Exhibit 10.1
PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT--EXCLUSIVE
COVER PAGE
For PHS internal use only:
Patent License Number: L-259-97/0
Serial Numbers of Licensed Patents: A.) USPN 5,635,599 (=USSN 08/225,224);
B.) USSN 08/722,258 (CIPofUSSN 08/225,224); C.) USPN 4,892,827(=USSN 06/911,227)
and D.) USPN5,720,720 [ = USSN 08/616,785 (FWC of 08/112,370)].
Licensee: Neurocrine Biosciences, Inc., 3050 Science Park Road, San Diego,
California 92121.
CRADA Number (if applicable): N/A
Additional Remarks: Foreign Patent rights to the '827 Patent reside with the
inventors.
This Patent License Agreement, hereinafter referred to as the "Agreement,"
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
(List of Patent(s) or Patent Application(s), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), Appendix F (Commercial Development Plan) and Appendix G ( PHS
Incurred Patent Prosecution Costs). The Parties to this Agreement are:
1) The National Institutes of Health ("NIH"), the Centers for Disease Control
and Prevention ("CDC"), or the Food and Drug Administration ("FDA"), agencies of
the United States Public Health Service ("PHS"), hereinafter singly or
collectively referred to as "PHS", within the Department of Health and Human
Services ("DHHS"); and
2) The person, corporation, or institution identified above and/or on the
Signature Page, having offices at the address indicated on the Signature Page,
hereinafter referred to as "Licensee".
PHS PATENT LICENSE AGREEMENT--EXCLUSIVE
PHS and Licensee agree as follows:
1. BACKGROUND
1.01 In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.
1.02 By assignment of rights from PHS employees and other inventors, DHHS, on
behalf of the United States Government, owns intellectual property rights
claimed in any United States and foreign Patent Applications or Patents
corresponding to the assigned inventions. DHHS also owns any tangible
embodiments of these inventions actually reduced to practice by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to PHS the
authority to enter into this Agreement for the licensing of rights to these
inventions under 35 U.S.C. 200-212, the Federal Technology Transfer Act of 1986,
15 U.S.C. 3710a, and/or the regulations governing the licensing of
Government-owned inventions, 37 CFR Part 404.
1.04 PHS desires to transfer these inventions to the private sector through
commercialization licenses to facilitate the commercial development of products
and processes for public use and benefit.
1.05 Licensee desires to acquire commercialization rights to certain of these
inventions in order to develop processes, methods, or marketable products for
public use and benefit.
2. DEFINITIONS
2.01 "Benchmarks" mean the performance milestones set forth in Appendix E.
2.02 "Commercial Development Plan" means the written commercialization plan is
attached as Appendix F and/or is attached to this Agreement and/or is
incorporated by reference into this Agreement.
2.03 "Corporate Collaborator" means a non-affiliate third party to whom Licensee
has granted exclusive or non-exclusive commercialization rights, to one or more
Licensed Product(s) or Licensed Process(es), but not including exclusive or
non-exclusive commercialization rights to manufacture either Licensed Products
and/or Licensed Process(es).
2.04 "First Commercial Sale" means, subsequent to the regulatory approval in the
respective country, the initial transfer by or on behalf of Licensee or its
sublicensees of Licensed Products or the initial practice of a Licensed Process
by or on behalf of Licensee or its sublicensees in exchange for cash or some
equivalent to which value can be assigned for the purpose of determining Net
Sales.
2.05 "Government" means the Government of the United States of America.
"Licensed Fields of Use" means the fields of use identif~ed in Appendix B.
"Licensed Patent Rights" shall mean:
a) U.S. Patent Applications and Patents listed in Appendix A, all divisions and
continuations of these Applications, all Patents issuing from such Applications,
divisions, and continuations, and any reissues, reexaminations, and extensions
of all such Patents;
b) to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these continuations-in-part; iii)
all Patents issuing from such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations, and extensions of all such
Patents;
c) to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: all counterpart foreign
Applications and Patents to a) and b) above, excluding those corresponding to
United States Patent Number 4,892,827, entitled, "Recombinant Pseudomonas
Exotoxin: Construction of An Immunotoxin With Low Side Effects", Inventors; Drs.
Ira H. Pastan, Sankar Adhya and David Fitzgerald, as listed in Appendix A.
Licensed Patent Rights shall not include subject matter within b) or c) above to
the extent that such subject matter is covered by one or more claims directed to
new matter which is not the subject matter disclosed in a) above.
2.08 "Licensed Process(es)" means processes which, in the course of being
practiced would, in the absence of this Agreement, infringe one or more claims
of the Licensed Patent Rights that have not been held invalid or unenforceable
by an unappealed or unappealable judgment of a court of competent jurisdiction.
2.09 "Licensed Product(s)" means tangible materials which, in the course of
manufacture, use, or sale would, in the absence of this Agreement, infringe one
or more claims of the Licensed Patent Rights that have not been held invalid or
unenforceable by an unappealed or unappealable judgment of a court of competent
jurisdiction.
2.10 "Licensed Territory" means the geographical area identified in Appendix B.
2.11 "Net Sales" shall mean the total of all amounts invoiced by Licensee and
its authorized Affiliates and sublicensees, for sales of Licensed Product(s),
net of all separately invoiced and actually incurred charges, including (a)
credits, allowances, discounts and rebates to, and charge-backs from the account
of, such independent third parties; (b) actual freight and insurance costs
incurred in transporting Licensed Product(s) to such independent third parties;
(c) reasonable and customary cash, quantity and trade discounts and other price
reduction programs; (d) sales, use, value-added and other direct taxes incurred;
and (e) customs duties, surcharges and other government charges incurred in
connection with the exportation or importation of Licensed Product(s).
