RESEARCH AND DEVELOPMENT AGREEMENT
EFFECTIVE DATE: April 10, 1995
PARTIES:
Cistron Biotechnology, Inc.
Box 3004
10 Bloomfield Avenue
Pine Brook, New Jersey, USA 07058 ("CISTRON")
Research and Diagnostic Systems, Inc.
614 McKinley Place NE
Minneapolis, Minnesota, USA 55413 ("R&D")
RECITALS:
A. CISTRON has an exclusive, worldwide license from the New England
Medical Center Hospitals, Inc., Tufts University, Massachusetts Institute of
Technology and Wellesley College (the "Institutions") to make, use and sell,
and to sublicense to others products utilizing the human interleukin-1 beta
("IL-1b"), which is the subject of patents owned by the Institutions, and to
make, use and sell products incorporating the inventions claimed in such
patents and related technology (the "License Agreement").
B. CISTRON has begun research and development of a chair-side,
interleukin-1 beta ("IL-1b") assay for the detection and monitoring of
periodontal disease in humans (the "DENTAL KIT") and other new research
products described in the following agreement.
C. R&D desires to support CISTRON's development of the DENTAL KIT and
the new research products in exchange for co-exclusive marketing rights with
CISTRON pursuant to the terms and provisions of the following agreement.
AGREEMENT:
In consideration of the rights, obligations and mutual premises set forth
herein, CISTRON and R&D, intending to be bound thereby, agree as follows:
Article 1. Definitions
The following terms as used in this Agreement shall have the following
meanings:
1.1 Territory. "TERRITORY" shall mean the dental diagnostic market
worldwide as to the DENTAL KIT and the research market worldwide as to the NEW
RESEARCH PRODUCTS.
1.2 Dental Kit. "DENTAL KIT" shall mean a single use, chair-side,
semi-quantitative EIA assay to measure IL-1b in human gingival crevicular
fluid to aid in the detection and/or monitoring of periodontal disease by
dentists and periodontists.
1.3 New Research Products. "NEW RESEARCH PRODUCTS" shall mean newly
identified cytokines, peptides, mutants and/or antibodies thereto, or other
products for the research market developed under the terms of this Agreement.
1.4 IL-1b Patents. "IL-1b PATENTS" shall mean all United States and
foreign patents and patent applications and any divisions, continuations,
continuations in part, reissues, reexaminations, renewals and extensions
thereof, and all pending applications therefor (a) which are set forth on
Appendix A, or (b) which claim inventions that are related to IL-1b or
derivatives, mutants, variants, fragments, antibodies, assays or chemical
analogs thereof, and which are conceived or reduced to practice in whole or in
part by (i) employees, agents or contractors of CISTRON during the term of this
Agreement and/or (ii) which are licensed to CISTRON, and/or (c) which are
derived in whole or in part from material, information or data proprietary to
CISTRON, provided by CISTRON to R&D and reduced to writing by either party
within thirty (30) days of transfer and the receipt of which is acknowledged
in writing by R&D.
1.5 Confidential Information. "CONFIDENTIAL INFORMATION" shall mean
any proprietary information or materials belonging to the disclosing party
(whether or not patentable) including, but not limited to, formulations,
techniques, methodology, equipment, data, reports, know-how, sources of
supply, patent positioning, consultants and business plans including any
negative development which are communicated to, learned by, or otherwise
acquired by the party receiving such information or materials during or in the
course of this Agreement.
Notwithstanding the foregoing, CONFIDENTIAL INFORMATION shall not include any
information which (a) is or becomes part of the public domain through no act or
omission on the part of the receiving party, (b) is disclosed to a third party
by the disclosing party without restriction on such third party, (c) is in the
receiving party's possession at or prior to the time of disclosure under this
Agreement and the receiving party is under no prior obligation of
confidentiality with respect thereto, (d) is disclosed to the receiving party
by a third party having no obligation of confidentiality with respect thereto,
(e) is independently developed by the receiving party, or (f) is released from
confidential treatment by written consent of the disclosing party.
