EXHIBIT 1.2
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LICENSE AND COLLABORATION AGREEMENT
BETWEEN
TARGETED GENETICS CORPORATION
AND
MEDEVA PHARMACEUTICALS, INC.
AN AFFILIATE OF
MEDEVA PLC
DATED NOVEMBER 23, 1998
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"[*]" = omitted, confidential material, which material has been separately filed
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
TABLE OF CONTENTS
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PAGE
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ARTICLE 1 DEFINITIONS..................................................... 3
1.1 Incorporation by Reference..................................... 3
ARTICLE 2 GRANT OF RIGHTS................................................. 3
2.1 Grant of License to Medeva..................................... 3
2.2 Covenant To Take No Action..................................... 4
2.3 Sublicenses.................................................... 4
2.4 Improvements and Other Development Activities.................. 5
2.5 Covenants...................................................... 6
2.6 No Other Rights................................................ 7
ARTICLE 3 PRODUCT DEVELOPMENT............................................. 7
3.1 Steering Committee............................................. 7
3.2 Responsibilities of the Parties................................ 9
3.3 Development R&D Funding........................................ 11
3.4 Other Costs and Expenses....................................... 13
3.5 Reports; Inspection............................................ 15
3.6 Conduct of Development Work; Subcontracting.................... 15
3.7 Approval Applications and Regulatory Approvals................. 16
ARTICLE 4 MARKETING AND COMMERCIALIZATION................................. 18
4.1 Diligence...................................................... 18
4.2 Termination of Exclusivity..................................... 18
4.3 Status Reports................................................. 21
4.4 Trademarks..................................................... 21
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ARTICLE 5 CONSIDERATION................................................... 22
5.1 Equity Purchase................................................ 22
5.2 License and Technology Access Fee.............................. 22
5.3 Other Payments................................................. 22
5.4 Form of Payment; Late Payments................................. 23
ARTICLE 6 INTELLECTUAL PROPERTY MATTERS................................... 24
6.1 Ownership of Intellectual Property............................. 24
6.2 Ownership of Approval Applications and Regulatory Approvals.... 24
6.3 Prosecution and Maintenance of Patent Rights; Abandonment...... 25
6.4 Prosecution and Maintenance of Joint Patents; Abandonment...... 27
6.5 Enforcement of Patent Rights................................... 28
6.6 Enforcement of Joint Patent Rights............................. 30
6.7 Settlement with a Third Party.................................. 32
6.8 Infringement of Third Party Rights............................. 32
6.9 Infringement of Medeva Trademarks.............................. 33
6.10 Offset for Infringement........................................ 33
ARTICLE 7 MASTER AGREEMENT................................................ 35
7.1 Incorporation by Reference..................................... 35
List of Schedules and Exhibits
Schedule 3.3.2 Budgeted Development R&D Funding for First Project Year
Exhibit A Development Plan
Exhibit B Outside Contractor Letter
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LICENSE AND COLLABORATION AGREEMENT
THIS LICENSE AND COLLABORATION AGREEMENT (the "Agreement") is made
effective as of the 23rd day of November 1998 (the "Effective Date") by and
between TARGETED GENETICS CORPORATION, a corporation organized under the laws of
the State of Washington, United States of America, having offices at 1100 Olive
Way, Suite 100, Seattle, Washington 98101, United States of America, ("TGC") and
MEDEVA PHARMACEUTICALS, INC., a corporation organized under the laws of the
State of Delaware, United States of America, having offices at 755 Jefferson
Road, Rochester, New York 14623, United States of America, ("Medeva") an
Affiliate of MEDEVA PLC, a public limited liability company organized under the
laws of England, having offices at 10 St. James's Street, London, SW1A 1EF,
England ("Medeva PLC"). TGC and Medeva are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
RECITALS
1. TGC has entered into the following four license agreements
(collectively, the "Third Party Agreements") under which it acquired certain
rights relating to cystic fibrosis gene therapy, including (a) a non-exclusive
license agreement, dated March 28, 1994, with the Regents of the University of
Michigan and HSC Research and Development Limited Partnership (the "U.
Michigan/HSC Agreement"), (b) a non-exclusive license agreement, dated June 23,
1993, with certain agencies of the United States Public Health Service within
the Department of Health and Human Services (the "NIH/CDC L-232-92 Agreement"),
(c) an exclusive license agreement, dated March 8, 1994, with certain agencies
of the United States Public Health Service within the Department of Health and
Human Services (the "NIH/CDC L-059-93 Agreement"), and (d) an exclusive sub-
license agreement, dated July 23, 1996, with Alkermes, Inc., an exclusive
licensee of
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the Children's Hospital Research Foundation/Children's Hospital, Inc. (the
"Alkermes Agreement").
2. TGC owns or, pursuant to the Third Party Agreements, is a licensee of
certain patents, patent applications and valuable technology and know-how
relating inter alia to cystic fibrosis gene therapy and the treatment of cystic
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fibrosis using an adeno-associated viral ("AAV") vector to deliver a gene
encoding a cystic fibrosis transmembrane regulator ("CFTR") protein.
3. Medeva has valuable intellectual property and technology relating to
delivery of pharmaceutical products by inhalation and other means and has
experience with the clinical development and marketing of such products.
4. The Parties wish to collaborate in the further development and
commercialization of a CFTR gene therapy product for the treatment of cystic
fibrosis on the terms and conditions hereinafter set forth.
5. Concurrently herewith, the Parties are entering into a certain Supply
Agreement (the "Supply Agreement"), pursuant to which TGC will supply to Medeva,
and Medeva will purchase from TGC, TGC's CFTR gene therapy product for use in
the treatment of cystic fibrosis, as more fully set forth therein, a certain
Common Stock Purchase Agreement, pursuant to which Medeva will purchase from TGC
shares of common stock of TGC, as set forth more fully therein, a Credit
Agreement, pursuant to which Medeva will extend TGC credit for the purpose of
constructing a manufacturing facility, as set forth more fully therein, and a
certain Master Agreement (the "Master Agreement"), pursuant to which the
Parties' intent is set forth to organize a new corporate structure and to
provide contractual arrangements to protect the interests of each of the Parties
and, in addition, which contains provisions which are intended by
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the Parties to be common to, and to apply to and govern the Parties under, this
Agreement and the Supply Agreement and, in certain limited respects, the Common
Stock Purchase Agreement and the Credit Agreement, as set forth more fully
therein,.
In consideration of the premises and of the mutual covenants and
obligations set forth herein, the Parties agree as set out below.
ARTICLE 1
DEFINITIONS
1.1 INCORPORATION BY REFERENCE. Article 1 (Definitions) of the Master
Agreement is hereby incorporated by reference. All capitalized terms not
otherwise defined in this Agreement shall have the meanings set forth in Article
1 of the Master Agreement.
ARTICLE 2
GRANT OF RIGHTS
2.1 GRANT OF LICENSE TO MEDEVA. Subject to the terms and conditions of this
Agreement, including without limitation payment of the license fee set forth in
Section 5.2, TGC hereby grants Medeva, for the sole purpose of enabling Medeva
to exercise Medeva's rights and to perform Medeva's obligations under this
Agreement, a worldwide, exclusive license under the Licensed Patent Rights and
the Licensed Know-How to use Bulk Licensed Product to make, have made, use, have
used, offer for sale, lease, market, sell, have sold and import Licensed
Products for use in the Field. It is understood and agreed that, upon expiration
of this Agreement in accordance with the terms of Section 5.1 of the Master
Agreement, Medeva shall have a paid-up, irrevocable, worldwide, nonexclusive
right and license under the Licensed Know-How existing as of the date of such
expiration to make, have made, use and sell Licensed Products for use in the
Field.
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2.2 COVENANT TO TAKE NO ACTION. Subject to the terms and conditions of this
Agreement, Medeva hereby agrees that, if any intellectual property rights
Controlled by Medeva shall be required by TGC or Affiliates of TGC or
Sublicensees of TGC to enable TGC or Affiliates of TGC or Sublicensees of TGC to
develop and manufacture Bulk Licensed Product for sale to Medeva in accordance
with the terms of this Agreement, Medeva will take no action of any nature
whatsoever during the term of this Agreement under such intellectual property
which would interfere with such activities.
