneys and independent accountants
agree to be bound by confidentiality and non-use obligations
substantially similar to those contained in this Agreement;
provided, however, that the term of confidentiality for such
attorneys and independent accountants shall be no less than
[**]; or
(f) is deemed necessary by a Party to be disclosed to Related
Parties, agents, consultants, and/or other Third Parties for
the Development, Manufacturing or Commercialization of
Ophthalmic Product (or for such entities to determine their
interest in performing such activities) in accordance with
this Agreement on the condition that such Third Parties agree
to be bound by confidentiality and non-use obligations
substantially similar to those contained in this Agreement
provided, however, that the term of confidentiality for such
Third Parties shall be no less than [**].
Any combination of features or disclosures shall not be deemed to
fall within the foregoing exclusions merely because individual
features are published or available to the general public or in the
rightful possession of the receiving Party unless the combination
itself and principle of operation are published or available to the
general public or in the rightful possession of the receiving Party.
Notwithstanding the obligations of confidentiality and non-use set
forth above, a receiving Party may provide Information disclosed to
it to (i) governmental or other Regulatory Authorities in order to
obtain patents or to gain or maintain approval to conduct Clinical
Studies or to otherwise Develop, Manufacture or Commercialize
Ophthalmic Products; provided, that such disclosure shall be subject
to the prior written consent of the Party whose Information is
intended to be disclosed (which consent shall not be unreasonably
withheld), and such Information shall be disclosed only to the
extent reasonably necessary to obtain patents or authorizations,
(ii) the extent required
49
by applicable law, including without limitation by the rules or
regulations of the United States Securities and Exchange Commission
or similar regulatory agency in a country other than the United
States or of any stock exchange or Nasdaq, (iii) any bona fide
actual or prospective underwriters, investors, lenders or other
financing sources who are obligated to keep such information
confidential, to the extent reasonably necessary to enable such
actual or prospective underwriters, investors, lenders or other
financing sources to determine their interest in underwriting or
making an investment in, or otherwise providing financing to, the
receiving Party; provided, however, that in the case of an investor
that is a Significant Pharmaceutical Company, such disclosure shall
be subject to the prior written consent of the Party whose
Information is intended to be disclosed (which consent shall not be
unreasonably withheld), and (iv) in the event that the Party seeking
to provide Information of the other Party is the Continuing Party
with respect to a Royalty-Bearing Product, any bona fide actual or
prospective collaborators or strategic partners with respect to the
Development or Commercialization of such Royalty-Bearing Product,
who are obligated to keep such information confidential; provided,
however, that the Party and/or its Affiliates shall only disclose to
actual or prospective collaborators and strategic partners the
general subject matter of this Agreement, the licenses granted
hereunder, the provisions set forth in Section 2.13 and 13.2, the
provisions of Articles 8, 9 and 11, and such Know-How and Patent
Rights relating to such Royalty-Bearing Product as the receiving
Party, in its reasonable judgment, considers necessary for such
actual or prospective collaborators or strategic partners to
evaluate their interest in such Royalty-Bearing Product.
If a Party is required by judicial or administrative process to
disclose Information that is subject to the non-disclosure
provisions of this Section 9.1 or Section 9.2, such Party shall
promptly inform the other Party of the disclosure that is being
sought in order to provide the other Party an opportunity to
challenge or limit the disclosure obligations. Information that is
disclosed by judicial or administrative process shall remain
otherwise subject to the confidentiality and non-use provisions of
this Section 9.1 and Section 9.2, and the Party disclosing
Information pursuant to law or court order shall take all steps
reasonably practical, including without limitation seeking an order
of confidentiality, to ensure the continued confidential treatment
of such Information. In addition to the foregoing restrictions on
public disclosure, if either Party concludes that a copy of this
Agreement must be filed with the Securities and Exchange Commission,
such Party shall provide the other Party with a copy of this
Agreement showing any sections as to which the Party proposes to
request confidential treatment, will provide the other Party with an
opportunity to comment on any such proposal and to suggest
additional portions of the Agreement for confidential treatment, and
will take such Party's reasonable comments into consideration before
filing the Agreement.
9.2 PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's
interest in publishing the results of the Development. Each Party
also recognizes the mutual interest in obtaining valid patent
protection and in protecting business interests and trade secret
information. Consequently, except for disclosures permitted pursuant
to Section 9.1, either Party, its Affiliates, or their respective
employees or consultants wishing to make a publication or a
disclosure to a Third Party relating to the Ophthalmic Collaboration
or any Profit-Sharing Product shall deliver to the other Party a
copy of the
50
proposed written publication or an outline of an oral disclosure at
least thirty (30) days prior to submission for publication or
presentation. The reviewing Party shall have the right (a) to
propose modifications to the publication or presentation for patent
reasons, trade secret reasons or business reasons, or (b) to request
a reasonable delay in publication or presentation in order to
protect patentable information. If the reviewing Party requests a
delay, the publishing Party shall delay submission or presentation
for a period of sixty (60) days to enable patent applications
protecting each Party's rights in such information to be filed in
accordance with Article 11 below. Upon expiration of such sixty (60)
days, the publishing Party shall be free to proceed with the
publication or presentation. If the reviewing Party requests
modifications to the publication or presentation, the publishing
Party shall edit such publication to prevent disclosure of trade
secret or proprietary business information prior to submission of
the publication or presentation. With respect to any proposed
publications or disclosures by investigators or academic or
non-profit collaborators, such materials shall be subject to review
under this Section 9.2 to the extent that MERCK or ALNYLAM, as the
case may be, has the right and ability (after using reasonable
efforts) to do so. For the avoidance of doubt, subject to its
obligations under Section 9.1, the Continuing Party with respect to
a Royalty-Bearing Product may make publications and disclosures to
Third Parties relating to such Royalty-Bearing Product without any
obligation to permit the Opt-Out Party to review or comment on such
publication or disclosure. Furthermore, subject to its rights under
Section 9.1, the Opt-Out Party with respect to a Royalty-Bearing
Product shall have no right to make any publications and disclosures
to Third Parties relating to such Royalty-Bearing Product.
9.3 PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the
terms of, this Agreement may be made by either Party, and no Party
shall use the name, trademark, trade name or logo of the other Party
or its employees in any publicity, news release or disclosure
relating to this Agreement or its subject matter, without the prior
express written permission of the other Party, except as may be
required by law or expressly permitted by the terms hereof.
Notwithstanding the foregoing, prior to the execution of this
Agreement by both Parties, the Parties shall agree in writing upon a
press release to be issued jointly by the Parties publicizing the
Ophthalmic Collaboration. After such initial press release, neither
Party shall issue a press release or public announcement relating to
the Ophthalmic Collaboration or this Agreement without the prior
written approval of the other Party, which approval shall not be
unreasonably withheld, except that a Party may (a) once a press
release or other written statement is approved in writing by both
Parties, make subsequent public disclosure of the information
contained in such press release or other written statement without
the further approval of the other Party, and (b) issue a press
release or public announcement as required, in the reasonable
judgment of such Party, by applicable law, including without
limitation by the rules or regulations of the United States
Securities and Exchange Commission or similar regulatory agency in a
country other than the United States or of any stock exchange or
Nasdaq, in each case after first notifying the other Party of such
planned press release or public announcement at least seven (7)
business days in advance of issuing such press release or making
such public announcement (or, with respect to press releases and
public announcements made
51
pursuant to the foregoing clause (b), with as much advance notice as
possible under the circumstances if it is not possible to provide
notice at least seven (7) business days in advance) for the sole
purpose of allowing the other Party to review the proposed press
release or public announcement for the inclusion of Confidential
Information or the use of its name.
10. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other Party that as of the Effective Date of this
Agreement:
10.1.1 It is duly-organized and validly existing under the laws of its
jurisdiction of incorporation or formation, and has full corporate
or other power and authority to enter into this Agreement and to
carry out the provisions hereof.
10.1.2 It is duly-authorized to execute and deliver this Agreement and to
perform its obligations hereunder, and the person or persons
executing this Agreement on its behalf has been duly-authorized to
do so by all requisite corporate action.
10.1.3 This Agreement is legally binding upon it and enforceable in
accordance with its terms. The execution, delivery and performance
of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a
party and by which it may be bound.
10.1.4 It has not, and will not during the Agreement Term, grant any
right to any Third Party which would conflict with the rights
granted to the other Party hereunder. It has (or will have at the
time performance is due) maintained and will maintain and keep in
full force and effect all agreements (including license
agreements) and filings (including patent filings) necessary to
perform its obligations hereunder.
