Exhibit 10.2
PASTAN/FITZGERALD AND NEUROCRINE BIOSCIENCES, INC.
PATENT LICENSE AGREEMENT
PATENT LICENSE AGREEMENT dated as of April 28, 1998, between Ira Pastan and
David J. FitzGerald (collectively, "Licensor") and Neurocrine Biosciences, Inc.,
a California corporation having an office at 3050 Science Park Road, San Diego,
California 92121 ("Licensee").
Licensor and Licensee agree as follows:
1. DEFINITIONS
1.01 "Affiliate" of either party to this Agreement means any person,
firm, or corporation which controls, is controlled by or is
under common control with such party. Control means either the
direct or indirect ownership of forty eight percent (48%) or
more of the voting stock of the subject entity.
1.02 "Licensed Patent Rights" means patent applications and patents
listed in Appendix A (together with all counterpart applications
and patents in other countries, if any), 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.
For the avoidance of doubt, counterpart patent applications and
patents in the United States are not owned by Licensor and
therefore are not included in Licensed Patent Rights.
1.03 "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.
1.04 "Licensed Territory" means all countries in the world, excluding
the United States.
1.05 "Licensor Representative" means Dr. David FitzGerald, who is
authorized to act on behalf of Licensor in connection with this
Agreement.
1.06 "Net Sales" means the total gross receipts for sales of Licensed
Products by or on behalf of Licensee or its sublicensee and from
leasing, renting, or otherwise making Licensed Products
available to others without sale or other dispositions, whether
invoiced or not, less returns and allowances actually granted,
packing costs, insurance costs, freight out, taxes or excise
duties imposed on the transaction (if separately invoiced),
wholesaler and cash discounts in amounts customary in the trade,
credits, chargebacks, rebates or refunds incurred or granted
pursuant to legal or contractual requirements. No deductions
shall be made for commissions paid to individuals, whether they
be with independent sales agencies or regularly employed by
Licensee and on its payroll, or for the cost of collections. For
the avoidance of doubt, sales of Licensed Products, whether or
not manufactured in the Licensed Territory pursuant to the
license hereunder, in the United States (which is not part of
the Licensed Territory) shall not give rise to Net Sales for all
purposes of the Agreement.
1.07 "First Commercial Sale" means the initial transfer by or on
behalf of Licensee of Licensed Products in exchange for cash or
some equivalent to which value can be assigned for the purpose
of determining Net Sales.
1.08 "Licensed Fields of Use" means IL-4 conjugated with pseudomonas
exotoxin for the therapeutic treatment of cancer.
2. GRANT OF RIGHTS
2.01 Licensor hereby grants and Licensee accepts, subject to the
terms and conditions of this Agreement, an exclusive license to
Licensee 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.
2.02 Licensee shall have the right to grant sublicenses. Any
sublicenses granted by Licensee shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensee and Licensor, at the option of
the sublicensee, upon termination of this Agreement. Such
conversion is subject to the approval of Licensor and contingent
upon acceptance by the sublicensee of the remaining provisions
of this Agreement.
2.03 Licensor hereby grants Licensee the exclusive option, for a
period of two (2) years from the completion of Phase II clinical
trials, to obtain an exclusive license to the use of the
Licensed Patent Rights for IL-4 conjugated with pseudomonas
exotoxin in all therapeutic applications outside of the Licensed
Fields of Use. In the event that Licensee provides written
notice to Licensor of its desire to exercise such an option, the
parties shall meet and negotiate in good faith the terms of such
a license. If the parties cannot agree upon the terms of the
license within ninety (90) days after entering such
negotiations, Licensor shall be free to license such Licensed
Patent Rights to a third party upon terms no more favorable than
those last offered to Licensee.
2.04 This Agreement confers no license or rights by implication,
estoppel, or otherwise under any patent applications or patents
of Licensor other than the Licensed Patent Rights regardless of
whether such patents are dominant or subordinate to Licensed
Patent Rights.
3. ROYALTIES AND REIMBURSEMENT
3.01 Licensee agrees to pay to Licensor a license issue royalty and
certain milestone payments as set forth in Appendix B within
thirty (30) days from the date that this Agreement becomes
effective or the applicable milestone is achieved, as the case
may be.
3.02 Licensee agrees to pay to Licensor a nonrefundable minimum
annual royalty as set forth in Appendix B. The minimum annual
royalty is due and payable on each anniversary of the date
hereof for a period not to exceed three (3) years.
3.03 Licensee agrees to pay to Licensor earned royalties as set
forth in Appendix B.