"Practical Application" means to manufacture in the case of a composition or
product, to practice in the case of a process or method, or to operate in the
case of a machine or system; and in each case, under such conditions as to
establish that the invention is being utilized and that its benefits are to the
extent permitted by law or Government regulations available to the public on
reasonable terms.
2.13 "Research License" means a nontransferable, nonexclusive license to make
and to use the Licensed Products or Licensed Processes as defined by the
Licensed Patent Rights for purposes of research and not for purposes of
commercial manufacture or distribution or in lieu of purchase.
2.14 "Affiliate" means a corporation or other business entity which, directly or
indirectly, is controlled by, controls, or is under common control with
Licensee. For this purpose, the term "control" shall mean ownership of more than
forty-eight percent (48%) of the voting stock or other ownership interest of the
corporation or other business entity, or the power to elect or appoint more than
forty-eight percent (48%) of the members of the governing body of the
corporation or other business entity.
2.15 "Optioned Field(s) of Use" means the fields of use identified in Appendix
B.
3. GRANT OF RIGHTS
3.01 PHS hereby grants and Licensee accepts, subject to the terms and conditions
of this Agreement, an exclusive license under the Licensed Patent Rights, in the
Licensed Territory to make and have made, to use and have used, and to sell and
have sold any Licensed Products in the Licensed Fields of Use and to practice
and have practiced any Licensed Processes in the Licensed Fields of Use.
3.02 Subject to Article 5, Paragraphs 5.01-5.05, PHS hereby grants and Licensee
accepts an exclusive option under the Licensed Patent Rights in the Licensed
Territory for any therapeutic application not within the Licensed Field of Use
(hereinafter defined as "Optioned Field(s) Use").
3.03 This Agreement confers no license or rights by implication, estoppel, or
otherwise under any Patent Applications or Patents of PHS other than Licensed
Patent Rights regardless of whether such Patents are dominant or subordinate to
Licensed Patent Rights.
4. SUBLICENSING
4.01 Licensee will provide PHS written notice of its intent to sublicense the
Licensed Patent Rights and a copy of the term sheet and/or pertinent
sublicensing terms within thirty (30) days [***]. However, PHS has the right to
require deletion or mod)fication of any provision(s) of such sublicensing
agreement(s) which PHS determines to be contrary to Law or Federal Statutes.
4.02 Licensee agrees that any sublicenses granted by it shall provide that the
obligations to PHS of paragraphs 6.01-6.04, 9.01-9.02, 11.01-11.02, 13.05 and
14.07-14.09 of this Agreement shall be binding upon the sublicensee as if it
were a party to this Agreement. Licensee further agrees to attach copies of
these Paragraphs to all sublicense agreements.
4.03 Any sublicenses granted by Licensee shall provide for the termination of
the sublicense, or the conversion to a license directly between such
sublicensees and PHS, at the option of the sublicensee, upon termination of this
Agreement under Article 14. Such conversion is subject to PHS approval and
contingent upon acceptance by the sublicensee of the remaining provisions of
this Agreement.
4.04 Licensee agrees to forward to PHS a copy of each fully executed sublicense
agreement postmarked within sixty (60) days of the execution of such agreement.
To the extent permitted by law, PHS agrees to maintain each such sublicense
agreement in confidence.
5. OPTION
5.01 The option period shall extend for five (5) years from the effective date
of this Agreement. Subject to the provisions of this Article 5, PHS will not
offer an exclusive or non-exclusive license or an exclusive or non-exclusive
option to any third party until the end of the option period, [***].
5.02 Licensee may exercise its option by providing a written notice to PHS prior
to expiration of the option period [***], said notice shall include a Commercial
Development Plan and Benchmarks for each therapeutic application within the
Optioned Field(s) of Use for which Licensee will undertake development.
5.03 [***], PHS will be free to license Licensed Patent Rights within the
Optioned Field(s) of Use to a third party [***] upon any terms PHS deems to be
commercially reasonable.
The Commercial Development Plan(s) and Benchmarks set forth in Paragraph 5.02
shall be subject to PHS ~ review and approval.
5.05 Upon PHS's receipt, review and approval of the Commercial Development
Plan(s) and Benchmarks, the parties to this Agreement shall meet and negotiate
in good faith the term of license for the use of the License Patent Rights for
each of the therapeutic applications be: requested by Licensee within the
Optioned Field(s) of Use. If the parties cannot agree upon terms of a license
for the Optioned Field(s) of Use within sixty (60) days after entering into
negotiations, PHS shall be free to license the Licensed Patent Rights for such
Optioned Fields of Use to a third party (a) at any time within two (2) months
from the termination of such negotiations at terms no more favorable than those
last offered to Licensee, or (b) at any time subsequent to the expiration of
three (3) months from the termination of such negotiations any terms PHS deems
to be commercially reasonable.
6. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
6.01 PHS reserves on behalf of the Government an irrevocable, nonexclusive,
nontransferable, royalty-free license for the practice of all inventions
licensed under the Licensed Patent Rights throughout the world by or on behalf
of the Government and on behalf of any foreign government or international
organization pursuant to any existing or future treaty or agreement which the
Government is a signatory. Prior to the First Commercial Sale, Licensee agrees
to provide PHS mutually acceptable quantities of Licensed Products or materials
made through Licensed Processes for research use. PHS shall supply Licensee with
a research plan outlining its intended use of the Licensed Products or materials
made through the Licensed Processes supplied by Licensee to PHS. PHS will allow
Licensee to provide its input regarding the PHS research plan and PHS will
provide Licensee with a summary of its results of research under research plan.