10.1.5 If any human primary cell lines, human tissue, human clinical
isolates or similar human-derived materials ("Human Materials")
have been or are to be collected and/or used in the Ophthalmic
Collaboration, each Party represents and warrants (i) that it has
complied, or shall comply, with all applicable laws, guidelines
and regulations relating to the collection and/or use of the Human
Materials, and (ii) that it has obtained, or shall obtain, all
necessary approvals and appropriate informed consents, in writing,
for the collection and/or use of such Human Materials. Each Party
shall provide documentation of such approvals and consents upon
the other Party's request. Each Party further represents and
warrants that such Human Materials may be used as contemplated in
this Agreement without any obligation to the individuals or
entities ("Providers") who contributed the Human Materials,
including without limitation any obligation of compensation to
such Providers or any other Third Party for the intellectual
property associated with the Human Materials or commercial use
thereof for any purposes.
10.1.6 Neither Party nor any of its Affiliates has been debarred or is
subject to debarment and neither Party nor any of its Affiliates
will use in any capacity, in connection with the Development,
Manufacture or Commercialization of an Ophthalmic Product, any
person
52
or entity that has been debarred pursuant to Section 306 of the
United States Federal Food, Drug, and Cosmetic Act, or that is the
subject of a conviction described in such section. Each Party
agrees to inform the other Party in writing immediately if it or
any person or entity that is performing activities under the
Ophthalmic Collaboration is debarred or is the subject of a
conviction described in Section 306, or if any action, suit,
claim, investigation or legal or administrative proceeding is
pending or, to the best of such Party's knowledge, is threatened,
relating to the debarment or conviction of such Party or any
person or entity used in any capacity by such Party or any of its
Affiliates in connection with the Development, Manufacture or
Commercialization of an Ophthalmic Product.
10.2 ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and
warrants to MERCK that as of the Effective Date of this Agreement:
10.2.1 To the best of ALNYLAM's knowledge, the ALNYLAM Patent Rights
exist and are not invalid or unenforceable, in whole or in part;
10.2.2 It has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in the ALNYLAM Technology
in a manner that conflicts with any rights granted to MERCK
hereunder; and
10.2.3 Except as set forth in Section 10.2.3 of Schedule 10 to this
Agreement, there are no claims, judgments or settlements against
or owed by ALNYLAM or its Affiliates or pending or threatened
claims or litigation relating to the ALNYLAM Technology.
10.3 MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and
warrants to ALNYLAM that as of the Effective Date of this
Agreement:
10.3.1 To the best of MERCK's knowledge, the MERCK Patent Rights exist
and are not invalid or unenforceable, in whole or in part;
10.3.2 It has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in the MERCK Technology
in a manner that conflicts with the rights granted to ALNYLAM
hereunder; and
10.3.3 There are no claims, judgments or settlements against or owed by
MERCK or its Affiliates or pending or threatened claims or
litigation relating to the MERCK Technology that are expected to
impact the Ophthalmic Collaboration or any Ophthalmic Product.
10.4 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS
ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER
PARTY WITH RESPECT TO ANY TECHNOLOGY, OPHTHALMIC PRODUCTS, GOODS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND
HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT
TO ANY AND ALL OF
53
THE FOREGOING. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR
WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF
ANY OPHTHALMIC PRODUCT PURSUANT TO THIS AGREEMENT WILL BE
SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO THE
OPHTHALMIC PRODUCTS WILL BE ACHIEVED.
10.5 INDEMNIFICATION.
10.5.1 GENERAL INDEMNIFICATION BY MERCK. MERCK shall indemnify, hold
harmless, and defend ALNYLAM, its Affiliates, and their respective
directors, officers, employees and agents ("ALNYLAM Indemnitees")
from and against any and all Third Party claims, suits, losses,
liabilities, damages, costs, fees and expenses (including
reasonable attorneys' fees) (collectively, "Losses") arising out
of or resulting from, directly or indirectly, (a) any breach of,
or inaccuracy in, any representation or warranty made by MERCK in
this Agreement, or any breach or violation of any covenant or
agreement of MERCK in or pursuant to this Agreement, or (b) the
negligence or willful misconduct by or of MERCK, its Affiliates
and their respective Sublicensees, and their respective directors,
officers, employees and agents. This indemnification excludes
Losses arising out of Third Party Infringement Claims resulting
from MERCK's exercise in accordance with the terms of this
Agreement of any intellectual property rights granted by ALNYLAM
hereunder. Furthermore, MERCK shall have no obligation to
indemnify the ALNYLAM Indemnitees to the extent that the Losses
arise out of or result from, directly or indirectly, any breach
of, or inaccuracy in, any representation or warranty made by
ALNYLAM in this Agreement, or any breach or violation of any
covenant or agreement of ALNYLAM in or pursuant to this Agreement,
or the negligence or willful misconduct by or of any of the
ALNYLAM Indemnitees.
10.5.2 GENERAL INDEMNIFICATION BY ALNYLAM. ALNYLAM shall indemnify, hold
harmless, and defend MERCK, its Affiliates and their respective
directors, officers, employees and agents ("MERCK Indemnitees")
from and against any and all Losses arising out of or resulting
from, directly or indirectly, (a) any breach of, or inaccuracy in,
any representation or warranty made by ALNYLAM in this Agreement,
or any breach or violation of any covenant or agreement of ALNYLAM
in or pursuant to this Agreement, or (b) the negligence or willful
misconduct by or of ALNYLAM, its Affiliates and their respective
Sublicensees, and their respective directors, officers, employees
and agents. This indemnification excludes Losses arising out of
Third Party Infringement Claims resulting from ALNYLAM's exercise
in accordance with the terms of this Agreement of any intellectual
property rights granted by MERCK hereunder. Furthermore, ALNYLAM
shall have no obligation to indemnify the MERCK Indemnitees to the
extent that the Losses arise out of or result from, directly or
indirectly, any breach of, or inaccuracy in, any representation or
warranty made by MERCK in this Agreement, or any breach or
violation of any covenant or agreement of MERCK in or pursuant to
this Agreement, or the negligence or willful misconduct by or of
any of the MERCK Indemnitees.
10.5.3 PRODUCT LIABILITY.
54
(a) MERCK shall indemnify and hold harmless the ALNYLAM
Indemnitees from, against and in respect of any and all
Losses arising out of Third Party product liability claims
incurred or suffered by the ALNYLAM Indemnitees, or any of
them, directly or indirectly relating to an Ophthalmic
Product and resulting from or arising out of the negligence,
willful misconduct, or breach of this Agreement of or by
MERCK or any of the other MERCK Indemnitees, except to the
extent caused by the negligence, willful misconduct or
breach of this Agreement of or by ALNYLAM or any of the
other ALNYLAM Indemnitees.
(b) ALNYLAM shall indemnify and hold harmless the MERCK
Indemnitees from, against and in respect of any and all
Losses arising out of Third Party product liability claims
incurred or suffered by the MERCK Indemnitees, or any of
them, directly or indirectly relating to an Ophthalmic
Product and resulting from or arising out of the negligence,
willful misconduct, or breach of this Agreement of or by
ALNYLAM or any of the other ALNYLAM Indemnitees, except to
the extent caused by the negligence, willful misconduct or
breach of this Agreement of or by MERCK or any of the other
MERCK Indemnitees.
(c) Any Losses arising out of Third Party product liability
claims (other than such claims entitled to indemnification
under Sections 10.5.3(a) or (b)) shall (i) be borne by the
Continuing Party, to the extent such Losses were incurred
with respect to the Development, Manufacture or
Commercialization of a Royalty-Bearing Product, (ii) be
included in U.S. Development Expenses and shared by the
Parties pursuant to Section 2.11, to the extent such Losses
were incurred with respect to the Development (and/or
related Manufacture) of a Profit-Sharing Product in the
United States, (iii) be included in Commercialization
Expenses for purposes of calculating U.S. Operating
Profit/Loss pursuant to Section 8.2, to the extent such
Losses were incurred with respect to the Commercialization
(and/or related Manufacture) of a Profit-Sharing Product in
the United States, or (iv) be borne by MERCK, to the extent
such Losses were incurred with respect to Development,
Manufacture or Commercialization of a Profit-Sharing Product
in the Territory outside the United States.
10.5.4 INDEMNIFICATION PROCEDURE. In the event of any such claim against
any MERCK Indemnitee or ALNYLAM Indemnitee (individually, an
"Indemnitee"), the indemnified Party shall promptly notify the
other Party in writing of the claim and the indemnifying Party
shall manage and control, at its sole expense, the defense of the
claim and its settlement. The Indemnitee shall cooperate with the
indemnifying Party and may, at its option and expense, be
represented in any such action or proceeding. The indemnifying
Party shall not be liable for any settlements, litigation costs or
expenses incurred by any Indemnitee without the indemnifying
Party's written authorization. Notwithstanding the foregoing, if
the indemnifying Party believes that any of the exceptions to its
obligation of indemnification of the Indemnitees set forth in
Sections 10.5.1, 10.5.2 or 10.5.3 may apply, the indemnifying
Party shall promptly notify the Indemnitees, which shall then have
the right to be represented in any such action or proceeding by
separate counsel at their expense; provided, that the indemnifying
Party shall be responsible for
55
payment of such expenses if the Indemnitees are ultimately
determined to be entitled to indemnification from the indemnifying
Party.
11. INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS
11.1 INVENTORSHIP. Inventorship for patentable inventions conceived or
reduced to practice during the course of the performance of
activities pursuant to this Agreement shall be determined in
accordance with United States patent laws for determining
inventorship.
11.2 OWNERSHIP. ALNYLAM shall own the entire right, title and interest
in and to all inventions and discoveries (and Patent Rights
claiming patentable inventions therein) first made or discovered
solely by employees or consultants of ALNYLAM or acquired solely
by ALNYLAM in the course of conducting the Ophthalmic
Collaboration. MERCK shall own the entire right, title and
interest in and to all inventions and discoveries (and Patent
Rights claiming patentable inventions therein) first made or
discovered solely by employees or consultants of MERCK or acquired
solely by MERCK in the course of conducting the Ophthalmic
Collaboration. The Parties shall jointly own any inventions and
discoveries (and Patent Rights claiming patentable inventions
therein) first made or discovered jointly in the course of
conducting the Ophthalmic Collaboration.
11.3 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.
11.3.1 MERCK TECHNOLOGY. MERCK has the sole responsibility to, at MERCK's
discretion, file, conduct ex parte and inter partes prosecution,
and maintain (including the defense of any interference or
opposition proceedings) in the Territory, all Patent Rights
comprising MERCK Technology (other than Joint Collaboration IP),
in MERCK's name.
11.3.2 ALNYLAM TECHNOLOGY. ALNYLAM has the sole responsibility to, at
ALNYLAM's discretion, file, conduct ex parte and inter partes
prosecution, and maintain (including the defense of any
interference or opposition proceedings) in the Territory, all
Patent Rights comprising ALNYLAM Technology (other than Joint
Collaboration IP), in ALNYLAM's name.
11.3.3 JOINT COLLABORATION IP. Subject to ALNYLAM's continuing right to
the prior review of, comment on, revision to and approval of
material documents, which shall not be unreasonably delayed or
withheld, MERCK has the sole responsibility to, at MERCK's
discretion, file, conduct ex parte and inter partes prosecution,
and maintain (including the defense of any interference or
opposition proceedings) in the Territory, all Patent Rights
comprising Joint Collaboration IP (other than Broad RNAi
Technology Collaboration IP), in the names of both ALNYLAM and
MERCK. Notwithstanding the foregoing, if ALNYLAM is the Continuing
Party with respect to a Royalty-Bearing Product, then ALNYLAM
shall have the sole responsibility to, at ALNYLAM's discretion,
file, conduct ex parte and inter partes prosecution, and maintain
(including the defense of any interference or opposition
proceedings) in the Territory, all Patent
56
Rights comprising Joint Collaboration IP Covering, claiming or
relating to such Royalty-Bearing Product, in the names of both
ALNYLAM and MERCK. Each Party shall use Commercially Reasonable
Efforts to make available to the Prosecuting Party or its
authorized attorneys, agents or representatives, such of its
employees as the Prosecuting Party in its reasonable judgment
deems necessary in order to assist it in obtaining patent
protection for such Joint Collaboration IP. Each Party shall sign,
or use Commercially Reasonable Efforts to have signed, all legal
documents necessary to file and prosecute patent applications or
to obtain or maintain patents in respect of such Joint
Collaboration IP, at no cost to the Prosecuting Party.
11.3.4 BROAD RNAI TECHNOLOGY COLLABORATION IP. Notwithstanding Section
11.3.3, subject to MERCK's continuing right to the prior review
of, comment on, revision to and approval of material documents
relating to Joint Collaboration IP, which shall not be
unreasonably delayed or withheld, ALNYLAM has the sole
responsibility to, at ALNYLAM's discretion, file, conduct ex parte
and inter partes prosecution, and maintain, including the defense
of any interference or opposition proceedings, in the Territory,
all Patent Rights comprising Broad RNAi Technology Collaboration
IP in the names of both ALNYLAM and MERCK. MERCK shall use
Commercially Reasonable Efforts to make available to ALNYLAM or
its authorized attorneys, agents or representatives, such of its
employees as ALNYLAM in its reasonable judgment deems necessary in
order to assist it in obtaining patent protection for such Broad
RNAi Technology Collaboration IP. MERCK shall sign or use
Commercially Reasonable Efforts to have signed all legal documents
necessary to file and prosecute patent applications or to obtain
or maintain patents in respect of such Broad RNAi Technology
Collaboration IP, at no cost to ALNYLAM.
11.3.5 CONTINGENT RIGHTS. The Party having the right to prosecute and
maintain patents under Sections 11.3.1, 11.3.2, 11.3.3 and 11.3.4
shall be referred to as the "Prosecuting Party". In the event the
Prosecuting Party elects not to seek or continue to seek or
maintain patent protection on any ALNYLAM Collaboration IP, MERCK
Collaboration IP or Joint Collaboration IP which are subject to
the other Party's licensed rights under Section 7 in the
Territory, the other Party shall have the right (but not the
obligation), at its expense, to prosecute and maintain in any
country within the Territory patent protection on such ALNYLAM
Collaboration IP, MERCK Collaboration IP or Joint Collaboration IP
in the name of ALNYLAM, MERCK or both Parties as set forth in
Sections 11.3.1, 11.3.2, 11.3.3 and 11.3.4. The previously
Prosecuting Party shall use Commercially Reasonable Efforts to
make available to the other Party or its authorized attorneys,
agents or representatives, such of its employees as are reasonably
necessary to assist the other Party in obtaining and maintaining
the patent protection described under this Section 11.3.5. The
previously Prosecuting Party shall sign or use Commercially
Reasonable Efforts to have signed all legal documents necessary to
file and prosecute such patent applications or to obtain or
maintain such patents.
11.3.6 COOPERATION. Each Party hereby agrees: (a) to make its employees,
agents and consultants reasonably available to the other Party (or
to the other Party's authorized attorneys, agents or
representatives), to the extent reasonably necessary to enable
such Party to undertake patent prosecution; (b) to provide the
other Party with copies of all
57
material correspondence pertaining to prosecution with the patent
offices; (c) to cooperate, if necessary and appropriate, with the
other Party in gaining patent term extensions wherever applicable
to Patent Rights; and (d) to endeavor in good faith to coordinate
its efforts with the other Party to minimize or avoid
interference with the prosecution and maintenance of the other
Party's patent applications.
11.3.7 PATENT EXPENSES. The patent filing, prosecution and maintenance
expenses incurred after the Effective Date with respect to Patent
Rights comprised of ALNYLAM Technology and MERCK Technology
("Patent Expenses") shall be borne by each Party having the right
to file, prosecute and maintain such Patent Rights under this
Section 11.3, except that Patent Expenses incurred (a) by the
Opt-Out Party with respect to a Royalty-Bearing Product shall be
reimbursed in full by the Continuing Party, (b) by a Party with
respect to a Profit-Sharing Product in the United States prior to
the First Commercial Sale of such product in the United States
shall be included in U.S. Development Expenses for such product
and shared by the Parties pursuant to Section 2.11, (c) by a
Party with respect to a Profit-Sharing Product in the United
States after the First Commercial Sale of such product in the
United States shall be included in Commercialization Expenses for
such product for purposes of calculating U.S. Operating
Profit/Loss pursuant to Section 8.2, and (d) by ALNYLAM with
respect to a Profit-Sharing Product in the Territory outside the
United States shall be reimbursed in full by MERCK.
11.4 THIRD PARTY INFRINGEMENT.
11.4.1 NOTICES. Each Party shall promptly report in writing to the other
Party during the Agreement Term any (a) known or suspected
infringement of any ALNYLAM Technology or MERCK Technology being
used in the Ophthalmic Collaboration, including without
limitation any Joint Collaboration IP or (b) unauthorized use or
misappropriation of any Information by a Third Party of which it
becomes aware, and shall provide the other Party with all
available evidence supporting such infringement, or unauthorized
use or misappropriation
11.4.2 RIGHTS TO ENFORCE.
11.4.2.1 MERCK'S FIRST RIGHT. Subject to the provisions of Section
11.4.2.2(b) and the provisions of any Third Party agreement under
which MERCK's rights in MERCK Technology are granted or ALNYLAM's
rights in ALNYLAM Technology are granted and of any In-License,
in respect of each (a) Profit-Sharing Product in the Field in the
Territory and (b) Royalty-Bearing Product in the Field in the
Territory for which MERCK is the Continuing Party, MERCK shall
have the sole and exclusive right to initiate an infringement or
other appropriate suit anywhere in the world against any Third
Party who at any time has infringed, or is suspected of
infringing, any Patent Rights, or of using without proper
authorization any Know-How, comprising (i) MERCK Technology or
ALNYLAM Technology that is licensed to MERCK under Section 7.1
with respect to such Profit-Sharing Product or Royalty-Bearing
Product, as the case may be or (ii) Joint Collaboration IP
Covering, claiming or relating to such Profit-Sharing Product or
Royalty-Bearing Product, as the case may be.