2.3 SUBLICENSES. Medeva shall have the right to grant sublicenses under the
license set forth in Section 2.1 and to employ Contract Manufacturers and
Outside Contractors in connection with the performance of its obligations
hereunder, provided that the execution of a sublicense or a subcontract shall
not in any way diminish, reduce or eliminate any of Medeva's obligations under
this Agreement, and Medeva shall remain primarily liable for such obligations.
The right of Medeva to grant sublicenses pursuant to this Section 2.3 is subject
to the following conditions:
(a) At least thirty (30) days prior to the anticipated date of
execution and delivery of each proposed sublicense by Medeva and the proposed
Sublicensee of Medeva, Medeva shall forward to TGC all material terms of the
proposed sublicense agreement which relate directly to Medeva's obligations
under this Agreement and to the Licensed Products;
(b) Each sublicense and proposed Sublicensee of Medeva as so disclosed
to TGC in (a) above shall be subject to approval in advance in writing by TGC,
which approval shall not be unreasonably withheld or delayed;
(c) Each Sublicensee of Medeva shall be expressly prohibited from
further sublicensing; and
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(d) Each sublicense shall contain terms with the same effect as Article
3 of the Master Agreement and, where relevant, Sections 2.5, 4.3 and 6.1 of this
Agreement, Sections 6.3 and 7.1 of the Supply Agreement, and Sections 7.1 and
8.4 of the Master Agreement, and TGC shall be expressly acknowledged as a third
party beneficiary thereof, and Medeva shall be responsible for the performance
by its Sublicensee of the relevant terms of such sublicense and shall take all
measures reasonably requested by TGC to enforce such terms against such
Sublicensee.
2.4 IMPROVEMENTS AND OTHER DEVELOPMENT ACTIVITIES.
2.4.1 To the extent that it has the right to do so, each Party shall
promptly disclose to the Steering Committee and the other Party all Improvements
and New Products with utility in the Field which such Party conceives of, makes,
acquires, discovers or invents during the term of this Agreement (collectively,
"Product Information"). TGC represents and warrants that TGC has the right to
disclose to Medeva all Product Information which exists as of the Effective
Date, and that TGC shall use Reasonable Commercial Efforts during the term of
this Agreement not to enter into any agreement which would restrict TGC's right
to make the disclosures contemplated under this Section 2.4.1.
2.4.2 Within thirty (30) days of receipt of any Product Information, the
Steering Committee shall determine whether to recommend that an Improvement be
adopted or that a New Product be developed. If the Steering Committee determines
that an Improvement should be adopted or that a New Product should be developed,
the Steering Committee shall recommend whether such adoption or development
should occur in lieu of or in addition to the then-current activities with
respect to existing Licensed Product(s).
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2.4.3 If the Steering Committee recommends adoption of an Improvement or
development of a New Product, and if Medeva and TGC agree upon such adoption or
development and the anticipated cost thereof, the Steering Committee may request
that either TGC or Medeva undertake, and such Party shall undertake, development
activities leading to adoption of such Improvement or development of such New
Product. Such development work shall be (i) conducted pursuant to a development
plan established by the Steering Committee, (ii) supported by appropriate
research funding, including without limitation, but only in the case of a New
Product, other payments similar to those set forth in Section 5.3, and (iii)
performed in accordance with parameters for adoption of such Improvement or
development of such New Product consistent with parameters set forth herein for
development of Licensed Products.
2.5 COVENANTS. Each Party covenants and agrees that, during the term of this
Agreement, it shall not, nor shall it enter into or permit or cause its
Affiliates, Sublicensees, Contract Manufacturers and Outside Contractors to
enter into any agreement or arrangement to, manufacture, develop, use, offer for
sale, lease, market, sell, import, commercialize or otherwise exploit, either
directly or indirectly, [ * ], including without limitation any Licensed Product
or New Product, except in accordance with the terms and conditions of the
collaboration provided for in this Agreement (collectively, "Outside Development
and Commercialization Work"). Without limiting the foregoing, except for
sublicenses and subcontracts entered into under terms and conditions consistent
with the terms and conditions of this Agreement, neither Party will grant any
Third Party any right under the Patent Rights or the Licensed Know-How which
would permit such Third Party to engage in or otherwise exploit Outside
Development and Commercialization Work in the Field. If a Party breaches the
foregoing covenants, then without
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limiting any other remedies available to the other Party, the breaching Party
shall, at its sole expense, contribute the Outside Development and
Commercialization Work to the other Party for use under the terms of this
Agreement and secure for the other Party the exclusive right to use and exploit
the Outside Development and Commercialization Work in connection with the
development, sale and exploitation of Licensed Products and New Products in the
Field.
2.6 NO OTHER RIGHTS. This Agreement confers no license or rights by
implication, estoppel, or otherwise under any patents, patent applications,
know-how or other intellectual property rights of either Party other than as
expressly set forth in this Article 2. Each Party hereby expressly reserves all
rights not specifically granted to the other Party hereunder.
ARTICLE 3
PRODUCT DEVELOPMENT
3.1 STEERING COMMITTEE. In accordance with the terms and conditions set forth
below, the commercial development of Licensed Products in the Field
("Development Work") will be conducted by or on behalf of the Parties pursuant
to the mutually agreed development plan to be attached hereto as Exhibit A (the
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"Development Plan"). Within ten (10) days after the Effective Date, each of the
Parties shall appoint three (3) persons to serve as its representatives on a
joint steering committee (the "Steering Committee"). Each Party shall have the
right to change any or all of its representatives on the Steering Committee upon
written notice to the other Party. The Steering Committee shall:
(a) Establish the Development Plan, including without limitation
milestones, go/no-go criteria, timelines and responsibilities, and ensure that
each Party completes its respective work in compliance with the Development
Plan;
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(b) Monitor and make recommendations regarding the performance of the
Development Plan and the conduct of the Development Work;
(c) Propose modifications to the Development Plan;
(d) Establish regulatory strategies;
(e) Determine how Improvements should be incorporated into the
Development Plan;
(f) Determine whether to recommend that an Improvement be incorporated
or that a New Product be developed, and if so whether such incorporation or
development should occur in lieu of or in addition to the then-current
activities with respect to existing Licensed Product(s); and
(g) Review any and all proposed publications or communications relating
to the Development Plan, and activities relating to an Improvement or a New
Product, if applicable, and the results therefrom and any and all proposed
filings of patent applications in connection therewith.
The Steering Committee shall meet not less frequently than once per calendar
quarter during the Development Period, on such dates and at such times as agreed
to by the Parties. All decisions made or actions taken by the Steering Committee
shall be made unanimously, with each Party entitled to one (1) vote. A quorum of
the Steering Committee shall consist of two members, provided that at least one
member appointed by each Party is present. Members of the Steering Committee may
attend a meeting of the Steering Committee either in person or by telephone
conference call, but not by proxy. In the event of a deadlock vote regarding a
matter before the
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Steering Committee, the Responsible Executives of the Parties shall meet to
resolve the matter. If resolution of the matter is not achieved by the
Responsible Executives of the Parties within thirty (30) days of the deadlock
vote, TGC shall have the right to resolve such deadlock until the start of the
first Phase II Clinical Trial; provided, however, that Medeva shall have the
right to resolve any deadlock with respect to the design and location of Phase
II Clinical Trials and the determination of which Party shall be responsible to
conduct such trials. Thereafter, Medeva shall have the right to resolve any
deadlock.
