EXHIBIT 10.56
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXECUTION COPY
LICENSE AGREEMENT
dated as of March 8, 1999
by and between
TECHNICLONE CORPORATION
and
SCHERING AG
TABLE OF CONTENTS
PAGE
Article I DEFINITIONS .................................................................................... I-4
Section 1.01 Definitions..........................................................................I-4
Article II LICENSES AND ASSIGNMENT............................................................................II-11
Section 2.01 Exclusive Patent and Trademark License and Assignment to Schering..................II-11
Section 2.02 Existing Licenses..................................................................II-12
Section 2.03 VTA Technology.....................................................................II-12
Section 2.04 Credit for Oncolym Payments........................................................II-13
Section 2.05 Orphan Drug Act....................................................................II-13
Article III DEVELOPMENT ..................................................................................III-14
Section 3.01 JDC ............................................................................. III-14
Section 3.02 Development.......................................................................III-15
Section 3.03 Clinical Development Applications and Drug Approval Applications..................III-17
Section 3.04 Costs of Development..............................................................III-18
Section 3.05 Use of Funds......................................................................III-19
Section 3.06 Right to Engage Third Parties.....................................................III-19
Section 3.07 Schering Step-In Rights...........................................................III-20
Section 3.08 Commercialization.................................................................III-20
Article IV PAYMENTS .................................................................................. IV-20
Section 4.01 Initial Payment....................................................................IV-20
Section 4.02 Milestone Payments.................................................................IV-21
Section 4.03 Additional Indications.............................................................IV-21
Article V COMMERCIALIZATION ...................................................................................V-22
Section 5.01 Schering as Sole Marketing Party....................................................V-22
Section 5.02 Commercialization Efforts...........................................................V-22
Section 5.03 Competing Products..................................................................V-22
Section 5.04 Techniclone Restrictions............................................................V-22
Article VI ROYALTIES .................................................................................. VI-23
Section 6.01 Royalties..........................................................................VI-23
Section 6.02 Royalty Reports and Payments.......................................................VI-24
Section 6.03 Payments; Interest.................................................................VI-24
Section 6.04 Taxes .............................................................................VI-24
Section 6.05 Payments to or Reports by Affiliates...............................................VI-24
Section 6.06 Payment Currency...................................................................VI-24
i.
Article VII MANUFACTURE AND SUPPLY...........................................................................VII-25
Section 7.01 Manufacture and Supply by Techniclone.............................................VII-25
Section 7.02 Regulatory Approval for Manufacturing.............................................VII-25
Section 7.03 Testing ..........................................................................VII-25
Section 7.04 Specifications....................................................................VII-26
Section 7.05 Quality Testing...................................................................VII-26
Section 7.06 Stability; Recordkeeping; Inspection; etc.........................................VII-27
Section 7.07 Forecasts and Orders..............................................................VII-27
Section 7.08 Delivery and Shipment.............................................................VII-27
Section 7.09 Warranties........................................................................VII-27
Section 7.10 Acceptance and Pricing............................................................VII-27
Section 7.11 Construction of Commercial Radiolabeling Sites....................................VII-28
Section 7.12 Schering Option to Take Over Manufacturing........................................VII-29
Section 7.13 Schering Manufacturing Step-In Rights.............................................VII-29
ARTICLE VIII CONFIDENTIALITY ...............................................................................VIII-30
Section 8.01 Confidentiality; Exceptions......................................................VIII-30
Section 8.02 Authorized Disclosure............................................................VIII-30
Section 8.03 Survival........................................................................ VIII-31
Section 8.04 Termination of Prior Agreement...................................................VIII-31
Section 8.05 Publications.....................................................................VIII-31
Section 8.06 Publicity Review.................................................................VIII-31
Article IX OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS...............................................IX-31
Section 9.01 Ownership..........................................................................IX-31
Section 9.02 Disclosure of Joint Inventions.....................................................IX-31
Section 9.03 Patent Filings.....................................................................IX-31
Section 9.04 Third Party Patent Rights..........................................................IX-32
Section 9.05 Enforcement Rights.................................................................IX-32
Section 9.06 Defense and Settlement of Third Party Claims.......................................IX-33
Section 9.07 Patent Expenses....................................................................IX-33
Section 9.08 Trademarks.........................................................................IX-33
Section 9.09 Use of Names.......................................................................IX-33
Article X REPRESENTATIONS AND WARRANTIES.......................................................................X-33
Section 10.01 Representations and Warranties......................................................X-33
Section 10.02 Indemnification for Breaches of Representations and Warranties......................X-34
Section 10.03 Performance by Affiliates...........................................................X-34
ii.
Article XI INFORMATION AND REPORTS............................................................................XI-35
Section 11.01 Information and Reports During Development and Commercialization...................XI-35
Section 11.02 Adverse Drug Experiences; Complaints...............................................XI-35
Section 11.03 Records of Revenues and Expenses...................................................XI-35
Article XII TERM AND TERMINATION.............................................................................XII-36
Section 12.01 Term .............................................................................XII-36
Section 12.02 Termination at Will...............................................................XII-36
Section 12.03 Surviving Rights..................................................................XII-41
Article XIII INDEMNIFICATION................................................................................XIII-41
Section 13.01 Indemnification..................................................................XIII-41
Article XIV MISCELLANEOUS .................................................................................XIV-43
Section 14.01 Assignment........................................................................XIV-43
Section 14.02 Retained Rights...................................................................XIV-43
Section 14.03 Further Actions...................................................................XIV-43
Section 14.04 No Trademark Rights...............................................................XIV-43
Section 14.05 Notices ..........................................................................XIV-43
Section 14.06 Waiver ...........................................................................XIV-44
Section 14.07 Severability......................................................................XIV-44
Section 14.08 Ambiguities.......................................................................XIV-44
Section 14.09 Governing Law.....................................................................XIV-45
Section 14.10 Headings .........................................................................XIV-45
Section 14.11 Counterparts......................................................................XIV-45
Section 14.12 Entire Agreement; Amendments......................................................XIV-45
Section 14.13 Expenses .........................................................................XIV-45
Section 14.14 Independent Contractors...........................................................XIV-45
EXHIBITS
EXHIBIT A-1 Techniclone Patents
EXHIBIT A-2 Third Party Agreements (Excluding Licenses)
EXHIBIT B Development Plan and Budget
EXHIBIT C Third Party Licenses
EXHIBIT D VTA Term Sheet
iii.
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
LICENSE AGREEMENT
-----------------
LICENSE AGREEMENT (the "AGREEMENT"), dated as of March 8, 1999
(the "EFFECTIVE DATE"), by and between TECHNICLONE CORPORATION, a Delaware
corporation having its principal place of business at 14282 Franklin Avenue,
Tustin, California 92680 (hereinafter referred to as "TECHNICLONE") and SCHERING
AG, a corporation organized and existing under the laws of Germany having its
principal place of business at 13342, Berlin, Germany (hereinafter referred to
as "SCHERING"). Techniclone and Schering are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Techniclone is developing through its research and
development activities a radiolabeled antibody for use in oncology products, and
has the right to grant rights and licenses and/or sublicenses under the
Techniclone Patents (hereinafter defined) and Techniclone Know-How (hereinafter
defined);
WHEREAS, Schering has expressed to Techniclone its interest in
obtaining from Techniclone certain rights and licenses to the Techniclone
Patents and Techniclone Know-How;
WHEREAS, Techniclone is willing to grant such rights and
licenses to Schering under the terms and conditions hereinafter set forth; and
WHEREAS, the Parties intend to record, characterize and report
their activities under this Agreement as separate activities of each of the
Parties;
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements contained herein, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
Article I
DEFINITIONS
-----------
Section 1.01 DEFINITIONS. The following terms, when capitalized, shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined) as used in this Agreement:
"AFFILIATE" means any person, corporation, partnership, firm,
joint venture or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
Techniclone or Schering, as the case may be. As used in this definition,
"control" means the possession of the power to direct or cause the direction of
the management and policies of an entity, whether through the ownership of the
outstanding voting securities or by contract or otherwise.
4
"ANTIBODY" shall mean an IgG2a produced by the cell line
designated ATCC No. HB 8612 and specifically against normal human B-cells and
derived malignancies, as described in the patent listed in Exhibit A-1.
"AUDIT DISAGREEMENT" shall have the meaning set forth in
Section 11.03(b).
"BANKRUPTCY EVENT" shall have the meaning set forth in Section
12.02(c).
