EXHIBIT 10.17
RESEARCH & LICENSE AGREEMENT BETWEEN
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MEGABIOS CORP.
AND
GLAXO GROUP LIMITED
APRIL 11, 1994
RESEARCH AND LICENSE AGREEMENT
ARTICLE PAGE
ARTICLE I - DEFINITIONS............................................ 1
ARTICLE II - RESEARCH.............................................. 6
ARTICLE III - RESEARCH FEES........................................ 7
ARTICLE IV - INFORMATION, REPORTS AND SAMPLES...................... 7
ARTICLE V - DEVELOPMENT, MARKETING AND SALES....................... 9
ARTICLE VI - GRANT OF CYSTIC FIBROSIS LICENSES AND SUBLICENSES..... 10
ARTICLE VII- GRANT OF ASTHMA OPTION................................ 12
ARTICLE VIII - PAYMENT OBLIGATIONS................................. 13
ARTICLE IX - OWNERSHIP, PATENTS AND INFRINGEMENT................... 16
ARTICLE X - CONFIDENTIALITY........................................ 19
ARTICLE XI- WARRANTIES AND COVENANTS............................... 22
ARTICLE XII - TERM AND TERMINATION................................. 23
ARTICLE XIII - ASSIGNMENT.......................................... 27
ARTICLE XIV - PUBLICITY............................................ 27
ARTICLE XV - MISCELLANEOUS......................................... 28
RESEARCH AND LICENSE AGREEMENT
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THIS AGREEMENT is entered into as of the 11th day of April, 1994, by and
between MEGABIOS CORP., a California corporation, having offices at 871
Industrial Road, San Carlos, California 94070 ("MEGABIOS") and GLAXO GROUP
LIMITED, a corporation organized under the laws of England and Wales having
offices at Glaxo House, Berkeley Avenue, Greenford, Middlesex, UB60NN, England,
("Glaxo"), each of MEGABIOS and Glaxo being referred to herein as a "Party."
WHEREAS, MEGABIOS owns or has rights to technology related to delivery
systems for DNA fragments, particularly the Cystic Fibrosis Transmembrane
Regulator ("CFTR") gene; and
WHEREAS, Glaxo has established expertise in the worldwide development and
sale of pharmaceuticals, particularly those in the area of respiratory
therapeutics; and
WHEREAS, the Parties desire to establish a relationship to foster research
in such delivery system for the treatment of cystic fibrosis and to provide a
mechanism for the commercialization of products resulting therefrom;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I - DEFINITIONS
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1.1 "Affiliate" means any entity that directly or indirectly Owns, is
Owned by, or is under common Ownership with, a Party to this Agreement, where
"Owns" or "Ownership" means direct or indirect possession of at least 50% of the
outstanding voting securities of a corporation or a comparable equity interest
in any other type of entity.
1.2 "Agreement" means the present agreement together with all appendices.
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1.3 "Asthma Agent" means any Complex containing at least a [*] which
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Complex is useful In the prevention or treatment of asthma.
1.4 "Asthma Field" means the subject matter of the disease asthma and
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methods and compounds including Asthma Agents, to prevent or treat asthma.
1.5 "Complex" means an aggregate, assemblage, association or construct of
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at least two different molecules.
1.6 "Control" means possession of the ability, or an option to obtain such
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ability, to grant a license or sublicense as provided for herein without
violating the terms of any agreement with or other arrangement with, or the
rights of, any Third Party.
1.7 "Cystic Fibrosis Agent" means any Complex containing at least a
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nucleotide sequence and a Lipid, which Complex is useful in the prevention or
treatment of cystic fibrosis, and includes without limitation a Complex of [*]
and one of the plasmid DNA's referred to by MEGABIOS as [*]
1.8 "Cystic Fibrosis Field" means the subject matter of Cystic Fibrosis
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Agents, the disease cystic fibrosis, and methods and compounds to prevent or
treat cystic fibrosis, including the CFTR gene.
1.9 "Cystic Fibrosis Information" means any and all present and future
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information relating to the Cystic Fibrosis Field, including but not limited to
techniques, inventions, designs, practices, knowledge, know-how, skill and
experience, test data (including pharmacological and clinical test data),
analytical and quality control data, and marketing, sales and manufacturing
data.
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[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
1.10 "Development Costs" means the costs to find the desired formulation
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of a Cystic Fibrosis Agent and to prove its safety and efficacy prior to it
being approved by a governmental agency for sale in the prevention or treatment
of cystic fibrosis, including, without Limitation, the costs of toxicology
studies, clinical safety studies and clinical efficacy studies.
1.11 "Effective Date" means the date first written above.
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1.12 "Glaxo Nucleotide Sequence" means a nucleotide sequence as to which
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(i) Glaxo has filed one or more patent applications or has been issued one or
more patents in the United States and the European Patent Office containing one
or more claims covering such sequence or its use, or (ii) Glaxo has some other
demonstrable market exclusivity for the commercialization of, including, orphan
drug status, in both the United States and the EEC.
1.13 "Joint Research Policy Committee" or "JRPC" means a committee of
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MEGABIOS and Glaxo employees as described in Article II of this Agreement.
1.14 "Lipid" means[ * ]amphiphile of a hydrophilic
headgroup and one or more attached hydrophobic moieties, which amphiphile
spontaneously forms multimolecular structures of various forms on dispersion in
aqueous media, including naturally occurring compounds, derivatives thereof, or
compounds that do not occur in nature. Naturally occurring compounds include,
without limitation, phospholipids, sphingolipids, glycolipids, sterols,
glycerides, and other known structures. The headgroup may contain the following
in any desired or preferred combination:
1.[ * ]
2.[ * ]
3.[ * ]
4.[ * ]
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5. [ * ]
The hydrophobic moieties of the molecule may be composed, without
limitation, of one or more of the following:
1.[ * ]most likely composed of between [ * ] carbon atoms,
with between [ * ]
2.[ * ]most likely composed of between [ * ] carbon atoms,
with between
3. [*]
The hydrophobic moieties of the molecule may be linked to the headgroup via
a number of possible chemical bonds, including, but not limited to, ester bonds,
ether bonds, and amide bonds.
1.15 "Michigan License" means the form of license agreement entitled
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"License Agreement/Michigan File 492c2 Technology/Therapeutic License" offered
by the University of Michigan, a copy of which is attached hereto as Appendix 1.
1.16 "Net Sales Revenue" means the gross receipts from sales in the
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Territory by Glaxo, or its Affiliates or sublicensees, as appropriate, of Cystic
Fibrosis Agents to Third Parties less deductions for, to the extent specifically
allocated to sales of such Agents, (i) direct transportation charges, including
transit insurance, of transport of the Agent to the customer, (ii) sales and
excise taxes and duties and any other governmental charges imposed upon
production, importation, use or sale of such Agent all to the extent paid or
allowed by Glaxo, its Affiliate or sublicensee (iii) normal and customary trade,
quantity and cash rebates, credits or discounts actually allowed or incurred,
(iv) actual allowances or credits to customers on account of
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rejection or return of Cystic Fibrosis Agents to Glaxo its Affiliates or
sublicensees and (v) royalties and fees payable to Third Parties under Section
9.5.
1.17 "Patent" means a valid and enforceable patent including any
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extension, registration, confirmation, supplementary protection certificate,
reissue or renewal thereof.
1.18 "Patent Application" means an application for a Patent.
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1.19 "Patent Rights" means the rights granted by any governmental
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authority under those claims of a Patent which cover a method or material in the
Cystic Fibrosis Field, which Patent is owned or Controlled by MEGABIOS or an
Affiliate of MEGABIOS, provided that such Patent issues from (i) a Patent
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Application filed at any time prior to one year following the termination of the
Research Term or (ii) a Patent Application which claims priority from or has an
effective filing date of any Patent Application disclosing the same method or
material and filed at any time prior to one year following termination of the
Research Term.
1.20 "Research Term" means the period commencing on the Effective Date
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and ending on such date as determined pursuant to Section 12.9.
1.21 "Sublicensing Revenue" means the gross revenues actually received by
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Glaxo as a result of the sublicensing of any Cystic Fibrosis Agents, including
upfront fees and milestone payments, but excluding royalty payments.
1.22 "Territory" means all countries of the world, including nations,
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states, provinces and territories.
1.23 "Third Party" means any party other than MEGABIOS or Glaxo or an
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Affiliate of MEGABIOS or Glaxo.
1.24 "UCSF Option" means the option to license granted to MEGABIOS
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pursuant to the Option to an Exclusive License for In Vivo Gene Therapy
agreement dated as of April 30,
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1992, by and between the Regents of the University of California and MEGABIOS,
attached hereto as Appendix 2.
ARTICLE II - RESEARCH
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2.1 MEGABIOS Research. MEGABIOS will conduct research in the Cystic
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Fibrosis Field for the Research Term with the goal of identifying Cystic
Fibrosis Agents as outlined in the research plan attached as Appendix 3.
MEGABIOS will expend reasonable efforts in the conduct of such research and
maintain laboratories and offices necessary to carry out the goals of the
research plan, as determined by the JRPC. Except as provided in Article III,
MEGABIOS will bear all of its own expenses incurred in connection with such
research and will manage and compensate its employees and consultants assigned
to such research as it deems appropriate.
2.2 Responsibilities of the JRPC. Scientific aspects of the research under
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Section 2.1 will be reviewed by the JRPC, which will be comprised of four
members with two being appointed and replaced by Glaxo and two being appointed
and replaced by MEGABIOS. The JRPC shall establish the research objectives to be
achieved by the Parties. It will be the responsibility of the JRPC to establish
such research objectives in a manner that advances compounds to exploratory
development as rapidly as possible, consistent with Article 2.1 and subject to
the requirements of responsible drug development. The initial members of the
JRPC will be appointed by the Parties within 30 days following the Effective
Date. The JRPC, in establishing the research objectives, will consider such
scientific aspects of the research as scientific direction, allocation of
resources within the scope of Section 2.1, and selection of compounds for
further evaluation. The JRPC will meet at least four times per year at
locations and times to be determined by the JRPC, with each Party to bear all
travel and related costs for
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its members. A chair of the JRPC will be nominated alternatively by Glaxo and
MEGABIOS to twelve month terms.
2.3 Disagreements. Any disagreement among members of the JRPC will be
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resolved within the JRPC based on the efficient achievement of the objects of
this Agreement. Should the members maintain their disagreement and MEGABIOS or
Glaxo request a resolution, the Chief Executive Officer of MEGABIOS and the
Senior Science Officer of Glaxo will confer and use their best efforts to
resolve the disagreement.
ARTICLE III - RESEARCH FEES
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3.1 Research Fees. On the Effective Date Glaxo will pay MEGABIOS[ * ]and
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on the first days of July and October in 1994, and on the first days of January,
April, July and October of up to and including October 1, 1998, Glaxo will pay
MEGABIOS[ * ] for research to be conducted by MEGABIOS under Section 2.1.
ARTICLE IV - INFORMATION, REPORTS AND SAMPLES
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4.1 Disclosure by MEGABIOS. During the Research Term, MEGABIOS will make
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available and, upon request, disclose to Glaxo all Cystic Fibrosis Information
known and Controlled by MEGABIOS as of the Effective Date and at any time during
the Research Term, as provided in this Section 4.1. It is understood and
acknowledged by the Parties that personnel from Glaxo and MEGABIOS shall
informally confer with respect to efforts conducted in the Cystic Fibrosis
Field. With respect to Cystic Fibrosis Information which MEGABIOS desires that
Glaxo not use outside the Cystic Fibrosis Field, MEGABIOS shall deliver to
Glaxo, in writing, a non-confidential (for purposes of Section 10.5) summary of
such Cystic Fibrosis
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Information. Upon receipt of such summary, Glaxo shall request or decline, in
writing, receipt of the Cystic Fibrosis Information so summarized. Should Glaxo
request receipt, MEGABIOS shall set forth such Cystic Fibrosis Information in
full, in writing and marked as confidential. All Cystic Fibrosis Information
disclosed to Glaxo in writing and marked confidential as provided above will not
be disclosed by MEGABIOS to any Third Party for use in the Cystic Fibrosis
Field. During the Research Term MEGABIOS will deliver a semi-annual report
presenting a summary of its research in the Cystic Fibrosis Field pursuant to
Section 2.1. MEGABIOS will also communicate through the JRPC to inform Glaxo of
research conducted pursuant to Section 2.1. MEGABIOS will provide Glaxo with
[ * ] or photocopies thereof for any and all work carried out under this
Agreement, as reasonably requested by Glaxo Any publication of Cystic Fibrosis
Information will be subject to Section 10.4. MEGABIOS agrees that during the
term of this Agreement it will not enter into any arrangement with any Third
Party with the purpose of developing Cystic Fibrosis Agents.
4.2 Use of Cystic Fibrosis Information. Glaxo may use all Cystic Fibrosis
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Information conveyed to Glaxo by MEGABIOS under Section 4.1 in any manner it
wishes, at its sole discretion, consistent with the license to Patent Rights
granted with respect thereto under Article VI and subject to the restrictions
and limitations on use set forth in Section 10.5. The disclosure by Glaxo to any
Third Party of Cystic Fibrosis Information disclosed by MEGABIOS to Glaxo will
be subject to Section 10.1 of this Agreement.
4.3 Testing of Samples. Upon request, during the Research Term samples
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of all compounds reasonably believed by either Party to be Cystic Fibrosis
Agents or to be useful in the design of Cystic Fibrosis Agents shall be tested
for such utility by Glaxo. Glaxo shall communicate the results of such testing
to MEGABIOS and such results will be considered
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Cystic Fibrosis Information to be maintained under obligations of
non-disclosure under Section 10.1 of this Agreement. Any such samples delivered
to Glaxo by MEGABIOS shall be subject to Section 10.3.
ARTICLE V - DEVELOPMENT, MARKETING AND SALES
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5.1 Development. Based on research conducted under Article II and Cystic
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Fibrosis Information disclosed under Article IV, the JRPC will recommend to
Glaxo and Glaxo will select Cystic Fibrosis Agents to be developed to the stage
of being approved by relevant regulatory authorities for sale in the Territory.