3.2 RESPONSIBILITIES OF THE PARTIES.
3.2.1 In accordance with the Development Plan, as modified from time to
time, TGC shall use Reasonable Commercial Efforts to:
(a) Conduct preclinical Development Work, including without
limitation pre-clinical research, process development and other relevant
research and development activities, required to support clinical testing,
Regulatory Approvals and commercialization of the Licensed Products in the Field
("Development R&D");
(b) Conduct clinical research with Licensed Products in the Field
in the U.S. through completion of Phase I Clinical Trials;
(c) Conduct clinical research with Licensed Products in the Field
in the U.S. through completion of Phase II Clinical Trials, to the extent the
Steering Committee, in its sole discretion, determines that it is appropriate
for TGC to conduct such Phase II Clinical Trials in the U.S. pursuant to Section
3.1 hereinabove;
(d) Pursuant to the terms of the Supply Agreement, produce all AAV-
CFTR raw material and manufacture therefrom sufficient Bulk Licensed Product for
the manufacture of
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Licensed Products for use in all clinical trials to be conducted by TGC and
Medeva in the Field; and
(e) Pursuant to the terms of the Supply Agreement, manufacture or
have manufactured Licensed Products for use in clinical trials to be conducted
by TGC in the Field.
3.2.2 In accordance with the Development Plan, as modified from time to
time, Medeva shall use Reasonable Commercial Efforts to:
(a) Conduct Development R&D and other Development Work to support
commercialization of the Licensed Products in the Field, except to the extent
that TGC is responsible therefor as set forth in Section 3.2.1;
(b) Conduct all clinical trials (except Phase I Clinical Trials to
be conducted by TGC pursuant to Section 3.2.1(b) and Phase II Clinical Trials to
be conducted by TGC pursuant to Section 3.2.1(c)) necessary to obtain Regulatory
Approvals required for commercialization of Licensed Products in the Field in
each of the Countries;
(c) Use Bulk Licensed Product supplied to Medeva pursuant to the
Supply Agreement, to manufacture or have manufactured Licensed Products in
appropriate dosage and appropriate delivery form for clinical trials of such
Licensed Products to be conducted by Medeva;
(d) Obtain and maintain Regulatory Approvals for Licensed Products
in the Field in Regions 1 and 3 by any appropriate means;
(e) Launch Licensed Products in the Field in Regions 1 and 3; and
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(f) Promote and sell Licensed Products in the Field in Regions 1
and 3.
3.3 DEVELOPMENT R&D FUNDING.
3.3.1 Medeva will provide funding to TGC during the first three (3)
Project Years of the Development Period to enable TGC to fulfill its
responsibilities to conduct Development R&D and any non-aerosol Phase I Clinical
Trials to the extent approved by Medeva. The Steering Committee will agree upon
the activities to be conducted under the Development Plan (as provided in
Section 3.1 above) and upon a budget for funding to cover expenses of such
activities to be conducted during each such Project Year, such budget to include
a five percent (5%) contingency to cover unforeseen cost overruns or unexpected
cost items. Except as provided in the following sentence, TGC will be
responsible for expenses incurred in a Project Year by TGC in respect of
activities that were not approved by the Steering Committee or in respect of
activities approved by the Steering Committee to the extent that such expenses
exceed the budgeted amounts therefor, including the five percent (5%)
contingency. If, during any Project Year, the Steering Committee agrees to
modify or otherwise change the activities to be conducted by TGC or to increase
the amount budgeted for activities previously approved, the budget for funding
to TGC for that Project Year will be revised to reflect any adjustment in the
estimated expenses for such Project Year as a result of the modified or
otherwise changed activities or budget. The total funding to TGC from Medeva for
Development R&D shall be an amount equal to the lesser of either (i) Five
Million U.S. Dollars ($US5,000,000) per Project Year, or (ii) notwithstanding
the budget, the expenses actually incurred by TGC in a Project Year with respect
to Development R&D, subject to approval by the Steering Committee of the
activities to be conducted by TGC and the expenses associated with such
activities. During the third Project Year, the Parties will decide Development
R&D funding requirements, if any, for a
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fourth Project Year. Notwithstanding anything to the contrary, if Medeva decides
in its sole discretion to provide Development R&D funding for any Project Year
after the third Project Year, the Parties, during such Project Year, will decide
the funding requirements, if any, for the next Project Year. Medeva has no
obligation to provide any Development R&D funding after the third Project Year
of the Development Period, unless the Steering Committee recommends that TGC
continue its Development Work and, accordingly, that Development R&D funding
should be provided.
3.3.2 Budgeted Development R&D funding for the first Project Year is set
forth in Schedule 3.3.2. The Development R&D funding payment for the first
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quarter of the first Project Year shall be [ * ], representing one-fourth of the
budgeted research funding set forth in Schedule 3.3.2, and shall be paid upon
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execution of this Agreement. Thereafter and for each Project Year after the
First Project Year, research funding payments shall be paid quarterly in advance
in equal quarterly installments based upon budgeted Development R&D funding for
such Project Year as approved by the Steering Committee. Notwithstanding the
previous sentence, after the end of each quarter, the Parties will review the
amount of actual expenses incurred by TGC in the just-ended quarter and, in the
event that the amount actually spent was less than the Development R&D funding
payment advanced by Medeva to TGC for such quarter, the amount not expended
shall be applied as a credit toward the next research funding payment to be made
by Medeva. In the event that the amount of actual expenses incurred by TGC in
the just-ended quarter was more than the research funding payment for such
quarter, such excess will be paid by Medeva together with the next scheduled
research funding payment. All funding payments to TGC hereunder shall be made in
U.S. Dollars by wire transfer of immediately
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available funds to such account notified by TGC from time to time to Medeva in
writing in accordance with Section 5.4 so long as the total funding payments for
a Project Year do not exceed the maximum amount thereof provided in Section
3.3.1.
3.3.3 As per Section 3.3.1 above, the Development R&D activities for which
Medeva will provide research funding and the budgeted funding for such
activities for each Project Year after the first Project Year shall be
recommended by the Steering Committee and agreed upon by Medeva and TGC in
advance of the start of each such Project Year. In the event that the budgeted
funding for any Project Year has not been agreed upon in advance of the start of
such Project Year, the Responsible Executives of the Parties shall meet to
resolve the matter. In the interim before resolution of the matter, Medeva will
provide funding payments in amounts sufficient to fund the costs and expenses of
Development R&D activities previously approved by the Steering Committee under
the Development Plan and still ongoing from the previous Project Year.
3.4 OTHER COSTS AND EXPENSES.
3.4.1 Medeva will bear all costs and expenses incurred by Medeva in
performance of Medeva's responsibilities under the Development Plan.
3.4.2 Medeva will reimburse TGC for the costs and reasonable expenses of
conducting a Phase I Clinical Trial in the Field in the U.S. with an aerosol
form of a Licensed Product, but only to the extent that such costs and expenses
during the Project Year in which such clinical trial is underway, together with
the Development R&D funding provided by Medeva to TGC pursuant to Section 3.3 in
such Project Year do not exceed Five Million U.S. Dollars ($US5,000,000).
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3.4.3 In the event that the Steering Committee decides to have TGC conduct
Phase II Clinical Trials in the U.S. as contemplated under Section 3.2.1(c)
above, Medeva shall reimburse TGC for all expenses incurred by TGC to conduct
such Phase II Clinical Trials in accordance with a budget for such trials
prepared by TGC and approved by Medeva prior to initiation of such trials (the
"Phase II Expenses").
3.4.4 Subject to the limitations set forth in this Section 3.4, TGC shall
invoice Medeva yearly in arrears for the costs of conducting the Phase I Trials
contemplated under Section 3.4.2 above and, if applicable, quarterly in arrears
for the Phase II Expenses. Medeva shall pay such invoices within thirty (30)
days after receipt thereof in the manner provided in Section 5.4.
3.4.5 Except as provided in Section 3.3 and Sections 3.4.2-3.4.4 above,
TGC will bear all of its costs and expenses incurred in performing TGC's
responsibilities under the Development Plan as provided in Section 3.2.1. To the
extent that Medeva assigns responsibilities to TGC under the Development Plan in
addition to those contained in Section 3.2.1 above, Medeva shall reimburse TGC
for all expenses incurred by TGC relating to such additional responsibilities
pursuant to the budget provided in Section 3.3.1 or in accordance with an
additional budget prepared by TGC and approved by Medeva in advance of any
required work.