"CLINICAL DEVELOPMENT" shall refer to all activities relating
to planning and execution of clinical studies in humans directed toward
obtaining Regulatory Approval of a Product, but does not include any activities
falling within the definition of CMC/Manufacturing. Clinical Development
includes clinical studies and related regulatory affairs and outside counsel
regulatory legal services.
"CLINICAL DEVELOPMENT EXPENSES" means the expenses incurred by
a Party or for its account which are paid to a Third Party, and Internal Costs,
consistent with the Development Plan and Budget and are specifically
attributable to the Clinical Development of a Product (excluding royalties paid
to a Third Party). Clinical Development Expenses shall include, but are not
limited to, the direct costs of manufacturing and packaging Oncolym for use in
Clinical Development, the cost of clinical studies in humans on the
toxicological, pharmacokinetic, metabolic or clinical aspects of a Product by
individual investigators, of consultants necessary for the purpose of obtaining
and/or maintaining Regulatory Approval of the Product in the Territory,
including Third Party contractors, and costs (and related fees) for preparing,
submitting, reviewing or developing data or information relating to clinical
studies in humans for the purpose of submission to a governmental authority to
obtain and/or maintain Regulatory Approval of a Product in the Territory.
Clinical Development Expenses shall not include Existing Trial Expenses or
CMC/Manufacturing Expenses. Each Party shall incur only those Clinical
Development Expenses as are reasonably necessary to develop the Product for the
indications described in the Existing Trials and such other indications as are
agreed upon by the JDC.
5
"CMC/MANUFACTURING" means the development of one or more
processes for the manufacture and packaging of the Antibody and/or the Product
for Preclinical Development, Clinical Development and Commercialization, and
shall include, without limitation, formulation, production, fill/finish,
sourcing of components, raw materials and packaging supplies, development of
regulatory methods and controls, including assays, quality control and quality
assurance methodology and stability protocols, qualification of one or more
Antibody production facilities and one or more radiolabeling facilities.
"CMC/MANUFACTURING EXPENSES" means the expenses incurred by a
Party or for its account consistent with the Development Plan and Budget and
specifically attributable to the CMC/Manufacturing of the Antibody and/or the
Product. CMC/Manufacturing Expenses shall not include the direct costs of
manufacturing and packaging Oncolym for use in Clinical Development. Each Party
shall incur only those CMC /Manufacturing Expenses as are reasonably necessary
to develop the Product for the indications described in the Existing Trials and
such other indications as are agreed upon by the JDC.
"COMMERCIALIZATION" and "COMMERCIALIZE" shall refer to all
activities undertaken relating to the pre-marketing, marketing, distribution and
sale of the Product.
"COMPETING PRODUCT" means a radioactive monoclonal antibody
which recognizes any antigen on the surface of B-cells and is approved for use
in the treatment of intermediate- or high-grade Non-Hodgkins Lymphoma, or for
any other labeled indication for which the Product is approved.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 8.01.
"CONTROL" or "CONTROLLED" shall refer to possession of the
ability to grant a license or sublicense of patent rights, know-how, Information
or other intangible rights as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party.
"DEVELOPMENT" and "DEVELOP" shall refer to all activities
relating to Existing Trials, Preclinical Development, Clinical Development and
CMC/Manufacturing.
"DEVELOPMENT EXPENSE" means Existing Trial Expenses,
Preclinical Development Expenses, Clinical Development Expenses and
CMC/Manufacturing Expenses.
"DEVELOPMENT PLAN AND BUDGET" shall have the meaning set forth
in Section 3.02(b).
"DRUG APPROVAL APPLICATION" means an application for
Regulatory Approval required to be approved before commercial sale or use of a
Product as a drug in a regulatory jurisdiction, including, for the purposes of
Regulatory Approval in the United States, a Biologic License Application and all
supplements filed pursuant to the requirements of the FDA (including all
documents, data and other information concerning a Product which are necessary
for, or included in, FDA approval to market the Product), and, for the purposes
of Regulatory Approval in Europe, applications for Regulatory Approval to EMEA.
6
"EFFECTIVE DATE" shall have the meaning set forth in the
Recitals to this Agreement.
"EMEA" means the European Medicines Evaluation Agency, or any
successor agency.
"EUROPE" means the countries which are members of the European
Union as such membership may change from time to time.
"EXISTING TRIALS" means the ongoing (as of the Effective Date)
Phase II study of Oncolym in intermediate and high-grade Non-Hodgkin's B-cell
lymphoma, protocol no. LYM 9702. If the Existing Trial is extended as a Phase
III clinical trial study, the Phase III extension shall not be considered an
Existing Trial.
"EXISTING TRIAL EXPENSES" means the expenses incurred by
Techniclone or for its account payable to Third Parties and specifically
attributable to Existing Trials. Existing Trial Expenses shall not include any
Internal Costs of Techniclone (including overhead, amortization of existing
capital assets and other administrative expenses) incurred in conducting the
Existing Trials not directly payable to a Third Party.
"FDA" means the United States Food and Drug Administration, or
any successor agency.
"FIELD" means all uses of products for the in vivo therapeutic
prevention, treatment, cure or mitigation of all human disease states,
conditions, disorders and indications.
"FIRST COMMERCIAL SALE" means the date Schering or an
Affiliate or a sublicensee of Schering first sells commercially, pursuant to a
Regulatory Approval, a Product in any country of the Territory, PROVIDED that
where such a first commercial sale has occurred in a country for which pricing
or reimbursement approval is necessary for widespread sale, then such sales
shall not be deemed a First Commercial Sale until such pricing or reimbursement
approval has been obtained.
"GCPs" means clinical practices in conformity with the current
Good Clinical Practices as established by the International Conference on
Harmonization, as such regulations may be amended from time to time and in
conformity with equivalent regulations in regulatory jurisdictions in the
Territory.
"GLPs" means laboratory practices in conformity with the FDA's
regulations governing current good laboratory practices set forth in 21 C.F.R.
Part 58 ET SEQ., as such regulations may be amended from time to time, and in
conformity with equivalent regulations in regulatory jurisdictions outside the
United States.
"GMPs" means manufacturing practices in conformity with the
FDA's regulations governing current good manufacturing practices set forth in 21
C.F.R. Part 210 ET SEQ., as such regulations may be amended from time to time,
and in conformity with equivalent regulations in regulatory jurisdictions
outside the United States.
7
"INFORMATION" means (i) techniques and data within the Field
relating to the Product, including, but not limited to, inventions, practices,
methods, knowledge, know-how, skill, trade secrets, experience, test data
including pharmacological, toxicological, preclinical and clinical test data,
regulatory submissions, adverse reactions, analytical and quality control data,
marketing, pricing, distribution, cost, sales and manufacturing data or
descriptions, and (ii) compounds, compositions of matter, assays and biological
materials within the Field relating to the Product.
"INITIAL DEVELOPMENT PLAN AND BUDGET" means the initial
Development Plan and Budget concerning the Development of Oncolym as set forth
in more detail on Exhibit B hereto.
"INTERNAL COSTS" means direct costs and charges, including
direct overhead charges, incurred by a Party, but shall only exclude costs and
charges related to unused manufacturing capacity, amortization of property,
plant or equipment, allocation of general corporate overhead and any employee
costs associated with equity incentive plans.
"JOINT DEVELOPMENT COMMITTEE" or "JDC" means the committee
established pursuant to Section 3.01 below.
"JOINT PATENTS" shall have the meaning set forth in Section
9.03(a).
"LOSSES" shall have the meaning set forth in Section 13.01(a).
"MANUFACTURING PARTY" means the Party who is from time to time
responsible for the (i) manufacturing and supply of the Antibody and/or the
Product for use during Development or (ii) commercial manufacture and supply of
the Antibody and/or the Product.
"MILESTONE PAYMENTS" shall have the meaning set forth in
Section 4.02.