6.02 Licensee agrees that products used or sold in the United States embodying
Licensed Products or produced through use of Licensed Processes shall be
manufactured substantially in the United States, unless a written waiver is
obtained in advance from PHS.
6.03 Licensee acknowledges that PHS may enter into future Cooperative Research
and Development Agreements (CRADAs) under the Federal Technology Transfer Act of
1986 that relate to the subject matter of this Agreement. Licensee agrees not to
unreasonably deny requests for a Research License from such future collaborators
with PHS when acquiring such rights is necessary in order to make a CRADA
project feasible. Licensee may request an opportunity to join as a party to the
proposed CRADA.
6.04 In addition to the reserved license of Paragraph 5.01 above, PHS reserves
the right to grant such nonexclusive Research Licenses directly or to require
Licensee to grant nonexclusive Research Licenses on reasonable terms. The
purpose of this Research License is to encourage basic research, whether
conducted at an academic or corporate facility. In order to safeguard the
Licensed Patent Rights, however, PHS shall obtain the prior written consent of
Licensee, which consent shall not be unreasonably withheld, before granting an
commercial entities a Research License. If PHS desires to provide research
samples of biological materials claimed under the Licensed Patent Rights to a
commercial entity, PHS shall only do so under an appropriate Research License or
Material Transfer Agreement.
7. ROYALTIES AND REIMBURSEMENT
7.01 Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty as set forth in Appendix C within thirty (30) days from the date that
this Agreement becomes effective.
7.02 Licensee agrees to pay to PHS a [***] royalty payment as set forth in
Appendix C. The [***] royalty payment is due and payable on [***]. The [***]
royalty payment due for the first [***] of this Agreement may be prorated
according to the fraction of the calendar year remaining between the effective
date of the Agreement and the [***].
7.03 Licensee agrees to pay PHS earned royalties as set forth in Appendix C.
7.04 Licensee agrees to pay PHS benchmark royalties as set forth in Appendix C.
7.05 Licensee agrees to pay [***] as set forth in Appendix
C.
7.06 A claim of a Patent or Patent Application licensed under this Agreement
shall cease to fall within the Licensed Patent Rights for the purpose of
computing the minimum annual royalty and earned royalty payments in any given
country on the earliest of the dates that a) the claim has been abandoned but
not continued, b) the Patent expires or irrevocably lapses, or c) the claim has
been held to be invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or administrative agency.
7.07 No multiple royalties shall be payable because any Licensed Products or
Licensed Processes are covered by more than one of the Licensed Patent Rights.
7.08 On sales of Licensed Products by Licensee to sublicensees or aff~liated
parties or on sales made in other than an arm's-length transaction, the value of
the Net Sales attributed under this Article 6 to such a transaction shall be
that which would have been received in an arm's-length transaction, based on
sales of like quantity and quality products on or about the time of such
transaction. Sales of Licensed Products for use in preclinical and clinical
testing and sales of Licensed Products, on a non-commercial basis, for research
purposes are excluded from this provision, as are limited interim transfers of
Licensed Products to Affiliates, sublicensees or incidental to a partnership or
joint venture collaboration between Licensee and a third party.
7.09 With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all Patent Applications and Patents, except for
USPN 4,892,827 (= USSN 06/911,227), included within the Licensed Patent Rights
incurred by PHS prior to the effective date of this Agreement, Licensee shall
pay to PHS, as an additional royalty, within sixty (60) days of PHS's submission
of a statement and request for payment to Licensee, the amount [***] to cover
Patent expenses previously incurred by PHS and detailed in Appendix G.
With regard to expenses associated with the preparation, filing, prosecution,
and maintenance of all Patent Applications and Patents included within the
Licensed Patent Rights incurred by PHS on or after the effective date of this
Agreement, PHS, at its sole option, may require Licensee:
(a) to pay PHS on an annual basis, within sixty (60) days of PHS's submission
of a statement and request for payment, a royalty amount equivalent to all
such Patent expenses incurred during the previous calendar year(s); or
(b) to pay such expenses directly to the law firm employed by PHS to handle
such functions. However, in such event, PHS and not Licensee shall be the
client of such law firm.
Under exceptional circumstances, Licensee may be given the right to assume
responsibility for the preparation, filing, prosecution, or maintenance of any
Patent Application or Patent included with the Licensed Patent Rights. In that
event, Licensee shall directly pay the attorneys or agents engaged to prepare,
file, prosecute or maintain such Patent Applications or Patents and shall
provide to PHS copies of each invoice associated with such services as well as
documentation that such invoices have been paid.
Licensee may elect to surrender its rights in any country of the Licensed
Territory under any Licensed Patent Rights upon sixty (60) days written notice
to PHS and owe no further obligation for Patent-related expenses incurred in
that country after the effective date of such written notice.
8. PATENT FILING, PROSECUTION, AND MAINTENANCE
8.01 Except as otherwise provided in this Article 8, PHS agrees to take
responsibility for, but to consult with, the Licensee in the preparation,
filing, prosecution, and maintenance of any Patent Applications or Patents
included in the Licensed Patent Rights and shall furnish cof relevant
Patent-related documents to Licensee.