58
11.4.2.2 ALNYLAM'S FIRST RIGHT.
(a) Subject to the provisions of any Third Party agreement
under which ALNYLAM's rights in ALNYLAM Technology or
MERCK's rights in MERCK Technology are granted and of any
In-License, in respect of each Royalty-Bearing Product in
the Field in the Territory for which ALNYLAM is the
Continuing Party, ALNYLAM shall have the sole and exclusive
right to initiate an infringement or other appropriate suit
anywhere in the world against any Third Party who at any
time has infringed, or is suspected of infringing, any
Patent Rights, or of using without proper authorization any
Know-How, comprising ALNYLAM Technology or MERCK Technology
that is licensed to ALNYLAM under Section 7.1 with respect
to such Royalty-Bearing Product or Joint Collaboration IP
Covering, claiming or relating to such Royalty-Bearing
Product.
(b) ALNYLAM shall have the sole and exclusive right to initiate
an infringement or other appropriate suit anywhere in the
world against any Third Party who at any time has
infringed, or is suspected of infringing, any Patent
Rights, or of using without proper authorization any
Know-How, comprising Broad RNAi Technology Collaboration
IP.
11.4.3 STEP-IN RIGHTS. Subject to the provisions of any Third Party
license agreement under which ALNYLAM's rights in ALNYLAM
Technology are granted or MERCK's rights in MERCK Technology are
granted, and of any In-Licenses, if the Party with the first
right to enforce (the "Initial Enforcement Rights Party") ALNYLAM
Technology, MERCK Technology, Joint Collaboration IP or Broad
RNAi Technology Collaboration IP under Section 11.4.2 fails to
initiate a suit or take other appropriate action that it has the
initial right to initiate or take pursuant thereto within ninety
(90) days after becoming aware of the basis for such suit or
action, then the other Party (the "Secondary Enforcement Rights
Party") may, in its discretion, provide the Initial Enforcement
Rights Party with written notice of such Secondary Enforcement
Rights Party's intent to initiate a suit or take other
appropriate action. If the Secondary Enforcement Rights Party
provides such notice and the Initial Enforcement Rights Party
fails to initiate a suit or take such other appropriate action
within thirty (30) days after receipt of such notice from the
Secondary Enforcement Rights Party, then the Secondary
Enforcement Rights Party shall have the right to initiate a suit
or take other appropriate action that it believes is reasonably
required to protect its ownership interest in and to, or licensed
interest under, as applicable, ALNYLAM Technology and MERCK
Technology, including without limitation, Joint Collaboration IP
and Broad RNAi Technology Collaboration IP.
11.4.4 PROCEDURES; EXPENSES AND RECOVERIES. The Party having the right
to initiate any infringement suit under Section 11.4.2 above
shall have the sole and exclusive right to select counsel for any
such suit and shall pay all expenses of the suit, including
attorneys' fees and court costs and reimbursement of the other
Party's reasonable out-of-pocket expense in rendering assistance
requested by the initiating Party, except that such expenses in
respect of any Profit-Sharing Product in the United States (i)
prior to
59
the First Commercial Sale of such Profit-Sharing Product in the
United States shall be included in U.S. Development Expenses for
such product and shared by the Parties pursuant to Section 2.11,
and (ii) after the First Commercial Sale of such Profit Sharing
Product in the United States shall be Commercialization Expenses
for purposes of calculating U.S. Operating Profit/Loss pursuant
to Section 8.2. If required under applicable law in order for the
initiating Party to initiate and/or maintain such suit, or if
either Party is unable to initiate or prosecute such suit solely
in its own name or it is otherwise advisable to obtain an
effective legal remedy, in each case, the other Party shall join
as a party to the suit and will execute and cause its Affiliates
to execute all documents necessary for the initiating Party to
initiate litigation to prosecute and maintain such action. In
addition, at the initiating Party's request, the other Party
shall provide reasonable assistance to the initiating Party in
connection with an infringement suit at no charge to the
initiating Party except for reimbursement by the initiating Party
of reasonable out-of-pocket expenses incurred in rendering such
assistance. The non-initiating Party shall have the right to
participate and be represented in any such suit by its own
counsel at its own expense. If the Parties obtain from a Third
Party, in connection with such suit, any damages, license fees,
royalties or other compensation (including any amount received in
settlement of such litigation), such amounts shall be allocated
as follows:
(a) In all cases, to reimburse each Party for all expenses of
the suit, including attorneys' fees and disbursements,
court costs and other litigation expenses; and
(b) If the infringement by the Third Party is related to a
Profit-Sharing Product in the United States (i) prior to
the First Commercial Sale of the Profit-Sharing Product in
the United States, the balance shall be applied to
reimburse the Parties for U.S. Development Expenses in
accordance with their share of such expenses as set forth
in Section 2.11 and (ii) after the First Commercial Sale of
the Profit-Sharing Product in the United States, the
balance shall be deemed Net Sales for the purpose of
calculating U.S. Operating Profit/Loss for such
Profit-Sharing Product pursuant to Section 8.2; or
(c) If the infringement by the Third Party is related to a
Profit-Sharing Product in the Territory outside the United
States, the remaining amount shall be treated as if it were
Net Sales of MERCK, with ALNYLAM receiving a royalty on
such remaining amount pursuant to the terms of Section
8.3.1, and the balance being retained by MERCK; or
(d) If the infringement by the Third Party is related to a
Royalty-Bearing Product, the remaining amount shall be
treated as if it were Net Sales of the Continuing Party,
with the other Party receiving a royalty on such remaining
amount pursuant to the terms of Section 8.3.2, and the
balance being retained by the Continuing Party.
11.5 CLAIMED INFRINGEMENT.
60
11.5.1 NOTICE. In the event that a Third Party at any time provides
written notice of a claim to, or brings an action, suit or
proceeding against, any Party, or any of their respective
Affiliates or Sublicensees, claiming infringement of its patent
rights or unauthorized use or misappropriation of its know-how,
based upon an assertion or claim arising out of the Development,
Manufacture or Commercialization of Ophthalmic Products in the
Field in the Territory ("Infringement Claim"), such Party shall
promptly notify the other Party of the claim or the commencement
of such action, suit or proceeding, enclosing a copy of the claim
and all papers served. Each Party agrees to make available to the
other Party its advice and counsel regarding the technical merits
of any such claim at no cost to the other Party and to offer
reasonable assistance to the other Party at no cost to the other
Party.
11.5.2 PROFIT-SHARING PRODUCTS. Any Infringement Claim brought against
either Party or its Affiliates or Sublicensees arising out of the
Development, Manufacture or Commercialization of any
Profit-Sharing Product in the Field in the Territory, shall be
defended by MERCK if it so desires; provided, however, that
ALNYLAM shall defend any such Infringement Claim relating to Broad
RNAi Technology, if it so desires. All litigation costs and
expenses incurred by the Defending Party (defined below) in
connection with such Infringement Claim, and all damages, payments
and other amounts awarded against, or payable by, either Party
under any settlement with such Third Party (a) with respect to the
United States (i) prior to the First Commercial Sale of the
Profit-Sharing Product in the United States, shall be U.S.
Development Expenses for such Profit-Sharing Product as set forth
in Section 2.11 and (ii) after the First Commercial Sale of the
Profit-Sharing Product in the United States, shall be
Commercialization Expenses for purposes of calculating U.S.
Operating Profit/Loss in respect of such Profit-Sharing Product
pursuant to Section 8.2, and (b) with respect to the Territory
outside the United States, shall be borne by MERCK.
11.5.3 ROYALTY-BEARING PRODUCTS. In respect of any Royalty-Bearing
Product, the applicable Continuing Party shall assume full
responsibility for any Infringement Claims brought against either
Party or its Affiliates or Sublicensees arising out of the
Development, Manufacture or Commercialization of such
Royalty-Bearing Product. All liabilities, damages, costs and
expenses arising out of such Third Party Infringement Claims shall
be borne by the Continuing Party.
11.5.4 PROCEDURE. The Party having the initial right to defend an
Infringement Claim shall be referred to as the "Defending Party."