Glaxo will carry out its responsibilities outlined in the research plan attached
hereto as Appendix 3 including the funding of the Development Costs after such
selection for such development for sales in various countries of the Territory
with the amount of such funding and the selection of countries being at Glaxo's
sole discretion. Glaxo will promptly notify MEGABIOS of any decision not to
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develop a particular Cystic Fibrosis Agent.
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5.2 Marketing. Glaxo will evaluate and position Cystic Fibrosis Agents
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as it deems appropriate m its sole discretion; provided, however, that Glaxo
shall discuss and consider contributions from MEGABIOS regarding such evaluation
and positioning.
5.3 Sales. Glaxo will sell Cystic Fibrosis Agents in quantities and
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packaging to buyers and with sales, detailing, advertising and promotional
efforts as it deems appropriate in its sole discretion; provided, however, that
Glaxo shall discuss and consider contributions from MEGABIOS regarding such
sales, detailing, advertising and promotional efforts, including co-promotion
with Glaxo of a Cystic Fibrosis Agent.
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5.4 Pricing. It is the mutual objective of the Parties to develop Cystic
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Fibrosis Agents and make them available to the medical community as rapidly as
practical, consistent with each Parties' internal standards, and to derive
overall profits from the sale of such Agents consistent with industry standards.
Consistent with the foregoing, Glaxo will sell Cystic Fibrosis Agents at prices
it deems appropriate in its sole discretion. In determining price, Glaxo will
adhere to all state and federal laws and regulations regarding discriminatory
pricing, predatory pricing, bundling and dumping, including the Robinson-Patman
Act and the Sherman Anti-Trust Act.
5.5 Non-Exclusivity. It is recognized by the Parties that Glaxo may wish
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to enter into agreements with Third Parties regarding products to treat diseases
other than cystic fibrosis, including products which contain [*]
Glaxo shall have the right to enter into such agreements, providing Glaxo
adheres to the provisions of Article X.
ARTICLE VI - GRANT OF CYSTIC FIBROSIS LICENSES AND SUBLICENSES
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6.1 Research License to Glaxo. MEGABIOS grants Glaxo a sole license, with
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the right to grant sublicenses only as set forth in Article 6.3, under its
Patent Rights to make and use materials to conduct research solely in the Cystic
Fibrosis Field and in the Territory. MEGABIOS shall retain the right under its
Patent Rights to make and use all materials in the Cystic Fibrosis Field to the
extent necessary to perform its obligations under this Agreement. MEGABIOS
retains all rights under its patent rights to conduct research outside the
Cystic Fibrosis Field.
6.2 Commercialization License to Glaxo. MEGABIOS grants Glaxo the
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exclusive, even as to MEGABIOS, license, with the right to grant sublicenses
only as set forth in Section
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6.3 below under MEGABIOS' Patent Rights, in the Territory, to make, have made,
use, sell, supply and import Cystic Fibrosis Agents in the Cystic Fibrosis
Field.
6.3 Sublicensing. Glaxo may grant a sublicense of any of its rights under
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Sections 6.1 and 6 2 to an Affiliate of Glaxo upon prior written notice to
MEGABIOS, and to a Third Party upon grant of written permission by MEGABIOS,
which permission shall not be unreasonably withheld, based solely upon the
ability of the sublicensee to achieve reasonable sales volumes of Cystic
Fibrosis Agents on which payments are to be made to MEGABIOS under Article VIII.
Any sublicenses granted hereunder shall be consistent with the terms and
conditions in this Agreement, and as a condition of the effectiveness of any
sublicense hereunder, the sublicensee shall agree in writing to be bound by the
terms and conditions of this Agreement to which Glaxo is bound, without
limitation.
6.4 Third Party License to Glaxo. MEGABIOS grants Glaxo a sublicense under
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any license it Controls which is granted to MEGABIOS by a Third Party and which
concerns a method or material in the Cystic Fibrosis Field, including the UCSF
Option, such sublicense herein granted to Glaxo to be effective only upon
MEGABIOS' exercise, where applicable, of an option for such Third Party license.
Such sublicense shall be on terms substantially identical to the license granted
to MEGABIOS by such Third Party and shall be limited to the Cystic Fibrosis
Field. Glaxo understands and acknowledges that it has the sole responsibility
for obtaining a license under the Michigan License, and for making all payments
due in connection therewith.
6.5 Disclosure; Research License to MEGABIOS. During the Research Term,
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Glaxo will make available and, upon request, disclose to MEGABIOS information
controlled by Glaxo regarding Cystic Fibrosis Agents. Glaxo hereby grants to
MEGABIOS a royalty-free, non-
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exclusive license, under Glaxo's patent rights, to make and use any materials
solely for the conduct of research by MEGABIOS in the Cystic Fibrosis Field
pursuant to Article II.
ARTICLE VII - GRANT OF ASTHMA OPTION
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7.1 Option MEGABIOS grants Glaxo the right to negotiate with MEGABIOS
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regarding a non-exclusive, worldwide license, with the right to grant
sublicenses, solely to develop, manufacture and sell Asthma Agents in the Asthma
Field under MEGABIOS patent rights (and/or using MEGABIOS know-how) covering
such Asthma Agents. The terms of such license shall include a royalty payment at
a rate [ * ] of net sales, minimum royalty obligations and milestone
payments (the "Asthma Option"). The Asthma Option shall expire on the earlier of
(i) the [ * ]anniversary of the Effective Date, (ii) the termination of this
Agreement pursuant to Article XII, or (iii) thirty (30) days written notice of
unilateral termination of the option by Glaxo to MEGABIOS (the "Option Term").
The disclosure to Glaxo of any information regarding Complexes designed or
constructed primarily to be Asthma Agents shall be governed by separate
agreement between the parties. If, upon expiration of the Option Term, the
Parties have not entered into a license agreement with respect to Asthma Agents,
then Glaxo's rights with respect to such Agents shall terminate, and MEGABIOS
shall be free to enter into any arrangement with any Third Party regarding such
Agents.
7.2 Option Fees. In consideration for the option granted in Section 7.1
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above, Glaxo shall pay to MEGABIOS the amounts set forth below in each of the
years of the Research Term so indicated:
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Year 1 [ * ]
Year 2 [ * ]
Year 3 [ * ]
Year 4 [ * ]
Year 5 [ * ]
Such amounts shall be payable in advance, 30 days prior to the commencement of
the relevant Year for which payment is due, with "Year 1" commencing on the
Effective Date and each "Year" thereafter commencing upon the respective
anniversary thereof.
ARTICLE VIII - PAYMENT OBLIGATIONS
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8.1 Royalty Payments. Glaxo will pay MEGABlOS a royalty equal to [*] of
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the Net Sales Revenue for Cystic Fibrosis Agents sold by Glaxo, its Affiliates
or sublicensees. In addition, Glaxo shall pay to MEGABIOS an amount equal to [*]
of all Sublicensing Revenue. Glaxo shall pay to MEGABIOS the payments provided
in this Section 8.1 for
8.2 Minimum Royalties. Glaxo agrees that in each of the first [ * ]
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following first commercial sale of a Cystic Fibrosis Agent in any country, Glaxo
shall pay to MEGABIOS a minimum royalty as follows:
First Year [ * ]
Second Year [ * ]
Third Year [ * ]
All such minimum royalties shall be paid quarterly, beginning in the quarter
following the quarter during which such first commercial sale occurs, in U.S.
dollars, within 60 days after the
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end of each calendar quarter. Any failure of Glaxo to pay to MEGABIOS the
applicable minimum royalty shall be deemed a material breach of this Agreement
by Glaxo, subject to the remedies of Section 12.7.
8.3 Milestone Payment. Within 30 days prior to its initiation of the first
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Phase III clinical trials to be conducted with respect to a Cystic Fibrosis
Agent, Glaxo will deliver to MEGABIOS written notice of such initiation. Within
60 days following such notice, Glaxo will pay MEGABIOS [ * ] Glaxo shall be
entitled to credit [ * ] of such milestone payment (i.e.,:[*] against the
royaltiesowed pursuant to Sections 8.1 and 8.2 for a period of [ * ] provided
that the credit allowable in any year shall not exceed [*]
8.4 Third Party Royalties. In addition to and not in lieu of any other
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payments provided for in this Agreement, Glaxo shall pay to MEGABIOS, or to the
Regents of the University of California on behalf of MEGABIOS, the royalties
owed by MEGABIOS to the Regents of the University of California pursuant to any
license taken under the UCSF Option, as set forth in Section 5.1(d) of the UCSF
Option. Such royalties and payments shall be made according to the terms and
subject to the conditions of such license agreement and the UCSF Option.
8.5 Royalty Calculation; Reports. Within 60 days after the end of each
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calendar quarter, Glaxo will deliver to MEGABIOS a report of its Net Sales
Revenue and Sublicensing Revenue, a report of the accounting used to calculate
Net Sales Revenue and Sublicensing Revenue, including line items for each
deduction, and payment due to MEGABIOS under Section 8.1 and 8.2, in the
currency in which such Net Sales Revenue or Sublicensing Revenue takes place.
Each payment and report shall be accompanied by a certificate of a financial
officer of Glaxo stating that the payment calculation is correct.
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8.6 Records Retention. Glaxo shall keep, and shall cause its Affiliates
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and sublicensees to keep, complete and accurate records pertaining to the sale
of Cystic Fibrosis Agents in sufficient detail to enable MEGABIOS to confirm the
accuracy of calculations of all payments hereunder. Such records shall be
maintained for a two year period following the year in which such payments were
made to MEGABIOS
8.7 Audit Request. At the request and expense of MEGABIOS, Glaxo shall
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permit MEGABIOS or a certified public accountant designated by MEGABIOS
reasonably acceptable to Glaxo, at reasonable times and upon reasonable notice
to examine Glaxo records to determine the correctness of any report or payment
made hereunder.
8.8 Tax Withholding. In the event that Glaxo is required to withhold
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taxes imposed upon MEGABIOS for any payment under this Agreement by virtue of
the statutes, laws, codes or governmental regulations of a country in which
Cystic Fibrosis Agents are sold, then such payments will be made by Glaxo on
behalf of MEGABIOS by deducting from the payment due MEGABIOS and remitting such
taxes to the proper authorities on a timely basis and the payments provided for
under this Agreement will be adjusted appropriately, provided that Glaxo
supplies MEGABIOS with official documentation and/or tax receipts of such
withholdings supporting such taxes and such payments as may be required by
MEGABIOS for its tax records on or before the date on which such payment is due
MEGABIOS under this Agreement.
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ARTICLE IX - OWNERSHIP, PATENTS AND INFRINGEMENT
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9.1 Ownership.
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(a) Inventions. As determined in accordance with the rules of
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inventorship under U.S. law, each Party shall have sole ownership of all
inventions invented, discovered or developed solely by it, its employees or
agents during the term of this Agreement which cover a method or material in the
Cystic Fibrosis Field. Glaxo and MEGABIOS shall own jointly all inventions
invented, discovered or developed jointly by the parties, their employees or
agents.
(b) Know-How. All non-patented or non-patentable inventions, know-
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how, techniques, processes and the like invented, discovered or developed
jointly by Glaxo and MEGABIOS shall be considered prior knowledge of each Party
under Sections 10.2(a) and 10.6(a).
9.2 Filing of MEGABIOS Patent Applications. MEGABIOS will have full
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responsibility to file, prosecute and maintain Patent Applications in the Cystic
Fibrosis Field according to its own internal standards and in its own name, so
as to obtain Patents covering inventions which it owns under Section 9.1(a),
including Cystic Fibrosis Agents, their preparation, formulation and use. Should
MEGABIOS not wish to proceed with any such filing, Glaxo may request such filing
and MEGABIOS will make such filing in any country of the Territory. All of the
out-of-pocket expenses of such filing, prosecution, maintenance and issue in a
particular country shall be [* ] by MEGABIOS and Glaxo, except that if MEGABIOS
or Glaxo does not wish to pay for any such expenses, the Party paying the
entirety of such expenses in such country will recover such amount not paid by
the other Party from the
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other Party's share of Net Sales Revenue for a Cystic Fibrosis Agent covered by
Patent Rights resulting from such filing in the applicable jurisdiction and
marketed by Glaxo.
9.3 Filing of Glaxo Patent Applications. Glaxo will have full
-----------------------------------
responsibility to file, prosecute and maintain Patent Applications in the Cystic
Fibrosis Field according to its own internal standards and in its own name, so
as to obtain Patents covering inventions which it owns under Section 9.1(a),
including Cystic Fibrosis Agents, their preparation, formulation and use. All
of the out-of-pocket expenses of such filings, prosecution, maintenance and
issue shall be paid by Glaxo, except that if Glaxo does not wish to proceed with
any such filings, MEGABIOS may request such filing and Glaxo will make such
filing in any country of the Territory at the expense of MEGABIOS and MEGABIOS
will recover such amount paid in a like manner to Section 9.2 in addition to any
payments made pursuant to Articles III and VIII hereof.
9.4 Joint Patent Applications. The Parties will discuss and agree as to
-------------------------
which Party shall have the primary responsibility for the application and
prosecution of Patent Applications and maintenance of patent rights worldwide
for those inventions owned jointly under Section 9.1(a).
9.5 Third Party Technology. Should Glaxo determine that an additional
----------------------
license from a Third Party is reasonably necessary to sell Cystic Fibrosis
Agents, Glaxo will negotiate with the Third Party in good faith [*] any bona
fide royalties or fee payable to such Third Party.
9.6 Patent Application Files, Assistance. Glaxo and MEGABIOS will provide
------------------------------------
each other with copies of Patent Applications filed under Sections 9.2 and 9.3
and such will be maintained under the obligations of Article X. Each Party
agrees to assist the other in every proper way in the application, prosecution,
and maintenance of Patent Applications and Patent
17
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
Rights under this Article IX, including the execution of all proper documents
requested by the filing Party.