3.04 Licensee agrees to pay to Licensor an option fee as set forth
in Appendix B for the second year of the exclusive option
outlined in Section 2.03. Licensee will notify Licensor of its
intention to maintain the option for the second year and will
pay the fee within thirty (30) days of completion of the first
year of the exclusive option.
3.05 A claim of a patent 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, c) the patent is no longer maintained by the Licensor,
d) all claims of the Licensed Patent Rights have been held to be
invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or administrative
agency, or e) it has been pending longer than the later of: (i)
seven (7) years from the date of filing of the earliest asserted
priority patent application; or (ii) seven (7) years from the
date of the request for examination in a country in which such a
request is necessary.
3.06 No multiple royalties shall be payable because any Licensed
Products or Licensed Processes are covered by more than one of
the Licensed Patent Rights.
3.07 In the event that Licensee elects to take a license under one or
more patent rights of a third party in order to make, have made,
use, or sell a Licensed Product within the Licensed Field of
Use, then Licensee shall be entitled to reduce earned royalty
payments to Licensor under Paragraph 3.03 by one half of the
actual amount paid to such third parties, provided that the
royalty payable to Licensor shall not be reduced to less than
one half of the amount which would otherwise be due in that
calendar year.
3.08 On sales of Licensed Products by Licensee in other than an
arm's- length transaction, the value of the Net Sales attributed
under this Article 3 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. The exclusive license hereunder is
granted to Licensee and its Affiliates. Accordingly,
inter-company sales among them will not be subject to the
imputed sales provision of this Paragraph.
4. RECORD KEEPING
4.01 Licensee agrees to keep accurate and correct records of Licensed
Products made, used, or sold under this Agreement appropriate to
determine the amount of royalties due Licensor. Such records
shall be retained for at least [***] following a given reporting
period. They shall be available during normal business hours for
inspection at the expense of Licensor by an accountant or other
designated auditor selected by Licensor for the sole purpose of
verifying reports and payments hereunder. The accountant or
auditor shall only disclose to Licensor information relating to
the accuracy of reports and payments made under this Agreement.
If an inspection shows an underreporting or underpayment in
excess of five percent (5%) for any twelve (12) month period,
then Licensee shall reimburse Licensor for the cost of the
inspection at the time Licensee pays the unreported royalties,
including any late charges as required by Paragraph 5.06 of this
Agreement. All payments required under this Paragraph shall be
due within thirty (30) days of the date Licensor provides
Licensee notice of the payment due.
5. REPORTS ON SALES AND PAYMENTS
5.01 From the date of first commercial sale, Licensee shall submit to
Licensor within sixty (60) days after [***] a royalty report
setting forth for the preceding [***] period the amount of the
Licensed Products sold 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 Licensor for any
reporting period, the written report shall be certified as
correct by an authorized officer of Licensee and shall include a
detailed listing of all deductions made under Paragraph 1.06 to
determine Net Sales made under Article 3 to determine royalties
due.
5.02 Royalties and all other payments due under Article 3 shall be
paid in U.S. dollars, by wire transfer of funds to an account at
a commercial bank in New York City or Washington, D.C. as
designated by the Licensor Representative. For conversion of a
foreign currency to U.S. Dollars, the conversion rate shall be
the rate quoted in the Wall Street Journal on the day that the
payment is due (i.e., the last business day of the related [***]
period). Any loss of exchange, value, taxes, or other expenses
incurred in the transfer of conversion to U.S. dollars shall be
paid entirely by Licensee. The royalty report required by
Paragraph 5.01 of this Agreement shall be sent to the Licensor
Representative, at the address for notices indicated on the
signature page hereof, concurrently with each such payment.
6. PERFORMANCE
6.01 Licensee shall use its reasonable best efforts to introduce the
Licensed Products into the commercial market as soon as
practicable.
7. INFRINGEMENT AND PATENT ENFORCEMENT
7.01 Licensor and Licensee agree to notify each other promptly of
each infringement or possible infringement, as well as any facts
which may affect the validity, scope, or enforceability of the
Licensed Patent Rights of which either Party becomes aware.
7.02 If Licensor does not initiate legal action or otherwise abate an
infringement of the Licensed Patent Rights within sixty (60)
days of written notification to the Licensor Representative from
Licensee of the existence of a substantial infringement,
Licensee shall have the right (but not the obligation) to
institute infringement litigation against the infringer. If
Licensee institutes such infringement litigation within six (6)
months, Licensee shall be entitled, if applicable, to a
reduction in royalty rate as provided in Appendix B.