The Defending Party shall have the sole and exclusive right to
select counsel for any Infringement Claim; provided, that it shall
consult with the other Party with respect to selection of counsel
for such defense. The Defending Party shall keep the other Party
informed, and shall from time to time consult with the other Party
regarding the status of any such claims and shall provide the
other Party with copies of all documents filed in, and all written
communications relating to, any suit brought in connection with
such claims. The other Party shall also have the right to
participate and be represented in any such claim or related suit,
at its own expense. The other Party shall have the sole and
exclusive right to control the defense of an Infringement Claim in
the event the Defending Party fails to exercise its right to
assume such defense within thirty (30) days following written
notice from the other
61
Party of such Infringement Claim. No Party shall settle any claims
or suits involving rights of another Party without obtaining the
prior written consent of such other Party, which consent shall not
be unreasonably withheld.
11.5.5 LIMITATIONS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 10,
THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF ALNYLAM AND
MERCK, AND THE SOLE AND EXCLUSIVE REMEDY OF ALNYLAM OR MERCK, AS
THE CASE MAY BE, IN THE CASE OF ANY CLAIMED INFRINGEMENT OF ANY
THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION
OF ANY THIRD PARTY'S KNOW-HOW.
11.6 OTHER INFRINGEMENT RESOLUTIONS. In the event of a dispute or
potential dispute that has not ripened into a demand, claim or
suit of the types described in Sections 11.4 and 11.5 of this
Agreement (e.g., actions seeking declaratory judgments and
revocation proceedings), the same principles governing control of
the resolution of the dispute, consent to settlements of the
dispute, and implementation of the settlement of the dispute
(including the sharing in and allocating the payment or receipt of
damages, license fees, royalties and other compensation) shall
apply.
11.7 PRODUCT TRADEMARKS.
11.7.1 OWNERSHIP OF PRODUCT TRADEMARKS. MERCK shall own the Product
Trademarks for Profit-Sharing Products in the Territory and shall
be responsible for filing and maintaining the Product Trademarks
in the Territory (including payment of costs associated
therewith), subject to reimbursement of such costs in the United
States as Commercialization Expenses for purposes of calculating
U.S. Operating Profit/Loss for such Profit-Sharing Product
pursuant to Section 8.2. Each Party shall have the right to
monitor the quality of such products in accordance with reasonable
procedures to be agreed upon by the Parties. The Continuing Party
shall own the Product Trademarks for Royalty-Bearing Products and
shall be solely responsible for filing and maintaining the Product
Trademarks in the Territory (including payment of costs associated
therewith). Promptly after exercising its Opt-Out Right with
respect to such Royalty-Bearing Product, MERCK shall assign to
ALNYLAM all Product Trademarks for such Royalty-Bearing Product
Controlled by MERCK in accordance with terms and conditions to be
negotiated by the Parties in good faith.
11.7.2 THIRD PARTY INFRINGEMENT.
(a) PROFIT-SHARING PRODUCTS. In the event that either Party
becomes aware of any infringement of a Product Trademark for
a Profit-Sharing Product by a Third Party, it shall promptly
notify the other and the Parties shall consult with each
other and jointly determine the best way to prevent such
infringement, including without limitation by the
institution of legal proceedings against such Third Party.
All out-of-pocket costs, including attorneys' fees, relating
to such legal proceedings incurred (a) with respect to the
United States (i) prior to the First Commercial Sale of the
Profit-Sharing Product in the United States shall be
62
included in U.S. Development Expenses for such
Profit-Sharing Product and shared by the Parties pursuant to
Section 2.11 and (ii) after the First Commercial Sale of the
Profit-Sharing Product in the United States shall be
included in Commercialization Expenses for purposes of
calculating U.S. Operating Profit/Loss for such
Profit-Sharing Product pursuant to Section 8.2 and (b) in
the Territory outside the United States shall be borne
solely by MERCK.
(b) ROYALTY-BEARING PRODUCTS. The applicable Continuing Party
shall assume full responsibility, at its sole cost and
expense, for any infringement of a Product Trademark for a
Royalty-Bearing Product by a Third Party.
11.7.3 CLAIMED INFRINGEMENT. If a Third Party challenges the Parties'
right to commercialize a Profit-Sharing Product under the selected
Product Trademark, the JSC shall consider the grounds for such
challenge and recommend to MERCK a course of action in the
affected market based on an assessment of the legal merits of such
Third Party claim. The foregoing procedure shall also be followed
in the event of an objection to the selected Product Trademark
raised by a Regulatory Authority. In the case of a Royalty-Bearing
Product, the Continuing Party will defend and indemnify the
Opt-Out Party for and against any claims of infringement of the
rights of a Third Party by the use of a Product Trademark in
connection with such Royalty-Bearing Product.
11.8 PATENT TERM EXTENSIONS. The Parties shall use reasonable efforts
to obtain all available supplementary protection certificates
("SPC") and other extensions of Patent Rights (including those
available under the Xxxxx-Xxxxxx Act). Each Party shall execute
such authorizations and other documents and take such other
actions as may be reasonably requested by the other Party to
obtain such extensions. The Parties shall cooperate with each
other in gaining patent term restorations, extensions and/or SPCs
wherever applicable to Patent Rights. The Party first eligible to
seek patent term restoration or extension of any such Patent
Rights or any SPC related thereto shall have the right to do so;
provided, that if in any country the first Party has an option to
extend the patent term for only one of several patents, the first
Party shall consult with the other Party before making the
election. If more than one patent is eligible for extension or
patent term restoration, the JSC shall agree upon a strategy that
shall maximize patent protection and commercial value for
Ophthalmic Products. All filings for such extensions and
certificates shall be made by the Party to whom responsibility for
prosecution and maintenance of the Patent Rights are assigned,
provided, that in the event that the Party to whom such
responsibility is assigned elects not to file for an extension or
SPC, such Party shall (i) inform the other Party of its intention
not to file and (ii) grant the other Party the right to file for
such extension or SPC in the patentee's name and such Party shall
provide all necessary assistance in connection therewith.
11.9 PATENT CERTIFICATION. To the extent required by law or permitted
by law, the Parties shall use Commercially Reasonable Efforts to
maintain with the applicable Regulatory Authorities during the
Agreement Term correct and complete listings of applicable Patent
Rights for Ophthalmic Products being commercialized, including all
so called "Orange Book" listings required under the Xxxxx-Xxxxxx
Act.
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12. TERM AND TERMINATION
12.1 TERM AND EXPIRATION.
12.1.1 EXPIRATION OF OPHTHALMIC COLLABORATION. The Ophthalmic
Collaboration shall commence on the Effective Date and expire on
the date on which no Profit-Sharing Products are being Developed
or Commercialized by the Parties. Expiration of the Ophthalmic
Collaboration shall only affect the terms, responsibilities and
activities undertaken in accordance with the Ophthalmic
Collaboration and shall not affect the other terms of this
Agreement.
12.1.2 TERMINATION OF AGREEMENT. This Agreement shall be effective as of
the Effective Date and, unless terminated earlier pursuant to
Section 12.2 below, this Agreement shall continue in effect until
expiration of all royalty obligations hereunder ("Agreement
Term"). Upon expiration of the Agreement Term, all licenses of the
Parties under Article 7 then in effect shall become fully paid-up,
perpetual, non-exclusive licenses.
12.2 TERMINATION FOR CAUSE.
12.2.1 CAUSE FOR TERMINATION. This Agreement may be terminated at any
time during the Agreement Term:
(a) upon written notice by either Party (the "Non-Breaching
Party") if the other Party (the "Breaching Party") is in
breach of its material obligations hereunder by causes and
reasons within its control and has not cured such breach
within ninety (90) days after notice requesting cure of the
breach; provided, however, in the event of a good faith
dispute with respect to the existence of a material breach,
the ninety (90) day cure period shall be tolled until such
time as the Dispute is resolved pursuant to Section 13.6
hereof; or
(b) by either Party upon the filing or institution of
bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion
of the assets for the benefit of creditors by the other
Party; provided, however, that in the event of any
involuntary bankruptcy or receivership proceeding such right
to terminate shall only become effective if the Party
consents to the involuntary bankruptcy or receivership or
such proceeding is not dismissed within ninety (90) days
after the filing thereof.