"NET SALES" means the amount invoiced by, or on behalf of, a
Party, its Affiliates or its sublicensees from sales of the Product by or on
behalf of such Party to Third Parties in the Territory, less reasonable and
customary deductions applicable to the Product for (i) transportation charges
and charges such as insurance, relating to transportation paid by the selling
party; (ii) sales and excise taxes or customs duties paid by the selling party
and any other governmental charges imposed upon the sale of the Product and paid
by the selling party; (iii) distributors' fees, rebates or allowances actually
incurred; (iv) quantity discounts, cash discounts or chargebacks actually
incurred in the ordinary course of business in connection with the sale of the
Product; (v) allowances or credits to customers, not in excess of the selling
price of the Product, on account of governmental requirements, rejection,
outdating, recalls or return of the Product; (vi) costs of customer programs
such as cost effectiveness or patient or physician assistance programs designed
to aid in patient compliance to maintain medication schedules and which Schering
is reasonably required to carry out in order to effect a sale of the Product;
and (vii) a deduction for actual bad debts not to exceed 1%. Sales of the
Product between a Party and its Affiliates or sublicensees solely for research
or clinical testing purposes shall be excluded from the computation of Net
Sales. Net Sales of Schering will be accounted for in accordance with
International Accounting Standards, consistently applied. Net Sales of
Techniclone will be accounted for in accordance with Generally Accepted
Accounting Principles, consistently applied.
8
"NON-MANUFACTURING PARTY" shall be any Party that is not a
Manufacturing Party.
"PACKAGED PRODUCT" means the Product packaged and labeled in
compliance with the specifications and requirements of the Regulatory Approval
of the country of commercial distribution, in a fully equipped kit containing
imaging and/or treatment doses in the strengths and sizes ordered by the
Schering customer, in a form ready for delivery to Schering's customer by a
common carrier.
"PATENTS" means all existing United States patents and patent
applications and all United States patent applications hereafter filed,
including any continuation, continuation-in-part, division, provisional or any
substitute applications, any patent issued with respect to any such patent
applications, any reissue, re-examination, renewal or extension (including any
supplemental protection certificate) of any such patent, and any confirmation
patent or registration patent or patent of addition based on any such patent,
and all foreign counterparts of any of the foregoing and that are now owned or
Controlled or hereafter acquired or Controlled by a Party or its Affiliates.
"Patents" also includes a Supplementary Certificate of Protection of a member
state of the European Union and any other similar protective rights in any other
country.
"PATENT EXPENSES" means the fees, expenses and disbursements
and outside counsel fees, and payments to Third Party agents incurred in
connection with the preparation, filing, prosecution and maintenance of
Techniclone Patents covering the Product within the Field, including
Techniclone's costs of patent interference and opposition proceedings and
actions at law and equity for patent infringement and any sums paid to Third
Parties on account of judgments or settlements arising out of Third Party patent
claims (other than such judgments or settlements resulting in the payment of
royalties).
"PHASE II CLINICAL TRIAL" means any Phase II clinical trial as
described in 21 C.F.R. ss. 312.21 (b), other than the Existing Trials.
"PHASE III CLINICAL TRIAL" means any Phase III clinical trial
as described in 21 C.F.R. ss. 312.21(c).
"PRECLINICAL DEVELOPMENT" shall refer to all activities
relating to the planning and execution of non-human studies conducted in IN
VITRO or in relevant IN VIVO animal models directed toward obtaining Regulatory
Approval of a Product in each regulatory jurisdiction in the Territory. This
includes preclinical testing, pharmacokinetics, toxicology, documentary and
medical writing directly related to Preclinical Development activities, and
related regulatory affairs and outside counsel regulatory legal services.
"PRECLINICAL DEVELOPMENT EXPENSES" means the expenses incurred
by a Party or for its account which are paid to a Third Party, and Internal
Costs, consistent with the Development Plan and Budget and are specifically
attributable to the Preclinical Development of a Product (excluding royalties
paid to a Third Party). Preclinical Development Expenses shall include, but are
not limited to, the cost of non-human studies on the toxicological,
pharmacokinetic, metabolic or clinical aspects of a Product conducted internally
or by individual investigators, of consultants necessary for the purpose of
obtaining and/or maintaining Regulatory Approval of a Product in the Territory,
including Third Party contractors, and costs (and related fees) for preparing,
submitting, reviewing or developing data or information relating to non-human
studies for the purpose of submission to a governmental authority to obtain
and/or maintain Regulatory Approval of a Product in the Territory.
9
"PRODUCT" or "ONCOLYM" means the Antibody combined with
Iodine-131.
"REGULATORY APPROVAL" means any approvals, product and/or
establishment licenses, registrations or authorizations of any federal, state or
local regulatory agency, department, bureau or other governmental entity,
necessary for the manufacture, use, storage, importation, export, transport or
sale of Product in a regulatory jurisdiction.
"ROYALTY PERCENTAGE" shall have the meaning set forth in
Section 6.01.
"SAFETY" means adverse experiences which are significant,
unexpected (as defined in 21 C.F.R. ss. 314.80(a)), serious or life threatening
or have a toxicological effect on one or more body tissues.
"TECHNICLONE'S COST OF GOODS" shall mean (i) with regard to
Techniclone's Internal Costs and charges, the direct costs and charges,
including direct overhead charges, related to the manufacture, packaging and
shipment of the Antibody, Product or Packaged Product, and shall exclude costs
and charges related to or occasioned by unused manufacturing capacity; the
manufacture of other products at Techniclone's facilities; amortization of
property, plant or equipment not specifically related to manufacturing the
Antibody, Product or Packaged Product; allocation of general corporate overhead;
and any employee costs associated with equity incentive plans; and (ii) with
regard to Techniclone's external costs and charges, the commercially reasonable
invoiced costs and charges of suppliers of goods and services directly related
to the manufacture or packaging of Antibody, Product and Packaged Product.
"TECHNICLONE KNOW-HOW" means all Information, whether
currently existing or developed or obtained during the course of this Agreement,
and whether or not patentable or confidential that is now Controlled or
hereinafter becomes Controlled by Techniclone or its Affiliates and that relates
to the research, development, utilization, manufacture or use of the Product.
Notwithstanding anything herein to the contrary, Techniclone Know-How shall
exclude Techniclone Patents.
"TECHNICLONE PATENTS" means any Patents owned or Controlled by
Techniclone or its Affiliates covering the research, development, manufacture,
use, importation sale or offer for sale of a Product.
"TERRITORY" means all the countries, possessions, and
subdivisions of the world.
"THIRD PARTY" means any entity other than Techniclone or
Schering and their respective Affiliates and sublicensees.
"TOLERABILITY" means adverse drug experiences which are
unpleasant to such an extent that they can materially and adversely affect
market potential or market penetration of a Product, but which do not
necessarily require discontinuation of drug therapy.
10
"TREATMENT" means all Packaged Product required to provide one
imaging dose and two therapeutic doses for a patient of average body mass.
"VTA TECHNOLOGY" means Techniclone's vascular targeting agent
technology which is the subject of that certain Coagulation Patent License
Agreement between University of Texas System and Techniclone effective as of
October 8, 1998 and a related Patent License Agreement between University of
Texas System and Techniclone effective as of October 8, 1998.
"VALID CLAIM" means a claim of any issued, unexpired United
States or foreign patent which shall not have been withdrawn, canceled or
disclaimed, or held invalid or unenforceable by a court of competent
jurisdiction in an unappealed or unappealable decision.
"WRITTEN DISCLOSURE" shall have the meaning set forth in
Section 8.06.
ARTICLE II
LICENSES AND ASSIGNMENT
-----------------------
Section 2.01 Exclusive Patent and Trademark License and Assignment to
Schering.
(a) EXCLUSIVE PATENT AND TRADEMARK LICENSE TO SCHERING.
Techniclone grants to Schering a paid-up, exclusive (even as to Techniclone)
worldwide license, with a right to sublicense, under the Techniclone Patents,
the Techniclone Know-How and the Joint Patents to use, develop, manufacture,
have manufactured, market, sell, import for sale, and distribute the Antibody
and/or the Product in the Territory for all indications in the Field, subject to
the terms and conditions hereof and the terms and conditions of the Existing
Licenses described in Section 2.02 below. Notwithstanding the foregoing,
Techniclone shall retain the right to conduct Development and related activities
and to manufacture and have manufactured the Product to the extent specifically
provided for in this Agreement, subject to the terms and conditions hereof.
A list of the Techniclone Patents identified as of the
Effective Date is attached hereto as Exhibit A-1. Such list shall be modified
from time to time to reflect any changes to Techniclone Patents and to include
any Techniclone Patents acquired by or coming under the Control of Techniclone
during the course of this Agreement.