9.7 Enforcement of Patent Rights. Glaxo and MEGABIOS shall promptly
----------------------------
notify the other in writing of any infringement of a Patent within the Patent
Rights of which they become aware. MEGABIOS may, but shall not be required to,
prosecute any alleged infringement or threatened infringement of a Patent within
the Patent Rights of which it is aware or which is brought to its attention. In
the event MEGABIOS brings such action, Glaxo shall, at MEGABIOS' expense,
cooperate fully with MEGABIOS, including if required to bring such action, the
furnishing of a power of attorney. MEGABIOS shall act in its own name and at its
own expense unless, with respect to alleged infringement or threatened
infringement of such a Patent in the Cystic Fibrosis Field, Glaxo or its
Affiliate elects to pay a percentage of all MEGABIOS reasonable out-of-pocket
costs. Any recovery obtained shall belong to MEGABIOS unless Glaxo pays some
percentage of said costs, in which case Glaxo shall receive [ * ]
9.8 Glaxo Right to Enforce Patent Rights. If MEGABIOS fails to commence
------------------------------------
prosecution of an alleged or threatened infringement under Section 9.7 above
within six months after it has been brought to MEGABIOS' attention, Glaxo may,
but shall not be required to, prosecute such alleged or threatened infringement.
Glaxo shall act in its own name and at its own expense. In such event, MEGABIOS
shall cooperate fully with Glaxo, at Glaxo's expense, including if required in
order to bring such an action, the furnishing to Glaxo of a power of attorney.
Any recovery obtained shall be applied first to reimburse Glaxo for its out of
pocket expenses incurred in such action. Any remaining sums, unless specified as
punitive damages, shall be [ * ]
18
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
ARTICLE X - CONFIDENTIALITY
---------------------------
10.1 Obligation of Non-Disclostire. Any Cystic Fibrosis information
-----------------------------
communicated by the Parties under this Agreement shall be maintained by the
receiving Party in strict confidence and shall not be disclosed by either Party
to any Third Party, except as provided in Section 10.2 or 10.4 or the following
sentence. Such information may be disclosed by a Party to an Affiliate of the
Party, to a consultant retained by the Party or retained by an Affiliate of the
Party, or any other person or entity, provided that such Affiliate, consultant
or other person or entity agrees to be bound substantially to the same extent as
the Parties under this Article X.
10.2 Exceptions. The Section 10.1 obligation of non-disclosure of Cystic
----------
Fibrosis Information will apply to all such Information except that which:
(a) is known by the receiving Party prior to its disclosure as
demonstrated by written evidence; or
(b) becomes known to the receiving Party from a Third Party who was under
no obligation of non-disclosure regarding such Information; or
(c) is public knowledge or later becomes public knowledge through no act
on the part of the receiving Party, provided such disclosure occurs
only after such Information becomes public knowledge.
The disclosing Party shall use its best efforts to summarize in writing and
deliver to the other Party within 90 days following disclosure any Cystic
Fibrosis Information that is disclosed orally or visually and which the
disclosing Party wishes the receiving Party to maintain under an obligation of
non-disclosure under Section 10.1. Nothing in this Article X shall prevent a
Party from disclosing to government authorities information received hereunder
or generated by such Party by itself which is necessary, in the good faith
opinion of such Party, to receive
19
government permission to make, have made, use, sell, supply or import Cystic
Fibrosis Agents, or as permitted by Article XIV.
10.3 Samples. Any samples delivered to Glaxo by MEGABIOS pursuant to
-------
Section 4.3, or any other biological or chemical materials delivered to Glaxo,
shall be used by Glaxo solely in the Cystic Fibrosis Field, unless such samples
or materials are freely available from a Third Party or are already in the
possession of Glaxo from sources other than MEGABIOS. Title to such samples and
materials shall remain with MEGABIOS, and their physical conveyance by MEGABIOS
to Glaxo in and of itself shall not convey upon Glaxo any rights to MEGABIOS's
intellectual property rights. Any samples submitted to a Party under Article IV
which have apparent applicability only in the Cystic Fibrosis Field will not be
transferred by such Party to any Third Party, including transfer to another
research partner of such Party, except as directed by the JRPC. The foregoing
restriction shall end with respect to a particular sample when its structure is
properly made public, including disclosure by publication under Section 10.4.
Any samples submitted to a Party under Article IV which have apparent
applicability inside and outside, or only outside, the Cystic Fibrosis Field may
be disclosed or transferred by such Party to a Third Party only under the
conditions of Section 10.1 or 10.4.
10.4 Publications. MEGABIOS shall submit to Glaxo manuscripts, including
------------
abstracts, and texts of poster presentations and other presentations, of any of
its research applicable to the Cystic Fibrosis Field at least 30 days prior to
presentation or submission for publication for purposes of allowing Glaxo to
comment on the manuscript or text, request filing by MEGABIOS of a Patent
Application under Section 9.2, or initiate filing of a Patent Application under
Section 9.3. Glaxo will make decisions on such publications and filing of
Patent Applications at its sole
20
discretion. MEGABIOS will make such submission to Glaxo until one year
following the end of the Research Term.
10.5 Obligation of Non-Use. Any Cystic Fibrosis Information disclosed by
---------------------
MEGABIOS in writing and marked as confidential pursuant to Section 4.1, or
disclosed by Glaxo and marked as confidential, shall not be used by the
receiving Party outside of the Cystic Fibrosis Field, except as provided under
Section 10.6.
10.6 Exceptions. The Section 10.5 obligation of non-use of Cystic Fibrosis
----------
Information will apply to all such Information except that which:
(a) is known by the receiving Party prior to its disclosure as
demonstrated by written evidence; or
(b) becomes known to the receiving Party from a Third Party who was
under no obligation of non-use regarding such Information; or
(c) is public knowledge or later becomes public knowledge through no
act on the part of the receiving Party, provided such use occurs
only after such Information becomes public knowledge.
10.7 Termination of Prior Agreements. The Confidential Disclosure
-------------------------------
Agreement by and between Glaxo and MEGABIOS dated as of April 26, 1993, is
hereby terminated with respect to the disclosure and use of Cystic Fibrosis
Information only and all such Information to be kept confidential under such
agreements as of the Effective Date shall be maintained by the receiving Party
under the obligations of nondisclosure and non-use set forth in this Agreement.
21
ARTICLE XI - WARRANTIES AND COVENANTS
-------------------------------------
11.1 No Conflict. Each Party represents and warrants that (i) it has not
-----------
granted any license rights, or committed itself to grant any license rights, to
any Third Party within the Cystic Fibrosis Field, and (ii) its execution,
delivery and performance of this Agreement will not conflict with the terms of
any other agreement to which it is or becomes a party or by which it is or
becomes bound.
11.2 Disclaimer of Warranties. The Parties understand that research under
------------------------
this Agreement will involve technologies that have not been approved by any
regulatory authority and that neither Party guarantees the safety or usefulness
of any Cystic Fibrosis Agent. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
THE PARTIES DISCLAIM ALL WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED, INCLUDING
THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR THAT ANY
CYSTIC FIBROSIS AGENTS OR CYSTIC FIBROSIS INFORMATION ARE FREE FROM ANY THIRD
PARTY INFRINGEMENT CLAIM. Without limiting the generality of the foregoing,
MEGABIOS expressly does not warrant (i) the patentability or usefulness of any
Cystic Fibrosis Information, or (ii) that the research conducted by MEGABIOS
pursuant to Article II will yield any Useful or patentable results or
inventions.
11.3 Indemnification. Glaxo hereby agrees to save, defend and hold
---------------
MEGABIOS and its agents and employees harmless from and against any and all
suits, claims, actions, demands, liabilities, expenses and/or loss, including
reasonable legal expense and attorneys fees ("Losses") resulting directly or
indirectly from the manufacture, use, handling, storage, sale or other
disposition of chemical agents, including Cystic Fibrosis Agents, by Glaxo, its
Affiliates or sublicensees, except to the extent such Losses result from the
negligence of MEGABIOS.
22
In the event MEGABIOS seeks indemnification under this Section 11.3, it
shall inform Glaxo of a claim as soon as reasonably practicable after it
receives notice of the claim, shall permit Glaxo to assume direction and control
of the defense of the claim (including the right to settle the claim solely for
monetary consideration), and shall cooperate as requested (at the expense of
Glaxo) in the defense of the claim.
11.4 Thirty Party Licenses. MEGABIOS warrants that it is and will
---------------------
continue to be an optionee under the UCSF Option until the earlier of April 30,
1995 or expiration or termination of that certain Research Agreement between
MEGABIOS and the Regents of the University of California dated April 30,1992.
MEGABIOS warrants that it is empowered to, and will upon request of Glaxo, grant
the sublicenses to Glaxo thereunder as set forth in Section 6.4, without
compensation to MEGABIOS for the granting of such sublicense.
ARTICLE XII - TERM AND TERMINATION
----------------------------------
12.1 Term. Unless sooner terminated as provided in this Article XII, the
----
term of this Agreement will be from the Effective Date until Glaxo, its
Affiliates and sublicensees ceases selling Cystic Fibrosis Agents for which
payments are due MEGABIOS in accordance with Article VIII, in every country of
the Territory.
12.2 Termination by Mutual Agreement. By mutual written agreement, the
----------- -- ------ ---------
Parties may at any time terminate this entire Agreement or the Research Term.
12.3 Termination by Glaxo for Cause. Upon 90 days notice, Glaxo may
------------------------------
terminate this Agreement, under any of the following circumstances:
(i) The issuance of a Patent in the United States or the European Patent
Office owned or Controlled by a Third Party which contains a claim that covers a
Cystic
23
Fibrosis Agent which the JRPC recommends for development under this Agreement or
its use and for which there is not a viable alternative, provided Glaxo or
MEGABIOS have obtained a bona fide opinion from an independent patent attorney
who has analyzed such Patent and concluded that the Patent is more likely than
not valid and infringed by the making, using or selling of such Cystic Fibrosis
Agents; or
(ii) The regulatory approval in the United States or the EEC, of a
pharmaceutical containing a nucleotide sequence to treat cystic fibrosis,
including a Cystic Fibrosis Agent, under laws, including the Orphan Drug
Statutes of the United States, or circumstances which make it unlikely that
Glaxo will be able to obtain regulatory approval of a Cystic Fibrosis Agent in
the U.S. or the EEC containing a CFTR gene within [ * ]after the end of the
Research Term, in the opinion of independent regulatory counsel approved by both
parties.
In the event of termination by Glaxo under this Section 12.3, all licenses
granted to Glaxo under Article VI will terminate, Glaxo will convey and assign
all Cystic Fibrosis Information in its possession to MEGABIOS, and Glaxo will
not use such Information in any research and Glaxo will not conduct any research
in the area of [ * ] until the [ * ] anniversary of the date of such
termination.
12.4 Glaxo Unilateral Termination. Following the tenth anniversary of the
----------------------------
Effective Date, Glaxo shall have the right, for any or no reason, to terminate
this Agreement upon 12 months written notice, provided that during such time
Glaxo shall use its good faith efforts to transfer to MEGABIOS all aspects of
the manufacture, marketing and sale of the Cystic Fibrosis Agents, at Glaxo's
expense. In the event of such termination, Glaxo shall assign to MEGABIOS any
and all regulatory filings and approvals for commercial sale of such Cystic
24
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
Fibrosis Agents, and shall License and/or assign to MEGABIOS all rights
necessary for MEGABIOS to continue to manufacture, market and sell such Cystic
Fibrosis Agents in the countries in which such Agents had been sold by Glaxo, at
Glaxo's expense.
12.5 Termination by MEGABIOS.
-----------------------
(a) In the event Glaxo, its Affiliates or sublicensees cease to conduct
research, development or commercialization efforts with respect to Cystic
Fibrosis Agents for a period of [ * ] then MEGABIOS shall have the right to
-----------
terminate this Agreement upon written notice, whereupon the licenses granted to
Glaxo under Article VI shall terminate, and MEGABIOS shall be free to enter into
any arrangement with any Third Party with respect to the development and
commercialization of Cystic Fibrosis Agents.
(b) In the event Glaxo fails to file an IND or its equivalent in the
United States or the United Kingdom within [ * ] from the Effective Date, then
MEGABIOS shall have the right to terminate this Agreement upon written notice,
whereupon the licenses granted to Glaxo under Article VI shall terminate,
MEGABIOS shall be free to enter into any arrangement with any Third Party with
respect to the development and commercialization of Cystic Fibrosis Agents, and
Glaxo's obligation to pay Research Fees under Article III shall terminate;
provided, however, that such [ * ] period shall be suspended for a period
equal to the time of any delay incurred by Glaxo in attempting to file any such
IND, which delay arose solely from Force Majeure, as defined under Section 15.1.
12.6 Termination after the Research Term. In the event Glaxo, its
-----------------------------------
Affiliates or sublicensees obtain IND approval but fail to commence clinical
trials with respect to one or more Cystic Fibrosis Agents during the Research
Term in any country of the Territory, then MEGABIOS shall have the right to
terminate this Agreement upon written notice to Glaxo. In
25
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
the event of any termination under this Section 12.6, the licenses granted to
Glaxo under Article VI shall terminate, and MEGABIOS shall be free to enter into
any arrangement with any Third Party with respect to the development and
commercialization of Cystic Fibrosis Agents.
12.7 Material Breach. MEGABIOS or Glaxo may terminate this Agreement
---------------
because of a material breach of this Agreement by the other Party upon 90 days
written notice of such termination setting forth in reasonable detail the
specifics of the breach; provided, however, that if within such 90 day period
the Party in breach cures the deficiency, then termination of the Agreement
shall not occur; and provided further, that in the event of nonpayment of
amounts due hereunder such notice and cure period shall be 30 days. In the event
of termination of this Agreement pursuant to this Section 12.7, all licenses
granted under Article VI shall terminate, and Glaxo will return to MEGABIOS all
MEGABIOS Cystic Fibrosis Information, and in the case of breach by Glaxo, Glaxo
will convey and assign all Cystic Fibrosis Information in its possession to
MEGABIOS.
12.8 Survival of Confidentiality Article. The provisions of Article X
-----------------------------------
with respect to Cystic Fibrosis Information or samples generated or conveyed
prior to the end of the term of this Agreement or the termination thereof shall
survive the end of such term or termination.