12.2.2 EFFECT OF TERMINATION FOR CAUSE.
(a) MATERIAL BREACH RELATING TO THE DEVELOPMENT OR
COMMERCIALIZATION OF A ROYALTY-BEARING PRODUCT. If the
material breach has, or is reasonably likely to have, a
material adverse effect on the Development, Manufacture or
Commercialization of a Royalty-Bearing Product in a Region
or Regions, then this Agreement shall not terminate in its
entirety, nor with respect to such Royalty-Bearing Product
in the Territory outside of such Region(s), provided that
with respect to such Region(s):
64
(i) except to the extent such licenses are necessary for
the Breaching Party to perform its obligations under
clause (iii) below, the licenses granted to the
Breaching Party under this Agreement with respect to
the Development, Manufacture and Commercialization of
such Royalty-Bearing Product in such Region(s) shall
terminate;
(ii) the Breaching Party hereby grants to the Non-Breaching
Party an exclusive (even as to the Breaching Party),
non-royalty-bearing perpetual license under ALNYLAM
Technology if the Breaching Party is ALNYLAM, or under
MERCK Technology, if the Breaching Party is MERCK, to
Develop, Manufacture and Commercialize such
Royalty-Bearing Product in the Field in such
Region(s); provided, however, that to the extent such
license to a Party's Technology includes a sublicense
under Necessary Third Party IP, including without
limitation the Existing ALNYLAM In-Licenses, the
non-Breaching Party shall be fully responsible for all
royalties, milestones or other payments under such
In-Licenses reasonably allocable to such
Royalty-Bearing Product in such Region(s);
(iii) in the event that the Breaching Party is Manufacturing
and supplying the Royalty-Bearing Product pursuant to
Section 6.4, the Breaching Party shall have the
obligation, if requested by the Non-Breaching Party,
to continue to Manufacture and supply the
Royalty-Bearing Product for such Region(s) in
accordance with, and for the time period described in,
Section 6.4; and
(iv) in the event that the Non-Breaching Party is
Manufacturing and supplying the Royalty-Bearing
Product pursuant to Section 6.4, the Breaching Party
shall have the obligation to reimburse the
Non-Breaching Party for any committed and
non-refundable or non-creditable costs or expenses
incurred by the Non-Breaching Party, as of the date of
notice of termination, with respect to the supply of
such Royalty-Bearing Product for the Breaching Party
for such Region(s), and shall purchase, at the Cost of
Goods Sold, any Royalty-Bearing Product Manufactured
and supplied by the Non-Breaching Party for such
Region(s), as well as any work in progress, raw
materials, intermediates or components relating to the
Royalty-Bearing Product, in each case in accordance
with, and for the time period described in Section
6.4.
(b) MATERIAL BREACH RELATING TO THE DEVELOPMENT OR
COMMERCIALIZATION OF A PROFIT-SHARING PRODUCT. If the
material breach has, or is reasonably likely to have, a
material adverse effect on the Development, Manufacture or
Commercialization of a Profit-Sharing Product in a Region or
Regions, then this Agreement shall not terminate in its
entirety, nor with respect to such Profit-Sharing Product in
the Territory outside of such Region(s), provided that with
respect to such Region(s):
65
(i) the licenses granted to the Breaching Party under this
Agreement with respect to the Development, Manufacture
and Commercialization of such Profit-Sharing Product
in such Region(s) shall terminate;
(ii) the licenses granted to the Non-Breaching Party by the
Breaching Party with respect to such Profit-Sharing
Product in such Region(s) pursuant to Article 7 shall
continue in full force and effect;
(iii) the Non-Breaching Party shall have the right to
Develop, Manufacture and Commercialize such
Profit-Sharing Product in the Field in such Region(s),
either alone or in collaboration with Third Parties,
without any financial obligation to the Breaching
Party; provided, however, that to the extent the
licenses in Section 12.2.2(b)(ii) include a sublicense
under Necessary Third Party IP, including without
limitation the Existing ALNYLAM In-Licenses, the
non-Breaching Party shall be fully responsible for all
royalties, milestones or other payments under such
In-Licenses reasonably allocable to such
Profit-Sharing Product in such Region(s); and
(iv) the exclusivity covenant in Section 2.13 shall not
apply to the Non-Breaching Party with respect to the
applicable Program in such Region(s).
(c) TERMINATION UPON BANKRUPTCY OF A PARTY. If this Agreement is
terminated by either Party (the "Non-Bankrupt Party")
pursuant to Section 12.2.1(b) due to the rejection of this
Agreement by or on behalf of the other Party (the "Bankrupt
Party") under Section 365 of the United States Bankruptcy
Code (the "Code"), all licenses and rights to licenses
granted under or pursuant to this Agreement by the Bankrupt
Party to the Non-Bankrupt Party are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the Code,
licenses of rights to "intellectual property" as defined
under Section 101(35A) of the Code. The Parties agree that
the Non-Bankrupt Party, as a licensee of such rights under
this Agreement, shall retain and may fully exercise all of
its rights and elections under the Code, and that upon
commencement of a bankruptcy proceeding by or against the
Bankrupt Party under the Code, the Non-Bankrupt Party shall
be entitled to a complete duplicate of, or complete access
to (as the Non-Bankrupt Party deems appropriate), any such
intellectual property and all embodiments of such
intellectual property. Such intellectual property and all
embodiments thereof shall be promptly delivered to the
Non-Bankrupt Party (i) upon any such commencement of a
bankruptcy proceeding upon written request therefor by the
Non-Bankrupt Party, unless the Bankrupt Party elects to
continue to perform all of its obligations under this
Agreement or (ii) if not delivered under (i) above, upon the
rejection of this Agreement by or on behalf of the Bankrupt
Party upon written request therefor by the Non-Bankrupt
Party. The foregoing provisions are without prejudice to any
rights the Non-Bankrupt Party may have arising under the
Code or other applicable law.
(d) For purposes of this Article 12, "Region" shall mean any of
the following regions in the Territory: (i) the United
States; (ii) the European Union, (iii) the
66
region comprised of the following countries: Australia,
Bangladesh, Bhutan, Brunei, Darussalam, Burma, Cambodia,
China (including Hong Kong), India, Indonesia, Japan, Laos,
Macao, Malaysia, Mongolia, Nepal, New Zealand, Papua New
Guinea, Pakistan, Philippines, Republic of Korea, Singapore,
Sri Lanka, Taiwan, Thailand and Vietnam; and (iv) the region
comprised of the countries of the world not included in
clauses (i), (ii) or (iii) above.
12.3 OTHER CONSEQUENCES OF TERMINATION OR THE EXERCISE OF OPT-OUT
RIGHTS.
12.3.1 OTHER CONSEQUENCES OF TERMINATION. For purposes of this Section
12.3.1, "Transferring Party" shall mean the Breaching Party or the
Opt-Out Party, as the case may be, and "Receiving Party" shall
mean the Non-Breaching Party or the Continuing Party, as the case
may be. In addition to the consequences set forth in Sections 4.3,
4.4 and 12.2 and without limiting any other legal or equitable
remedies that a Party may have, in the event of a termination
pursuant to Section 12.2 with respect to the Region(s) to which
such termination applies, or upon the exercise by a Party of its
Opt-Out Rights pursuant to Sections 4.3 or 4.4:
(a) with respect to each Ophthalmic Product that is the subject
of the material breach or the exercise of an Opt-Out Right,
the Transferring Party shall:
(i) promptly provide, or cause to be provided, to the
Receiving Party all Know-How it Controls that pertains
to the applicable Ophthalmic Product not previously
provided by it to the Receiving Party reasonably
necessary for the practice of the license rights
granted to such other Party under this Agreement;
(ii) promptly transfer, or cause to be transferred, to the
Receiving Party, subject to the completion of the
on-going Clinical Studies under subsection (c) below,
as applicable, all [**];
(iii) promptly transfer, or cause to be transferred, to the
Receiving Party any and all tangible manifestations
and embodiments of the other Party's Know-How and
other materials provided by it pursuant to this
Agreement in respect of such Ophthalmic Product
(provided that in the event of termination pursuant to
Section 12.2, such transfer shall only be to the
extent necessary to enable the Receiving Party to
exercise its rights with respect to the terminated
Region(s));
(iv) promptly assign, or cause to be assigned, to the
Receiving Party upon the Receiving Party's request,
any Third Party agreements to which the Transferring
Party is a party, to the extent such agreements relate
to the Development, Manufacture or Commercialization
of the applicable Ophthalmic Product (in the
terminated Region(s), in the event of termination
pursuant to Section 12.2);
(b) The Breaching Party will allow the Non-Breaching Party, [**]
(with respect to the terminated Region(s), in the event of
termination pursuant to Section 12.2), or if this is not
reasonably practicable, the Breaching Party will [**]. At
the option of the Non-Breaching Party, the Breaching Party
will assign to the Non-
67
Breaching Party, [**] (with respect to the terminated
Region(s), in the event of termination pursuant to Section
12.2), to the extent legally permissible; and
(c) The Transferring Party will cooperate in any reasonable
manner requested by the Receiving Party to achieve a smooth
transition of the development, manufacturing, marketing and
sales of the Ophthalmic Product to it or its licensees as
contemplated by Section 4.3, 4.4 or 12.2, as applicable,
such as transfer of its Know-How relating to Manufacturing
and assistance in connection with regulatory matters
relating to the transfer of the Ophthalmic Product.