At Schering's election, to be exercised on a
country-by-country basis for all of the countries of the Territory in which
Techniclone has rights to the trademark "Oncolym," Techniclone shall, subject to
the terms and conditions hereof, (i) grant to Schering a paid-up exclusive (even
as to Techniclone) royalty free, perpetual license for the use of the trademark
"Oncolym" to be used in connection with the purposes of this Agreement, such
license to terminate on a country-by-country basis as of such time as Schering
shall obtain an exclusive trademark for the Product other than the trademark
"Oncolym" or (ii) assign such trademark to Schering.
11
(b) ASSIGNMENT. With the exception of the Existing Licenses
described in Section 2.02 below, Techniclone assigns to Schering all its right,
title and interest under all agreements (the "Third Party Agreements") with
Third Parties relating in any way to this Agreement and existing as of the date
hereof. Such agreements are listed on Exhibit A-2 hereto. Notwithstanding the
foregoing, Techniclone shall retain the right to conduct Development and related
activities and to manufacture and have manufactured the Product to the extent
specifically provided for in this Agreement. Techniclone agrees to use
commercially reasonable efforts to cause the applicable Third Parties to assign
the Third Party Agreements to Schering.
Section 2.02 EXISTING LICENSES. The licenses granted under Section 2.01
include sublicenses of Third Party technology existing on the Effective Date and
licensed to Techniclone. A list of all such agreements as of the Effective Date
is attached hereto as Exhibit C, true, correct and complete copies of which have
been provided to Schering prior to the Effective Date. Any royalties payable to
Third Parties pertaining to technology discussed in the previous sentence shall
be paid by Techniclone, and, if not so paid, may be paid by Schering and offset
or deducted from royalty payments under Section 6.01. From time to time at
Schering's request, Techniclone will use its commercially reasonable efforts to
obtain a consent (a "CONSENT") from existing licensors and other contractual
counterparties with Techniclone. Such Consent shall contain the agreement of
such licensor or counterparty to (i) give reasonable written notice to Schering
prior to terminating the underlying license or contract, (ii) provide Schering a
reasonable period to cure any default under such license or contract, and (iii)
permit Schering or one or more of its Affiliates to assume Techniclone's
obligations thereunder as assignee of Techniclone's rights thereunder, in each
case at Schering's option.
Section 2.03 VTA TECHNOLOGY. Techniclone has confirmed to Schering its
willingness to enter into a License and Development Agreement in respect of the
VTA Technology in accordance with the terms set out in Exhibit D (the "Proposed
Offer"). Techniclone hereby undertakes, at Schering's request, to enter into
good faith negotiations and to use all reasonable efforts to negotiate and
conclude a License and Development Agreement in respect of the VTA Technology in
accordance with such terms within thirty (30) days of the Effective Date. During
such thirty (30) day period, Techniclone will not license or dispose of any
rights to the VTA Technology to any Third Party, and will permit Schering to
conduct such reasonable due diligence as Schering believes to be appropriate. In
the event that during the thirty (30) day period Schering believes that
additional time is necessary to conclude a License and Development Agreement in
respect of the VTA Technology, then Schering shall so notify Techniclone
pursuant to Section 14.05, in which case the time period shall be extended by
thirty (30) days, and following Techniclone's receipt of the notice from
Schering, Schering and Techniclone shall be bound by the terms set out on
Exhibit D.
If the thirty (30) day (or sixty (60) day if extended by Schering)
period expires without the Parties having concluded a License and Development
Agreement in respect of the VTA Technology, they shall observe the following
procedure:
(i) Techniclone shall have the right to conclude a definitive
agreement for the rights to the VTA Technology with a Third Party on
terms on the whole materially more favorable to Techniclone than the
Proposed Offer.
12
(ii) In the event that within one (1) year of the Effective Date
Techniclone desires to conclude a definitive agreement with a Third Party
for the VTA Technology on terms equivalent to or materially less
favorable to Techniclone than the Proposed Offer, then Techniclone shall
submit such terms to Schering in writing pursuant to Section 14.05 (the
"New Proposed Offer"). Techniclone need not disclose to Schering the
identity of the Third Party. Schering shall then respond in writing to
Techniclone within ten (10) days after receipt of such New Proposed Offer
notice indicating whether Schering desires to commence negotiations with
respect to same, and if Schering so indicates its desire to commence such
negotiations, Schering shall have the right to cause Techniclone to enter
into negotiations for thirty (30) days (or such longer period as the
Parties may agree), and Techniclone's rights shall be determined
accordingly.
(iii) Provided Techniclone has complied with its obligations set
forth in this Section 2.03, then following the first anniversary of the
Effective Date Techniclone shall thereafter be relieved of its
obligations set forth in this Section 2.03.
Section 2.04 CREDIT FOR ONCOLYM PAYMENTS. In the event that Schering and
Techniclone conclude a definitive agreement concerning Techniclone's VTA
Technology pursuant to the first paragraph of Section 2.03 pursuant to
negotiations commenced prior to the expiration of the sixty day period referred
to therein, and the Development of Oncolym ceases pursuant to Article XII
without Oncolym being marketed in the United States or Europe, then Schering
shall be entitled to a credit under the definitive agreement concerning the VTA
Technology (i) for the initial payment of three million dollars ($3,000,000)
paid by Schering to Techniclone pursuant to Section 4.01 of this Agreement, and
(ii) for any Milestone Payments paid by Schering to Techniclone pursuant to
Section 4.02 of this Agreement.
Section 2.05 ORPHAN DRUG ACT.
To the fullest extent permitted by law:
(a) Promptly following the Effective Date, Techniclone shall
transfer to Schering legal title to and possession of any and all Orphan Drug
Act petitions and other requests for designation by FDA of the Product as an
orphan drug, and/or any and all Orphan Drug Act designations by FDA of the
Product as an orphan drug. The Parties confirm that Schering will have the right
to claim and use any taxation credits, deductions or other benefits available as
a result of Orphan Drug Act designation by FDA of the Product, or a grant of
marketing exclusivity by FDA for the Product pursuant to the Orphan Drug Act.
13
(b) Techniclone agrees to cooperate with and assist Schering
to the extent reasonably requested by Schering in the preparation, amendment,
and/or prosecution of petitions or other requests for Orphan Drug Act
designation or Orphan Drug Act exclusivity for Product, and any other marketing
exclusivity available in the United States or any other country of the
Territory. Such assistance shall include without limitation participation by
Techniclone representatives in meetings with governmental authorities as
reasonably requested by Schering, and subject to the availability of Techniclone
personnel. Schering shall keep Techniclone apprised of its progress in obtaining
Orphan Drug Act exclusivity and any other marketing exclusivity that becomes
available in the United States and any other country of the Territory. Schering
shall be the legal and beneficial owner of Orphan Drug Act exclusivity or any
other marketing exclusivity obtained in regard to any Product in the United
States or any other country of the Territory.
ARTICLE III
DEVELOPMENT
-----------
Section 3.01 JDC
(a) FORMATION OF THE JDC. Within fifteen (15) days after the
Effective Date (or such later time as may be mutually agreed to by the Parties),
the Parties shall establish the JDC. The JDC shall consist of an equal number of
representatives of Techniclone and Schering to be agreed upon by the Parties
from time to time. Either Party may designate a substitute for a member unable
to be present at a meeting. One of the Schering members of the JDC, chosen at
the sole discretion of Schering, along with one of the Techniclone members of
the JDC, chosen at the sole discretion of Techniclone, shall serve as co-chairs
of the JDC. Regardless of the number of representatives from each Party on the
JDC, each Party shall have one vote on any issue. Meetings of the JDC shall be
held quarterly and may be called by either Party with not less than ten (10)
business days notice to the other unless such notice is waived, and all meetings
shall be held at the office of Schering's United States Affiliate in Richmond,
California, unless otherwise agreed in writing. The JDC may be convened, polled,
or consulted from time to time by means of telecommunication or correspondence.
Each Party will disclose to the other proposed agenda items reasonably in
advance of each meeting of the JDC. Each Party shall bear its own costs for
participation in the JDC.
(b) FUNCTIONS OF THE JDC. The JDC shall function as a forum
for the Parties to inform and consult with one another concerning progress of
and changes to Development and the Development Plan and Budget, meeting
Development goals, dealing with obstacles to successful Development, and the
status of obtaining Regulatory Approvals. The JDC shall have no role,
consultative or otherwise, with regard to Commercialization. The following
specific functions shall be delegated to the JDC.