3.5 REPORTS; INSPECTION. Each Party shall maintain, and shall cause its
Contract Manufacturers and Outside Contractors to maintain, accurate and
complete records of all Development Work and all results of any trials, studies
and other investigations conducted under this Agreement by or on behalf of such
Party, its Affiliates or Sublicensees, as applicable. For so long as a Party is
conducting Development Work hereunder, such Party will prepare and submit
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to the Steering Committee, on a semi-annual basis, written progress reports
summarizing the current status and progress of Development Work. A Party, or
such Party's authorized representatives (including members of Steering Committee
selected by such Party), may visit the facilities of the other Party where
Development Work is being performed during normal business hours upon reasonable
notice without undue interruption to normal business operations.
3.6 CONDUCT OF DEVELOPMENT WORK; SUBCONTRACTING. Each Party may contract with
one or more Outside Contractors to perform any or all of its non-manufacturing
obligations under the Development Plan, provided that (i) the contracting Party
permits the other Party to review and comment on, and incorporates the
reasonable comments of such other Party in, the drafts of the respective
agreements (each an "Outside Contractor Agreement"), (ii) the contracting Party
provides the other Party with a true and accurate copy of each such Outside
Contractor Agreement, and (iii) the contracting Party uses Reasonable Commercial
Efforts to cause each Outside Contractor to agree to execute and deliver to the
other Party a letter in the form of Exhibit B hereto, and to include the
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provisions set forth therein in the relevant Outside Contractor Agreement. As to
each Outside Contractor that executes and delivers such a letter to Medeva, TGC
agrees that Medeva may seek to enforce TGC's remedies under such Outside
Contractor Agreement directly against such Outside Contractor without first
exhausting its remedies against TGC if the Outside Contractor breaches such
Outside Contractor Agreement so as to cause TGC to become liable to Medeva for
damages due to TGC's inability to complete its responsibilities under Section
3.2.1 hereof; provided, however, that if Medeva shall seek to exercise such
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remedies, TGC shall remain primarily liable and obligated to Medeva under all
provisions of this Agreement. Further, TGC agrees to use its Reasonable
Commercial Efforts to include in each Outside Contractor Agreement the following
provisions: (a) a prohibition against
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sublicensing by such Outside Contractor of any Patent Rights or Licensed Know-
How licensed to such Outside Contractor by TGC; (b) if TGC provides such Outside
Contractor any Bulk Licensed Product, a prohibition against the sale by such
Outside Contractor of such Bulk Licensed Product to any Third Party; (c) a
prohibition, approved by Medeva, against manufacturing, having manufactured,
supplying, using or selling any product which generates functional CFTR protein
and which is derived from or embodies, in whole or in part, any intellectual
property either Controlled by TGC or licensed to TGC pursuant to the Third Party
Agreements; and (d) a right for TGC to terminate such Outside Contractor
Agreement in the event of a breach of the terms set forth in either of (a), (b)
or (c) above.
3.7 APPROVAL APPLICATIONS AND REGULATORY APPROVALS.
3.7.1 TGC, (at Medeva's expense subject to the limitations set forth in
Section 3.4.2 and, if applicable, Section 3.4.3) with appropriate assistance
from Medeva, will be responsible for assembling all Approval Applications needed
to conduct clinical trials with Licensed Products in the Field in the U.S. in
accordance with TGC's obligations under Section 3.2.1. Medeva with appropriate
assistance from TGC, at Medeva's expense, will be responsible for assembling all
Approval Applications needed to conduct clinical trials with Licensed Products
in the Field in accordance with Medeva's obligations under Section 3.2.2. The
expenses incurred by a Party after the Effective Date in assembling such
Approval Applications shall be paid or reimbursed in accordance with Section
3.4.4 above.
3.7.2 Medeva will be responsible for obtaining and thereafter, subject to
Reasonable Commercial Efforts and Medeva's obligations with respect to Minimum
Performance Levels set forth in Section 4.2, maintaining Regulatory Approval for
Licensed Products in the Field in each Country in Region 1 and in Region 3.
Medeva shall consult in good faith with TGC with respect
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to Approval Applications necessary to obtain Regulatory Approval for Licensed
Products in the Field in such Countries; and TGC will cooperate with Medeva, at
Medeva's expense, in such manner as Medeva may reasonably request in obtaining
such Regulatory Approvals. Each Party will promptly send to the other copies of
all Regulatory Approvals (including English translations thereof, if applicable)
and of any other correspondence with any Government Authority regarding use of
Licensed Products in the Field.
3.7.3 In the event that TGC converts the exclusive license granted to
Medeva to a non-exclusive license in any Region pursuant to Section 4.2 of this
Agreement, Medeva, at Medeva's expense, for a period of six (6) months after the
effective date of such conversion, shall cooperate reasonably with TGC and TGC's
designee, if applicable, in the issuance (or reissuance, if appropriate) in the
name of TGC or TGC's designee of all Regulatory Approvals necessary to market
Licensed Product(s) in the Region (or Regions) in which Medeva has lost
exclusivity.
3.7.4 In the event that TGC terminates this Agreement pursuant to Section
5.3 of the Master Agreement, or in the event that Medeva terminates this
Agreement pursuant to Section 5.2 of the Master Agreement, Medeva, at Medeva's
expense, for a period of six (6) months after the effective date of such
termination, shall cooperate reasonably with TGC and TGC's designee, if
applicable, in the issuance (or reissuance, if appropriate) in the name of TGC
or TGC's designee of all Regulatory Approvals theretofore obtained by Medeva.
17
ARTICLE 4
MARKETING AND COMMERCIALIZATION
4.1 DILIGENCE. The Parties acknowledge that Medeva is one of the first
companies in the world seeking to obtain Regulatory Approval of a gene therapy
product. As such, Medeva may not anticipate all tests or studies which a
Government Authority (e.g., FDA) may require during the regulatory approval
----
process of the Licensed Products.
4.2 TERMINATION OF EXCLUSIVITY.
4.2.1 Upon thirty (30) days prior written notice, TGC may convert the
exclusive license granted to Medeva hereunder with respect to a Region to a non-
exclusive license for such Region if Medeva (i) fails to submit an Approval
Application in each Country in such Region [ * ] with Licensed Products in the
Field (subject to certain adjustments set forth below), or (ii) fails to launch
a Licensed Product in the Field in each Country in a Region [ * ] after
Regulatory Approval is obtained in such Country, subject to reasonable delay to
take advantage of suitable launch timings (e.g., professional sales meetings
and/or congresses), as determined by the Parties; provided, however, that the
-------- -------
right of TGC to terminate Medeva's exclusivity pursuant to this Section 4.2 may
not be exercised by TGC if Medeva's failure to submit an application for
Regulatory Approval or to commence a Licensed Product launch in a Country is due
to (a) a request by a Government Authority in or governing such Country to
conduct tests or studies not provided for, or other than as provided for, in the
Development Plan, or (b) a court order, judgment, ruling, or other similar
demand or requirement imposed upon Medeva arising out and as the result of a
Third Party Infringement (as defined in Section 6.8.1 below), or (c)TGC's breach
of the Supply Agreement. In connection with (i) above, the [ * ] period shall be
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extended if, and only if, (1) the treatment protocol for patients enrolled in
such Phase III Clinical Trials covers a period of more than [ * ], in which case
such [ * ] period shall be extended by the number of months by which the length
of such treatment protocol exceeds [ * ]; or (2) the conduct of such Phase III
Clinical Trial is delayed due to TGC's failure to perform its obligations
hereunder, or under the Supply Agreement, in a timely manner, in which case such
[ * ] period shall be extended by a reasonable amount of time to compensate for
the delay caused by such TGC failure. In the event that Medeva's failure under
this Section 4.2.1 is due to TGC's breach of this Agreement or the Supply
Agreement, TGC shall have no right to convert the exclusive license granted to
Medeva hereunder with respect to a Region to a non-exclusive license for such
Region unless and until TGC has cured such breach and, in such case, the
relevant time periods referred to in this Section 4.2.1 above shall be extended
by a reasonable amount of time to compensate for the delay caused by TGC.