12.4 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or
termination of this Agreement shall not relieve the Parties of any
obligation accruing prior to such expiration or termination. Any
expiration or termination of this Agreement shall be without
prejudice to the rights of either Party against the other accrued
or accruing under this Agreement prior to expiration or
termination, including without limitation the obligation to pay
royalties for Ophthalmic Products sold prior to such expiration or
termination. The provisions of Articles 9, 11, 13 and Sections
2.12.1 (as it relates to the orderly cessation of Development
activities), 10.5, 12.2.2, 12.3.1 and 12.4 shall survive any
expiration or termination of this Agreement. Except as set forth
in this Article 12, upon termination or expiration of this
Agreement all other rights and obligations cease.
13. MISCELLANEOUS
13.1 FORCE MAJEURE. Neither Party shall be held liable to the other
Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in performing any obligation under
this Agreement to the extent that such failure or delay is caused
by or results from causes beyond the reasonable control of the
affected Party, potentially including without limitation
embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, fire, floods, or other acts of God, or acts,
omissions or delays in acting by any governmental authority or the
other Party. The affected Party shall notify the other Party of
such force majeure circumstances as soon as reasonably practical,
and shall promptly undertake all reasonable efforts necessary to
cure such force majeure circumstances.
13.2 ASSIGNMENT/CHANGE OF CONTROL.
13.2.1 ASSIGNMENT. Except as provided in this Section 13.2, this
Agreement may not be assigned or otherwise transferred, nor may
any right or obligation hereunder be assigned or transferred, by
either Party without the consent of the other Party. Either Party
may, without the other Party's consent, assign this Agreement and
its rights and obligations hereunder in whole or in part to an
Affiliate. In any event, the assigning Party shall remain
responsible for the performance by its Affiliate of this Agreement
or any obligations hereunder so assigned to such Affiliate, and
such assignment shall terminate, and all rights so assigned shall
revert to the assigning Party, if and when such
68
Affiliate ceases to be an Affiliate of the assigning Party.
Furthermore, in connection with a Change of Control (as
defined below) of a Party, such Party may assign this
Agreement and its rights and obligations hereunder in whole to
the surviving entity or acquiror upon ninety (90) days' prior
written notification to the other Party. Any attempted
assignment not in accordance with this Section 13.2.1 shall be
void.
13.2.2 CHANGE OF CONTROL. In the event of a Change of Control of a
Party, such Party (the "Acquired Party") shall provide prompt
written notice to the other Party (the "Non-Acquired Party") of
the effective date of such Change of Control ("Change of Control
Notice").
13.2.2.1 For each Profit-Sharing Product [**], the Non-Acquired Party may
elect, by written notice to the Acquired Party within [**] after
receipt of the Change of Control Notice, [**], such
Profit-Sharing Product shall be deemed [**] [**] with respect to
such Royalty-Bearing Product; provided, however, that (a)
[**]such Royalty-Bearing Product shall be [**], (b) [**],
calculated as set forth in Sections 8.1.3.2 and 8.3.2.3,
respectively, in each case [**], then for the [**].
13.2.2.2 For each Profit-Sharing Product [**] as of the effective date of
the Change of Control:
(a) In the Territory outside of the United States, MERCK shall
retain the right to Develop, Manufacture and Commercialize
such Profit-Sharing Product and the obligation to pay
royalties with respect thereto to ALNYLAM pursuant to
Section 8.3.1.
(b) In the United States, the Non-Acquired Party may [**] after
receipt of the Change of Control Notice, [**]. If the
Non-Acquired Party [**], the provisions of Section 4.4.2
will apply to such Royalty-Bearing Product and [**] with
respect to such Royalty-Bearing Product; provided, however,
that (a) [**] such Royalty-Bearing Product shall be [**],
and (b) the Acquired Party shall [**]; (ii) [**] with
respect to such Royalty-Bearing Product; and (iii) royalties
on Net Sales of such Royalty-Bearing Product calculated as
set forth in Section 8.3.2.1, with the following values:
(A) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(B) Royalty Rate One shall be [**] percent ([**]%);
(C) Royalty Rate Two shall be [**] percent ([**]%);
(D) Royalty Rate Three shall be [**] percent ([**]%); and
(E) Royalty Rate Four shall be [**] percent ([**]%).
69
13.2.2.3 For each Profit-Sharing Product with respect to which an
NDA has been filed:
(a) In the Territory outside of the United States, MERCK shall
retain the right to Develop, Manufacture and Commercialize
such Profit-Sharing Product and the obligation to pay
royalties with respect thereto to ALNYLAM pursuant to
Section 8.3.1.
(b) In the United States, the Non-Acquired Party may elect, by
written notice to the Acquired Party within thirty (30) days
after receipt of the Change of Control Notice, to change the
Commercialization arrangements for such Profit-Sharing
Product such that [**]. If the Non-Acquired Party does not
so elect within such period, the Commercialization
arrangements between the Parties in existence in the United
States for such Profit-Sharing Product on the effective date
of the Change of Control shall continue.
(c) If the Non-Acquired Party elects to change the
Commercialization arrangements between the Parties within
the United States for such Profit-Sharing Product as set
forth in clause (b) above, such change will be implemented
during a transition period not to exceed [**] after the date
of such election and the Parties will cooperate to ensure
the orderly implementation of such transition. Furthermore,
the Party receiving sole Commercialization rights (the "Sole
Commercialization Party") shall pay to the other Party (the
"Divesting Party") in respect of such Profit-Sharing
Product, [**] shall be reported and paid on a quarterly
basis. Each quarterly report of [**] provided to the
Divesting Party shall include information about Net Sales of
the Profit-Sharing Product comparable to the information
specified for royalty reports in Section 8.3.8, and shall
also include information in summary form concerning the
Commercialization Expenses deducted from Net Sales of such
Profit-Sharing Product to calculate [**] during the
applicable Calendar Quarter. Quarterly reports shall be due
no later than the twenty-fifth (25th) day following the
close of each Calendar Quarter. If the Divesting Party
believes in good faith that [**] the Parties shall discuss
the Divesting Party's concerns and the Sole
Commercialization Party shall consider the Divesting Party's
concerns in good faith.
13.2.2.4 For purposes of this Section 13.2.2, a "CHANGE OF
CONTROL" of a Party shall be deemed to occur if such Party is
involved in a merger, reorganization or consolidation in which
its shareholders immediately prior to such transaction would hold
fifty percent (50%) or less of the securities or other ownership
or voting interests representing the equity of the surviving
entity immediately after such merger, reorganization or
consolidation, or if there is a sale of all or substantially all
of such Party's assets or business relating to this Agreement, or
if a "Significant Pharmaceutical Company" (as defined below)
effectively acquires control of the management and policies of
such Party. A "Significant Pharmaceutical Company" is a
pharmaceutical company, biotechnology company, or group of such
companies acting in concert, with annual sales of human
pharmaceutical products greater than [**] U.S. dollars ($[**]).
70
13.3 SEVERABILITY. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby, unless the absence of the invalidated provision(s)
adversely affects the substantive rights of the Parties. The Parties
shall in such an instance use their best efforts to replace the
invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, implement the
purposes of this Agreement.
13.4 NOTICES. All notices which are required or permitted hereunder shall
be in writing and sufficient if delivered personally, sent by
facsimile (and promptly confirmed by personal delivery, registered
or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed
as follows:
If to ALNYLAM, to: ALNYLAM PHARMACEUTICALS, INC.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
and: FABER DAEUFER & XXXXXXXXX, P.C.
Xxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Sumy Daeufer
Facsimile No.: (000) 000-0000
If to MERCK, to: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Office of Secretary
Facsimile No.: (000) 000-0000
and: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Chief Licensing Officer
Facsimile: (000) 000-0000
or to such other address as the Party to whom notice is to be given
may have furnished to the other Party in writing in accordance
herewith. Any such notice shall be deemed to have been given: (a)
when delivered if personally delivered or sent by facsimile on a
business day (or if delivered or sent on a non-business day, then on
the next business day); (b) on receipt if sent by
nationally-recognized overnight courier; and/or (c) on receipt if
sent by mail.
71
13.5 APPLICABLE LAW. The Agreement shall be governed by and construed
in accordance with the laws of the State of New York and the
patent laws of the United States without reference to any rules of
conflict of laws or renvoi.