8.02 Upon execution of this Agreement, Licensee shall assume the responsibility
for the preparation, filing, prosecution, and maintenance of United States
Patent Number 5,635,599 and United States Patent Application Serial Numbers
08/722,258 and 08/616,785 of Licensed Patent Rights, including all relevant
continuations-in-part, all divisions and continuations of these continuation
in-part; all Patents issuing from such continuation-in-part, divisions, and
continuations, and any reissues, reexaminations and extensions of all such
Patents, and shall on an ongoing basis promptly furnish copies of all
Patent-related documents to PHS. In such event, Licensee shall, subject to the
prior approval of PHS, select registered Patent attorneys or Patent agents to
provide such services on behalf of Licensee and PHS.PHS shall provide
appropriate powers of attorney and other documents necessary to undertake such
actions to the Patent attorneys or Patent agents providing such services.
Licensee and its attorneys or agents shall consult with PHS in all aspects of
the preparation, filing, prosecution and maintenance of Patent Applications and
Patents included within the Licensed Patent Rights and shall provide PHS
sufficient opportunity to comment on any document that Licensee intends to file
or to cause to be filed with the relevant intellectual property or Patent
office.
8.03 If Licensee has assumed control of the Licensed Patent Rights in accordance
with Paragraphs 7.10 and 8.02, at any time, PHS may provide Licensee with
written notice that PHS wishes to assume control of the preparation, filing,
prosecution, and maintenance of any and all Patent Applications or Patents
included in the Licensed Patent Rights. If PHS elects to assume such
responsibilities, Licensee agrees to cooperate fully with PHS, its attorneys and
agents in the preparation, filing, prosecution, and maintenance of any and all
Patent Applications or Patents included in the Licensed Patent Rights and to
provide PHS with complete copies of any and all documents or other materials
that PHS deems necessary to undertake such responsibilities. Licensee shall be
responsible for all costs associated with transferring Patent prosecution
responsibilities to an attorney or agent of PHS's choice.
8.04 Each party shall promptly inform the other as to all matters that come to
its attention that may affect the preparation, filing, prosecution, or
maintenance of the Licensed Patent Rights and permit each other to provide
comments and suggestions with respect to the preparation, filing, and
prosecution of Licensed Patent Rights, which comments and suggestions shall be
considered by the other party.
9. RECORD KEEPING
9.01 Licensee agrees to keep accurate and correct records of Licensed Products
made, used, or sold and Licensed Processes practiced under this Agreement
appropriate to determine the amount of royalties due PHS. Such records shall be
retained for at least [***] years following a given reporting period. Upon the
written request of PHS, and not more than once per calendar year, unless PHS
determines there is reason(s) for more frequent inspections, Licensee shall
permit an accountant or other designated auditor selected by PHS to inspect such
records for the sole purpose of verifying reports and payments hereunder at the
expense of PHS. The accountant or auditor shall only disclose to PHS infonnation
relating to the accuracy of reports and payments made under this Agreement. If
an inspection shows an underreporting or underpayment in excess of [***] for any
twelve (12) month period, then Licensee shall reimburse PHS for the cost of the
inspection at the time Licensee pays the unreported royalties, including any
late charges as required by Paragraph 10.08 of this Agreement. All payments
required under this Paragraph shall be due within thirty (30) days of the date
PHS provides Licensee notice of the payment due.
9.02 Licensee agrees to conduct an independent audit of sales and royalties at
least every two years if annual sales of the Licensed Product or Licensed
Processes are over [***] dollars. The audit shall address, at a minimum, the
amount of gross sales by or on behalf of Licensee during the audit period, the
amount of funds owed to the Government under this Agreement, and whether the
amount owed has been paid to the Government and is reflected in the records of
the Licensee. A report by the auditor shall be submitted promptly to PHS on
completion. Licensee shall pay for the entire cost of the audit, however,
Licensee may credit [***] of such costs for the audit against any future
royalties due to PHS under this Agreement.
10. REPORTS ON PROGRESS. BENCHMARKS. SALES. AND PAYMENTS
10.01 Prior to signing this Agreement, Licensee has provided to PHS the
Commercial Development Plan attached and/or as Appendix F, under which Licensee
intends to bring the subject matter of the Licensed Patent Rights to the point
of Practical Application. This Commercial Development Plan is attached and/or
hereby incorporated by reference into this Agreement. Based on this plan,
performance Benchmarks are determined as specified in Appendix E.
10.02 Licensee shall provide written annual reports on its product development
progress or efforts to commercialize under the Commercial Development Plan for
each of the Licensed Fields of Use within sixty (60) days after December 31 of
each calendar year. These progress reports shall include, but not be limited to:
progress on research and development, status of applications for regulatory
approvals, manufacturing, sublicensing, marketing, and sales during the
preceding calendar year, as well as plans for the present calendar year. PHS
also encourages these reports to include information on any of Licensee's public
service activities that relate to the Licensed Patent Rights. If reported
progress differs from that projected in the Commercial Development Plan and
Benchmarks, Licensee shall explain the reasons for such differences. Licensee
agrees to provide any additional information reasonably required by PHS to
evaluate Licensee's performance under this Agreement. PHS shall not unreasonably
withhold approval of any request of Licensee to extend the time periods of this
schedule if such request is supported by a reasonable showing by Licensee of
diligence in its performance under the Commercial Development Plan and toward
bringing the Licensed Products to the point of Practical
10.03 Licensee shall report to PHS the date of the First Commercial Sale in each
country in the Licensed Territory within thirty (30) days of such occurrence.