12.9 End of Research Term. The Research Term will commence on the
--------------------
Effective Date and, unless this Agreement is sooner terminated as provided in
Section 12.2, 12.3, 12.5 or 12.7, will continue until the 5 year anniversary
thereof; provided, however, that Glaxo's obligations to pay Research Fees to
MEGABIOS under Article III shall survive any termination of this Agreement,
except termination by Glaxo under Section 12.7 or by MEGABIOS under Section
12.5(b).
26
ARTICLE XIII - ASSIGNMENT
-------------------------
13.1 Successor. Neither this agreement nor the obligation of the Parties
---------
hereunder shall be assignable except upon the prior written permission of the
other Party; provided, however, that either Party shall each have the right to
assign its respective obligations hereunder to any successive owner or any
Affiliate without such consent.
ARTICLE XIV - PUBLICITY
-----------------------
14.1 Publicity Review. Glaxo and MEGABIOS will jointly discuss and agree,
----------------
based on the principles of Section 14.2, on any statement to the public
regarding the execution and the subject matter of this Agreement, the research
to be conducted by the Parties under this Agreement, or any other aspect of this
Agreement, except with respect to disclosures required by law or regulation;
provided, however, that MEGABIOS shall be free to discuss the existence and
general terms of this Agreement with potential investors of MEGABIOS. Promptly
following the Effective Date, the Parties shall issue the press release attached
hereto as Appendix 4. Subject to Section 10.2, any of such statements may be
made to a Third Party providing any such Third Party is bound under obligations
of confidentiality substantially similar to those of Article X.
14.2 Standards. In the discussion and agreement referred to in Section
---------
14.1, the principles observed by Glaxo and MEGABIOS will be accuracy, the
requirements for confidentiality under Article X, the advantage a competitor of
Glaxo or MEGABIOS may gain from any public statements or statements to Third
Parties under Section 14.1, the requirements of disclosure under any securities
laws or regulations of the United States or the United Kingdom, including those
associated with public offerings, and the standards and custom in the
27
pharmaceutical industry for such disclosures by Companies comparable to Glaxo
and MEGABIOS.
ARTICLE XV - MISCELLANEOUS
--------------------------
15.1 Force Majeure. Neither party shall lose any rights hereunder or be
-------------
Liable to the other party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or
any other similar cause beyond the control of the defaulting Party, provided
that the Party claiming force majeure has exerted all reasonable efforts to
avoid or remedy such force majeure.
15.2 Notices. Any notices or communications provided for in this
-------
Agreement to be made by either of the parties to the other shall be in writing,
in English, and shall be made by prepaid courier service with return receipt
addressed to the other at its address set forth above. Any such notice or
communication may also be given by hand, or facsimile to the appropriate
destination, followed by a mailing. Either Party may by like notice specify an
address to which notices and communications shall thereafter be sent. Notices
sent by mail, facsimile or cable shall be effective upon receipt and notices
given by hand shall be effective when delivered.
15.3 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Delaware, as such laws are applied to contracts entered into and to be
performed within such state.
15.4 Waiver. Except as specifically provided for herein, the waiver from
------
time to time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not
28
operate or be construed as a continuing waiver of same or of any other of such
Party's rights or remedies provided in this Agreement.
15.5 Severability. If any term, covenant or condition of this Agreement
------------
or the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) the remainder of this Agreement,
or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the Parties that the basic purposes of this Agreement are to be effectuated.
15.6 Entire Agreement. This Agreement sets forth all the covenants,
----------------
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto and supersedes and terminates all prior agreements
and understanding between the Parties regarding the subject matter hereof. There
are no covenants, promises, agreements, warranties, representations, conditions
or understandings, either oral or written, between the Parties other than as set
forth herein or therein. No subsequent alteration, amendment, change or addition
to this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by the respective authorized officers of the Parties.
29
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.
MEGABIOS CORP GLAXO GROUP LIMITED
/s/WILLIAM L. BROWN /s/RICHARD B. LYKER
By _____________________________ By____________________________
Vice President
Title: ___________________________ Title:__________________________
April 11, 1994
Date: __________________________ Date:__________________________
30
APPENDIX 1
----------
[MICHIGAN FORM OF LICENSE]
31
LICENSE AGREEMENT
MICHIGAN FILE 492c2 TECHNOLOGY
THERAPEUTIC LICENSE
This is an Agreement, effective as of the _____ day of ______ 1992 (the
"Effective Date"), entered into by __________________, a corporation
incorporated in the State of ______________ with offices located at
______________________________ ("LICENSEE") , the Regents of the University
of Michigan, a constitutional corporation of the State of Michigan
("MICHIGAN"), and HSC Research and Development Limited Partnership, a
Partnership Organized and subsisting under the laws of the Province of
Ontarion, Canada ("RDLP"). LICENSEE, MICHIGAN and RDLP agree as follows:
1. BACKGROUND.
----------
1.1 Michigan and the Research Institute of the Hospital for Sick Children of
Toronto, Ontario, Canada, ("HSC") have conducted research relating to
cystic fibrosis. As a result of that research, MICHIGAN and RDLP have
developed rights in the "Licensed Patents" defined below.
1.2 LICENSEE desires to obtain, and MICHIGAN and RDLP, consistent with their
missions of education and research, desire to grant a license of the
Licensed Patents on the terms and conditions listed below.
2. DEFINITIONS.
-----------
2.1 "TECHNOLOGY", as used in this Agreement, shall mean the information,
manufacturing techniques, data, designs or concepts developed by MICHIGAN
and HSC, Covering the gene for cystic fibrosis and uses thereof as [ * ]
2.2 "Parties", in singular or plural usage as required by the context, shall
mean LICENSEE, MICHIGAN and/or RDLP.
2.3 "Affiliate(s)" shall mean any individual, corporation, Partnerships,
proprietorship or other entity controlled by, controlling, or under common
control with LICENSEE through equity ownership, ability to elect directors,
or by virtue of a majority of overlapping directors, and shall include any
individual, corporation, partnership, proprietorship or other entity
directly or indirectly owning, owned by or under common ownership with
LICENSEE to the extent of thirty percent 30% or more of the voting
shares, including shares owned beneficially by such party.
2.4 "Licensed Patent(s)" shall mean [ * ] and all foreign
equivalent patent applications and Patent Cooperation Treaty filings, and
all patents issuing therefrom in which MICHIGAN
1
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
and/or RDLP has or acquires a properly interest. "Licensed Patent(s)" shall
also include any divisional, continuation (excluding continuations-in-
part), reissue, reexamination or extension of the above-described patent
applications and resulting patents, along with any extended or restored
term, and any confirmation patent, registration patent, or patent of
addition.
2.5 "Valid Claim(s)" means any claim(s) in an unexpired patent or pending in a
patent application included within the Licensed Patents which has not been
held unenforceable, unpatentable, or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and which has not been
admitted to be invalid or unenforceable through reissue or disclaimer. If
in any country there should be two or more such decisions conflicting with
respect to the validity of the same claim, the decision of the higher or
highest tribunal shall thereafter control; however, should the tribunals be
of equal rank, then the decision or decisions upholding the claim shall
prevail when the conflicting decisions are equal in number, and the
majority of decisions shall prevail when the conflicting decisions are
unequal in number.
2.6 "Product(s)" shall mean any product(s) whose manufacture, use or sale in
any country would, but for this Agreement, comprise an infringement,
including contributory infringement, of one or more Valid Claims.
2.7 "Field of Use" shall refer to the field for which Products may be designed,
manufactured, used and/or marketed under this Agreement, and shall mean
solely Products to be used for the therapeutic treatment of the disease
cystic fibrosis.
2.8 "Net Sales" shall mean the sum, over the term of this Agreement, of all
amounts received and all other consideration received (or, when in a form
other than cash or its equivalent, the fair market value thereof when
received) by LICENSEE and its Affiliates from persons or entities due to or
by reason of the sale or other distribution of Products, or the use of
Products, including any use by LICENSEE and Affiliates in the performance
of services for their customers; less the following deductions and offsets,
but only to the extent such sums are otherwise included in the computation
of Net Sales, or are paid by LICENSEE and not otherwise reimbursed:
refunds, rebates, replacements or credits actually allowed and taken by
purchasers for return of Products; customary trade, quantity and cash
discounts actually allowed and taken; excise, value-added, and sales taxes
actually paid by LICENSEE for Products; and shipping and handling charges
actually paid by LICENSEE for Products.
2
2.9 "Royalty Quarter(s)" shall mean the three-month periods ending on the last
day of March, June, September and December of each year.
2.10 "Territory" means all Countries of the world.
2.11 "First Therapeutic Sale" shall mean the first sale of any Product
(including any sale of a service using a Product in the Field of Use) by
LICENSEE or an Affiliate, other than for use in clinical trials being
conducted to obtain FDA or other governmental approvals to market Products.
3. GRANT OF LICENSE.
----------------
3.1 MICHIGAN and RDLP hereby grant to LICENSEE a non-exclusive license under
the Licensed Patents to make, have made, use (including use in the
performance of services for its customers), market and sell, in the
Territory, Products designed and marketed solely for use in the Field of
Use.
3.2 MICHIGAN and RDLP reserve the right to license and use all aspects of the
TECHNOLOGY and the Licensed Patents for any use or purpose, including the
right to develop and produce Products.
3.3 The license granted to LICENSEE herein shall be without the right to
sublicense, except that LICENSEE may sublicense Affiliate(s) who agree to
be and are bound in writing to the terms and conditions of this Agreement
to the same extent as LICENSEE. LICENSEE agrees to strictly monitor and
enforce compliance with the terms and conditions of this Agreement by all
Affiliate sublicensees.
4. CONSIDERATION.
4.1 LICENSEE shall pay to MICHIGAN a one-time license issue fee of [*]
forthwith following the Effective Date. Notwithstanding any other terms of
this Agreement, this Agreement and the license granted hereunder shall not
become effective until such issue fee is received by MICHIGAN.
4.2 LICENSEE shall also pay MICHIGAN, with respect to each Royalty Quarter, a
royalty equal to [ * ] of the Net Sales of LICENSEE and Affiliates.
4.3 The obligation to pay MICHIGAN a royalty under this Article 4 is imposed
only once with respect to the same unit of Product regardless of the
number of Valid Claims or Licensed Patents covering the same; however, for
purposes of determination of Payments due hereunder, whenever the term
"Product" may apply to a property during various stages of manufacture, use
or sale, Net Sales, as otherwise defined, shall be derived from the sale,
distribution or use of such Product by LICENSEE or Affiliates at the stage
of its highest invoiced value to unrelated third parties.
3
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
4.4 LICENSEE shall pay to MICHIGAN an annual license maintenance fee. This
annual fee shall accrue in the Royalty Quarter ending in March of the years
specified below, and shall be due and payable and included with the report
for that quarter.
If LICENSEE defaults in the payment of any annual license maintenance fee,
and fails to remedy that default within thirty (30) days after written
notice of it by MICHIGAN, then this Agreement and the license rights
conveyed herein shall terminate.
The annual license maintenance fees shall be as follows:
(1) In 1994 and 1995: [ * ]
(2) In 1996, 1997 and 1998: [ * ]
(3) In 1999, and in each year thereafter during the term of this Agreement
up to and including the year in which LICENSEE first obtains FDA
approval or other governmental approval to distribute or use Products
in the Field of Use: [ * ]
Also, notwithstanding (1-3) above (and in place of the amounts therein
listed, when applicable):
(4) In the first calendar year following the year in which LICENSEE
obtains the approval described in (3) above, and in each year
thereafter during the term of this Agreement up to and including the
year in which the First Therapeutic Sale occurs: [ * ]
Also, notwithstanding (1-4) above (and in place of the amounts therein
listed, when applicable):
(5) In the first calendar year following the First Therapeutic Sale: [*]
(6) In the second year following the First Therapeutic Sale: U.S. [*]
(7) In the third year following the First Therapeutic Sale:
U.S. [ * ] and
(8) In the fourth year following the First Therapeutic Sale, and in each
year thereafter during the term of this Agreement; [ * ]
Each annual fee paid under (5-8) above may be credited by LICENSEE in full
against all earned royalties otherwise to be paid to MICHIGAN under
Paragraph 4.2 for the calendar year in which the specific annual fee is
paid. The year for which such credits against royalties may be taken
includes the
4
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
Royalty Quarter in which the annual fee accrues and the next three Royalty
Quarters.
Each annual fee paid under (1-4) above may be credited by LICENSEE in full
against all earned royalties otherwise to be paid to MICHIGAN under
Paragraph 4.2 after such annual fee is paid.
4.5 If it is necessary for LICENSEE to take any license(s), in a given country,
under valid third party patents which would be infringed by the practice of
Licensed Patents in that country, then LICENSEE can deduct [ * ]
of the royalties otherwise due and payable in each Royalty Quarter under
Paragraph 4.2 above for Net Sales in that country, until such time as
LICENSEE has recovered an amount equal to [ * ] of the
royalty paid to such third parties; provided that in no event shall such
deducted amounts be applied to reduce or require reimbursement of the
annual fees required under Paragraph 4.4. This Paragraph is not intended
to imply an obligation upon MICHIGAN to reimburse LICENSEE's above-
described third-party royalties; the rights granted to LICENSEE in this
Paragraph shall not exceed the ability of the above-described mechanism
(i.e., a deduction of [ * ] due upon Net Sales in the
country in question) to reimburse such expenses. LICENSEE shall make an
accounting to MICHIGAN of all such third-party royalties, and all resulting
deduction from royalties otherwise due and payable to MICHIGAN, as part of
its reporting obligations under Article 5 below.
5 REPORTS.
-------
5.1 Within sixty (60) days after the close of each Royalty Quarter during the
term of this Agreement (including the close of any Royalty Quarter
immediately following any termination of this Agreement), LICENSEE shall
report to MICHIGAN all royalties accruing to MICHIGAN during such Royalty
Quarter. Such quarterly reports shall indicate for each Royalty Quarter
the gross sales and Net Sales of Products by LICENSEE and Affiliates, and
any other revenues with respect to which payments are due, and the amount
of such payments, as well as the various calculations used to arrive at
said amounts, including the quantity, description (nomenclature and type
designation), country of manufacture and country of sale of Products. In
case no payment is due for any such period, LICENSEE shall so report.