Article 2. Funded Research and Development Program
2.1 Marketing Rights. CISTRON has initiated research and development of
the DENTAL KIT and certain NEW RESEARCH PRODUCTS. R&D has agreed to support
the research and development of the DENTAL KIT and NEW RESEARCH PRODUCTS in
return for co-exclusive marketing rights with CISTRON in the TERRITORY. For
purposes of this Agreement, "co-exclusive marketing right" shall mean that
CISTRON grants to R&D a sole exclusive license or sublicense, as applicable,
and retains for itself the right, to market the products, but CISTRON shall not
grant any third party any rights to the DENTAL KIT or the NEW RESEARCH
PRODUCTS.
2.2 Research and Development Payments.
a. Calculation. R&D will pay CISTRON an aggregate of One Million
Dollars ($1,000,000) (the "Research Funds") towards the research and
development of the DENTAL KIT according to the preliminary research plan
attached as Appendix B and the NEW RESEARCH PRODUCTS identified in
Appendix B and other NEW RESEARCH PRODUCTS approved by R&D in writing from
time to time. CISTRON and R&D agree to negotiate in good faith to develop
a detailed research plan for the DENTAL KIT and the NEW RESEARCH PRODUCTS
identified on Appendix B and other potential NEW RESEARCH PRODUCTS. R&D
shall have the right to redirect the use of the Research Funds among the
DENTAL KIT and NEW RESEARCH PRODUCTS projects if results of any data or
research is not progressing in a satisfactory or successful manner, as
defined in accordance with the research plan set forth in Appendix B, as
amended from time to time by the parties.
b. Payment. The Research Funds shall be payable in ten (10)
calendar quarterly payments in the amount of $100,000 each, starting July
1, 1995. These quarterly payments are non-refundable and shall be due on
the first day of each calendar quarter regardless of scientific progress.
The Research Funds are not subject to set-off if R&D has any claim against
CISTRON for breach of this Agreement or for any other reason. If R&D
defaults in the payment of any quarterly Research Fund payment and such
payment remains unpaid ten (10) business days after delivery of written
notice of nonpayment by CISTRON to R&D, the remaining Research Funds shall
become immediately due and payable.
2.3 Reports. CISTRON will provide R&D with calendar quarterly written
progress reports on the development of the DENTAL KIT and NEW RESEARCH
PRODUCTS. Such reports shall be delivered within thirty (30) days after the
end of each calendar quarter during the term of this Agreement. Such progress
reports shall be considered Confidential Information and subject to the
confidentiality provisions of Section 5.2.
2.4 License. Upon completion of the preliminary research plan set forth
in Appendix B and upon receipt of the full Research Funds, R&D shall
automatically receive a fully paid right and license to exploit the inventions
and technology covered by the claims in IL-1b PATENTS to market the DENTAL KIT
and the NEW RESEARCH PRODUCTS in the Territory co-exclusively with CISTRON for
the term of this Agreement. R&D acknowledges and agrees that such right and
license may be limited if CISTRON's right to grant such right and license is
limited; provided, however, CISTRON will grant such right and license to the
fullest extent of its right to do so. CISTRON agrees to sell to R&D its
requirements of the DENTAL KIT and the NEW RESEARCH PRODUCTS under the terms
of a supply agreement to be negotiated between the parties in good faith at
such time as quantities and manufacturing costs are determined, but in no event
shall such manufacturing costs for the DENTAL KIT be less than CISTRON's fully
absorbed manufactured cost plus twenty percent (20%). Such supply agreement
shall contain similar provisions as found in the Supply Agreement between the
parties executed on even date herewith.
2.5 DENTAL KIT Patent Rights. Notwithstanding any of the provisions
contained in this Agreement, R&D understands and agrees that CISTRON will
retain ownership of all of its patent rights relating to the DENTAL KIT and/or
NEW RESEARCH PRODUCTS as may presently or hereafter exist.
