EXHIBIT 10.281
AMENDMENT TO AGREEMENT
AMONG
LIGAND PHARMACEUTICALS INCORPORATED,
SERAGEN, INC.
AND
ELI LILLY & COMPANY
THIS AMENDMENT TO AGREEMENT (the "AMENDMENT") is made and entered into on
this 8th day of November, 2004 by and among Ligand Pharmaceuticals Incorporated
("LIGAND"), Seragen, Inc. ("SERAGEN") and Eli Lilly & Company ("LILLY").
WHEREAS, Ligand, Seragen and Lilly are parties to that certain Agreement
dated as of May 11, 1998 (the "AGREEMENT"); and
WHEREAS, Ligand, Seragen and Lilly wish to amend the Agreement to provide
for options on the part of Ligand or Lilly, as the case may be, to buy-down
Ligand's royalty obligations on Net Sales in the United States as set forth
herein.
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment and in the Agreement, and pursuant to Section 13(f)
of the Agreement, Ligand, Seragen and Lilly do hereby amend the Agreement, as
follows:
1. Section 8(a) of the Agreement is hereby amended by adding the following
immediately after the royalty table and related asterisk:
"Notwithstanding the foregoing, Ligand or Lilly, as the case may
be, shall have the options set forth below to require a royalty reduction
with respect to Net Sales in the United States:
(i) During the period beginning January 1, 2005 and ending
on January 7, 2005, Ligand shall have the option to require a royalty
reduction with respect to Net Sales in the United States (the "First
Option"). If Ligand exercises the First Option, the following shall occur:
(A) Ligand shall pay to Lilly the sum of twenty million
dollars ($20,000,000) in immediately available funds;
(B) Ligand shall be relieved of the obligation to pay
royalties on Net Sales in the U.S. that occur during the calendar year
2005; and
(C) Ligand's royalty obligation with respect to Net
Sales in the U.S. for Net Sales occurring after December 31, 2005 until the
end of the Royalty Term shall be as follows:
Annual Net Sales ($M) Royalty Rate (% of Net Sales)
- --------------------- -----------------------------
0-23 0
>23-50 20
>50-72 15
>72 10
For the avoidance of doubt, each percentage set forth in the table above
applies only to the portion of calendar year Net Sales shown in the
corresponding left column.
Ligand shall give any notice of its intent to exercise the First Option to
Lilly in writing within the option period provided above. Payment to Lilly
from Ligand shall be made within five business days of delivery of notice
as determined pursuant to Section 13(c) of the Agreement, with a copy to
Randy Loser, Assistant General Counsel, Eli Lilly and Company, fax (317)
276-2763. If Ligand fails to timely exercise the First Option, the First
Option shall expire.
(ii) During the period beginning April 1, 2005 and ending on
April 7, 2005, Ligand shall have the option to require a further royalty
reduction with respect to Net Sales in the United States (the "Second
Option"). If Ligand exercises the Second Option, the following shall occur:
(A) Ligand shall pay to Lilly the sum of thirteen
million dollars ($13,000,000) in immediately available funds;
(B) Ligand shall be relieved of the obligation to pay
royalties on Net Sales in the U.S. that occur during the calendar year
2006; and
(C) Ligand's royalty obligation with respect to Net
Sales in the U.S. for Net Sales occurring after December 31, 2006 until the
end of the Royalty Term shall be as follows:
Annual Net Sales ($M) Royalty Rate (% of Net Sales)
- --------------------- -----------------------------
0-38 0
>38-50 20
>50-72 15
>72 10
For the avoidance of doubt, each percentage set forth in the table above
applies only to the portion of calendar year Net Sales shown in the
corresponding left column.
Ligand shall give any notice of its intent to exercise the Second Option to
Lilly in writing within the option period provided above. Payment to Lilly
from Ligand shall be made within five business days of delivery of notice
as determined pursuant to Section 13(c) of the Agreement, with a copy to
Randy Loser, Assistant General Counsel, Eli Lilly and Company, fax (317)
276-2763. The Second Option may only be exercised if the First
Option has been exercised by Ligand. If Ligand fails to timely exercise the
Second Option, the Second Option shall expire.
(iii) During the period beginning July 1, 2005 and ending on
July 7, 2005, Lilly shall have the option to require a royalty reduction
with respect to Net Sales in the United States (the "Third Option"). If
Lilly exercises the Third Option, the following shall occur:
(A) Ligand shall pay to Lilly the sum of twenty two
million dollars ($22,000,000) in immediately available funds;
(B) Ligand shall be relieved of the obligation to pay
royalties on Net Sales in the U.S. that occur during the calendar year
2005; and
(C) Ligand's royalty obligation with respect to Net
Sales in the U.S. for Net Sales occurring after December 31, 2005 until the
end of the Royalty Term shall be as follows:
Annual Net Sales ($M) Royalty Rate (% of Net Sales)
- --------------------- -----------------------------
0-23 0
>23-50 20
>50-72 15
>72 10
For the avoidance of doubt, each percentage set forth in the table above
applies only to the portion of calendar year Net Sales shown in the
corresponding left column.