5.2 LICENSEE covenants that it will promptly establish and consistently employ
a system of specific nomenclature and type designations for Products so
that various types can be identified and segregated, where necessary;
LICENSEE and Affiliates shall consistently employ such system when
rendering invoices thereon and henceforth agree to inform MICHIGAN, or its
auditors, when requested as to the details
5
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
concerning such nomenclature system as well as to all additions thereto and
changes therein.
5.3 LICENSEE shall keep, and shall require its Affiliates to keep, true and
accurate records and books of account containing data reasonably required
for the computation and verification of payments to be made as provided by
this Agreement, which records and books shall be open for inspection upon
reasonable notice during business hours by either MICHIGAN auditor(s) or an
independent certified accountant selected by MICHIGAN, for the purpose of
verifying the amount of payments due and payable. Said right of inspection
will exist for six (6) years from the date of origination of any such
record, and this requirement and right of inspection shall survive any
termination of this Agreement. MICHIGAN shall be responsible for all
expenses of such inspection, except that if such inspection reveals an
underpayment of royalties to MICHIGAN in excess of ten percent (10%), then
said inspection shall be at LICENSEE's expense and such underpayment shall
become immediately due and payable to MICHIGAN.
5.4 The reports provided for hereunder shall be certified by an authorized
representative of LICENSEE to be correct to the best of LICENSEE's
knowledge and information.
6. TIMES AND CURRENCIES OF PAYMENTS.
--------------------------------
6.1 Payments accrued during each Royalty Quarter shall be due and payable in
Ann Arbor, Michigan on the date each quarterly report is due (as provided
in Paragraph 5.1), shall be included with such report and shall be paid in
United States dollars. LICENSEE agrees to make all payments due hereunder
to MICHIGAN by check made payable to "The Regents of The University of
Michigan," and sent by prepaid, certified or registered mail, return
receipt requested, to the address for notices set forth in Article 19
herein.
6.2 On all amounts outstanding and payable to MICHIGAN, interest shall accrue
from the date such amounts are due and payable at two percentage points
above the prime lending rate as established by the Chase Manhattan Bank,
N.A., in New York City, New York, or at such lower rate as may be required
by law.
6.3 Where Net Sales are generated in foreign currency, such foreign currency
shall be converted into its equivalent in United States dollars at the
exchange rate of such currency as reported (or if erroneously reported, as
subsequently corrected) in the Wall Street Journal on the last business day
of the Royalty Quarter during which such payments are received by LICENSEE
or Affiliates (or if not reported on that date, as quoted by the Chase
Manhattan Bank, N.A., in New York City, New York).
6
6.4 Except as provided in the definition of Net sales, all royalty payments to
MICHIGAN under this Agreement shall be without deduction for sales, use,
excise, personal property or other similar taxes or other duties imposed on
such payments by the government of any country or any political subdivision
thereof; and any and all such taxes or duties shall be assumed by and paid
by LICENSEE.
7. COMMERCIALIZATION.
-----------------
7.1 It is understood that LICENSEE has the responsibility to do all that is
necessary for any governmental approvals to manufacture and/or sell
Products.
7.2 LICENSEE agrees to use reasonable efforts to develop Products, obtain any
government approvals necessary, and manufacture and sell Products at the
earliest possible date; and to effectively exploit, market and manufacture
in sufficient quantities to meet anticipated customer demand and to make
the benefits of the Products reasonably available to the public.
7.3 Within fifteen (15) days of the First Therapeutic Sale, LICENSEE shall
report by written letter to MICHIGAN the date and general terms of that
sale.
7.4 LICENSEE shall promptly inform MICHIGAN of any patent applications or
similar applications relating to the TECHNOLOGY filed by or on behalf of
LICENSEE or Affiliates anywhere in the world.
8. PATENT APPLICATIONS AND MAINTENANCE.
-----------------------------------
MICHIGAN and RDLP shall control all aspects of filing, prosecuting, and
maintaining Licensed Patents, including foreign filings and Patent
Cooperation Treaty filings. MICHIGAN and RDLP may in their sole discretion
decide to refrain from or to cease prosecuting or maintaining any of the
Licensed Patents, including any foreign filing or any Patent Cooperation
Treaty filing.
9. INFRINGEMENT.
------------
If LICENSEE becomes aware of or reasonably suspects infringement of
Licensed Patents by third parties, LICENSEE agrees to promptly notify
MICHIGAN of such alleged infringement. MICHIGAN and RDLP, at their sole
discretion and at their own expense, may initiate proceedings in response
to alleged infringement.
10. NO WARRANTIES; LIMITATION ON MICHIGAN'S and RDLP'S LIABILITY.
------------------------------------------------------------
10.1 MICHIGAN and RDLP, including their fellows, officers, employees and agents,
make no representations or warranties that any Licensed Patent is or will
be held valid, or that the manufacture, use, sale or other distribution of
any
7
Products will not infringe upon any patent or other rights not vested in
MICHIGAN or RDLP.
10.2 MICHIGAN AND RDLP, INCLUDING THEIR FELLOWS, OFFICERS, EMPLOYEES AND
AGENTS, MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES or
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUME NO
RESPONSIBILITIES WHATEVER WITH RESPECT TO DESIGN, DEVELOPMENT,
MANUFACTURE, USE, SALE On OTHER DISPOSITION BY LICENSEE OR AFFILIATES OF
PRODUCTS.
10.3 THE ENTIRE RISK AS TO THE DESIGN, DEVELOPMENT, MANUFACTURE, OFFERING FOR
SALE, SALE OR OTHER DISPOSITION, AND PERFORMANCE OF PRODUCTS IS ASSUMED BY
LICENSEE AND AFFILIATES. In no event shall MICHIGAN, RDLP or HSC,
including their fellows, officers, employees and agents, be responsible or
liable for any direct, indirect, special, incidental, or consequential
damages or lost profits to LICENSEE, Affiliates or any other individual or
entity regardless of legal theory. The above limitations on liability
apply even though MICHIGAN, RDLP, or HSC, including their fellows,
officers, employees or agents, may have been advised of the possibility of
such damage.
10.4 LICENSEE shall not, and shall require that its Affiliates do not, make any
statements, representations or warranties or accept any liabilities or
responsibilities whatsoever to or with regard to any person or entity
which are inconsistent with any disclaimer or limitation included in this
Article 10.
10.5 Regardless of any testing that may have been done at HSC or MICHIGAN, HSC,
MICHIGAN and RDLP make no representations regarding how Products can or
should be used in the therapeutic treatment of the disease cystic
fibrosis.
10.6 IT IS UNDERSTOOD THAT THE TECHNOLOGY AND THE LICENSED PATENTS DO NOT
IDENTIFY THE PRESENCE OF THE CYSTIC FIBROSIS DISEASE IN ALL CASES.
11. INDEMNITY; INSURANCE.
--------------------
11.1 LICENSEE shall defend, indemnify and hold harmless and shall require its
affiliates to defend, indemnify and hold harmless MICHIGAN, RDLP and HSC,
as well as their fellows, officers, trustees, directors, employees and
agents, for and against any and all claims, demands, damages, losses, and
expenses of any nature (including attorneys' fees and other litigation
expenses), resulting from, but not limited to, death, personal injury,
illness, property damage, economic loss or products liability arising from
or in connection with, any of the following:
(l) Any manufacture, use, sale or other disposition by LICENSEE,
Affiliates or transferees of Products;
8
(2) The direct or indirect use by any person of Products made, used, sold
or otherwise distributed by LICENSEE or Affiliates;
(3) The use by LICENSEE or Affiliates of any invention related to the
TECHNOLOGY or the Licensed Patents.
11.2 MICHIGAN and RDLP shall be entitled to participate at their option and
expense through counsel of its own selection, and may join in any legal
actions related to any such claims, demands, damages, losses and expenses
under Paragraph 11.1 above.
11.3 LICENSEE shall purchase and maintain in effect a policy of product
liability insurance covering all claims with respect to any Products
manufactured, sold, licensed or otherwise distributed by LICENSEE and
Affiliates, and shall specify MICHIGAN, RDLP and HSC, including their
fellows, officers, trustees, directors and employees, as an additional
insured. LICENSEE shall furnish certificate(s) of such insurance to
MICHIGAN, upon request.
12. TERM AND TERMINATION.
--------------------
12.1 Upon any termination of this Agreement, and except as provided herein to
the contrary, all rights and obligations of the Parties hereunder shall
cease, except as follows:
(1) Obligations t6 pay royalties and other sums accruing hereunder up
to the day of such termination;
(2) MICHIGAN's rights to inspect books and records as described in
Article 5, and LICENSEE's obligations to keep such records for
the required time;
(3) Obligations of defense and indemnity under Article 11;
(4) Any cause of action or claim of LICENSEE or MICHIGAN accrued or
to accrue because of any breach or default by the other Party
hereunder;
(5) The general rights, obligations, and understandings of Articles
2, 10, 15, 17, 26 and 27; and
(6) All other terms, provisions, representations, rights and
obligations contained in this Agreement that by their sense and
context are intended to survive until performance thereof.
12.2 This Agreement will become effective on its Effective Date and, unless
terminated under another, specific provision of this Agreement, will
remain in effect until and terminate upon the last to expire of Licensed
Patents.
9
12.3 If LICENSES shall at any time default in the payment of any royalty or the
making of any report hereunder, or shall make any false report, or shall
commit any material breach of any covenant or promise herein contained,
and shall fail to remedy any such default, breach or report within thirty
(30) days after written notice thereof by MICHIGAN specifying such
default, then MICHIGAN and RDLP may, at their option, terminate this
Agreement and the license rights granted herein by notice in writing to
such effect. Any such termination shall be without prejudice to any
Party's other legal rights for breach of this Agreement.
12.4 LICENSEE may terminate this Agreement by giving MICHIGAN a notice of
termination, which shall include a statement of the reasons, whatever they
may be, for such termination and the termination date established by
LICENSEE, which date shall not be sooner than ninety (90) days after the
date of the notice. Such notice shall be deemed by the Parties to be
final.
12.5 In the event LICENSEE shall at any time during the term of this Agreement
deal with the TECHNOLOGY or Products in any manner which violates the
laws, regulations or similar legal authority of any jurisdiction
including, but not limited to, the public health requirements relating to
the TECHNOLOGY or Products or the design, development, manufacture,
offering for sale, sale or other disposition of Products, the license
granted herein shall terminate immediately with respect to such Products
within the territory encompassed by such jurisdiction.
13. ASSIGNMENT
----------
Due to the unique relationship between the Parties, this Agreement shall
not be assignable by LICENSEE without the prior written consent of
MICHIGAN and RDLP. Any attempt to assign this Agreement without such
consent shall be void from the beginning. MICHIGAN and RDLP shall not
unreasonably withhold consent for LICENSEE to assign this Agreement to a
purchaser of all or substantially all of LICENSEE's business. No
assignment shall be effective unless and until the intended assignee
agrees in writing with RDLP and MICHIGAN to accept all of the terms and
conditions of this Agreement. Further, LICENSEE shall refrain from
pledging any of the license rights granted in this Agreement as security
for any creditor.
14. REGISTRATION AND RECORDATION.
----------------------------
14.1 If the terms of this Agreement, or any assignment or license under this
Agreement are or become such as to require that the Agreement or license
or any part thereof be registered with or reported to a national or
supranational agency of any area in which LICENSEE or Affiliates would do
business, LICENSEE will, at its expense, undertake such registration or
10
report. Prompt notice and appropriate verification of the act of
registration or report or any agency ruling resulting from it will be
supplied by LICENSEE to MICHIGAN.
14.2 Any formal recordation of this Agreement or any license herein granted
which is required by the law of any country, as a prerequisite to
enforceability of the Agreement or license in the courts of any such
country or for other reasons, shall also be carried out by LICENSEE at its
expense, and appropriately verified proof of recordation shall be promptly
furnished to MICHIGAN.
15. LAWS AND REGULATIONS OF THE UNITED STATES AND CANADA; EXPORT.
------------------------------------------------------------
15.1 Activities under this Agreement shall be subject to all appropriate United
States and Canadian laws and regulations now or hereafter applicable.
15.2 LICENSEE shall comply, and shall require its Affiliates to comply, with
all provisions of any applicable laws, regulations, rules and orders
relating to the license herein granted and to the testing, Production,
transportation, export, packaging, labeling, sale or use of Products, or
otherwise applicable to LICENSEE'S or its Affiliates activities
hereunder.
15.3 LICENSEE shall obtain, and shall require its Affiliates to obtain, such
written assurances regarding export and reexport of technical data
(including Products made by use of technical data) as may be required by
the United States Office of Export Administration Regulations, and
LICENSEE hereby gives such written assurances as may be required under
those Regulations to MICHIGAN.
15.4 LICENSEE shall obtain, and shall require its Affiliates to obtain, such
authorization regarding export and re-export of technical data (including
Products made by use of technical data) as may be required by the
Department of External Affairs, Export Controls Division, or any
authorization necessary for export from or import into Canada, and
LICENSEE hereby gives written assurances as may be required under those
regulations to RDLP.
16. BANKRUPTCY
----------
If during the term of this Agreement, LICENSEE shall make an assignment
for the benefit of creditors, or if proceedings in voluntary or
involuntary bankruptcy shall be instituted on behalf of or against
LICENSEE, or if a receiver or trustee shall be appointed for the property
of LICENSEE, MICHIGAN and RDLP may, at their option terminate this
Agreement and revoke the license herein granted by written notice to
LICENSEE.
11
17. PUBLICITY
---------
LICENSEE agrees to refrain from using and to require Affiliates to refrain
from using the name of MICHIGAN, RDLP and HSC in publicity or advertising
without the prior written approval of that entity.
18. PRODUCT MARKING.
---------------
LICENSEE agrees to mark, and to require Affiliates to mark, Products with
the appropriate patent notice as approved by MICHIGAN (when appropriate),
such approval not to be unreasonably withheld.
19. NOTICES.
-------
Any notice, request, report or payment required or permitted to be given or
made under this Agreement by a Party shall be given by sending such notice
by certified or registered mail, return receipt requested, to the address
set forth below or such other address as such Party shall have specified by
written notice given in conformity herewith. Any notice not so given shall
not be valid unless and until actually received, and any notice given in
accordance with the provisions of this Paragraph shall be effective when
mailed.