(i) plan, coordinate and oversee the Development of the
Product in order to obtain Regulatory Approval in the
Territory (including establishing in writing the Approval
Criteria specified in Section 12.02(a)(iii));
14
(ii) assume responsibility for the Development Plan and
Budget as established in Section 3.02(b);
(iii) propose updates yearly to the Development Plan and
Budget, which plan and budget will specify a reasonable
level of detail by which Techniclone and Schering will
conduct Preclinical Development, Clinical Development and
CMC/Manufacturing;
(iv) propose any amendments of the Development Plan and
Budget which are not covered in the yearly updates;
(v) prepare detailed budgets consistent with the
Development Plan and Budget and allocate such budgets to
particular Development tasks; and
(vi) subject to Section 3.06, evaluate any proposal to
contract with any Third Party to perform any Development
activities.
(c) LIMITATION ON JDC AUTHORITY. Notwithstanding the creation
of the JDC, each Party to this Agreement shall retain the rights, powers and
discretion granted to it hereunder, and the JDC shall not be delegated or vested
with any such rights, powers or discretion unless such delegation or vesting is
expressly provided for herein or the Parties expressly so agree in writing. The
JDC shall not have the power to amend or modify this Agreement, which may be
amended or modified only as provided in Section 14.12.
(d) RESOLUTION OF DISPUTES. If the JDC cannot reach a
unanimous decision with respect to the Development matters delegated to it
within ten (10) days then the disputed matter shall be promptly referred to a
senior manager of each Party designated by such Party for resolutions. If the
senior managers are unable to resolve such matter within ten (10) days after one
Party notifies the other of its desire to have the matter referred to such
senior managers, the decision of Schering's senior manager shall control.
Schering's initial senior manager designee is the head of Strategic Unit
Therapeutics for Schering's U.S. Affiliate, and Techniclone's Chief Executive
Officer.
Section 3.02 Development.
(a) Techniclone and Schering each agree to co-operate in the
Development of the Product and to use commercially reasonable efforts to develop
and bring the Product to market. Techniclone and Schering each agree to use
commercially reasonable efforts to execute and substantially perform the
obligations assumed by it under the Development Plan and Budget. All Clinical
Development, including all clinical trials other than the Existing Trials, shall
be conducted by Schering. The Existing Trials shall be conducted by Techniclone
under the supervision of Schering. Promptly following the Effective Date
Techniclone shall transfer legal title to all data from completed studies of the
Product to Schering. Promptly following the conclusion of any Existing Trials
Techniclone shall transfer legal title to all data from such Existing Trials to
Schering.
15
(b) The Development of the Product shall be governed by a
development plan and budget ("DEVELOPMENT PLAN AND BUDGET"), which shall provide
for Development of the Product in the Territory and, together with updates,
shall be updated, amended, supplemented and otherwise modified from time to time
by the JDC. The Parties have agreed upon and approved the Initial Development
Plan and Budget which is attached hereto as Exhibit B.
(c) With respect to the Development of additional indications
for the Product, the Development Plan and Budget for each such additional
indication shall be proposed by the JDC and agreed between the Parties, and each
subsequent Development Plan and Budget for each such additional indication shall
be proposed by the JDC and submitted to the Parties for review and approval.
Anything in the previous sentence notwithstanding, Schering shall have the right
at its sole discretion to veto or proceed with Development of the Product for
additional indications regardless of Techniclone's disagreement. Cost of
Development of the Product for additional indications will be borne exclusively
by Schering except in the circumstances described in Section 4.03.
(d) Each Development Plan and Budget shall provide a
reasonably detailed written time-line for each step to be achieved with respect
to the Development and Regulatory Approval of the Product, the estimated
Development Expenses of obtaining such Regulatory Approval and the description
of a final Product.
(e) Each Development Plan and Budget shall be updated annually
by the JDC, and submitted by October 1 of each calendar year to the Parties for
review and approval not later than sixty (60) days after such submission.
16
Section 3.03 Clinical Development Applications and Drug Approval
Applications.
(a) CLINICAL STUDIES. Except in the case of Existing Trials
Schering shall be responsible for preparing, filing and prosecuting applications
for permission to conduct Clinical Development in such countries of the
Territory which require such applications to be filed and wherein Schering, in
good faith and in the exercise of reasonable business judgment, determines it is
commercially reasonable to do so. With respect to the United States and any
other country where Techniclone has such an application on file with appropriate
regulatory authorities, Techniclone shall transfer such application to Schering
promptly following the request of Schering PROVIDED that, from and after the
Effective Date, Schering shall have authority and control with respect to any
such applications (and prior to the transfer to Schering, all communications and
interactions with regulatory authorities by Techniclone with respect to such
applications shall be reviewed and approved in advance by Schering).
(b) DRUG APPROVAL APPLICATIONS. Techniclone will use its
reasonable best efforts to schedule as soon as is practical, a meeting with the
FDA (the "Conversion Meeting") for the purpose, INTER ALIA, of extending the
Existing Trial into a Phase III Clinical Trial. Schering shall be responsible
for preparing, filing, and prosecuting Drug Approval Applications and seeking
Regulatory Approvals for the Product in all countries in the Territory wherein
Schering, in good faith and in the exercise of reasonable business judgment,
determines it is commercially reasonable to do so, including preparing all
reports necessary as part of a Drug Approval Application. All such Drug Approval
Applications shall be filed in the name of Schering, and a copy of each such
Drug Approval Application shall be promptly provided to Techniclone. In
connection with all Drug Approval Applications being prosecuted by Schering
under this Section 3.03, Schering agrees to provide Techniclone with a copy
(which may be wholly or partly in electronic form) of all filings to regulatory
agencies that it makes hereunder within thirty (30) days after written request
by Techniclone, at no cost to Techniclone.
(c) COOPERATION. The Parties shall consult and cooperate
(including in the case of Techniclone providing such commercially reasonable
assistance as Schering shall reasonably request) in the preparation of each
regulatory submission and in obtaining and maintaining Regulatory Approvals
within the Territory, PROVIDED, HOWEVER, that except with regard to Existing
Trials, prior to and following approval of a Drug Approval Application, Schering
shall be solely responsible for interactions with regulatory authorities
throughout the Territory. Subject to the foregoing, Schering shall provide
Techniclone and Techniclone shall provide Schering (until transfer of
applications for permission to conduct Clinical Development, and thereafter
solely in regard to the Existing Trials) with reasonable advance notice of any
scheduled meeting with the FDA, EMEA or any other regulatory authority in a
major regulatory jurisdiction, relating to any Drug Approval Application, and
Techniclone or Schering, as applicable, shall have the right to participate in
any such meeting. In the event that any regulatory agency threatens or initiates
any action to remove a Product from the market in any country in the Territory,
Schering shall notify Techniclone of such communication within two business days
of receipt by Schering. As between Parties, Schering shall be the legal and
beneficial owner of all Drug Approval Applications and related approvals in the
Territory.
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Section 3.04 Costs of Development.
(a) GENERAL. All Development Expenses incurred throughout the
Territory pursuant to an approved Development Plan and Budget for the Product
shall be shared by the Parties in the Territory in the manner as set forth in
this Section 3.04. Each Party shall calculate and maintain records of
Development Expenses incurred by it in accordance with procedures to be agreed
upon between the Parties, which shall include an appropriate procedure for
classifying Development Expenses as Existing Trial Expenses, Preclinical
Development Expenses, Clinical Development Expenses and CMC/Manufacturing
Expenses. Accounting by Schering for Development Expenses shall be consistent
with International Accounting Standards, consistently applied. Accounting by
Techniclone for Development Expenses shall be consistent with Generally Accepted
Accounting Principles, consistently applied. Each Party shall report quarterly
to the other Party on its Development Expenses, with such reports to be
submitted within thirty (30) days after the end of each calendar quarter. At the
end of each calendar year the Parties shall assess the Development Expenses
incurred and documented by each Party. In the event that either Party disagrees
with the assessment, then the Chief Financial Officers of Techniclone and
Schering's U.S. Affiliate shall meet and attempt to resolve the disagreement. If
the Chief Financial Officers are unable to resolve the disagreement, then it
shall be resolved in the same manner as an Audit Disagreement pursuant to
Section 11.03(b). Each Party shall also have the right to audit the Development
Expenses reported by the other Party pursuant to Section 11.03.
(b) SHARING OF DEVELOPMENT EXPENSES.
(i) PRECLINICAL DEVELOPMENT EXPENSES. All Preclinical
Development Expenses incurred after the Effective Date up
to $500,000 shall be borne by Techniclone; Preclinical
Development Expenses incurred after the Effective Date in
excess of $500,000 shall be borne fifty percent (50%) by
Schering and fifty percent (50%) by Techniclone.