2.6 FDA Approval. Upon completion of the research plan for the DENTAL
KIT or for any NEW RESEARCH PRODUCT, either party may delivery written notice
to the other party of its desire to file an application with, and seek approval
of, the U.S. Food and Drug Administration or the equivalent United States
regulatory body (the "FDA") for the manufacture and sale of the DENTAL KIT as
a diagnostic product or of a NEW RESEARCH PRODUCT. The other party shall have
a period of one hundred twenty (120) days to elect whether or not to
participate in such application. Such election shall be made by delivery of
written notice to the first party prior to the expiration of the one hundred
twenty (120) day period. If the party elects to participate in such
application, each party shall share equally in the preparation and filing of
such application with the FDA. If the other party elects not to participate
in such application, such party shall loose its co-exclusive rights under this
Agreement and the first party shall have the full, exclusive rights to
manufacture and market the affected product.
Article 3. Warranties
3.1 Corporate Authority. CISTRON and R&D each represents and warrants
to the other that:
a. it is a corporation, duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
b. it has taken all necessary action on its part that may be
required under the laws of its state of incorporation and under its
certificate of incorporation and its bylaws to authorize the execution,
delivery and performance of this Agreement; and
c. this Agreement constitutes the valid and legally binding
obligation of such party, enforceable against it in accordance with its
terms.
3.2 License Agreement. CISTRON represents and warrants to R&D that it
has the exclusive, worldwide license from the Institutions to make, use and
sell, and to sublicense to others, products utilizing the IL-1b and to make,
use and sell products incorporating the inventions claimed in the IL-1b PATENTS
and related technology under the terms of the License Agreement.
3.3 DISCLAIMER OF WARRANTIES. THE WARRANTIES SET FORTH IN
THIS ARTICLE 3 ARE THE ONLY WARRANTIES MADE BY THE PARTIES AND
ARE EXPRESSLY IN LIEU OF ANY AND ALL OTHER WARRANTIES EXPRESSED
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY AND ALL WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY
DISTRIBUTEE OF THE OTHER PARTY OR ANYONE ELSE IN PRIVITY WITH THE
OTHER PARTY FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
REGARDLESS OF WHETHER OR NOT THE FIRST PARTY HAS BEEN APPRISED OF
THE POSSIBILITY THEREOF.
Article 4. Term and Termination
4.1 Term. Unless earlier terminated pursuant to paragraphs 4.2, 4.3 or
4.4, the provisions of this Agreement will expire upon the expiration of the
last to expire of the IL-1b PATENTS. For purposes of this paragraph, "expire"
shall mean expiration, abandonment, cancellation, disclaimer, award to another
in an interference proceeding, or declaration of invalidity or unenforceability
by a court or other authority of competent jurisdiction from which no further
appeal has or can be taken.
4.2 Termination For Breach. Upon material breach of this Agreement by
either party and in the event the breach is not cured within forty-five (45)
days after delivery of written notice to the defaulting party by the other
party, in addition to any other remedy it may have, the notifying party at its
sole option may terminate this Agreement by delivery of an additional
termination notice to the other party at the end of such forty-five (45) day
period.
4.3 Insolvency. This Agreement may be terminated by one party if the
other party becomes insolvent, is unable to pay its debts as they mature, makes
an assignment for the benefit of its creditors, files a petition for protection
under any bankruptcy law, has an involuntary petition for bankruptcy filed
against it, or applies for the appointment of a receiver or trustee for
substantially all of its property or assets or permits the appointment of any
such receiver or trustee who is not discharged within a period of thirty (30)
days after such appointment.
4.4 Infringement by DENTAL KIT. The portions of this Agreement
pertaining to the DENTAL KIT may be terminated by either party upon learning
of the existence of a third party patent which, in the opinion of competent
legal counsel, is infringed by the sale of the DENTAL KIT.
4.5 Post Termination Rights. Upon any termination of this Agreement, R&D
will be entitled to use and sell any completed inventory of DENTAL KITS and/or
NEW RESEARCH PRODUCTS, so long as R&D pays to CISTRON the amount applicable to
the purchase of such inventory in accordance with the terms and conditions of
the negotiated supply agreement. The above described rights and obligations
of R&D and the rights and obligations of the parties under Sections 5.2 and 6.2
of this Agreement are the only rights and obligations of either party which
shall survive termination of this Agreement.