10.04 Licensee shall submit to PHS within sixty (60) days after each [***] a
royalty report setting forth for the preceding half-year period the amount of
the Licensed Products sold or Licensed Processes practiced by or on behalf of
Licensee in each country within the Licensed Territory, the Net Sales, and the
amount of royalty accordingly due. With each such royalty report, Licensee shall
submit payment of the earned royalties due. If no earned royalties are due to
PHS for any reporting period, the written report shall so state. The royalty
report shall be certified as correct by an authorized of ficer of Licensee and
shall include a detailed listing of all deductions made under Paragraph 2.10 to
determine Net Sales made under Article 7 to determine royalties due.
10.05 Licensee agrees to forward [***] to PHS a copy of such reports received by
Licensee from its sublicensees during the preceding [***] period as shall be
pertinent to a royalty accounting to PHS by Licensee for activities under the
sublicense.
10.06 Royalties due under Article 6 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion rate shall be the
New York foreign exchange rate quoted in The Wall Street Journal on the day that
the payment is due. All checks and bank drafts shall be drawn on United States
banks and shall be payable, as appropriate, for FDA or NIH licenses to the
National Institutes of Health, P.O. Box 360120, Pittsburgh, Pennsylvania
15251-6120. Any loss of exchange, value, taxes, or other expenses incurred in
the transfer or conversion to U.S. dollars shall be paid entirely by Licensee.
The royalty report required by Paragraph 9.04 of this Agreement shall accompany
each such payment and a copy of such report shall also be mailed to PHS at its
address for notices indicated on the Signature Page of this Agreement.
10.07 The parties acknowledge that Licensee and its sublicensees may be
obligated to pay taxes, fees, assessments or other charges imposed by government
authorities (the "Charges") up on royalty payments payable in connection with
the sale of Licensed Products. Licensee and its sublicensees shall provide PHS
with documentation regarding the Charges and the payment of such Charges to the
appropriate governmental authorities. Licensee and its sublicensees shall deduct
all such Charges from the royalty payments due in Paragraph 7.03 and shall
provide a listing of all such Charges in the royalty report due in Paragraph
10.04. Licensee shall pay the Charges to the appropriate governmental
authorities. Licensee shall promptly provide PHS with any documents which may
reasonably be necessary for PHS to obtain any credit to which it may be entitled
with respect to the Charges.
10.08 Late charges will be assessed by PHS as additional royalties on any
overdue payments at a rate of [***] percent per month compounded monthly. The
payment of such late charges shall not prevent PHS from exercising any other
rights it may have as a consequence of the lateness of any payment.
10.09 All plans and reports required by this Article 10 and marked confidential"
by Licensee shall, to the extent permitted by law, be treated by PHS as
commercial and financial information obtained from a person and as privileged
and confidential and any proposed disclosure of such records by the PHS under
the Freedom of Information Act, 5 U.S.C. 552 shall be subject to the
predisclosure notification requirements of 45 CFR 5.65(d).
11. PERFORMANCE
11.01 Licensee shall use its reasonable best efforts to bring the License
Products and Licensed Processes to Practical Application. "Reasonable best
efforts" for the purposes of this provision shall include Licensee's good faith
attempts to adhere to the Commercial Development Plan at Appendix F and perform
the Benchmarks at Appendix E.
The efforts of a sublicensee shall be considered the efforts of Licensee.
11.02 Upon the First Commercial Sale, until the expiration of this Agreement,
Licensee shall use its reasonable best efforts to make Licensed Products and
Licensed Processes reasonably accessible to the United States public.
12. INFRINGEMENT AND PATENT ENFORCEMENT
12.01 PHS and Licensee agree to notify each other promptly of each infringement
or possible infringement of the Licensed Patent Rights, as well as any facts
which may affect the validity, scope, or enforceability of the Licensed Patent
Rights of which either Party becomes aware.
12.02 Pursuant to this Agreement and the provisions of Chapter 29 of title 35,
United States Code, Licensee may a) bring suit in its own name, at its own
expense, and on its own behalf for infringement of presumably valid claims in
the Licensed Patent Rights; b) in any such suit, enjoin infringement and collect
for its use, damages, profits, and awards of whatever nature recoverable for
such infringement; and c) settle any claim or suit for infringement of the
Licensed Patent Rights provided, however, that [***]. If Licensee desires to
initiate a suit for Patent infringement Licensee shall notify PHS in writing. If
PHS does not [***]. PHS shall have a continuing right to intervene in such suit.
Licensee shall take no action to compel the Government either to initiate or to
join in any such suit for Patent infringement. Licensee may request the
Government to initiate or join in any such suit if necessary to avoid dismissal
of the suit. Should the Government be made a party to any such suit, Licensee
shall reimburse the Government for any costs, expenses, or fees which the
Government incurs as a result of such motion or other action, including any and
all costs incurred by the Government in opposing a such motion or other action.
In all cases, Licensee agrees to keep PHS reasonably apprised of status and
progress of any litigation. Before Licensee commences an infringement action,
Licensee shall notify PHS and give careful consideration to the views of PHS and
to any potential effects of the litigation on the public health in deciding
whether to bring suit.
12.03 In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the Licensed Patent Rights shall be brought against
Licensee or raised by way of counterclaim or affirmative defense in an
infringement suit brought by Licensee under Paragraph 12.02, pursuant to this
Agreement and the provisions of Chapter 29 of Title 35, United States Code or
other statutes, Licensee may a) defend the suit in its own name, at its own
expense, and on its own behalf for presumably valid claims in the Licensed
Patent Rights; b) in any such suit, ultimately to enjoin infringement and to
collect for its use, damages, profits, and awards of whatever nature recoverable
for such infringement; and c) settle any claim or suit for declaratory judgment
involving the Licensed Patent Rights-provided, however, that PHS and appropriate
Government Patent License Agreement authorities shall have the first right to
take such actions and shall have a continuing right to intervene in such suit.