(ii) CLINICAL DEVELOPMENT EXPENSES. Schering shall be
responsible for eighty percent (80%) of all Clinical
Development Expenses incurred after the Effective Date for
Products in the Territory, and Techniclone shall be solely
responsible for the remaining twenty percent (20%) of such
Clinical Development Expenses.
(iii) EXISTING TRIAL EXPENSES. Existing Trial Expenses
incurred after the Effective Date shall be borne twenty
percent (20%) by Techniclone and eighty percent (80%) by
Schering. Each Party shall bear one hundred percent (100%)
of its Internal Costs relating to an Existing Trial.
Techniclone shall complete all Existing Trials and
promptly provide Schering with all data and results from
the Existing Trials.
If the FDA confirms that an Existing Trial may be extended
to constitute a Phase III Clinical Trial, all Clinical
Development Expenses incurred in respect of that Phase III
Clinical Trial after both of the following events have
occurred shall be shared between the Parties in accordance
with (ii) above: (A) the decision of the FDA is confirmed
in writing; and (B) the dosing of the first patient under
the amended protocol converting the trial to a Phase III
Clinical Trial.
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(iv) CMC/MANUFACTURING EXPENSES. Techniclone shall be
responsible for all CMC/Manufacturing Expenses, except for
certain capital costs as described in Section 7.11.
Without limiting in any manner Techniclone's obligations
hereunder, if so requested by Techniclone, and subject to
availability of Schering personnel, Schering agrees to
provide reasonable advisory/consultancy input to
Techniclone with respect to CMC/Manufacturing at no cost
to Techniclone.
(c) PAYMENT. Each Party shall pay to the other Party its share
of Development Expenses within forty-five (45) days of its receipt of each
report referred to in Section 3.04(a) to the extent required pursuant to the
terms of Section 3.04(b).
Section 3.05 USE OF FUNDS. As of the Effective Date, Techniclone intends to
utilize the initial payment specified in Section 4.01 and the Milestone Payments
payable pursuant to Section 4.02 for Development Expenses and to fulfill any
manufacturing obligations it may have hereunder.
Section 3.06 Right to Engage Third Parties.
(a) Subject to the advance written approval of Schering,
Techniclone shall be entitled to contract with Third Parties to perform any
Development activities. Techniclone shall notify Schering in writing thirty (30)
days prior to entering into any contract with a Third Party to perform any
Development activities where such Third Party contract has not been unanimously
approved by the JDC. During the thirty (30) day period following such notice
from Techniclone, Schering shall have the right to (i) offer to perform itself
such Development activities or (ii) propose an alternative Third Party to
perform such Development activities. If Schering decides to offer to perform
itself such Development activities or to propose an alternative Third Party to
perform such Development activities, it shall notify Techniclone in writing
during such thirty (30) day period and shall include with such notice the terms
of its offer to perform such Development activities or the identification of
such alternative Third Party or the terms of the proposal for such alternative
Third Party to perform such Development activities, as the case may be.
Techniclone shall have no obligation to accept such offer or proposal, but shall
consider such offer or proposal in good faith and negotiate towards entering
into an agreement with Schering or the alternative Third Party proposed by
Schering if Schering's offer or proposal and the capabilities of Schering or
such alternative Third Party, as the case may be, are equivalent to those of the
Third Party proposed by Techniclone. All other things being equal, Schering or
its alternative Third Party shall be the preferred provider of such Development
activities, and Techniclone shall accept Schering's offer or proposal if it is
not materially more expensive or otherwise materially less beneficial than the
offer of the Third Party proposed by Techniclone.
(b) In the event that Schering shall not exercise its right
pursuant to Section 3.06(a) to offer to perform itself such Development
activities or to propose an alternative Third Party to perform such Development
activities, or if Techniclone shall have failed to accept any such offer or
proposal by Schering and such offer or proposal is not materially more expensive
or otherwise materially less beneficial than the offer of the Third Party
proposed by Techniclone, Techniclone shall not use any Third Party to perform
any Development without the prior written approval of Schering (which will not
be unreasonably withheld).
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(c) Each contract related to the Development or
Commercialization of any Product entered into by Techniclone shall expressly
provide for the automatic assignment of such contract to Schering at Schering's
option upon written notice to such Third Party not more than one hundred eighty
(180) days following the termination of this Agreement for any reason, other
than a termination by Schering pursuant to Section 12.02(a).
Section 3.07 SCHERING STEP-IN RIGHTS. Without prejudice to any other
remedies available to Schering under this Agreement or at law, if Techniclone
materially fails to carry out the reasonable Development tasks allocated to it
under this Agreement in accordance with the time lines and other conditions
allocated to it under the Development Plan and Budget and this Agreement
generally, Schering may, after forty-five (45) days prior written notice to
Techniclone, undertake that particular task ("Work") and complete it at its own
expense if Techniclone has not at such time begun to carry out such Work in a
manner reasonably likely to cure its default. Schering shall be entitled to
commercially reasonable cooperation and assistance from Techniclone to
accommodate its efforts, including assignment to Schering of sponsorship of
regulatory filings if necessary to permit the exercise by Schering of its rights
under this Section 3.07. All costs reasonably incurred by Schering in carrying
out such Work will be reimbursed by Techniclone on a quarterly basis pursuant to
the terms of Section 3.04(a) and (c) or may, at Schering's option, be set off
against any payments otherwise due to Techniclone under this Agreement.
Section 3.08 COMMERCIALIZATION. Schering undertakes to use all reasonable
commercial diligence to enable the Product to be commercially distributed
following Regulatory Approval in the United States or Europe, as the case may
be. In the event that Schering fails to Commercialize the Product in the United
States or Europe, Techniclone's sole remedies are those provided for in Section
12.02 (d) below.
ARTICLE IV
PAYMENTS
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SECTION 4.01 INITIAL PAYMENT. Schering shall pay to Techniclone an amount
equal to three million dollars ($3,000,000) within three (3) business days of
the execution of this Agreement. This amount shall be noncreditable against any
future obligations of Schering under this Agreement.
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SECTION 4.02 MILESTONE PAYMENTS. Schering shall make the following payments
("MILESTONE PAYMENTS") to Techniclone within thirty (30) business days after the
first achievement of each of the following milestones. Each of these Milestone
Payments shall be paid only once regardless of the number of times the
milestones are achieved by the Product or the number of indications for which
the Product is developed or commercialized except as provided in Section 4.03
below.
MILESTONE PAYMENT
--------- -------
(i) Prior to the termination of this Agreement and upon the acceptance by the FDA for $2,000,000
filing of the first Drug Approval Application for Oncolym in the United States.
(ii) Prior to the termination of this Agreement and upon Regulatory $7,000,000
Approval of Oncolym in the United States; PROVIDED that Techniclone
has made available to Schering reasonable quantities of Product that
can be immediately commercially distributed in interstate commerce in
the United States.
(iii) Prior to the termination of this Agreement and upon Regulatory $2,500,000
Approval of Oncolym in any country in Europe; PROVIDED that
Techniclone has made available to Schering reasonable quantities of
the Product that can be immediately commercially distributed in the
applicable country of Europe.
(iv) Prior to the termination of this Agreement and upon First Commercial Sale in any $2,500,000
country of Europe.
SECTION 4.03 ADDITIONAL INDICATIONS. In the event that Techniclone wishes
to develop the Product for indications other than those described in the
Existing Trials or agreed upon by the Parties in the JDC, and Schering does not
object to such development, Techniclone may carry out such development at its
own risk and expense. Prior to any proposal of the Product for any such
additional indications, the Parties agree to negotiate, in good faith (without
any obligation to conclude) an agreement regarding separate initial payments,
royalties and milestone payments for such additional indications, as have been
funded, or will be funded, by Techniclone pursuant to this Section 4.03. For the
avoidance of doubt, the Parties expressly agree that for any additional
indications, with respect to which any portion of the development is funded by
Schering, Techniclone shall not be entitled to any milestone or initial payments
(but only to the royalties specified in Article VI), nor shall there be any
requirement to so negotiate. Techniclone may not develop, commercialize, sell,
license or dispose of any right, title or interest in and to such additional
indications without Schering's written consent, which may be withheld by
Schering in its discretion.
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ARTICLE V
COMMERCIALIZATION
-----------------
Section 5.01 SCHERING AS SOLE MARKETING PARTY. Schering shall have the
exclusive right to Commercialize the Product (either by itself or through its
Affiliates or sublicensees) in the Territory.