4.6 Notification of Breach of License Agreement. CISTRON shall notify
R&D immediately if Cistron receives any notice of breach or termination of
CISTRON's license from the Institutions. In such case if CISTRON cannot or
will not cure such breach, CISTRON shall allow R&D to cure such breach and
deduct the cost thereof from the payments due to CISTRON under Article 2 of
this Agreement.
Article 5. Publicity and Confidentiality
5.1 Public Disclosure. The parties shall mutually agree upon the wording
of the initial press release regarding this Agreement. Neither party shall use
the name of the other party in any form of advertising or promotion, without
the express prior written approval of the other party.
5.2 Confidentiality.
a. Obligations. Except as provided in Section 5.2.b. below, for a
period of five (5) years from the termination date of this Agreement, the
receiving party will maintain any and all of the CONFIDENTIAL INFORMATION
received from the other party, in confidence, will not use same for its
own benefit except as expressly provided in this Agreement, and will not
release or disclose any tangible or intangible component thereof to any
third party without first receiving the prior written consent of the
disclosing party to said release or disclosure.
b. Exceptions. The provisions of Section 5.2.a. notwithstanding, a
receiving party may disclose CONFIDENTIAL INFORMATION of the other party
to its own affiliates or in the event of a disclosure compelled by a court
of competent jurisdiction. In addition, a receiving party may disclose
CONFIDENTIAL INFORMATION of the other party in confidence to any third
party who has a need to know such CONFIDENTIAL INFORMATION for the purpose
of this Agreement; provided that the receiving party will first notify the
other party of the identity of such third party and that such disclosure
will be made under the provisions of a written confidential disclosure
agreement which is binding upon such third party to the same obligations
of confidentiality under which the receiving party is bound to the
disclosing party by the terms of this Agreement. A receiving party need
not notify the disclosing party before disclosing any CONFIDENTIAL
INFORMATION of the disclosing party to any affiliate of the receiving
party.
Article 6. General Provisions
6.1 Relationship. The relationship between CISTRON and R&D is that of
independent contractors. CISTRON and R&D are not joint venturers, partners,
principal and agent, master and servant, employer and employee, and have no
relationship other than as independent contractors for the purpose of this
Agreement. CISTRON will have no power to bind or obligate R&D in any manner.
Likewise, R&D will have no power to bind or obligate CISTRON in any manner.
6.2 Arbitration.
a. Submission of Dispute. Any dispute, claim or controversy
arising out of or relating to this Agreement (a "Dispute") shall be
resolved by binding arbitration conducted pursuant to the provisions of
this Agreement and the commercial arbitration rules of the American
Arbitration Association ("AAA"), unless such AAA rules are inconsistent
with the provisions of this Agreement. Even though the arbitrator(s)
shall apply the AAA rules, the arbitration shall not be conducted by the
AAA. Either party may commence arbitration proceedings by delivery of
written notice to the other party describing the Dispute ("Arbitration
Notice").
b. Appointment of Arbitrator(s). The case shall be submitted to a
single arbitrator who shall be a retired state or federal judge or an
attorney who has practiced business litigation for at least ten (10)
years. Each party shall submit a list of three (3) arbitrators to the
other party within ten (10) days after delivery of the Arbitration Notice.
From the combined list, the parties shall mutually agree on the
arbitrator. Should the parties be unable to agree on the choice of an
arbitrator within thirty (30) days after delivery of the Arbitration
Notice, the arbitration shall be conducted by a panel of three (3)
arbitrators. Each party shall choose one arbitrator within ten (10) after
the expiration of the above thirty (30) day period and the two selected
shall choose a third arbitrator within five (5) days after their
appointment.
d. Location of Arbitration. The site of the arbitration shall be
in the State of New York. The exact location within the State of New York
shall be designated by the arbitrator(s).
e. Interim Remedies. Either party may apply to any court having
jurisdiction hereof and seek injunctive relief so as to maintain the
status quo until such time as the arbitration award is rendered or the
Dispute is otherwise resolved.
f. Costs and Fees. Each party shall be responsible for its own
costs and expenses of the arbitration and the costs and fees of the
arbitrator(s) shall be borne equally between the parties, unless the
arbitrator(s) indicate otherwise in the award.
g. Binding Effect. The decision and award rendered by the
arbitrator will be final and binding. Judgment upon the award may be
entered in any court having jurisdiction thereof.