4.2.2 Upon thirty (30) days prior written notice, TGC may convert the
exclusive license granted to Medeva hereunder with respect to a Region to a non-
exclusive license for such Region if Medeva fails to achieve the applicable
Minimum Performance Level in each Country in such Region within [ * ] after
Regulatory Approval is obtained for such Country, unless such failure is due to
either (i) a court order, judgment, ruling, or other similar demand or
requirement imposed upon Medeva arising out and as the result of a Third Party
Infringement, or (ii) TGC's breach of this Agreement or the Supply Agreement. In
the event that Medeva's failure is due to TGC's breach of this Agreement or the
Supply Agreement, TGC shall have no right to convert the exclusive license
granted to Medeva hereunder with respect to a Region to a non-exclusive
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19
license for such Region unless and until TGC has cured such breach and, in such
case, the [ * ] period referred to above shall be extended by a reasonable
amount of time to compensate for the delay caused by TGC.
4.2.3 In the event that the exclusive license granted to Medeva with
respect to a Region is converted to a non-exclusive license for such Region
pursuant to this Section 4.2, Medeva will be entitled to reimbursement of a
portion of its total development costs (including without limitation Development
R & D funding, and the payments under Sections 5.2 and 5.3 of this Agreement) in
obtaining all Regulatory Approvals. The amount of reimbursement shall equal the
total of such development costs divided by a number corresponding to the
specific Region in which the exclusive license was converted to a non-exclusive
license. For Region 1, such number shall be "2;" for Region 2, such number shall
-------- - --------
be "5;" for Region 3, such number shall be "2;" for Region 4, such number shall
- -------- - --------
be "6;" and for Region 5, such number shall be "7." Notwithstanding the above,
- -------- -
the total amount of reimbursement to Medeva under this Section 4.2.3 shall not
exceed [ * ] of Medeva's total development costs in obtaining Regulatory
Approvals. Such reimbursement shall be paid by TGC to Medeva in the form of a
royalty equal to [ * ] of TGC's Net Sales. TGC's Net Sales shall include sales
of Bulk Licensed Products not subsequently manufactured into Licensed Products
and, in addition, sales of Licensed Products.
4.2.4 The Parties agree that Medeva cannot be found in breach of Sections
3.2.2(d)-(f) if Medeva has not lost exclusivity pursuant to Sections 4.2.1 and
4.2.2. Further, a loss of exclusivity pursuant to Sections 4.2.1 or 4.2.2 only,
without additional facts or information, shall
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not constitute ipso facto a material breach of this Agreement entitling TGC to
---- -----
terminate this Agreement.
4.3 STATUS REPORTS. In addition to Medeva's obligation to prepare and submit
to the Steering Committee the reports required under Section 3.5 but only to the
extent not otherwise covered thereby, Medeva shall prepare and submit to TGC on
a semi-annual basis written status reports of Medeva's commercialization
programs for Licensed Products in the Field, including without limitation the
status of Regulatory Approvals. In addition to the foregoing, at TGC's request
from time to time, not to exceed once per quarter, Medeva agrees to provide
verbal updates on the status of Medeva's marketing of Licensed Products in the
Field.
4.4 TRADEMARKS. Medeva shall at its own expense select, register and maintain
the trademark(s) used by Medeva, its Affiliates and Sublicensees (the "Medeva
Trademarks") in connection with Licensed Products in the Field. All trademarks
used by TGC, its Affiliates or Sublicensees, including without limitation
trademarks used by TGC, its Affiliates or Sublicensees after conversion by TGC
of the exclusive license granted to Medeva hereunder with respect to a Region to
a non-exclusive license for such Region pursuant to Section 4.2, shall not be
confusingly similar to the Medeva Trademarks. TGC shall have no rights in
respect of Medeva Trademarks, including in the event of a termination of
exclusivity under Section 4.2.
ARTICLE 5
CONSIDERATION
5.1 EQUITY PURCHASE. In consideration of the grant by TGC of the rights and
licenses set forth in Article 2, Medeva or an Affiliate of Medeva, in accordance
with terms and conditions set forth in a certain Common Stock Purchase Agreement
of even date herewith, shall purchase
21
shares of common stock of TGC corresponding to a total purchase price equal to
Three Million U.S. Dollars ($US3,000,000).
5.2 LICENSE AND TECHNOLOGY ACCESS FEE. In addition to the foregoing, and in
further consideration of the grant by TGC of the rights and licenses set forth
in Article 2, upon the execution of this Agreement by each of the Parties,
Medeva will pay to TGC Five Million U.S. Dollars ($US5,000,000). Except as
provided in Section 6.10.2, such payment may not be applied to or otherwise
credited against any other payments which may be due to TGC under this
Agreement.
5.3 OTHER PAYMENTS. In addition to the foregoing, and in further consideration
of the grant by TGC of the rights and licenses set forth in Article 2, Medeva
shall pay to TGC the amounts specified below upon the occurrence of the events
specified below:
5.3.1 [ * ] either (i) within thirty (30) days after the date of written
notice by TGC to Medeva that TGC is authorized or otherwise permitted by FDA to
commence Phase I Clinical Trials of the first aerosol Licensed Product in the
Field, or (ii) upon the execution date of this Agreement if such authorization
or permission is obtained prior to such date.
5.3.2 [ * ] within thirty (30) days after the date of the enrollment of
the first patient in Phase II Clinical Trials for the first Licensed Product in
the Field.
5.3.3 [ * ] within thirty (30) days after the date of the enrollment of
the first patient in Phase III Clinical Trials for the first Licensed Product in
the Field.
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5.3.4 [ * ] within thirty (30) days after the date of the filing of a
Product License Application with FDA (or the equivalent thereof) for approval of
the first Licensed Product in the Field.
5.3.5 [ * ] within thirty (30) days after the date of Regulatory Approval
for sale of the first Licensed Product in the Field.
Except as provided in Section 6.10.2, none of the payments specified in this
Section 5.3 may be applied to or otherwise credited against any other payments
which may be due to TGC under this Agreement.
5.4 FORM OF PAYMENT; LATE PAYMENTS. Each Party shall make all payments due the
other Party under this Agreement in U.S. Dollars by wire transfer of immediately
available funds to such account notified by the receiving Party from time to
time to the other Party in writing. If any sum payable to TGC under this
Agreement shall not have been paid on or before the applicable due date, simple
interest shall accrue on the unpaid amount at the rate of twelve percent (12%)
per annum or, if less, the maximum rate permitted under applicable law from the
payment due date until the actual date of payment without prejudice to any other
claim or remedy; provided, however, that no interest shall accrue on any portion
--------
of an unpaid amount which is the subject of a good faith, legitimate dispute. If
any such dispute is resolved against Medeva, the date of resolution shall be
deemed the date that payment to TGC is due.
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ARTICLE 6
INTELLECTUAL PROPERTY MATTERS
6.1 OWNERSHIP OF INTELLECTUAL PROPERTY.
6.1.1 As between the Parties, subject only to the licenses set forth in
Article 2, TGC shall retain all right, title and interest in and to (i) the
Patent Rights and the Licensed Know-How, and (ii) all inventions and
developments made solely by employees, agents or contractors of TGC in the
course of performance of Development Work pursuant to the Development Plan, and
all patents and patent applications claiming such inventions or developments.
6.1.2 As between the Parties, subject only to the covenant set forth in
Section 2.2, Medeva shall own all Improvements made by Medeva and all inventions
and developments made solely by employees, agents or contractors of Medeva in
the course of performance of Development Work pursuant to the Development Plan,
and all patents and patent applications claiming such inventions or
developments.
6.1.3 The Parties shall jointly own any Joint Inventions and all Joint
Patents.
6.1.4 Inventorship of inventions shall be determined in accordance with
rules and guidelines regarding inventorship as established under U.S. patent
law.