Section 5.02 COMMERCIALIZATION EFFORTS. Schering agrees to use commercially
reasonable efforts with respect to the Commercialization of the Product
throughout the Territory as provided hereunder. Such commercially reasonable
efforts shall be consistent with the efforts used by Schering in preparing
commercialization plans and budgets and commercializing its own pharmaceutical
products. Without limiting the generality of the foregoing, Schering shall
determine the pricing and marketing strategy for the Product in its sole
discretion. Within 180 days after the execution hereof, Schering will present to
Techniclone a preliminary Commercialization plan outlining pre-launch
strategies, activities and plans related to the proposed Commercialization of
Oncolym, in the United States and Europe, together with projected five year
sales forecasts. Any such plans and forecasts provided to Techniclone by
Schering shall not be binding on Schering. Schering shall not be obligated to
Commercialize the Product in any country where Schering does not believe it
would be commercially reasonable to do so.
Section 5.03 COMPETING PRODUCTS. On a country-by-country basis, in the
event that after the Regulatory Approval of the Product Schering desires to
continue the sale or commence the sale, as the case may be, of a Competing
Product then at Schering's option one of the following conditions shall apply:
(i) Schering shall return to Techniclone marketing rights
to the Product in the applicable country; or
(ii) Schering shall pay Techniclone a royalty of three
percent (3%) on Schering's Net Sales of the Competing
Product in the country in question for as long as Schering
continues to sell both the Product and the Competing
Product and to pay royalties on sales of the Product in
the country in question in accordance with the terms
hereof.
The foregoing conditions shall not be applicable to the sale by Schering of a
Competing Product if in the applicable country Schering has sublicensed
marketing rights to Oncolym to a party that is not an Affiliate of Schering; and
such sub-licensee is not selling a Competing Product. The restrictions set forth
in this Section 5.03 shall apply in Europe only to the extent permitted by the
Treaty of Rome.
Section 5.04 TECHNICLONE RESTRICTIONS.
Outside of Europe Techniclone shall not make, use, sell or
permit, or cooperate with any Third Party in the manufacture use or sale of a
therapeutically capable radioisotope attached to any monoclonal antibody which
recognizes any antigen on the surface of B-cells. Within Europe, Techniclone's
reservation of diagnostic rights to the Antibody and/or the Product shall not
permit Techniclone to use, make or sell, or to permit or cooperate in the use,
manufacture or sale of the Antibody and/or the Product, in whole or in part, for
purposes falling within the Field.
22
ARTICLE VI
ROYALTIES
---------
Section 6.01 ROYALTIES. GENERAL. In further consideration of the rights and
licenses granted to Schering under Article II of this Agreement, Schering shall
pay to Techniclone a royalty equal to twelve percent (12%) of Net Sales of the
Product in the Territory (the "ROYALTY PERCENTAGE").
(b) ROYALTY TERM. Except where expressly provided otherwise in
this Agreement, and subject to Section 6.01(c) below, all royalties to a Party
shall be paid, on a country-by-country basis, from the date of the First
Commercial Sale of the Product in a particular country until the later (the
"Royalty Expiration Date") of (i) ten (10) years from the First Commercial Sale
in such country and (ii) the last to expire of any Techniclone Patent which
includes a Valid Claim in such country; PROVIDED, HOWEVER, that if the Product
is sold in any country in which Techniclone does not have a Valid Claim which
would prevent the sale of a generic form of such Product, the royalty obligation
set forth in Section 6.01(a) with respect to Net Sales attributable to the sale
of the Product in such country shall be reduced by fifty percent (50%) of the
royalty that would otherwise be payable with respect to Net Sales attributable
to the sale of the Product in such country, until Techniclone is granted a Valid
Claim in such country.
(c) GENERIC. The royalty reduction of 50% described in Section
6.01(b) above shall only apply in any country of the Territory if a generic form
of the Product is actually sold in such country.
(d) DISCONTINUANCE. Subject to the provisions of Article XII,
Schering may discontinue Commercialization of the Product at any time, in any
country, and on a country-by-country basis.
(e) LICENSE FOLLOWING EXPIRATION. After the Royalty Expiration
Date, Schering shall thereafter have an exclusive (even as to Techniclone),
paid-up license to Techniclone Know-How to make, have made, use, sell, offer for
sale, have sold and import the Antibody and/or Product in that country,
PROVIDED, HOWEVER, that if Schering elects not to continue paying royalties as
provided herein in subsection (g) below at any time after the Royalty Expiration
Date, such license shall be non-exclusive.
(f) NON-EXTENSION OF EXISTING TRIALS. If the FDA does not
consent to an extension of the Existing Trials as a Phase III Clinical Trial by
[...***...], then the royalty specified in Section 6.01(a) shall be reduced by
[...***...] (e.g., from [...***...]).
(g) ROYALTY EXTENSION. Schering, at its sole discretion, may
elect to continue paying royalties under Section 6.01(a)-(f) after the Royalty
Expiration Date PROVIDED Schering gives Techniclone at least twenty-four (24)
months notice prior to the then scheduled Royalty Expiration Date, and further
PROVIDED, that the applicable royalty will be 6% (subject to reduction under
subsections (b) and (f)). In the event that Schering thereafter elects to
terminate paying royalties to Techniclone, Schering shall provide twenty-four
(24) months advance notice to Techniclone, in which case Techniclone shall have
the right to terminate its manufacturing obligations under Article VII on
twenty-three (23) months advance notice to Schering. Notwithstanding anything to
the contrary contained herein, Techniclone shall not be obligated to continue to
perform its manufacturing obligations hereunder beyond the Royalty Expiration
Date PROVIDED that Techniclone uses its reasonable best efforts to have its
manufacturing contracts with Third Parties related to this Agreement (and its
rights and obligations thereunder) assigned and transferred to Schering or a
Third Party designated by Schering, in which case, the provisions of Section
7.12 hereof shall apply; and PROVIDED further, that, if Schering or its Third
Party designee does not duly assume such contracts (and the rights and
obligations thereunder) and Techniclone is not otherwise able to so assign and
transfer same to Schering or its Third Party designee, Techniclone shall have
the right to terminate its manufacturing obligations as of or at any time
following the Royalty Expiration Date on twenty-four (24) months prior notice to
Schering.
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
23
Section 6.02 ROYALTY REPORTS AND PAYMENTS. Schering shall make royalty
payments to Techniclone quarterly within sixty (60) days after the end of each
calendar quarter in which Net Sales occurred. A report summarizing the Net Sales
of the Products during the relevant quarter on a country-by-country basis shall
be delivered to Techniclone within sixty (60) days following the end of each
calendar quarter for which royalties are due.
Section 6.03 PAYMENTS; INTEREST. Any payments due under this Agreement
shall be due on such date as specified in this Agreement and, in the event such
date is a day on which commercial banks are not authorized to conduct business
in either Tustin, California, New York, New York or Berlin, Germany, then the
next succeeding business day, and shall be made by wire transfer to a designated
bank account of the receiving Party.
Any failure by a Party to make a payment within five days
after the date when due shall obligate such Party to pay interest to the
receiving Party at a rate per annum equal to the prime rate as quoted in the
Eastern edition of the WALL STREET JOURNAL as of the date such payment is due
and, in the event such a rate is not quoted on such date then on the immediately
preceding date such rate is quoted, such interest due and payable upon tender of
the payment otherwise due and payable.
Section 6.04 TAXES. The Party receiving royalties shall pay any and all
taxes levied on account of royalties it receives under this Agreement. If laws
or regulations require that taxes be withheld, the selling Party will (i) deduct
those taxes from the remittable royalty, (ii) timely pay the taxes to the proper
taxing authority, and (iii) send proof of payment to the other Party within
thirty (30) days of receipt of confirmation of payment from the relevant taxing
authority. The selling Party agrees to make all lawful and reasonable efforts to
minimize such taxes to the other Party.
Section 6.05 PAYMENTS TO OR REPORTS BY AFFILIATES. Any payment required
under any provision of this Agreement to be made to either Party or any report
required to be made by any Party shall be made to or by an Affiliate of that
Party if designated by that Party as the appropriate recipient or reporting
entity without relieving such party from responsibility for such payment or
report.