To LICENSEE: ____________________________
____________________________
____________________________
Attn: _______________________
To MICHIGAN: The University of Michigan
Intellectual Properties Office
475 E. Jefferson St., Room 2354
Ann Arbor, MI 48109-1248
U.S.A.
Attn: File No. 492c2
with a copy to: Research and Development
Limited Partnership
- 88 Elm Street
Toronto, Ontario M5G 1X8
CANADA
Attn: Barbara Lavers
20. INVALIDITY.
-----------
In the event that-any term, provision, or covenant of this Agreement shall
be determined by a court of competent jurisdiction to be invalid, illegal
or unenforceable, that term will be curtailed, limited or deleted, but only
to the extent necessary to remove such invalidity, illegality or
12
unenforceability, and the remaining terms, provisions and covenants shall
not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT AND AMENDMENTS.
This Agreement contains the entire understanding of the Parties with
respect to the matter contained herein. The Parties may, from time to time
during the Continuance of this Agreement, modify, vary or alter any of the
provisions of this Agreement, but only by an instrument duly executed by
authorized officials of all Parties hereto.
22. WAIVER.
No waiver by a Party of any breach of this Agreement, no matter how long
continuing or how often repeated, shall be deemed a waiver of any
subsequent breach thereof, nor shall any delay or omission on the part of a
Party to exercise any right, power, or privilege hereunder be deemed a
waiver of such right, power or privilege.
23. ARTICLE HEADINGS.
The Article headings herein are for purposes of convenient reference only
and shall not be used to construe or modify the terms written in the text
of this Agreement.
24. NO AGENCY RELATIONSHIP.
The relationship between the Parties is that of independent contractor and
contractees. LICENSEE shall not be deemed to be an agent of MICHIGAN or
RDLP in connection with the exercise of any rights hereunder, and shall not
have any right or authority to assume or create any obligation or
responsibility on behalf of MICHIGAN or RDLP.
25. FORCE MAJEURE.
-------------
No Party hereto shall be deemed to be in default of any provision of this
Agreement, or for any failure in performance, resulting from acts or events
beyond the reasonable control of such Party, such as Acts of God, acts of
civil or military authority, civil disturbance, war, strikes, fires, power
failures, natural catastrophes or other "force majeure" events.
26. GOVERNING LAW.
-------------
This Agreement and the relationships of the Parties shall be governed in
all respects by the law of the State of Michigan (notwithstanding any
provisions governing conflict of laws under such Michigan law to the
contrary), except that questions affecting the construction and effect of
any patent shall be determined by the law of the country in which the
patent has been granted.
13
27. JURISDICTION AND FORUM.
----------------------
LICENSEE hereby consents to the jurisdiction of the courts of the State of
Michigan over any dispute concerning this Agreement or the relationship of
the Parties. Should LICENSEE bring any claim, demand or other action
against MICHIGAN or RDLP, including their fellows, officers, employees or
agents, arising cut of this Agreement or the relationship between the
Parties, LICENSEE agrees to bring said action only in an appropriate court
of the State or Province of that Party.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in
triplicate originals by their duly authorized officers or representatives.
FOR LICENSEE
By _____________________________
(authorized representative)
Typed Name_____________________
Title__________________________
Date_______________________
FOR RESEARCH AND DEVELOPMENT FOR THE REGENTS OF
LIMITED PARTNERSHIP THE UNIVERSITY or MICHIGAN
By ________________________ By _________________________
(authorized representative) (authorized representative)
Typed Name__________________ Typed Name____________________
Title_______________________ Title__________________________
Date________________________ Date____________________________
14
APPENDIX 2
[UCSF Option Agreement]
APPENDIX 2
OPTION TO AN EXCLUSIVE LICENSE
FOR
IN VIVO GENE THERAPY
THIS OPTION AGREEMENT ("Agreement") effective this 30TH day of April, 1992,
by and between THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, a California
corporation, having its statewide administrative offices at 22nd Floor, 300
Lakeside Drive, Oakland, California 94612-3550 ("THE REGENTS") and MEGABIOS
Corp., a California corporation, having a principal place of business at Suite
410, Two Embarcadero Center, San Francisco,; California 94111, ("OPTIONEE").
RECITALS
--------
WHEREAS, certain inventions, generally characterized as a IN VIVO GENE
THERAPY, hereinafter collectively referred to as the "Invention", were made in
the course of research at the University of California, San Francisco, by Dr.
Robert J. Debs and are covered by Regents' Patent Rights as defined below;
WHEREAS, THE REGENTS is desirous that the Invention be developed and
utilized to the fullest extent so that the benefits can be enjoyed by the
general public; and
WHEREAS, OPTIONEE is desirous of obtaining certain rights from THE REGENTS
which would allow it to explore the commercial potential of the Invention, and
THE REGENTS is willing to grant such rights; and
WHEREAS, OPTIONEE wishes to support a program of research in Dr. Debs'
laboratory at the University of California, San
1
Francisco, with Dr. Debs as the Principal Investigator ("Research Project") as
provided in the sponsored research agreement ("Research Agreement") of even date
between the parties herein; and
WHEREAS, OPTIONEE is desirous of obtaining Tangible Research Product which
are owned by the Regents and are not a part of the public domain of information;
and
WHEREAS, THE REGENTS has no obligation to prevent such Tangible Research
Product from becoming a part of the public domain of information.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
-----------
1.1 "Regents' Patent Rights" means patent rights to any subject
----------------------
matter claimed in or covered by any of the following: (a) pending U.S. Patent
Application, [*
](b) any continuing or continuation-in-part applications thereof
including divisions and substitutions; (c) to the extent not expressly
prohibited by past agreements between the Regents and third parties any patent
applications that cover IN VIVO GENE THERAPY naming Dr. Debs or scientists
working in Dr. Debs' laboratory or under his supervision and which applications
such scientists are under a
12
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
duty to assign to THE REGENTS and which are conceived or reduced to practice
during the term of the Research Agreement as amended; (d) any patents issuing on
said applications or continuing application including reissues; (e) all
patentable inventions developed as part of the Research Project during the term
of the Research Agreement for which OPTIONEE has elected to obtain rights; and
(f) any corresponding foreign patents or patent applications.
1.2 "Licensed Product" means any material either that is covered by
----------------
Regents' Patent Rights or whose manufacture, use, or sale by an unlicensed third
party would constitute an infringement of any pending or issued claim within
Regents' Patent Rights.
1.3 "Licensed Method" means any method either that is covered by
---------------
Regents' Patent Rights or whose use or practice by an unlicensed third party
would constitute an infringement of any pending or issued claim within Regents'
Patent Rights.
1.4 "License Agreement" means the license agreement between THE
-----------------
REGENTS and OPTIONEE that shall result if OPTIONEE exercises its option pursuant
to Article 4.
1.5 "Research Agreement" means the Research Agreement between the
------------------
parties hereto dated this date.
1.6 "Tangible Research Product" means all know-how inventions, data,
-------------------------
technology and information (other than Regents' Patent Rights) developed in Dr.
Debs' laboratory and owned by THE REGENTS, or concerning which they have
the right to license, which is useful in connection with Licensed Product or
Licensed Method, including, but not limited
3
to, (i) medical, clinical, toxicological or other Scientific data, (ii)
processes and analytical methodology used in development, testing, analysis and
manufacture, and (iii) materials developed under the Research Agreement
including any cell line or derivatives, progenies or materials derived from it;
("Biological Materials").
1.7 "In Vivo Gene Therapy" means administration of genes,
--------------------
transgenes, or other nucleic acids directly into the human or animal body by any
means of delivery for the prevention, mitigation or treatment of diseases or
conditions of the human or animal body.
2. OPTION FOR EXCLUSIVE LICENSE.
----------------------------
2.1 Subject to the limitations set forth in this Agreement, THE
REGENTS hereby grant to OPTIONEE an option to acquire an exclusive license (with
right to sublicense) under Regents' Patent Rights (or any part thereof that
OPTIONEE desires) to make, have made, use and sell Licensed Products and to
practice Licensed Methods.
2.2 Said option shall commence on the effective date of this
Agreement and shall have an expiration date of the later of (i) three (3) years
from the effective date or (ii) expiration or termination of the Research
Agreement.
2.3 This Agreement does not constitute a license to make, have made,
use or sell Licensed Products or to practice the Licensed Method except for the
sole purpose of evaluating OPTIONEE's interest in exercising the option. See
also Article 6 (Due Diligence).
4
3. OPTION FEE
----------
As Consideration for this Agreement, OPTIONEE agrees to pay to THE
REGENTS an Option Fee of Twelve Thousand Dollars ($12,O00.00) per year to be
paid within thirty (30) days from the effective date of this Agreement and
within thirty (30) days from each subsequent anniversary date thereof during the
term of this Agreement. This Option Fee is neither refundable nor deductible
nor an advance against future royalties.
4. EXERCISE OF THE OPTION.
----------------------
4.1 If OPTIONEE elects to exercise its option rights to a License
Agreement under paragraph 2.1 hereof, OPTIONEE shall notify THE REGENTS in
writing pursuant to Article 14 (Notices) prior to the expiration of this
Agreement. Failure of OPTIONEE to so notify THE REGENTS shall be deemed to be
an election by OPTIONEE not to secure a license.
4.2 When OPTIONEE notifies THE REGENTS pursuant to paragraph 4.1, it
shall specify in writing those particular patent applications, fields of use and
territory for which it desires a license from THE REGENTS and those in which it
has no interest.
5. TERMS OF PROPOSED LICENSE.
-------------------------
5.1 If OPTIONEE exercises its option under Article 4, OPTIONEE and
THE REGENTS shall thereupon negotiate in good faith to arrive at mutually
agreeable, reasonable terms and conditions for the license. The terms of the
License Agreement shall include, but not be limited to, the following
provisions, all of which shall be fair and reasonable as compared with the then
5
contemporary license terms offered by THE REGENTS far biotechnology of similar
value:
a. a worldwide, exclusive license under Regents' Patent Rights
and, to the extent THE REGENTS is legally able, Tangible
Research Product to make, have made, use, and sell Licensed
Products and to practice the Licensed Method for the life of
Regents' Patent Rights on a country-by-country basis;
b. a right to sublicense THE REGENTS' Patent Rights and
Tangible Research Product worldwide;
c. a one-time license issue fee of [ * ] for all Licensed
Products and Licensed Methods;
d. a royalty rate based upon OPTIONEE's net receipts from Net
Sales (sales less customary allowances, charges and credits)
of Licensed Products, such rate to be [*
]
e. diligence terms; and
f. indemnification, infringement and warranty terms as set
forth in Exhibit 5.1 attached hereto.
-----------
5.2 If the parties are unable to reach agreement on the terms and
conditions of a proposed License Agreement in accordance with paragraph 5.1, the
parties shall resolve any
6
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
unsettled terms, other than those covered by Exhibit 5 1, by arbitration
-----------
pursuant to Article 19 hereof.
6. DUE DILIGENCE.
-------------
6.1 Subject to paragraph 2.3, OPTIONEE shall diligently undertake the
requisite research and testing of Licensed Products necessary to evaluate its
interest in exercising the option. It is understood between the parties that
OPTIONEE may meet its diligence obligation by its continued funding of the
Research Project.
6.2 OPTIONEE shall be entitled to exercise prudent and reasonable
business judgment in meeting its due diligence obligations hereunder.
6.3 OPTIONEE shall provide THE REGENTS with a progress report
covering its activities relating to the development and testing of Licensed
Products semi-annually on or before the following dates of each calendar year:
February 28
August 31
6.4 In addition to the obligations set forth above OPTIONEE shall
spend an aggregate of not less than Seven Hundred Forty-One Thousand Four
Hundred Three ($741,403.00) for the direct and indirect costs of development of
Licensed Products during the first three (3) years of this Agreement pursuant
and subject to the provisions of the Research Agreement.
7
7. PATENT PROSECUTION AND MAINTENANCE.
----------------------------------
7.1 THE REGENTS shall prosecute and maintain the United States and
foreign patent applications and patents in THE REGENTS' Patent Rights using
counsel of its choice and after due consultation with OPTIONEE. THE REGENTS
shall provide OPTIONEE with copies of all relevant documentation so that
OPTIONEE may be informed and apprised of the continuing prosecution, and
OPTIONEE agrees to keep this documentation Confidential.
7.2 THE REGENTS shall use reasonable efforts to amend any patent
application to include claims requested by OPTIONEE and required to protect the
products contemplated to be sold under the License Agreement.
7.3 All past direct costs (not to exceed $25,000) and all future
direct costs incurred by THE REGENTS in the filing, prosecuting and maintaining
of the United States patent applications and patents in Regents' Patent Rights
shall be borne by OPTIONEE.
7.4 THE REGENTS shall obtain patent protection on the invention in
foreign countries if available and if OPTIONEE so desires. OPTIONEE must notify
THE REGENTS within seven (7) months of the filing of the corresponding United
States application of its decision to obtain foreign patents. This notice
concerning foreign filing shall be in writing, must identify the countries
desired, and reaffirm OPTIONEE's obligation to underwrite the costs thereof.
The absence of such a notice from OPTIONEE to THE REGENTS shall be considered an
election not to secure foreign rights.
8
7.5 The preparation, filing and prosecuting of all foreign patent
applications filed at OPTIONEE'S request, as well as the maintenance of all
resulting foreign patents, shall be at the sole expense of OPTIONEE. Such
patents shall be held in the name of THE REGENTS and shall be obtained using
counsel selected by OPTIONEE from a list of three patent law firms proposed by
THE REGENTS.
7.6 OPTIONEE's obligation to underwrite and to pay patent prosecution
costs shall continue for so long as this Agreement remains in effect, provided,
however, that OPTIONEE may terminate its obligations with respect to any patent
application or patent upon three-(3) months' written notice to THE REGENTS. THE
REGENTS will use its best efforts to curtail the associated patent costs after
such notice is received from OPTIONEE. THE REGENTS may continue prosecution
and/or maintenance of such application(s) or patents(s) at its sole discretion
and expense; provided, however, that if THE REGENTS' unreimbursed expenditures
on account of any such application exceeds thirty-three (33) percent of the
amount reimbursed by OPTIONEE on account of said application or if OPTIONEE does
not reimburse THE REGENTS for such unreimbursed expenditures within thirty (30)
days after it receives written notice of granting of said application, OPTIONEE
shall have no further right or licenses thereunder.