6.2 OWNERSHIP OF APPROVAL APPLICATIONS AND REGULATORY APPROVALS.
6.2.1 Subject to the rights granted to or owned by Medeva hereunder, TGC
shall own all rights, title and interest in all Approval Applications filed in
the U.S. for the conduct of Phase I Clinical Trials in the U.S. and Phase II
Clinical Trials, to the extent such Phase II Clinical Trials are conducted in
the U.S. Such Approval Applications shall be filed in TGC's name and owned
24
by TGC. Notwithstanding anything to the contrary, including without limitation
Section 6.2.2 below, TGC shall own any establishment license application, and
any establishment license which may issue therefrom, necessary for TGC to
manufacture Bulk Licensed Product; provided that such a license is applicable to
the activities contemplated under this Agreement and the Supply Agreement, and
is required under Applicable Laws.
6.2.2 Subject to the rights granted to or owned by TGC hereunder, Medeva
shall own all right, title and interest in all Approval Applications for the
conduct of all Phase II Clinical Trials (except clinical trials to be conducted
by TGC) and Phase III Clinical Trials necessary to obtain Regulatory Approvals
required for commercialization of Licensed Products in the Field, together with
any Regulatory Approval obtained in connection therewith. Such Approval
Applications, together with any Regulatory Approvals obtained in connection
therewith, shall be filed in Medeva's name and owned by Medeva.
6.2.3 Each Party shall retain ownership and control of any of its
Confidential Information included in any Approval Application. Notwithstanding
the previous sentence, each Party agrees that it shall not withhold from the
other Party any Confidential Information necessary for the filing, maintenance,
modification or protection of an Approval Application by such other Party.
6.3 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS; ABANDONMENT.
6.3.1 TGC, or TGC's designee, shall have the responsibility to file,
prosecute and maintain the Patent Rights (except as otherwise provided under the
Third Party Agreements) and shall bear all Patent Costs associated therewith.
TGC shall provide Medeva with an opportunity to review and comment on the nature
and text of new or pending applications for Patent Rights (except as otherwise
provided under the Third Party Agreements) worldwide. TGC shall
25
consider in good faith any comments from Medeva regarding steps that might be
taken to strengthen patent protection with respect to any patent within the
Patent Rights, and shall conduct discussions with Medeva on a reasonable basis
regarding the patent prosecution strategy for Patent Rights. TGC agrees to keep
Medeva informed of the course of patent prosecution or other proceedings
relating to the Patent Rights to the extent known by TGC.
6.3.2 In the event TGC elects not to file or continue to prosecute an
application for a patent within the Patent Rights or to abandon an issued patent
within the Patent Rights in any country, TGC shall notify Medeva not less than
two (2) months before any relevant deadline, and thereafter Medeva shall have
the right to pursue, at Medeva's expense and in Medeva's sole discretion,
prosecution of such patent application or maintenance of such issued patent
(except with respect to any patent application or patent licensed to TGC under
the Third Party Agreements, in which case Medeva shall only have the right to
pursue prosecution or maintenance to the extent permitted in the applicable
Third Party Agreement).
6.3.3 TGC shall provide Medeva with a copy of any communications received
by TGC, or any communication which TGC intends to provide to any of its
licensors under the Third Party Agreements, relating to the preparation, filing,
prosecution and maintenance, including without limitation the issuance, lapse,
revocation, surrender, invalidation or abandonment, of any patent or patent
application under which TGC received a grant of rights pursuant to the Third
Party Agreements. To the extent TGC is afforded an opportunity by any such
licensor to comment on, or participate in the filing or maintenance of, any such
patent or patent application, TGC shall promptly notify Medeva and discuss TGC's
comments and TGC's participation in such filing or maintenance with Medeva.
Thereafter TGC shall notify its licensor of Medeva's comments and suggestions
relating to such filing or maintenance of such patent or patent application and
shall use
26
its Reasonable Commercial Efforts to cause such licensor to consider Medeva's
comments and suggestions. Without limiting the foregoing, TGC agrees not to
abandon any patent or patent application licensed to TGC under the Third Party
Agreements for which TGC has responsibility for prosecution and maintenance
without Medeva's prior written consent.
6.4 PROSECUTION AND MAINTENANCE OF JOINT PATENTS; ABANDONMENT. The Parties
agree to discuss in good faith and implement a mutually agreeable patent
strategy with respect to all Joint Inventions that may be patentable. With
respect to all Joint Inventions for which the Parties agree patent protection
should be sought, the Parties shall cooperate in the preparation, filing and
prosecution of Joint Patents and shall discuss and agree on the content and form
of relevant patent applications and any other relevant matters before such
applications are made. Each Party shall consider in good faith any comments from
the other regarding steps that might be taken to strengthen such Joint Patents.
Medeva shall have the right to file, prosecute and maintain such Joint Patents
worldwide, and the Parties shall bear all Patent Costs associated therewith
equally. Medeva shall take no significant steps relating to Joint Patents
without the prior approval of TGC for so long as TGC is paying its share of the
Patent Costs relating thereto. In the event that Medeva elects not to prosecute
a patent application on a particular Joint Invention, TGC may do so at its sole
discretion and expense, and all rights in such Joint Invention and the Joint
Patent claiming such invention shall be assigned to TGC. Either Party may choose
at any time not to continue to pay any such prosecution and maintenance costs
with respect to a particular Joint Patent, and shall thereafter assign all its
rights in such Joint Patent to the Party that pays all such costs. Such
assignment shall take place in a timely manner to enable the non-assigning Party
to meet any external requirement concerning prosecution matters and paying
prosecution and maintenance costs. In the event that a Party elects, at any
time, not to participate in the
27
preparation, filing and prosecution of any patent application covering a Joint
Invention, such Party shall provide reasonable assistance to the other Party, at
the expense of such other Party, with respect to any activities determined by
such other Party as necessary to obtain patent protection for such Joint
Invention.
6.5 ENFORCEMENT OF PATENT RIGHTS.
6.5.1 If any patent within the Patent Rights is or might reasonably be
infringed by a Third Party through the manufacture, use or sale of any products
in the Field (an "Infringement in the Field"), the Party to this Agreement first
having knowledge of such infringement shall promptly notify the other Party in
writing. The notice shall set forth the facts of that infringement in reasonable
detail.
6.5.2 Except as provided in Section 6.5.3, in the event of an Infringement
in the Field which, in the Parties' reasonable judgment, if continued, would
affect materially the marketing and commercialization of Licensed Product by
Medeva, TGC shall institute, prosecute, and control any action or proceeding
with respect to such infringement, provided that either (i) the patent allegedly
infringed is owned by TGC or (ii) TGC has a right to institute, prosecute and
control such action or proceeding. If the patent infringed is not owned by TGC
and TGC does not have a right to institute, prosecute and control such action or
proceeding, TGC shall use Reasonable Commercial Efforts to cause the owner of
such patent (the "Patent Owner") to institute, prosecute and control, or permit
TGC to control, any action or proceeding with respect to such infringement. To
the extent permitted by Applicable Laws where either (a) TGC has brought suit or
(b) the Patent Owner is a party other than TGC and TGC is authorized to permit
Medeva to do so, Medeva shall have the right, at its own expense, to be
represented in any such action or proceeding by counsel of its own choice. In
addition, to the extent that TGC is
28
authorized to permit Medeva to do so, TGC agrees to permit Medeva to control any
action or proceeding with respect to such infringement and, if the Patent Owner
is not TGC and TGC does not have the right to institute prosecute and control
such action or proceeding, TGC shall use Reasonable Commercial Efforts to cause
such Patent Owner to permit Medeva to control any such action or proceeding.