If PHS does not notify Licensee of its intent to respond to the legal action
within sixty (60) days, Licensee will be free to do so. Licensee shall take no
action to compel the Government either to initiate or to join in any such
declaratory judgment action. Licensee may request the Government to initiate or
to join any such suit if necessary to avoid dismissal of the suit. Should the
Government be made a party to any such suit by motion or any other action of
Licensee, Licensee shall reimburse the Government for any costs, expenses, or
fees which the Government incurs as a result of such motion or other action. If
Licensee elects not to defend against such declaratory judgment action, PHS, at
its option, may do so at its own expense. In all cases, Licensee agrees to keep
PHS reasonably apprised of the status and progress of any litigation. Before
Licensee commences an infringement action, Licensee shall notify PHS and give
careful consideration to the views of PHS and to any potential effects of the
litigation on the public health in deciding whether to bring suit.
12.04 In any action under Paragraphs 12.02 or 12.03 initiated by Licensee, the
expenses including costs, fees, attorney fees, and disbursements, shall be paid
by Licensee. [***].
12.05 PHS shall cooperate fully with Licensee in connection with any action
under Paragraphs 12.02 or 12.03. PHS agrees promptly to provide access to all
necessary documents and to render reasonable assistance in response to a request
by Licensee.
13. NEGATION OF WARRANTIES AND INDEMNIFICATION
13.01 PHS offers no warranties other than those specified in Article 1.
13.02 PHS represents to the best of knowledge and belief of PHS, as of the
execution date hereof, there are no Patents or Patent Applications of PHS, other
than those within the Licensed Patent Rights, which would dominate the
manufacture, use or sale of Licensed Product(s) or the use of Licensed
Process(es).
13.03 PHS does not warrant the validity of the Licensed Patent Rights and makes
no representations whatsoever with regard to the scope of the Licensed Patent
Rights, or that the Licensed Patent Rights may be exploited without infringing
other Patents or other intellectual property rights of third parties.
13.04 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF
THE LICENSED PATENT RIGHTS.
13.05 PHS does not represent that it will commence legal actions against third
parties infringing the Licensed Patent Rights.
13.06 Licensee shall indemnify and hold PHS, its employees, students, fellows,
agents, and consultants harmless from and against all liability, demands,
damages, expenses, and losses, including but not limited to death, personal
injury, illness, or property damage in connection with or arising out of
activities performed subsequent to the execution of the Agreement of a) the use
by or on behalf of Licensee, its Affiliates, sublicensees, and contractors and
their respective directors and employees of any Licensed Patent Rights, or b)
the design, manufacture, distribution, or use of any Licensed Products, Licensed
Processes or materials by Licensee, or other products or processes developed by
Licensee, its Affiliates, sublicensees, and contractors in connection with or
arising out of the Licensed Patent Rights. Licensee agrees to maintain a
liability insurance program consistent with sound business practice.
14. TERM. TERMINATION. AND MODIFICATION OF RIGHTS
14.01 This Agreement is effective when signed by all parties and shall extend to
the expiration of the last to expire of the Licensed Patent Rights on a
country-by-country basis, unless sooner terminated as provided in this Article
14.
14.02 In the event that Licensee is in default in the performance of any
material obligations under this Agreement, including but not limited to the
obligations listed in Article 14.05, and if the default has not been remedied
within ninety (90) days after the date of notice in writing of such default, PHS
may terminate this Agreement by written notice.
14.03 In the event that Licensee becomes insolvent, files a petition in
bankruptcy, has such a petition filed against it, determines to file a petition
in bankruptcy, or receives notice of a third party's intention to file an
involuntary petition in bankruptcy, Licensee shall immediately notify PHS in
writing.
14.04 Licensee shall have a unilateral right to terminate this Agreement and/or
any licenses in any country by giving PHS sixty (60) days written notice to that
effect.
14.05 PHS shall specifically have the right to terminate or modify, at its
option, this Agreement, if PHS determines that the Licensee: 1) is not executing
the Commercial Development Plan submiKed with its request for a license and the
Licensee carmot otherwise demonstrate to PHS's satisfaction that the Licensee
has taken, or can be expected to take within a reasonable time, effective steps
to achieve practical application of the Licensed Products or Licensed Processes;
2) has not achieved the Benchmarks as may be mod)fied under Paragraph 10.02; 3)
has willfully made a false statement of, or willfully omitted, a material fact
in the license application or in any report required by the license agreement;
4) has committed a material breach of a covenant or agreement contained in the
license; 5) is not keeping Licensed Products or Licensed Processes reasonably
available to the public after commercial use commences; 6) cannot reasonably
satisfy uninet health and safety needs; or 7) cannot reasonably justify a
failure to comply with the domestic production requirement of Paragraph 6.02
unless waived. In making this determination, PHS will talce into account the
normal course of such commercial development programs conducted with sound and
reasonable business practices and judgment and the ar~nual reports submitted by
Licensee under Paragraph 10.02. Prior to invoking this right, PHS shall give
written notice to Licensee providing Licensee specific notice of, and a ninety
(90) day opportunity to respond to, PHS's concerns as to the previous items 1)
to 7). If Licensee fails to alleviate PHS's concerns as to the previous items 1)
to 7) or fails to initiate corrective action to PHS's satisfaction, PHS may
terminate this Agreement.