7.03 In the event that a declaratory judgment action alleging
invalidity of any of the Licensed Patent Rights shall be brought
against Licensor, Licensor agrees to notify Licensee that an
action alleging invalidity has been brought. Licensor represents
that it will either commence legal action to defend against such
a declaratory action alleging invalidity, or will allow Licensee
to undertake such defense, at its expense. Licensee shall take
no action to compel Licensor either to initiate or to join in
any such declaratory judgment action. Should Licensor be made a
party to any such suit by motion or any other action of
Licensee, Licensee shall reimburse Licensor for any costs,
expenses, or fees which Licensor incurs as a result of its
defending against such motion or other action taken in response
to the motion.
8. NEGATION OF WARRANTIES AND INDEMNIFICATION
8.01 Licensor 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. However,
Licensor warrants that, as of the execution date hereof, there
are no patents or patent applications owned or controlled by
Licensor, other than those within the Licensed Patent Rights,
which would dominate the manufacture, use or sale of Licensed
Products.
8.02 LICENSOR MAKE NO WARRANTIES, EXPRESSED OR IMPLIED, OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
RIGHTS.
8.03 Licensor does not represent that it will commence legal actions
against third parties infringing the Licensed Patent Rights.
8.04 Licensee shall indemnify and hold Licensor, 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 directly related to a) the use by or on behalf of
Licensee, its sublicensee, directors, or employees of any
Licensed Patent Rights, or b) the design, manufacture,
distribution, or use of any Licensed Products or other
products or processes developed in connection with or
arising out of the Licensed Patent Rights. For the avoidance
of doubt, Licensee shall be required to indemnify Licensor
and the other specified parties, under either clause (a) or
clause (b) above, only with respect to Licensed Products made or
sold, or Licensed Patent Rights otherwise used, in each case
by or on behalf of Licensee or its Affiliates. Licensee
agrees to maintain a liability insurance program consistent
with sound business practice.
9. TERMINATION AND MODIFICATION OF RIGHTS
9.01 This Agreement is effective when signed by all parties and shall
extend on a country-by-country basis to the expiration of the
last to expire of the Licensed Patent Rights unless sooner
terminated as provided in this Article 9.
9.02 In the event that Licensee is in default in the performance of
any material obligations under this Agreement, and if the
default has not been remedied within ninety (90) days after the
date of notice in writing of such default, Licensor may
terminate this Agreement by written notice.
9.03 At least thirty (30) days prior to filing a petition in
bankruptcy, Licensee must inform Licensor in writing of its
intention to file the petition in bankruptcy or of a third
party's intention to file an involuntary petition in bankruptcy.
9.04 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 Licensor in writing.
Thereafter, Licensor shall have the right to terminate this
Agreement by giving Licensee sixty (60) days written notice.
9.05 Licensee shall have a unilateral right to terminate this
Agreement and/or its rights in any country by giving Licensor
sixty (60) day's written notice to that effect.
9.06 Within ninety (90) days of termination of this Agreement under
this Article 9 or expiration under Paragraph 9.01, a final
report shall be submitted by Licensee. Any royalty payments due
to Licensor become immediately due and payable upon termination
or expiration of this Agreement. If this Agreement is terminated
prior to expiration as contemplated in Paragraph 9.01, Licensee
shall return all Licensed Products or other materials included
within the Licensed Patent Rights to Licensor or provide
Licensor with certification of their destruction.
9.07 Paragraphs 4.01, 5.02, 8.02 and 8.04 of this Agreement shall
survive termination of this Agreement.
10. GENERAL PROVISIONS
10.01 Neither Party may waive or release any of its rights or
interests in this Agreement except in writing. The failure of
either party 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 such party or excuse a
similar subsequent failure to perform any such term or condition
by the other party.
10.02 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.
10.03 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 of law, such
determination shall not in any way affect the validity of
enforceability of the remaining provisions of this Agreement.
10.04 If either party desires a modification to this Agreement, the
parties shall, upon reasonable notice of the proposed
modification by the party desiring the change, confer in good
faith to determine the desirability of such modification. No
modification will be effective until a written amendment is
signed by the signatories to this Agreement or their designees.
10.05 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.
10.06 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 (to the Licensor
Representative, in the case of notices to Licensor) 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.
10.07 This Agreement shall not be assigned by Licensee except a) with
the prior written consent of Licensor; 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 Licensor within ten (10) days of any assignment of
this Agreement by Licensee.