6.5.3 If TGC or the Patent Owner fails to bring an action or proceeding
with respect to an Infringement in the Field within a period of ninety (90) days
after the earlier of (i) the date of the Parties' determination that such
infringement, in the Parties' reasonable judgment, if continued, would affect
materially the marketing and commercialization of Licensed Product by Medeva,
or, (ii) the date of Medeva's request to bring such an action or proceeding,
Medeva, to the extent that TGC is authorized to permit Medeva to do so, shall
have the right, but not the obligation, to bring and control an action or
proceeding in its name against such infringement by counsel of Medeva' own
choice. If the Patent Owner is not TGC, and TGC is not authorized to permit
Medeva to bring and control such an action or proceeding, TGC shall use
Reasonable Commercial Efforts to cause such Patent Owner to permit Medeva to do
so. In any such action, TGC and the Patent Owner shall have the right to join as
a party (or parties) and be represented in any such action by counsel of their
own choice at their own expense. Notwithstanding the above, in the event that it
is not possible under relevant local laws for Medeva to bring and control such
an action or proceeding, TGC, to the extent that TGC is able to do so, shall
bring, or shall cause the Patent Owner to bring, such an action and Medeva shall
control such action, at Medeva's expense. In any such case, TGC agrees to be
joined as a party plaintiff if necessary for Medeva to prosecute the action and
to give Medeva reasonable assistance and authority to file and prosecute the
suit. In addition, if the Patent Owner is not TGC and TGC does not have
29
authority to require the Patent Owner to join as a party plaintiff, TGC agrees
to use Reasonable Commercial Efforts to cause the Patent Owner to agree to be
joined as a party plaintiff if helpful for Medeva to prosecute the action and to
give Medeva reasonable assistance and authority to file and prosecute the suit.
6.5.4 TGC, or the Patent Owner if not TGC, shall retain all other rights
with respect to enforcement of patents which could give rise to an Infringement
in the Field. Any damages or other monetary awards recovered in an action or
proceeding against an infringer of the Patent Rights based on an Infringement in
the Field shall be applied first to the reimbursement of Medeva and TGC, and the
Patent Owner if not TGC, of their respective out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred in prosecuting such
infringement action, on a pro rata basis based upon their respective out-of-
pocket expenses, until all such expenses have been recovered. Unless TGC's pre-
existing written obligations to the Patent Owner require otherwise, any
remaining balance shall be divided (i) equally between the parties in the suit
if TGC, or the Patent Owner if not TGC, is controlling the litigation provided
Medeva did not have the right to control the litigation, or (ii) in the ratio of
[ * ] to Medeva and [ * ] to TGC and the Patent Owner if Medeva is controlling
the litigation or TGC is controlling the litigation at Medeva's request.
6.6 ENFORCEMENT OF JOINT PATENT RIGHTS. If any Joint Patent is or might
reasonably be infringed by a Third Party in any country in the Territory, the
Party to this Agreement first having knowledge of such infringement shall
promptly notify the other Party in writing. The notice shall set forth the
facts of that infringement in reasonable detail. With respect to Joint Patents
that are owned solely by one Party, such Party shall have the sole right, but
not the
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obligation, to institute, prosecute, and control any action or proceeding with
respect to such infringement. The non-owning Party agrees to give the owning
Party, at the owning Party's expense, including reimbursement of the non-owning
Party's out-of-pocket expenses, all reasonable assistance to defend or settle
any such action or proceedings. The owning Party shall bear the costs of such
action or proceedings. If such suspected infringement involves a jointly-owned
Joint Patent and if the Parties do not agree on a joint plan of action, then
Medeva first shall have the right, but not the obligation, to institute,
prosecute, and control any action or proceeding with respect to such
infringement, by counsel of its own choice and thereafter TGC shall have the
right but not the obligation to do so. The Party not bringing the action shall
have the right, at its own expense, to join as a party and be represented in any
such action by counsel of its own choice. If one Party brings any such action or
proceeding with respect to a jointly-owned Joint Patent, the other Party agrees
to be joined as a party plaintiff if necessary to prosecute the action and to
give the first Party reasonable assistance and authority to file and prosecute
the suit. Any damages or other monetary awards recovered in an action against an
infringer of a jointly-owned Joint Patent shall be applied to the reimbursement
of TGC and Medeva for their respective out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred in prosecuting such
infringement action on a pro rata basis based upon their respective out-of-
pocket expenses until all such expenses have been recovered, and any remaining
balance shall be divided equally between the Parties.
6.7 SETTLEMENT WITH A THIRD PARTY. A Party may not settle an action or
proceeding against an infringer under Section 6.5 or Section 6.6 above with
respect to a product in the Field without the written consent of such other
Party. Such consent shall not be unreasonably withheld, but
31
may be withheld if such settlement would materially and adversely affect the
interest of the other Party.
6.8 INFRINGEMENT OF THIRD PARTY RIGHTS.
6.8.1 In the event that a Third Party alleges that such Third Party's
intellectual property rights are being or have been infringed by (i) Medeva's or
TGC's selling, manufacturing, having manufactured or using, pursuant to this
Agreement or Supply Agreement, Bulk Licensed Product, Licensed Products or
products covered by Joint Patents, or (ii) a Third Party's use of Bulk Licensed
Product, Licensed Products or products covered by Joint Patents, Medeva shall
have the right to defend or settle in its sole discretion any legal action or
proceeding arising therefrom (a "Third Party Infringement"). In addition, in the
event that a patent application or patent held or otherwise controlled by Third
Party may be subject to challenge, opposition or other similar actions or
proceedings, including without limitation interference proceedings, Medeva shall
have the right to take appropriate steps to initiate and pursue such actions or
proceedings. TGC and Medeva shall consult with each other concerning strategy,
approaches and the consequences of approaches to be undertaken pursuant to this
Section 6.8, and TGC shall provide and shall cause the Patent Owner to provide,
if applicable, all reasonable assistance requested by Medeva in connection with
any such action or proceeding, provided however that Medeva reimburses the out-
of-pocket expenses of TGC and the Patent Owner, if applicable, in providing such
assistance.
6.8.2 If a Third Party Infringement alleges infringement of a Third Party
intellectual property right about which TGC notified Medeva prior to the
execution of this Agreement or a Third Party intellectual property right about
which neither Medeva nor TGC was aware prior to the
32
execution of this Agreement, Medeva shall be responsible for [ * ] of the costs
and expenses (including without limitation reasonable attorney's fees) incurred
in defending or settling such Third Party Infringement, and TGC shall be
responsible for [ * ] of such costs and expenses. However, if a Third Party
Infringement arises out of a breach of TGC's warranties or representations under
this Agreement, then TGC shall be responsible for [ * ] of the costs and
expenses actually incurred by Medeva in defending or settling such Third Party
Infringement. Payment by TGC of costs and expenses for which TGC is responsible
under this Section 6.8.2 shall be made within sixty (60) days after the date of
TGC's receipt of Medeva's invoice with respect thereto.
6.9 INFRINGEMENT OF MEDEVA TRADEMARKS. TGC agrees to give Medeva prompt
written notice of any unlicensed use by Third Parties of Medeva Trademarks of
which TGC has knowledge.
6.10 OFFSET FOR INFRINGEMENT.
6.10.1 If Medeva is required in accordance with Section 6.8.2 of this
Agreement, at any time during the term of this Agreement, to pay any damages or
other payments (but not milestone payments or payments of ongoing royalties in
either case based upon an amount of Licensed Product sold or a percentage of
sales of Licensed Product which are to be deducted from Net Sales pursuant to
Section 1.32(vii) of the Master Agreement) to any person or entity as a result
of a judgment, settlement or agreement relating to the past and/or future use of
Bulk Licensed Product by either Party ("Third Party Payments"), except insofar
as such Third Party Payments are attributable to the willful misconduct,
negligence or breach of this Agreement by Medeva, its Affiliates or
Sublicensees, Medeva may offset [ * ] of the amount of such Third
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Party Payments actually paid by Medeva against any fees and payments due TGC or
payable on behalf of TGC pursuant to (i) Section 5.3 of this Agreement, but not
research funding payments to TGC pursuant to Section 3.4, or (ii) Section 2.2.1
and Section 6.2 of the Supply Agreement, or (iii) Section 5.6.2 of the Master
Agreement. Such offsets may be made after the date a Third Party Payment was
paid by Medeva.