13.6 DISPUTE RESOLUTION.
13.6.1 DISPUTES. The Parties shall negotiate in good faith and use
reasonable efforts to settle any dispute, controversy or claim
arising from, or related to, this Agreement or to the breach
hereof (collectively, "Dispute"). In particular, the CEO of
ALNYLAM and the Executive Vice President of Worldwide Basic
Research for MERCK shall attempt to resolve all Disputes. In the
event that the CEO and the Executive Vice President cannot reach
an agreement regarding a Dispute, and a Party wishes to pursue the
matter, each such Dispute that is not an "Excluded Claim" shall be
finally resolved by binding arbitration in accordance with the
Commercial Arbitration Rules and Supplementary Procedures for
Large Complex Disputes of the American Arbitration Association
("AAA") and Section 13.6.2 below, and judgment on the arbitration
award may be entered in any court having jurisdiction thereof. As
used in this Section 13.6, the term "Excluded Claim" shall mean a
dispute that concerns (a) the validity or infringement of a
patent, trademark or copyright, or (b) any antitrust,
anti-monopoly or competition law or regulation, whether or not
statutory.
13.6.2 ARBITRATION. The arbitration shall be conducted by a panel of
three (3) persons experienced in the pharmaceutical business who
are independent of both Parties and neutral with respect to the
Dispute presented for arbitration. Within thirty (30) days after
initiation of arbitration, each Party shall select one person to
act as arbitrator and the two Party-selected arbitrators shall
select a third arbitrator within thirty (30) days of their
appointment. If the arbitrators selected by the Parties are unable
or fail to agree upon the third arbitrator, the third arbitrator
shall be appointed by the AAA. The place of arbitration shall be
New York, New York, and all proceedings and communications shall
be in English.
Either Party may apply to the arbitrators for interim injunctive
relief until the arbitration award is rendered or the controversy
is otherwise resolved. Either Party also may, without waiving any
remedy under this Agreement, seek from any court having
jurisdiction any injunctive or provisional relief necessary to
protect the rights or property of that Party pending the
arbitration award. The arbitrators shall have no authority to
award punitive or any other type of damages not measured by a
Party's compensatory damages. Each Party shall bear its own costs
and expenses and attorneys' fees, and the Party that does not
prevail in the arbitration proceeding shall pay the arbitrators'
and any administrative fees of arbitration. Except to the extent
necessary to confirm an award or as may be required by law,
neither a Party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written
consent of both Parties. In no event shall an arbitration be
initiated after the date when commencement of a legal or equitable
proceeding based on the dispute, controversy or claim would be
barred by the applicable New York statute of limitations.
72
(a) The Parties agree that, in the event of a Dispute over the
nature or quality of performance under this Agreement, neither
Party may terminate this Agreement until final resolution of
the Dispute through arbitration or other judicial
determination. The Parties further agree that any payments
made pursuant to this Agreement pending resolution of the
Dispute shall be refunded promptly if an arbitrator or court
determines that such payments are not due.
(b) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required to
be performed by a Party must be completed within a reasonable
time period following the final decision of the arbitrator.
(c) The Parties hereby agree that any monetary payment to be made
by a Party pursuant to a decision of the arbitrator shall be
made in United States dollars, free of any tax or other
deduction. The Parties further agree that the decision of the
arbitrator shall be the sole, exclusive and binding remedy
between them regarding determination of the matters presented
to the arbitrator.
13.7 ENTIRE AGREEMENT; AMENDMENTS. The Agreement contains the entire
understanding of the Parties with respect to the Ophthalmic
Collaboration and licenses granted hereunder. All express or implied
agreements and understandings, either oral or written, with regard
to the Ophthalmic Collaboration and the licenses granted hereunder
are superseded by the terms of this Agreement. This Agreement
(including the Schedules hereto) may be amended, or any term hereof
modified, only by a written instrument duly-executed by authorized
representatives of both Parties hereto.
13.8 HEADINGS. The captions to the Articles and Sections hereof are not a
part of this Agreement, but are merely for convenience to assist in
locating and reading the several Articles and Sections hereof.
13.9 INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and
MERCK shall be independent contractors and that the relationship
between ALNYLAM and MERCK shall not constitute a partnership, joint
venture or agency. ALNYLAM shall not have the authority to make any
statements, representations or commitments of any kind, or to take
any action, which shall be binding on MERCK, without the prior
written consent of MERCK, and MERCK shall not have the authority to
make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on ALNYLAM without the
prior written consent of ALNYLAM.
13.10 WAIVER. The waiver by either Party hereto of any right hereunder, or
of the failure of the other Party 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 such other Party,
whether of a similar nature or otherwise.
13.11 CUMULATIVE REMEDIES. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to in this Agreement or
otherwise available under law.
73
13.12 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity
to consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the
drafting Party shall not apply.
13.13 COUNTERPARTS. The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.14 LIMITATION OF LIABILITY. NEITHER PARTY HERETO WILL BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT
OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING
LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES, EXCEPT AS A
RESULT OF A PARTY'S WILLFUL MISCONDUCT OR A MATERIAL BREACH OF THE
CONFIDENTIALITY AND NON-USE OBLIGATIONS IN ARTICLE 9. NOTHING IN
THIS SECTION 13.14 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.
13.15 BINDING EFFECT. As of the Effective Date, this Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective permitted successors and permitted assigns.
13.16 NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated
herein, no Third Party, including any employee of any Party to this
Agreement, shall have or acquire any rights by reason of this
Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
74
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
MERCK & CO., INC. ALNYLAM PHARMACEUTICALS, INC.
BY: /s/Xxxxxxx X. Xxxxxxxxx BY: /s/ Xxxx Xxxxxxxxxx
--------------------------------- ----------------------------
NAME: Xxxxxxx X. Xxxxxxxxx NAME: Xxxx Xxxxxxxxxx
------------------------------ ------------------------
TITLE: Chairman, President and CEO TITLE: President & CEO
------------------------------ -----------------------
DATE: 6/27/04 DATE: 6/29/04
---------------------------- ------------------------
75
SCHEDULE 1.6
ALNYLAM PATENT RIGHTS
1.6.1 [**]
[**]
1.6.2 [**]
[**]
76
TABLE 1.6.1
PATENTS AND PATENT APPLICATIONS OWNED BY ALNYLAM
OR LICENSED BY ALNYLAM FROM THIRD PARTIES OTHER THAN ISIS PHARMACEUTICALS, INC.
Filing
Case No. Date Country Serial No. Status Title
-------- ---- ------- ---------- ------ -----
[**] [**] [**] [**] [**] [**]
77
SCHEDULE 1.30
EXISTING ALNYLAM IN-LICENSES
Existing ALNYLAM In-Licenses shall include the following Third Party agreements:
1. [**].
2. [**].
78
SCHEDULE 2.2
VEGF PROGRAM WORKPLAN
The work plan for the VEGF program [**]
[**]
[**]
[**]
[**]
[**]
[**]
VEGF Program Budget Overview (TO END of [**])
Full-time Merck Employees: [**] FTE
Full-Time Alnylam Employees: [**] FTE
TOTAL VEGF Program FTE: [**] FTE
Biology (Merck) [**] FTE
[**]
[**]
Biology (Alnylam) [**] FTE
[**]
[**]
[**]
Chemistry (Alnylam) [**] FTE
[**]
[**]
[**]
[**]
Program Management (Alnylam) [**] FTE
Program Management (Merck) [**] FTE
79
External costs: $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
Consultants
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**] [Terms to be
driven by workplan]
[**] $[**]
These figures are current estimates of costs through calendar year [**] based on
a preliminary work plan. FTE may be added at a later date as needed [**].
Separate budget proposals will cover [**].
80
Other Ocular Programs
[**]
[**]
81
VEGF Research Timeline
[Graphic showing research timeline.]
82
SCHEDULE 2.3
OPHTHALMIC PRODUCTS
ALNYLAM: The ALNYLAM duplexes numbered [**], inclusive.
MERCK: None.
83
SCHEDULE 5.5
U.S. CO-PROMOTION
AGREEMENT TERMS
Commercialization:
- ALNYLAM shall co-promote the Profit-Sharing Product in the United
States by [**]. The costs of ALNYLAM's co-promotion efforts
(consistent with the Commercialization Plan) shall be included in
Commercialization Expenses for purposes of calculating U.S.
Operating Profit/Loss.
- ALNYLAM shall [**] to support such Profit-Sharing Product in the
United States as set forth in the definitive Co-Promotion Agreement
relating to such Profit-Sharing Product that is executed by the
Parties pursuant to Section 5.5 of this Agreement. In the event that
[**] at the time of launch of such Profit-Sharing Product in the
United States, the Parties[**] following the launch of such
Profit-Sharing Product in the United States. MERCK will [**],
ALNYLAM shall [**].
- ALNYLAM's U.S. Co-Promotion activity shall be fully integrated into
MERCK's U.S. promotion effort for such Profit-Sharing Product.
- The Co-Promotion Agreement will also contain, without limitation,
provisions with respect to the following matters: [**].
84
SCHEDULE 10
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
Section 10.2.3:
[**]
[**]
85