14.06 When the public health and safety so require, and after written notice to
Licensee providing Licensee a sixty (60) day opportunity to respond, PHS'shall
have the right to require Licensee to grant sublicenses to responsible
applicants, on reasonable terms, in any Licensed Fields of Use under the
Licensed Patent Rights, unless Licensee can'reasonably demonstrate that the
granting of the sublicense would not materially increase the availability to the
public of the subject matter of the Licensed Patent Rights. PHS will not require
the granting of a sublicense unless the responsible applicant has first
negotiated in good faith with Licensee.
14.07 PHS reserves the right according to 35 U.S.C. * 209(f)(4) to terminate or
modify this Agreement if it is determined that such action is necessary to meet
requirements for public use specified by federal regulations issued after the
date of the license and such requirements are not reasonably satisfied by
Licensee.
14.08 Within thirty (30) days of receipt of written notice of PHS's unilateral
decision to modify or terminate this Agreement, Licensee may, consistent with
the provisions of 37 CFR 404.11, appeal the decision by written submission to
the designated PHS official. The decision of the designed PHS official shall be
the final agency decision. Licensee may thereafter exercise any and all
administrative or judicial remedies that may be available.
14.09 Within ninety (90) days of expiration or termination of this Agreement
under this Article 14, a final report shall be submitted by Licensee. Any
royalty payments, including those related to Patent expense, due to PHS shall
become immediately due and payable upon termination or expiration. If terminated
under this Article 14, sublicensees may elect to convert their sublicenses to
direct licenses with PHS pursuant to Paragraph 4.03.
15. GENERAL PROVISIONS
15.01 Neither Party may waive or release any of its rights or interests in this
Agreement except in writing. The failure of the Government to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right by the Government or
excuse a similar subsequent failure to perform any such term or condition by
Licensee.
15.02 This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of the Licensed Patent Rights, and all prior
negotiations, representations, agreements, and understandings are merged into,
extinguished by, and completely expressed by this Agreement.
15.03 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
under any controlling body c such determination shall not in any way affect the
validity or enforceability of the remainin~ provisions of this Agreement.
15.04 If either Party desires a mod)fication to this Agreement, the Parties
shall, upon reasonable notice of the proposed mod)fication by the Party desiring
the change, confer in good faith to determine the desirability of such
mod)fication. No mod)fication will be effective until a written amendment is
signed by the signatories to this Agreement or their designees.
15.05 The construction, validity, performance, and effect of this Agreement
shall be governed by Federal law as applied by the Federal courts in the
District of Columbia.
15.06 All notices required or permitted by this Agreement shall be given by
prepaid, first class, registered or certified mail properly addressed to the
other Party at the address designated on the following Signature Page, or to
such other address as may be designated in writing by such other Party, and
shall be effective as of the date of the postmark of such notice.
15.07 This Agreement shall not be assigned by Licensee except a) with the prior
written consent of PHS, such consent not to be withheld unreasonably; or b) as
part of a sale or transfer of substantially the entire business of Licensee
relating to operations which concern this Agreement. Licensee shall notify PHS
within ten (10) days of any assignment of this Agreement by Licensee.
15.08 Licensee agrees in its use of any PHS-supplied materials to comply with
all applicable statutes, regulations, and guidelines, including Public Health
Service and National Institutes of Health regulations and guidelines. Licensee
agrees not to use the materials for research involving human subjects or
clinical trials in the United States without complying with 21 CFR Part 50 and
45 CFR Part 46. Licensee agrees not to use the materials for research involving
human subjects or clinical trials outside of the United States without notifying
PHS, in writing, of such research or trials and complying with the applicable
regulations of the appropriate national control authorities. Written
not)fication to PHS of research involving human subjects or clinical trials
outside of the United States shall be given no later than sixty (60) days prior
to commencement of such research or trials.
15.09 Licensee acknowledges that it is subject to and agrees to abide by the
United States laws and regulations (including the Export Administration Act of
1979 and Arms Export Control Act) controlling the export of technical data,
computer software, laboratory prototypes, biological material, and other
commodities. The transfer of such items may require a license from the cognizant
Agency of the U.S. Government or written assurances by Licensee that it shall
not export such items to certain foreign countries without prior approval of
such agency. PHS neither represents that a license is or is not required or
that, if required, it shall be issued.
15.10 Licensee agrees to mark the Licensed Products or their packaging sold in
the United States with all applicable U.S. Patent numbers and similarly to
indicate "Patent Pending" status. All Licensed Products manufactured in, shipped
to, or sold in other countries shall be marked in such a manner as to preserve
PHS Patent rights in such countries.
15.11 By entering into this Agreement, PHS does not directly or indirectly
endorse any product or service provided, or to be provided, by Licensee whether
directly or indirectly related to this Agreement. Licensee shall not state or
imply that this Agreement is an endorsement by the Government, PHS, any other
Government organizational unit, or any Government employee. Additionally,
Licensee shall not use the names of NIH, CDC, PHS, or DHHS or the Government or
their employees in any advertising, promotional, or sales literature without the
prior written consent of PHS.
15.12 The Parties agree to attempt to settle amicably any controversy or claim
arising under this Agreement or a breach of this Agreement, except for appeals
of modifications or termination decisions provided for in Article 13. Licensee
agrees first to appeal any such unsettled clad or controversies to the
designated PHS official, or designee, whose decision shall be considered the
final agency decision. Thereafter, Licensee may exercise any administrative or
judicial remedies that may be available.