6.10.2 If at any time during the term of this Agreement, as a result of a
Third Party Infringement, Medeva (i) is prevented from selling Licensed Products
in either Region 1 or Region 3, or both; and (ii) has used its best efforts to
defend or settle legal actions relating to such Third Party Infringement, or to
otherwise obtain a license under intellectual property rights which are the
basis of such Third Party Infringement, then Medeva shall be entitled to offset
[ * ] of payments due to TGC pursuant to Section 5.2 and Section 5.3, but not
research funding payments to TGC pursuant to Section 3.4, against amounts
otherwise due to TGC pursuant to Section 2.2.1 and Section 6.2 of the Supply
Agreement.
6.10.3 Offsets by Medeva allowed pursuant to this Section 6.10,
cumulatively, shall be limited to, and shall not exceed, a total amount in any
calendar year equal to the sum of (i) [ * ] of the amount otherwise due to TGC
in such calendar year pursuant to Section 5.3 of this Agreement; (ii) [ * ] of
the amount otherwise due to TGC in such calendar year pursuant to Section 6.2 of
the Supply Agreement; and (iii) [ * ] of TGC's net profits in such calendar year
on sale of Bulk Licensed Product to Medeva pursuant to Section 2.2.1 of the
Supply Agreement. For purposes of this Section 6.10.3, the term "net profits"
shall mean Transfer Price less TGC's Manufacturing Cost.
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ARTICLE 7
MASTER AGREEMENT
7.1 INCORPORATION BY REFERENCE. Article 3 (Confidentiality), Article 4
(Representations and Warranties), Article 5 (Term and Termination), Article 6
(Indemnification; Insurance; Limitation of Liability), Article 7 (Governing Law;
Dispute Resolution) and Article 8 ( Miscellaneous) of the Master Agreement are
hereby incorporated by reference. The Parties intend and agree that the
provisions contained in the articles referred to in the previous sentence,
together with the provisions contained in the articles set forth in this
Agreement, describe fully the rights and obligations as between the Parties
under this Agreement, and that such articles, together with the articles set
forth in this Agreement, shall apply to and govern the Parties with respect to
this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
TARGETED GENETICS CORPORATION MEDEVA PHARMACEUTICALS, INC.
("TGC") ("MEDEVA")
By: /s/ H. Stewart Parker By: /s/ William Bogie
------------------------------------- --------------------------------
Name: H. Stewart Parker Name: William Bogie
----------------------------------- ------------------------------
Title: President, Chief Executive Officer Title: President
---------------------------------- -----------------------------
35
SCHEDULE 3.3.2
BUDGETED DEVELOPMENT R&D FUNDING FOR FIRST PROJECT YEAR
-------------------------------------------------------
Cost Structure per FTE (US $s) (1):
Direct labor [*]
Payroll taxes and benefits [*]
Lab supplies [*]
Indirect costs:
Dept. operating costs [*]
R&D management [*]
R&D facility maintenance/operating costs [*]
R&D rent and utilities [*]
R&D equipment-related costs [*]
Allocated G&A costs [*]
------
Total costs per FTE [*]
Less G&A costs [*]
------
Rate per FTE payable by Medeva [*]
Estimated level of effort (FTEs):
Process development [*]
Assay development [*]
Preclinical biology [*]
Product development [*]
------
Total [*]
Total cost of TGC internal effort (thousands of US $s) [*]
External costs (animal studies, assays, etc.) [*]
------
Subtotal [*]
5% Contingency [*]
------
Total estimated budget--Project Year 1 (thousands of US $s)
(1) FTE = full time equivalent R&D employee [*]
- -------------------------------------
/*/ Confidential Treatment Requested.
36
EXHIBIT A
DEVELOPMENT PLAN
----------------
SECTION 1
- ---------
1. For the purposes of the Transaction Documents the definitions of Phase I
Clinical Trial, Phase II Clinical Trial and Phase III Clinical Trial shall be
as follows:
"Phase I Clinical Trial" means the studies currently consisting of Studies
AAV9501, AAV9502 and AAV9701 (as described in Section 3 of this Exhibit A),
together with all extensions of these studies and any additional studies
which the Steering Committee determines (in accordance with the provisions of
Article 3 of this Agreement) are required to explore tolerance and, through
molecular and biological end points as indicators, designed to demonstrate
activity sufficient for the purposes of designing the Phase II Clinical
Trial.
"Phase II Clinical Trial" means the studies currently consisting of Studies
AAV9901 and AAV9902 (as described in Section 3 of this Exhibit A), together
with all extensions of these studies and any additional studies which the
Steering Committee determines (in accordance with the provisions of Article 3
of this Agreement) are required for the initial demonstration of clinical
efficacy (e.g. reduced infection incidents and/or increased FVC) and initial
determination of side effects, and designed to be sufficient for the purposes
of designing the Phase III Clinical Trial.
"Phase III Clinical Trial" means the studies required to provide definitive
proof of efficacy/determination of safety profile and to be performed after
appropriate evidence has been obtained of efficacy during Phase II Clinical
Trials, and designed to be sufficient for the purposes of submitting an
Approval Application.
2. The Parties have discussed previously (i) an outline of the clinical portions
of the Development Plan, (ii) the timetable for such clinical portion which
is attached in Section 2 of this Exhibit A, and the (iii) proposed budgeted
Development R&D funding for the first Project Year which is set out in
Schedule 3.3.2 to this Agreement.
3. The Parties acknowledge that it is the responsibility of the Steering
Committee (to be set up under Article 3 of this Agreement) to establish the
Development Plan and carry out the other activities in respect thereof in
accordance with the provisions of the Transaction Documents and in particular
Article 3 of this Agreement.
4. The draft preliminary Development Plan attached in Section 3 of this Exhibit
A has been drawn up by TGC and following discussion with Medeva it has been
agreed that such Development Plan will form the basis for discussion and
establishment of the Development Plan in accordance with the provisions of
Article 3 of this Agreement.
SECTION 2 - See Attached
- ---------
SECTION 3 - See Attached
- ---------
37
EXHIBIT A - Section 2
[ * ]
- -------------------------------------
/*/ Confidential Treatment Requested.
38
EXHIBIT A
SECTION 3
- ---------
[ * ]
- -------------------------------------
/*/ Confidential Treatment Requested.
39
EXHIBIT B
OUTSIDE CONTRACTOR LETTER
-------------------------
Medeva Pharmaceuticals, Inc.
755 Jefferson Road
Rochester, New York 14623
United States of America
Re: Third Party Service Contract
Dear Ladies and Gentlemen:
This letter will serve as notice to Medeva BV ("Medeva") that pursuant to
Section 3.7 of the License and Collaboration Agreement (the "Agreement") dated
_______________, between Medeva and Targeted Genetics Corporation ("TGC"),
[insert name of third party service provider] (the "Service Provider") has been
engaged as a contractor for TGC in connection with the performance of the
following obligation of TGC under the Agreement:
[insert description of obligation]
A copy of our agreement with TGC is attached hereto (the "Service Contract").
Such Service Contract constitutes the entire agreement between Service Provider
and TGC, is in full force and to our knowledge neither party is in breach of any
of the terms thereof.
Service Provider hereby acknowledges that, during the term of the Service
Contract, in the event of a breach of the Service Contract by Service Provider
which causes TGC to breach its obligations to Medeva, Medeva shall have the
right to pursue and seek to enforce TGC's remedies (including equitable
remedies) under the Service Contract directly against Service Provider without
first exhausting its remedies against TGC.
Service Provider acknowledges that any fees or compensation due it pursuant to
the Service Contract shall be payable by TGC only. Service Provider represents
and warrants to Medeva that it is not an affiliate of TGC. Service Provider
further acknowledges that Medeva shall not have any liability to, nor be
responsible for the payment of any amounts to, Service Provider.
Very truly yours,
[Name of Service Provider]
By:________________________
Name:
Title:
Address:
Date:
40