6.3 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter thereof and
supersedes all prior oral or written agreements to this respect. This
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of each party.
6.4 Modifications and Waivers. No purported amendment, modification or
waiver of any provision hereof shall be binding unless set forth in a writing
signed by both parties (in the case of amendments and modifications) or by the
party to be charged thereby (in the case of waivers). Any waiver shall be
limited to the circumstance or event specifically referenced in the written
waiver document and shall not be deemed a waiver of any other term of this
Agreement or of the same circumstance or event upon any recurrence thereof.
6.5 Governing Law. This Agreement will be construed and enforced in
accordance with the laws of the State of New York without reference to its
choice of law principles.
5.6 Headings. The headings in this Agreement have been inserted for the
convenience of the reference only and are not intended to limit or expand on
the meaning of the language contained in the particular article or section.
5.7 Notices. Any notice or other communication required or permitted
under this Agreement shall be made in writing and shall be deemed to have been
delivered upon the earlier of (i) when received, if personally delivered,
(ii) the next business day after delivery if delivered by telecopy or telex,
(iii) the next business day after placement with a reputable overnight delivery
service for next day delivery, or (iv) five (5) business days after depositing
in the U.S. mails for delivery by certified or registered mail, return receipt
requested, postage prepaid and addressed to the appropriate party at the
following address:
To R&D: R&D Systems, Inc.
614 McKinley Place NE
Minneapolis, Minnesota USA 55413
ATTN: Roger C. Lucas, Ph.D.
or Senior Executive Officer/Biotechnology
Copy to: Fredrikson & Byron, P.A.
1100 International Center
900 Second Avenue South
Minneapolis, Minnesota USA 55402
ATTN: Timothy M. Heaney, Esq.
To CISTRON: Cistron Biotechnology, Inc.
Box 2004
10 Bloomfield Avenue
Pine Brook, New Jersey USA 07058
ATTN: Bruce C. Galton
Copy to: Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177-0077
ATTN: Seth I. Truwit, Esq.
Addresses may be changed by delivery of notice to the other parties pursuant to
the terms of this paragraph. Any notice of change of address shall not be
effective until actually received by the addressee.
6.8 Injunctive Relief. The parties acknowledge and agree that a breach
of any of the terms and conditions of this Agreement, including the provisions
relating to confidentiality, may cause irreparable injury to the non-breaching
party and, according, that the prevailing party may seek and obtain in any
arbitration, in addition to damages, any and all available equitable remedies,
including, without limitation, specific performance and injunctive relief.
6.9 Force Majeure. Each party hereto will be excused from performance
for failure or delay in meeting any obligations hereunder due to Acts of God,
acts of war, fire, flood, embargo, riots or revolution, provided that such
excused performance will last only for so long as that party's performance is
reasonably prevented by such force majeure. The party affected by such force
majeure is to use its best efforts to mitigate any damage thus occasioned.
6.10 Severability. The provisions of this Agreement are severable and in
the event that any provision of this Agreement shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall not in any
way affect the validity or enforceability of the remaining provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Accepted and Agreed to:
CISTRON BIOTECHNOLOGY, INC. RESEARCH AND DIAGNOSTIC
SYSTEMS, INC.
By By
------------------ ---------------------
Bruce C. Galton Roger C. Lucas, Ph.D.
TITLE: President & COO TITLE: Executive Vice President
APPENDIX A
U.S. Patent No. 4,762,914
U.S. Patent No. 4,766,069
U.S. Patent No. 5,001,057
U.S. Patent No. 5,077,219
Foreign Equivalents, including
EPO Publication No. 0161901B1
APPENDIX B
I. IL-1b LEVELS USED AS AN INDICATOR OF PERIODONTITIS
A. Aim
The aim of this study is twofold. First, to assess the feasibility
of using Interleukin-1 beta (IL-1b) levels as a predictor of
periodontal disease activity and secondly, to develop a semi-
quantitative, chair-side assay for quick and easy measurement of
IL-1b.