10.08 All Licensed Products manufactured in, shipped to, or sold in
the Licensed Territory shall be marked in such a manner as to
preserve Licensor patent rights therein.
10.09 By entering into this Agreement, Licensor 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 Licensor. Additionally, Licensee
shall not use the names of Licensor in any advertising,
promotional, or sales literature without the prior written
consent of Licensor.
10.10 The parties agree to attempt to settle amicably any controversy
or claim arising under this Agreement or a breach of this
Agreement. In this regard, if a dispute arises between the
parties relating to the interpretation or performance of this
Agreement or the grounds for the termination thereof, the
parties agree to hold a meeting, attended by individuals with
decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute prior to
pursuing other available remedies. If, within 30 days after such
meeting, the parties have not succeeded in negotiating a
resolution of the dispute, such dispute shall be submitted to
non-binding arbitration under the then current Licensing
Agreement Arbitration Rules of the American Arbitration
Association ("AAA"), with a panel of three arbitrators in
Chicago, IL. Such arbitrators shall be selected by mutual
agreement of the parties or, failing such agreement, shall be
selected according to the aforesaid AAA rules. The parties shall
bear the costs of arbitration equally unless the arbitrators,
pursuant to their right, but not their obligation, require the
non-prevailing party to bear all or any unequal portion of the
prevailing party's costs. The arbitrators will be instructed to
prepare and deliver a written, reasoned opinion conferring their
decision. The rights and obligations of the parties to arbitrate
any dispute relating to the interpretation or performance of
this Agreement or the grounds for the termination thereof shall
survive the expiration or termination of this Agreement for any
reason.
10.11 [***].
This Paragraph 10.11 does not apply to any license agreements
executed by Licensor prior to the effective date of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement of the date
first above written.
Licensor: Licensee:
Address of the Licensor Representative for notices:
/s/ David FitzGerald /s/ Gary Lyons
1202 Azalea Drive President and CEO
Rockville, MD 20850 Neurocrine Biosciences, Inc.
3050 Science Park Road
San Diego, CA 92121
/s/ Ira Pastan
APPENDIX A - PATENTS AND PATENT APPLICATIONS
(as of April 7, 1995)
Country Application No. Filing Date Status
Australia 80211/87 09/22/87 Patent No. 618722 issued
Canada 547,614 09/23/87 Allowed
Denmark 2764/88 09/22/87 Pending
Europe 97113929.1 09/23/87 Patent No. 0261671 issued
Europe 93113917.4 08/31/93 Divisional pending
Finland 891321 09/22/87 Pending
Ireland 2552/87 09/22/87 Pending; div. to be filed
Israel 83971 09/22/87 Patent No. 83971 issued
Israel 105160 03/24/93 Divisional pending
Japan 505905/87 09/22/87 Pending
Korea 88-700570 09/22/87 Pending
Norway 882269 09/22/87 Pending
New Zealand 221923 09/23/87 Patent No. 221923 issued
Portugal 85777 09/23/87 Patent No. 85777 issued
Taiwan 76105894 10/02/87 Patent No. 54275 issued
South Africa 87/7153 09/23/87 Patent 87/7153 issued
APPENDIX B - PAYMENTS
Signing Fee
Licensee agrees to pay to Licensor a noncreditable, nonrefundable license issue
fee in the amount of [***].
[***] Royalty
Licensee agrees to pay Licensor a yearly [***] Royalty in the amount of [***]
the first year, [***] the second year, and [***] the third year subsequent to
execution of the Agreement. [***].
Royalties on Net Sales
Licensee agrees to pay Licensor earned royalties on Net Sales as follows: [***]
of Net Sales outside of the United States.
Milestone Payments
Licensee agrees to pay Licensor milestone payments as follows:
[***]
Option Fee
In the event that Licensee elects to exercise its right to maintain the second
year of the exclusive option outlined in Section 2.03, Licensee shall notify
Licensor within thirty (30) days of completion of the first year of the option.
Licensee agrees to pay Licensor [***] for the second year of the option.
Sublicensing Fee
Upon the first sublicensing of the Licensed Patent Rights in the Licensed
Territory, Licensee shall pay to Licensor the sum of [***].
Share of Patent Prosecution Costs
[***] incurred subsequent to the date of this Agreement for the prosecution
and/or maintenance of the Licensed Patent Rights, which expenses are not
otherwise reimbursed by a third party, [***].
Reduction of Royalty Rate During Infringement Litigation
If the Licensee has instituted an infringement litigation as provided in Section
7.02, Licensee shall be entitled reduction in royalty rate of [***] for the
period of the infringement litigation.