8. LIFE OF THE AGREEMENT.
---------------------
8.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement shall be
in full force and effect from
9
the effective date recited on page one and shall remain in effect for the
period specified in Article 2 (OPTION FOR EXCLUSIVE LICENSE).
8.2 Any termination of this Agreement shall not affect the rights and
obligations set forth in the following Articles:
Article 11 Use of Names, Trademarks and
Confidential Information
Article 13 Indemnification
Article 16 Late Payments
8.3 Any termination of this Agreement shall not relieve OPTIONEE of
its obligation to pay any monies due or owing at the time of such termination
and shall not impair any accrued right of THE REGENTS.
9. TERMINATION BY THE REGENTS.
--------------------------
9.1 If OPTIONEE should violate or fail to perform any term or
covenant of this Agreement, then THE REGENTS may give written notice of such
default (Notice of Default) to OPTIONEE. If OPTIONEE should fail to repair such
default within thirty (30) days of the effective date of such notice, THE
REGENTS shall have the right to terminate this Agreement by a second written
notice (Notice of Termination) to OPTIONEE; provided, however, that if such
default inherently requires additional time to cure then OPTIONEE will request
in writing an extension from THE REGENTS, such extension shall not be
unreasonably withheld. For events of default not involving the payment of money
by Optionee which cannot be cured within thirty (30) days, THE REGENTS will
grant a reasonable extension of time within which to cure such default based
upon the circumstances present at the time such extension
10
is requested by Optionee. If a proper Notice of Termination is sent to
OPTIONEE, this Agreement shall automatically terminate on the effective date of
such notice. These notices shall be subject to Article 14 (Notices). No
termination of this Exclusive Option Agreement shall affect any licenses granted
hereunder prior to the effective date of termination.
9.2 THE REGENTS shall also have the right and option to terminate
this Agreement if the Research Project, under the Research Agreement, sponsored
by OPTIONEE on the Invention at the University of California, San Francisco
under Dr. Robert Debs is prematurely terminated by OPTIONEE and there has been
no breach thereof by THE REGENTS. Said termination of this Agreement shall be
carried out in the manner set forth in paragraph 9.1.
10. TERMINATION By OPTIONEE.
-----------------------
OPTIONEE shall have the right at any time to terminate this Agreement
in whole or as to any portion of Regents' Patent Rights by giving notice in
writing to THE REGENTS. Such Notice of Termination shall be subject to Article
14 (Notices) and such termination shall be effective thirty (30) days from the
effective date of such notice.
11. USE OF NAMES, TRADEMARKS, AND CONFIDENTIAL INFORMATION.
------------------------------------------------------
11.1 Nothing contained in this Agreement shall be construed as
conferring any right to use in advertising, publicity, or other promotional
activities any name, trade name, trademark, or other designation of either party
hereto (including contraction, abbreviation or simulation of any of the
foregoing). Unless required by law, the use of the name, "THE REGENTS of the
11
University of California" or the name of any campus of the University of
California by the Optionee is expressly prohibited.
11.2 It is understood that THE REGENTS shall be free to release to
the inventors and Senior administrative officials employed by THE REGENTS the
terms and conditions of this Agreement upon their request. If such release is
made, THE REGENTS shall request that such terms and conditions not be disclosed
to others. It is further understood that should a third party inquire whether a
license to Regents' Patent Rights is available, THE REGENTS may disclose the
existence of this Agreement and the Extent of the grant in Article 2 to such
third party, but shall not disclose the name of the Licensee, except where THE
REGENTS is required to release such information under either the California
Public Records Act or other applicable law.
11.3 With regard to confidential information ("Data"), which can be
oral or written or both, received from THE REGENTS regarding this invention,
OPTIONEE agrees:
(a) not to use the Data except for the sole purpose of
performing under the terms of this Agreement;
(b) to safeguard Data against disclosure to others with the same
degree of care as it exercises with its own data of a
similar nature; and
(c) not to disclose Data to others (except to its employees,
agents or consultants who are bound to OPTIONEE by a like
obligation of
12
confidentiality) without the express written permission of
THE REGENTS,
except that OPTIONEE shall not be prevented from using or disclosing any of the
Data:
(i) which OPTIONEE can demonstrate by written records was
previously known to it;
(ii) which is now, or becomes in the future, public
knowledge other than through acts or omissions of
OPTIONEE; or
(iii) which is lawfully obtained by OPTIONEE from sources
independent of THE REGENTS; and
(d) that the secrecy obligations of OPTIONEE with respect to
Data shall continue for a period ending five (5) years from the termination date
of this Agreement.
With regard to Biological Material received from THE REGENTS,
OPTIONEE hereby agrees:
(e) not to use Biological Material except for the sole purpose
of performing under the terms of this Agreement;
(f) not to transfer Biological Material to others (except to its
employees, agents or consultants who are bound to the
Licenses by like obligations conditioning and restricting
access, use and continued use of Biological Material)
without the express written permission of THE REGENTS,
except that OPTIONEE shall not be prevented from
transferring Biological Material which:
13
(i) becomes publicly available other than through acts or
omissions of OPTIONEE, or
(ii) is lawfully obtained by OPTIONEE from sources
independent of THE REGENTS;
(g) to safeguard Biological Material against disclosure and
transmission to others with the same degree of care as it
exercises with its own biological materials of a similar
nature;
(h) to destroy all copies of Biological Material at the
termination of this Agreement.
12. LIMITED WARRANTY.
----------------
12.1 THE REGENTS warrant to OPTIONEE that it has the lawful right to
grant this option and that there is no conflict between this option and any
other grant of rights by THE REGENTS.
12.2 Except as set forth in paragraph 12.1, this Agreement and the
associated Invention are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. THE REGENTS
MAKE NO REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS OR LICENSED
METHODS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
12.3 IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS AGREEMENT OR
THE USE OF THE INVENTION OR LICENSED PRODUCTS.
14
12.3 Nothing in this Agreement shall be construed as:
(12.3a) a warranty or representation by THE REGENTS as to the
validity or Scope of any Regents' Patent Rights; or
(12.3b) a warranty or representation that anything made, used,
sold or otherwise disposed of under any license of
Regents' Patent Rights is or will be free from
infringement of patents of third parties; or
(12.3c) an obligation to bring or prosecute actions or suits
against third parties for patent infringement; or
(12.3d) conferring by implication, estoppel or otherwise any
license or rights under any patents of THE REGENTS
other than Regents' Patent Rights as defined herein,
regardless of whether such patents are dominant or
subordinate to Regents' Patent Rights; or
(12.3e) an obligation to furnish any know-how not provided in
Regents' Patent Rights or Tangible Research Product.
13. INDEMNIFICATION; INSURANCE.
--------------------------
13.1 Except as set forth in paragraph 12.1, the OPTIONEE agrees to
indemnify hold harmless and defend THE REGENTS, its officers, employees, and
agents; the sponsors of the
15
research that lead to the Invention; and the inventors of the patents and
patent application in Regents' Patent Rights and their employers against any and
all claims, suits, losses, damages, costs, fees, and expenses resulting from or
arising out of exercise of this Agreement.
13.2 THE REGENTS shall promptly notify OPTIONEE in writing of any
claim or suit brought against THE REGENTS in respect of which THE REGENTS intend
to invoke the provisions of this Article 13. OPTIONEE will keep THE REGENTS
informed on a current basis of its defense of any claims pursuant to this
Article 13.
13.3 At such time as OPTIONEE commences research activities in its
own facilities utilizing its own employees, OPTIONEE, at its sole cost and
expense, shall insure its activities in connection with the work under this
Agreement and obtain, keep in force and maintain insurance as follows, or an
equivalent program of self insurance;
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
(a) Each occurrence $1,000,000
(b) Personal injury $1,000,000
(c) General aggregate (commercial form only) $3,000,000
It should be expressly understood, however, that the coverages
and limits referred to under the above shall not in
16
any way limit the liability of OPTIONEE. OPTIONEE shall furnish THE REGENTS
with certificates of insurance evidencing compliance with all requirements.
Such certificates shall:
(a) Provide for thirty-(30) day advance written notice to THE
REGENTS of any modification.
(b) Indicate that THE REGENTS has been endorsed as an additional
Insured under the coverages referred to under the above.
(c) Include a provision that the coverages will be primary and
will not participate with nor will be excess over any valid and collectible
insurance or program of self-insurance carried or maintained by THE REGENTS.
13.4 THE REGENTS shall promptly notify OPTIONEE in writing of any
claim or suit brought against THE REGENTS in respect of which THE REGENTS
intends to invoke the provisions of this Article 13. OPTIONEE will keep THE
REGENTS informed on a current basis of its defense of any claims pursuant to
this Article 13.
14. NOTICES.
Any notice or payment required to be given to either party shall be deemed
to have been properly given and to be effective (a) on the date of delivery if
delivered in person or (b) five (5) days after mailing if mailed by certified
mail, postage paid, to the respective addresses given below or to such other
address as shall be designated by written notice given to the other party.
17
To OPTIONEE MEGABIOS Corp.
Suite 410
Two Embarcadero Center
San Francisco, California 94111
Attention: William L. Brown
Vice President
To THE REGENTS: The Regents of the University
of California (Case No. 91-281-1)
Office of Technology Transfer
1320 Harbor Bay Parkway, Suite 150
Alameda, California 9451
Attention: Director
15. ASSIGNABILITY.
-------------
This Agreement is binding upon and shall inure to the benefit of THE
REGENTS, their successors and assigns, but shall be personal to OPTIONEE and
assignable by OPTIONEE only with the written consent of THE REGENTS, which
consent shall not be unreasonably withheld.
16. LATE PAYMENTS.
-------------
In the event fees or payments are not received by THE REGENTS when due,
OPTIONEE agrees to pay THE REGENTS interest charges at a rate per annum of Ten
(10) percent. Such interest shall be calculated from the date payment was due
until actually received by THE REGENTS.
17. WAIVER.
------
It is agreed that no waiver by either party hereto of any breach or
Default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
18. GOVERNING LAWS.
--------------
THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
18
NOTWITHSTANDING, THE SCOPE AND VALIDITY OF ANY PATENT APPLICATION SHALL BE
GOVERNED BY THE APPLICABLE LAWS OF THE COUNTRY OF SUCH PATENT OR PATENT
APPLICATION.
19. ARBITRATION
-----------
Except for the provisions of Section 9.2, any controversy or claim
arising out of or relating to this contract, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
20. MISCELLANEOUS.
-------------
20.1 The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretations of this Agreement.
20.2 This Agreement will not be binding upon the parties until it has
been signed below on behalf of each party, in which event, it shall be effective
as of the date recited on page one.
20.3 No amendment or modification hereof shall be valid or binding
upon the parties unless made in writing and signed on behalf of each party.
20.4 Except for the Research Agreement, this Agreement embodies the
entire understanding of the parties relating to the subject matter hereof and
shall supersede all previous
19
communications, representations or understandings, either oral or written,
between the parties relating to such subject matter.
20.5 In case any of the provisions contained in this Agreement shall
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof, but
this Agreement shall be construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
IN WITNESS WHEREOF, both THE REGENTS and OPTIONEE have executed this
Agreement, in duplicate originals, by their respective officers hereunto duly
authorized as of the day and year first set forth above.
OPTIONEE THE REGENTS:
MEGABIOS Corp. THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA
/s/WILLIAM L. BROWN /s/
By: ____________________________ By: _______________________________
(Signature) (Signature)
Name: William L. Brown Name: Carl B. Wotten
Title: Vice President Title: Director, Office of Technology
Transfer
Approval as to legal form /s/MARTY SIMPSON, JR. 5/1/92
_______________________________________ ______
P. Martin Simpson, Jr. Resident Counsel Date
Office Of Technology Transfer
University of California
20
EXHIBIT 5.1
-----------
A. LIMITED WARRANTY.
----------------
l. The Regents warrant to LICENSEE that it has the lawful right to
grant this License and that such grant does not conflict with any other grant of
rights by The Regents.
2. Except as set forth in paragraph 12.1, this Agreement and the
associated Invention are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. THE REGENTS
MAKE NO REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS OR LICENSED
METHODS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
3. IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS AGREEMENT OR
THE USE OF THE INVENTION OR LICENSED PRODUCTS.
4. Nothing in this Agreement shall be construed as:
(a) a warranty or representation by The Regents as to the validity or
scope of any Regents' Patent Rights; or
(b) a warranty or representation that anything made, used, sold or
otherwise disposed of under any license of Regents' Patent Rights
is or will be free from infringement of patents of third parties;
or
(c) an obligation to bring or prosecute actions or suits against
third parties for patent infringement; or
1
(d) conferring by implication, estoppel or otherwise any license or
rights under any patents of The Regents other than Regents'
Patent Rights as defined herein, regardless of whether such
patents are dominant or subordinate to Regents' Patent Rights; or
(e) an obligation to furnish any know-how not provided in Regents'
Patent Rights or Tangible Research Product.
B. INDEMNIFICATION; INSURANCE.
--------------------------
l. The LICENSEE agrees to indemnify, hold harmless and defend The
Regents, their officers, employees, and agents; the sponsors of the research
that lead to the Invention; and the inventors of the patents and patent
application in Regents' Patent Rights and their employers against any and all
claims, suits, losses, damages, costs, fees, and expenses resulting from or
arising out of exercise of this Agreement.
2. The Regents shall promptly notify LICENSEE in writing of any
claim or suit brought against The Regents in respect of which The Regents intend
to invoke the provisions of this Article. LICENSEE will keep The Regents
informed on a current basis at its defense of any claims pursuant to this
Article.