B. Background
Previous studies have suggested that IL-1b is present at high levels
in gingival crevicular fluid (GCF) from subjects with periodontal
disease. These studies included a Phase I SBIR grant conducted by
Cistron. This cross-sectional study involved ninety-five (95)
subjects that were evaluated clinically using standard periodontal
parameters. The mean IL-1b level in subjects with periodontitis was
greater than 568pg/mL while the mean level in-health subjects and/or
those with gingivitis was less than 188pg/mL. However, when
in-health subjects were analyzed alone (without subjects with
gingivitis) the mean dropped to 70pg/mL.
Clearly, this study supported the involvement of IL-1b in
periodontitis, but by its cross-sectional design, could not give data
to support the possible use of IL-1b as a predictor. To accomplish
this task, a longitudinal study is needed.
C. Significance
It is estimated that 70% of American adults are affected by some
degree of periodontal disease. Approximately $4 billion was spent in
the U.S. during 1990 for periodontal disease diagnosis and treatment
(Biotechnology News, Vol. 12, No. 24). Current clinical examination
parameters and radiographic evidence only provide subjective insight
into the current activity status of a patient's condition. In our
Phase I SBIR study, mean IL-1b levels were shown to correlate with
clinical diagnosis of periodontitis, gingivitis and in-health. We
hypothesize that IL-1b may mediate, at least in part, the breakdown
of supporting periodontal tissues, including bone. Therefore, a
rapid, in-office assay which measures IL-1b levels in GCF may provide
the practitioner with a valuable tool to aid in the diagnosis of
active disease and to monitor the relative success of site treatment.
D. Experimental Design and Methods
To accomplish the twofold aim as previously discussed, we propose a
three phase study.
Phase I: a longitudinal study to be conducted at one geographical
site, employing 100 subjects with established periodontal disease.
Standard clinical indices will be compared to IL-1b levels found in
GCF collected at the following time intervals: 0, 4, 8 and 12
months. The data from Phase I will be analyzed and the merits of
using IL-1b levels to predict periodontitis will be evaluated.
Phase II: upon the successful completion of Phase I, a second phase
of this study will be started. The main purpose will be to expand
the patient population pool. To accomplish this task, two additional
geographical sites will be added to the study bringing the total
patient population to 300. The same clinical indices that were
employed in Phase I will be used in Phase II. All indices collected
will be compared to IL-1b levels to determine the possible
correlation between IL-1b levels and disease status. If a
correlation exists and IL-1b is a predictor of periodontal disease,
then the resultant data from Phases I and II would be used to gain
FDA approval for an in vitro diagnostic kit.
Phase III: to complete this study in a timely manner, Phase III will
be initiated concurrently with Phase II. The work performed in Phase
III will be dedicated to the development of a user-friendly semi-
quantitative assay system. In fact, much of the success of this
project will be based on acceptance of the assay system by the
practitioner. The envisioned final assay system, therefore, will
have to be a) easy to use with a minimal number of manipulations,
b) completely self contained, and c) able to clearly determine
in-health from disease state.
E. Conclusion
There is a clear window of opportunity to supply the periodontal
market with an in vitro diagnostic assay. This is a large market
that requires an objective quantitative test to determine the status
of periodontal disease activity. To date, there is a void in this
area. It is believed that if a user-friendly, chair-side assay as
previously described was made available to this market, it would be
warmly accepted.
II. NEW RESEARCH PRODUCTS
A. Enzymes
Cistron will develop enzyme(s), antibodies to such enzyme(s), and an
EIA kit to measure such enzyme(s). After development, Cistron will
manufacture the enzyme products for R&D to sell to the research
market on a co-exclusive basis with Cistron under such terms and
conditions as mutually agreed upon.
B. Culture Media Additive
Cistron will develop a new cytokine which may be useful as an
additive to culture medial.