Notwithstanding the foregoing, if Net Sales for the first five (5) months
of 2005 are less than an aggregate of five million dollars ($5,000,000),
then this Third Option shall be deemed void, and Lilly shall have no right
to exercise such Third Option. Not later than June 23, 2005, Ligand shall
advise Lilly in writing of the Net Sales for the first five (5) months of
2005.
Lilly shall give any notice of its intent to exercise the Third Option to
Ligand in writing within the option period provided above. Payment to Lilly
from Ligand shall be made within five business days of delivery of notice
as determined pursuant to Section 13(c) of the Agreement. The Third Option
may only be exercised if the First Option has not been exercised by Ligand.
If Lilly fails to timely exercise the Third Option, the Third Option shall
expire.
(iv) During the period beginning October 1, 2005 and ending
on October 7, 2005, Lilly shall have the option to require a further
royalty reduction with respect to Net Sales in the United States (the
"Fourth Option"). If Lilly exercises the Fourth Option, the following shall
occur:
(A) Ligand shall pay to Lilly the sum of fifteen
million dollars ($15,000,000) in immediately available funds;
(B) Ligand shall be relieved of the obligation to pay
royalties on Net Sales in the U.S. that occur during the calendar year
2006; and
(C) Ligand's royalty obligation with respect to Net
Sales in the U.S. for Net Sales occurring after December 31, 2006 until the
end of the Royalty Term shall be as follows:
Annual Net Sales ($M) Royalty Rate (% of Net Sales)
- --------------------- -----------------------------
0-38 0
>38-50 20
>50-72 15
>72 10
For the avoidance of doubt, each percentage set forth in the table above
applies only to the portion of calendar year Net Sales shown in the
corresponding left column.
Notwithstanding the foregoing, if Net Sales for the first eight (8) months
of 2005 are less than an aggregate of eight million dollars ($8,000,000),
then this Fourth Option shall be deemed void, and Lilly shall have no right
to exercise such Fourth Option. Not later than September 23, 2005, Ligand
shall advise Lilly in writing of the Net Sales for the first eight (8)
months of 2005.
Lilly shall give any notice of its intent to exercise the Fourth Option to
Ligand in writing within the option period provided above. Payment to Lilly
from Ligand shall be made within five business days of delivery of notice
as determined pursuant to Section 13(c) of the Agreement. The Fourth Option
may only be exercised if (A) the First Option or the Third Option has been
exercised by either Ligand or Lilly, as applicable, and (B) the Second
Option has not been exercised by Ligand. If Lilly fails to timely exercise
the Fourth Option, the Fourth Option shall expire."
2. A new Section 13(r) of the Agreement is hereby added by adding the
following:
"(r) Ligand acknowledges that Lilly has agreed to provide Ligand the First
and Second Options, including the royalty-free periods in 2005 and 2006 in
order to encourage Ligand's continued investment in the Product.
Accordingly, after the date of this Amendment, Ligand shall use its
Commercially Reasonable Efforts to further develop and expand
commercialization of the Product. "Commercially Reasonable Efforts" as used
in this Amendment means those diligent efforts, taken as a whole,
consistent with the exercise of prudent scientific and business judgment,
as applied to products having comparable market potential and comparable
developmental and regulatory risks and challenges and otherwise in
accordance with generally accepted practices in the pharmaceutical
industry. "Comparable market potential" shall be fairly
determined based upon relevant factors, including market size, price,
competition, patent rights, product liability issues and general marketing
parameters."
3. Governing Law. This Amendment shall be governed by the laws of the State
of Indiana, without regard to Indiana choice of law provisions.
4. Effect of Amendment. Except as amended hereby, the Agreement shall
remain in full force and effect.
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereof have caused this Amendment to be
duly executed and delivered as a deed by their respective authorized officers of
the day and year first written above.
LIGAND PHARMACEUTICALS INCORPORATED
By: /s/ Warner R. Broaddus
------------------------------------
Name: Warner R. Broaddus
Title: V.P., General Counsel
SERAGEN, INC.
By: /s/ Paul V. Maier
------------------------------------
Name: Paul V. Maier
Title: CEO
ELI LILLY & COMPANY
RDL By: /s/ Sidney Taurel
------------------------------------
Name: Sidney Taurel
Title: Chairman, President & CEO