3. At such time as LICENSEE commences research activities in its own
facilities utilizing its own employees, LICENSEE, at its sole cost and expense,
shall insure its activities in connection with the work under this Agreement and
2
obtain, keep in force and maintain insurance as follows, or an equivalent
program of self insurance:
Comprehensive or Commercial Form General Liability Insurance
(contractual liability included) with limits as follows:
(a) Each occurrence $1,000,000
(b) Products/Comprehensive Operations Aggregate $3,000,000
(c) Personal injury $1,000,000
(d) General aggregate (commercial form only) $3,000,000
It should be expressly understood, however, that the coverages and
limits referred to under the above shall not in any way limit the liability of
LICENSEE. LICENSEE shall furnish The Regents with certificates of insurance
evidencing compliance with all requirements. Such certificates shall:
(a) Provide for thirty-(30) day advance written notice to The
Regents of any modification.
(b) Indicate that The Regents has been endorsed as an additional
Insured under the coverages referred to under the above.
(c) Include a provision that the coverages will be primary and will
not participate with nor will be excess over any valid and collectible insurance
or program of self-insurance carried or maintained by The Regents.
Licensee shall further obtain insurance for products liability hazards
and for general aggregate with limits of $5,000,000 each prior to the first use
of a Licensed Product
3
or Licensed Method in commerce or Licensee shall maintain a comparable Self-
insurance program at such time.
4. The Regents shall promptly notify LICENSEE in writing of any
claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article. LICENSEE will keep The
Regents informed on a current basis of its defense of any claims pursuant to
this Article.
C. PATENT INFRINGEMENT.
-------------------
l. In the event that the LICENSEE shall learn of the substantial
infringement of any patent licensed under this Agreement, the LICENSEE shall
call The Regents' attention thereto in writing and shall provide The Regents
with reasonable evidence of such infringement. Both parties to this Agreement
agree that during the period and in a jurisdiction where the LICENSEE has
exclusive rights under this Agreement, neither will notify a third party of the
infringement of any of The Regents' Patent Rights without first obtaining
consent of the other party, which consent shall not be unreasonably denied.
Both parties shall use their best efforts in cooperation with each other to
terminate such infringement without litigation.
2. The LICENSEE may request that The Regents take legal action
against the infringement of The Regents' Patent Rights. Such request shall be
made in writing and shall include reasonable evidence of such infringement and
damages to the LICENSEE. If the infringing activity has not been abated within
ninety (90) days following the effective date of such request.
The Regents shall have the right to:
4
(a) commence suit on its own account; or
(b) refuse to participate in such suit, and The Regents shall
give notice of its election in writing to the LICENSEE by the end of the one-
hundredth (100th) day after receiving notice of such request from the LICENSEE.
The LICENSEE may thereafter bring suit for patent infringement if and only if
The Regents elects not to commence suit (other than as nominal party plaintiff)
and if the infringement occurred during the period and in a jurisdiction where
the LICENSEE had exclusive rights under this Agreement. However, in the event
the LICENSEE elects to bring suit in accordance with this paragraph, The Regents
may thereafter join such suit at its own expense.
3. Such legal action as is decided upon shall be at the expense of
the party on account of whom suit is brought and all recoveries recovered
thereby shall belong to such party, provided, however, that legal action
brought jointly by The Regents and the LICENSEE and fully participated in by
both shall be at the joint expense of the parties and all recoveries shall be
shared jointly by them in proportion to the share of expense paid by each party.
4. Each party agrees to cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party on account of
whom suit is brought. Such litigation shall be controlled by the party bringing
the suit, except that The Regents may be represented by counsel of its choice
pursuant to The Regents' determination in any suit brought by the LICENSEE.
5
APPENDIX 3
Research Plan
Glaxo and MEGABIOS will collaborate on the basic research programs
indicated below:
Glaxo Responsibilities:
- ----------------------
. Preclinical and clinical development of [*
]
. Preclinical and clinical development of other Cystic Fibrosis Agents
constructed by MEGABIOS
. Develop systems for the detection of [* ] as part of an overall
toxicology program.
MEGABIOS Responsibilities:
- --------------------------
. Construct novel plasmids, of which [ * ] shall be one, containing the
cystic fibrosis transmembrane regulator coding sequence and:
. -- At least [ * ] different promoter elements, [ * ] of which
shall be intended to give lung-specific expression.
-- At least [ * ] vectors with alternative 5' and 3' untranslated
regions.
-- A variety of E. coil host/strain backgrounds.
. Evaluate the novel plasmids in mice for:
-- Efficiency of transfection and expression of the CFTR protein.
-- Tissue specific expression.
-- The quantity of CFTR protein expressed.
. Evaluate up to [ * ] lipid formulations in conjunction with the
novel plasmids reference above for efficiency, specificity and
quantification of CFTR protein expression.
6
[*]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
APPENDIX 4
To be revised and released within 60 days
after the Effective Date
DRAFT
Announcement of agreement
Between Glaxo and Megabios
LONDON (DATE XX, 1994) -- Glaxo Holdings p.l.c. and Megabios Corp. today
announced they have agreed to collaborate on the development of a gene therapy
product for the prevention and treatment of cystic fibrosis.
The agreement represents Glaxo's first foray into the field gene therapy. Gene
therapy is any therapy in which a DNA fragment is introduced into cells to
direct the production of a protein which in turn, produces a therapeutic effect.
Leveraging Megabios' gene therapy program, the two corporations will collaborate
on the development and commercialization of a product designed to produce a
healthy protein in the cells lining the airways of cystic fibrosis patients with
the hope alleviating the disease in the lungs.
"The collaboration with Megabios should provide a model system for gaining
knowledge, experience and expertise in this rapidly emerging approach to
therapeutic treatment," said (GLAXO PERSON - ANDO?) "Glaxo has long been a
leader in developing medicines to treat respiratory disease, and this
collaboration gives us the opportunity to apply our expertise to the area of
gene therapy, and benefit of thousands of young people around the world whose
lives are threatened by this disease."
(Quote from a Megabios person -- call William Brown at -Megabios, 415-434-3333
Liza is his secretary.)
The gene therapy product has potential to deliver into lung cells of cystic
fibrosis patients the molecular machinery to replace defective cystic fibrosis
proteins. It will combine proprietary lipids and cDNA fragments which code for
the cystic fibrosis transmembrane regulator protein (CFTR).
Cystic fibrosis affects about 33,000 people in the United States and Canada, and
about 20,000 in Europe. It is the most common lethal hereditary disease
affecting Caucasian
7
populations, and occurs in about one of every 2,000 births. The average life
span of a person with CF is less than 30 years. The disease results from defects
in CFTR proteins that regulate the transport of salt through cell walls. The
transport defect causes the mucus in the lining of the lung, pancreas and liver
to accumulate and become abnormally thick and sticky, and significantly impair
the organ's function.
Present treatments help thin the mucus or treat infections associated with the
mucous load, but don't correct the genetic flaw. Gene therapy would represent a
significant advance over currently therapies.
London-based Glaxo Holdings, p.l.c., is a leader in research and treatment of
respiratory disease as well as gastrointestinal, central nervous system,
cardiovascular and infectious diseases. Glaxo is an integrated research-based
group of companies whose corporate purpose is to create, discover, develop,
manufacture and market throughout the world safe, effective medicines of the
highest quality which will bring benefit to patients through improved longevity
and quality of life, and to society in general through economic value.
Megabios Corp., located in San Carlos, Calif., is a privately-held
biopharmaceutical company formed to develop and commercialize lipid-based in
vivo gene therapeutics for the treatment of life-threatening disorders. The
company's unique knowledge of gene delivery and expression, lipid synthesis,
DNA/lipid complex formulation and multiple routes of administration is the basis
for the development of new therapeutics.
8
AMENDMENT NO. 1
TO
RESEARCH AND LICENSE AGREEMENT
THIS AMENDMENT NO. 1 (the "Amendment") is entered into as of this 31st
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day of May, 1996, by and between MEGABIOS CORP., a California corporation,
having offices at 863A Mitten Road, Burlingame, California 94010 ("MEGABIOS")
and GLAXO GROUP LIMITED, a corporation organized under the laws of England and
Wales having offices at Glaxo House, Berkeley Avenue, Greenford, Middlesex,
UB60NN, England ("Glaxo"), each of MEGABIOS and Glaxo being referred to herein
as a "Party" and both being referred to herein as "Parties."
WHEREAS, the Parties entered into a Research and License Agreement dated
April 11, 1994 (the "Original Agreement") to foster research in delivery systems
for DNA fragments, particularly the Cystic Fibrosis Transmembrane Regulator
("CFTR") gene, for the treatment of cystic fibrosis and to provide a mechanism
for the commercialization of products resulting therefrom; and
WHEREAS, the Parties desire to amend the Original Agreement on the terms
and conditions provided below;
NOW, THEREFORE, in consideration of the premises and mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which the Parties acknowledge by their signatures below, the
Parties, intending to be legally bound, agree as follows:
1. Section 2.1 of the Original Agreement shall be deleted in its entirety and
the following Section 2.1 shall be inserted in lieu thereof:
2.1 MEGABIOS Research The Parties concur that the responsibilities of
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MEGABIOS described in Appendix 3: Part I: Research Plan for Period
Commencing On the Effective Date and Ending on April 1, 1996, have been
fulfilled. During each applicable period of the Research Term identified in
Appendix 3, MEGABIOS will conduct development studies in the Cystic
Fibrosis Field as outlined in the work plan attached as Appendix 3 for such
period. MEGABIOS will expend reasonable efforts in the conduct of such work
and maintain laboratories and offices necessary to carry out the goals of
Appendix 3, as determined by the JRPC. Except as provided in Article III,
MEGABIOS will bear all of its own expenses incurred in connection with such
research and will manage and compensate its employees and consultants
assigned to such research as it deems appropriate.
2. Section 3.1 of the Original Agreement shall be deleted in its entirety and
the following Section 3.1 shall be inserted in lieu thereof:
3.1 Research Fees Glaxo will pay MEGABIOS during the term of this
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Agreement Research Fees up to a total amount of [*] according to the
following payment schedule for research to be conducted by MEGABIOS under
Article III:
2
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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Payment Due Date Payment Amount
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Effective Date [ * ]
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July 1, 1994 [ * ]
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October 1, 1994 [ * ]
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January 1, 1995 [ * ]
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April 1, 1995 [ * ]
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July 1, 1995 [ * ]
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October 1, 1995 [ * ]
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January 1, 1996 [ * ]
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April 1, 1996 [ * ]
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July 1, 1996 [ * ]
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October 1, 1996 [ * ]
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January 1, 1997 [ * ]
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Upon Execution of the [ * ]
Agreement
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3. Section 12.5(b) shall be amended by removing the period at the end of
Section 12.5(b) and inserting the following language:
;and provided further that, in the event of the occurrence of a
circumstance(s) which MEGABIOS and Glaxo mutually acknowledge to be
completely beyond the control of MEGABIOS and Glaxo, and which results in a
delay in the filing of an IND or its equivalent in the United States or the
United Kingdom within 3 years from the Effective Date, then MEGABIOS and
Glaxo shall use good faith efforts to agree upon an appropriate extension,
if any, of such 3 year period taking into account such circumstance(s).
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[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
4. Section 12.9 of the Original Agreement shall be deleted in its entirety and
the following Section 12.9 shall be inserted in lieu thereof:
12.9 End of Research Term. The Research Term will commence on the Effective
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Date and, unless this Agreement is sooner terminated as provided in Section
12.2, 12.3, 12.5, or 12.7, shall expire as of April 1, 1997; provided,
however, that Glaxo's obligations to pay Research Fees to MEGABIOS under
Article III shall survive any termination of this Agreement, except
termination by Glaxo under Section 12.7.
5. A new Article 16 shall be added to read as follows:
ARTICLE XVI - POST RESEARCH PERIOD DEVELOPMENT SERVICES
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After the end of the Research Term, Glaxo shall have the option to enter
into discussions with MEGABIOS for the performance of consulting services with
respect to the development of Cystic Fibrosis Agents and MEGABIOS agrees to
enter into good faith negotiations with Glaxo to agree upon reasonable terms and
conditions for the provision of such services and to provide such services
pursuant to such agreed-upon terms and conditions.
6. The existing Appendix 3 shall be retitled "Appendix 3: Part 1: Research
Plan for Period Commencing on the Effective Date and Ending on April 1, 1996"
and the attached Part II shall be added to Appendix 3.
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7. Except as provided above, the Original Agreement shall remain in full
force and effect. 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.
MEGABIOS CORP. GLAXO GROUP LIMITED
By: /s/ Benjamin F. McGraw By: /s/ T. Eaves
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Name: /s/ Benjamin F. McGraw Name: /s/ T. Eaves
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Title: /s/ President & CEO Title: /s/ Director
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APPENDIX 3: Part II
Research Plan for Period
Commencing April 2, 1996
and Ending April 1, 1997
During the period commencing April 2, 1996 and ending on April 1, 1997, Megabios
will provide general assistance to Glaxo Wellcome, as further described below,
in the submission of an [ * ]
The goal for this program is to submit the [ * ]
Preclinical Testing
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. [ * ]
. Performance of model as needed for R&D
. Technology transfer to contract toxicology house (excluding out-of-
pocket costs associated with the use of a contract toxicology house).
. [ * ] to contract toxicology house (excluding
out-of-pocket costs associated with the use of a contract toxicology house).
. [ * ] performance as necessary.
Manufacturing
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. Production of [ * ] of DNA for GLP studies (excluding supplies, reagents and
other raw materials).
. Production of liposomes [ * ] and complexes [ * ] for use in [ * ]
toxicology study (excluding supplies, reagents and other raw materials).
. Preparation for [ * ] excluding out-of-pocket costs associated
with use of [ * ] which will be required to prepare for [ * ]
. Production of [ * ] (excluding supplies, reagents and other raw
material).
. Assist Glaxo Wellcome with production of [ * ]
(excluding out-of-pocket costs and any costs associated with the use of a
contract manufacturer).
. Preliminary [ * ] studies [ * ] on material for GLP studies.
. Provision of information and technical assistance (including up to one week
of [ * ] in the UK) in transferring the technology for
the [ * ] to Glaxo Wellcome.
Documentation
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. [ * ]
. [ * ]
. Preparation of [ * ] together with Glaxo Wellcome regulatory
specialists.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.