15.13 Nothing relating to the grant of a license, nor the grant itself, shall be
construed to confer upon any person any immunity from or defenses under the
antitrust laws or from a charge of Patent misuse, and the acquisition and use of
rights pursuant to 37 CFR PaTt 404 shall not be immuniz~ from the operation of
state or Federal law by reason of the source of the grant.
15.14 Paragraphs 4.03, 9.01-9.02, 10.06-10.08, 13.01-13.05, 14.08, 14.09, and
l5.12 of this Agreement shall survive termination of this Agreement.
PHS PATENT LICENSE AGREEMENT--EXCLUSIVE
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this agreement on the dates set
forth below. The Effective Date of this Agreement shall mean the date on which
the last party to this Agreement signs. Any communication or notice to be given
shall be forwarded to the respective addresses listed below.
FOR PHS
/s/ Jack Spiegle, Ph.D May 7, 1998
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852
FOR LICENSEE (The undersigned expressly certifies or affirms that the contents
of any statements of LICENSEE, made or referred to in this document are truthful
and accurate.)
/s/ Gary Lyons May 7, 1998
President and C.E.O.
Neurocrine Biosciences, Inc.
Mailing Address for Notices:
Neurocrine Biosciences, Inc.
Attn.: Gary A. Lyons
President and C.E.O.
3050 Science Park Road
San Diego, California 92121
APPENDIX A--Patent(s) or Patent Application(s)
Licensed Patent Rights
USPN 5,635,599 (= USSN 08/225,224), Entitled, "Circularly Permuted Ligands And
Circularly Permuted Fusion Proteins", Inventors: Drs. Ira H. Pastan, Robert
Kreitman, and Raj K. Puri.
USSN 08/722,258 (= CIP of USSN 08/225,224), Entitled, "Circularly Permuted
Ligands and Circularly Permuted Chimeric Molecules", Drs. Ira H. Pastan and
Robert Kreitman.
USPN 4,892,827 (= USSN 06/911,227), Entitled, "Recombinant Pseudomonas Exotoxin:
Construction of an Active Immunotoxin with Low Side Effects", Inventors: Drs.
Ira H. Pastan, Sankar Adhya, and David Fitzgerald, - excluding any foreign
equivalents corresponding to 4,892,827 (= USSN 06/911,227).
USSN 08/616,785, Entitled "Convention-enhanced Drug Delivery", Inventors: Drs.
Douglas W. Laske, Edward H. Oldfield, Richard H. Bobo, Robert L. Denrick, and
Paul F. Morrison.
Licensed Fields of Use:
The use of Interleukin-4/Cytotoxin Fusion Proteins for the Therapeutic Treatment
of Cancer.
Licensed Territory:
Worldwide
Optioned Field(s) of Use:
The use of the Licensed Patent Rights for a therapeutic application(s) of
Interleukin4/Cytotoxin Fusion Proteins outside of the Licensed Fields of Use.
APPENDIX C--Royalties
Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of [***] housand dollars [***].
Licensee agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of ten thousand dollars ($10,000.00) for each year this Agreement is in
[***].
Licensee agrees to pay PHS earned royalties on Net Sales as follows:
A. [***] on Net Sales of Licensed Products made, have made, used, or sold by
Licensee or its sublicensees in the United States and Licensee or its
sublicensees shall be entitled to a [***] credit against the earned royalty rate
for each [***] of royalty which Licensee must pay to other unaffiliated
licensors for all therapeutically active ingredients required for the
manufacture or sale of Licensed Products except for royalty which Licensee must
pay to other unaffiliated licensors for all counterpart foreign Applications and
Patents corresponding to United States Patent Number 4,892,827, entitled,
"Recombinant Pseudomonas Exotoxin: Construction Of An Immunotoxin With Low Side
Effects", inventors; Pastan, A&ya and Fitzgerald, as listed in Appendix A.
However, in no event shall the earned royalty due to PHS for the sale of
Licensed Products fall below [***].
B. [***] on Net Sales of Licensed Products made, have made, used, or
sold by Licensee or its sublicensees in the Licensed Territory outside of the
United States.
Licensee agrees to pay PHS benchmark royalties as follows:
[***]
PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:
NONE DOES NOT APPLY/ NO MODIFICATIONS OR AMENDMENTS ARE HEREBY MADE TO THIS
AGREEMENT.
APPENDIX E - Benchmarks and Performance
Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within ten (10) days of Licensee achieving a Benchmark, shall
notify PHS in writing that a given Benchmark has been achieved.
[***]
APPENDIX F--Commercial Development Plan
See Neurocrine Biosciences, Inc.'s License Application for L-259-97/0.
The Neurocrine Bioscience, Inc. "Commercial Development Plan" is attached to
this Agreement and/or hereby incorporated by reference into this Agreement.
APPENDIX G--PHS Reimbursable Patent Prosecution Costs
As set forth in Section 7.09 of this Agreement.
1. USPN 5,635,599 (= USSN 08/225,224), Entitled, "Circularly Permuted Ligands
And Circularly Permuted Fusion Proteins", Inventors: Drs. Ira H. Pastan, Robert
Kreit~nan, and Raj K. Puri.
[***]
2. USSN 08/722,258 (= CIP of USSN 08/225,224), Entitled, "Circularly Permuted
Ligands and Circularly Permuted Chimeric Molecules", Drs. Ira H. Pastan and
Robert Kreitman.
[***]
3. USSN 08/616,785, Entitled "Convention-enhanced Drug Delivery", Inventors:
Drs. Douglas W. Laske, Edward H. Oldfield, Richard H. Bobo, Robert L. Denrick,
and Paul F. Morrison.
[***]
TOTAL AMOUNT: [***]