Section 6.06 PAYMENT CURRENCY. Payments by Schering under this Agreement
shall be paid to Techniclone in U.S. dollars by wire transfer of immediately
available funds to an account at a commercial bank designated by Techniclone
pursuant to this Article VI. Where payments are based on Net Sales in countries
other than the United States, the amount of such Net Sales expressed in the
currency of each country shall be converted first into Deutsche Marks, or if the
Deutsche Mark shall have been replaced by the Euro, into Euros, and then into
U.S. dollars at the average exchange rate (calculated at the average of the
"bid" and "asked" exchange rate) for the applicable quarter; PROVIDED, HOWEVER,
that the conversion of the currency in question into Deutsche Marks or Euros
prior to conversion into U.S. dollars shall be for calculation purposes only,
and no additional fee or commission will be incurred as a consequence of the
multiple currency conversions. In determining the average exchange rate for any
quarter, the standard shall be the exchange rate quoted by the Frankfurt Fixing
or any appropriate successor rate fixing procedure then in effect between
European First Class Banks for the applicable currency at 1:00 p.m. on the last
business day of the applicable quarter. If there is no Frankfurt Fixing or
appropriate successor rate fixing procedure in effect as of any date of
determination, the Parties shall agree on another reference rate.
24
ARTICLE VII
MANUFACTURE AND SUPPLY
----------------------
Section 7.01 MANUFACTURE AND SUPPLY BY TECHNICLONE. Techniclone shall be
responsible for CMC/Manufacturing of Antibody, Product and Packaged Product
(including Techniclone's own manufacturing operations and those of its Third
Party contractors and suppliers), and for receipt and disposal of Antibody and
Product returned to Techniclone by Third Party contractors and suppliers, and
Product and Packaged Product returned by Schering customers. Subject to any
dispute resolution mechanisms specified herein and to the other provisions of
this Article VII, Techniclone shall have the final authority, so long as it is
the Manufacturing Party, with regard to CMC/Manufacturing. From the Effective
Date of this Agreement until the Parties otherwise agree, or as otherwise
provided herein, Techniclone will manufacture, or arrange for manufacture of
Antibody, Product and Packaged Product and supply Packaged Product to Schering
or Schering's designated distributor or distributors for use in connection with
Development and for the Commercialization of the Product in each applicable
country of the Territory under Article V hereof. Techniclone will not enter into
any Third Party contract relating to the manufacture of Antibody or Product or
Packaged Product without Schering's consent, which will not be unreasonably
withheld. Techniclone shall seek Schering's approval for all CMC/Manufacturing
plans, the implementation of such plans, and procedural changes to manufacturing
plans and processes, to the level of detail which Schering reasonably considers
to be necessary for Schering to fulfill its responsibilities and obligations as
holder of Regulatory Approvals throughout the Territory.
Section 7.02 REGULATORY APPROVAL FOR MANUFACTURING. Schering shall be
responsible for preparing all filings to obtain, or causing a Third Party
manufacturer to make all necessary filings to obtain, Regulatory Approval for
the manufacture of the Antibody and the Product as part of the approval of a
Drug Approval Application for the Product. At the reasonable request of
Schering, Techniclone will provide draft submissions for filing to Schering and
will provide, or have provided to Schering, whatever other technical support and
expertise Schering reasonably deems necessary to effectively obtain Regulatory
Approval for the manufacture of the Antibody and the Product as part of the
approval of a Drug Approval Application for the Product. Schering shall have
authority and control with respect to all filings to obtain Regulatory Approval
for the manufacture of the Antibody and the Product, including Packaged Product.
Subject to the foregoing, Schering shall provide Techniclone and Techniclone
shall provide Schering with reasonable advance notice of any scheduled meeting
with the FDA, EMEA or any other regulatory authority in a major regulatory
jurisdiction, relating to any filing to obtain Regulatory Approval for the
Product, and Techniclone or Schering, as applicable, shall have the right to
participate in any such meeting. Once any filings are made in accordance with
this Section 7.02, Techniclone shall promptly notify Schering in writing, of any
proposed or required changes, to the process for the manufacture of Antibody,
Product or Packaged Product.
Section 7.03 TESTING. Techniclone shall be responsible for all testing and
document generation (including without limitation all facilities information and
related documentation; chemistry, manufacturing, and control information;
regulatory methods and controls; and assays and reference standards) necessary
for and required by the FDA, EMEA or Koseisho for the manufacture of Antibody
and Product, including Packaged Product.
25
Section 7.04 SPECIFICATIONS. Schering and Techniclone will jointly
establish release specifications and an expiration date for Antibody and
Product, including Packaged Product, to be manufactured by Techniclone and
Techniclone's Third Party contractors and suppliers, and commercialized by
Schering. Techniclone shall obtain the prior written approval of Schering to
specifications to be established by Techniclone relating to the process of
manufacture, labeling or packaging of Antibody and Product, including Packaged
Product, acceptance and release of raw materials, and facility and operational
specifications. Techniclone agrees that it will not make changes to any of the
specifications and procedures described in this Section without the prior
approval of Schering. The timelines for completing and implementing the
specifications described in this Section shall be established by the JDC.
Techniclone shall provide to Schering copies of all procedures relating to
manufacturing and packaging employed by Techniclone and its Third Party
contractors and suppliers.
Section 7.05 QUALITY TESTING. Techniclone shall perform quality control
tests and assays on Antibody and Product, including Packaged Product,
manufactured and/or packaged by it and its Third Party manufacturers and
suppliers pursuant to Section 7.01 in accordance with the requirements of the
applicable Drug Approval Application. Techniclone shall provide Schering with a
copy of the batch record, a certificate of analysis and a certificate of
compliance for each batch of Antibody and Product, including Packaged Product,
manufactured by or on behalf of Techniclone, promptly following final quality
control release. The certificate of compliance shall certify that each batch was
reviewed and meets all regulatory requirements. The certificate of analysis
shall certify that each batch was tested and meets all specifications.
Section 7.06 STABILITY; RECORDKEEPING; INSPECTION; ETC. Techniclone will
conduct a stability program for Antibody and Product, including Packaged
Product, to be produced pursuant to this Article VII (in compliance with
pharmaceutical industry standards and requirements of the FDA, EMEA and
Koseisho) and agreed upon between the Parties. Techniclone and its Third Party
contractors and suppliers will initiate and maintain all manufacturing-related
and packaging-related documents and records required by applicable law and
regulations. Techniclone will also: (a) furnish copies of such records to
Schering upon Schering's reasonable request; (b) conduct, at Schering's expense,
additional testing requested by any relevant regulatory authority in the
Territory and/or as may be reasonably requested by Schering (relating to
returned or suspect Products); (c) during and prior to the commencement of
manufacturing and/or packaging activities by Techniclone and its Third Party
contractors and suppliers, allow Schering or its agents to inspect, for quality
control purposes upon reasonable notice and during normal business hours, the
manufacturing, packaging and testing facilities, including the actual process of
manufacture, packaging and testing of Antibody and Product; (d) promptly inform
Schering of any inspection, seizure, or other actual or threatened legal or
regulatory action by any governmental authority relating to the process of
manufacture or packaging of any Antibody or Product, and promptly provide
Schering with any documentation relating thereto; (e) except for manufacturing
changes requiring the prior written approval of Schering pursuant to Section
7.02, provide reasonable advance notice to Schering and consult with Schering
prior to amending any governmental filing; and (f) comply in all material
respects with all laws relating to the generation, storage and disposal of waste
resulting from the manufacture and packaging of Antibody and Product.
Techniclone shall obtain the prior written approval of Schering with respect to
stability testing protocols, and process intermediates for Antibody and Product,
including Packaged Product. The Parties recognize that special stability studies
may be required by regulatory authorities to support transport of processes
intermediates such as Antibody between manufacturing sites, and final
distribution of Product with a stability period of brief duration.
26
Section 7.07 FORECASTS AND ORDERS. As soon as is practicable following the
Effective Date, the Parties shall establish a system by which Schering shall
submit non-binding forecasts of its requirements of Packaged Products to
Techniclone. The system will provide reasonable notice to Techniclone of
Schering's anticipated requirements of Product. Unless technical or commercial
realities require otherwise, Schering will provide Techniclone with an initial
non-binding forecast for the eighteen month period commencing with the
anticipated initial Regulatory Approval in the Territory at least six months
before the commencement of such period. A new eighteen month forecast will be
submitted by Schering to Techniclone at the beginning of the next calendar
quarter and each calendar quarter thereafter. The system to be established by
the Parties shall provide for forecast amendments by Schering, and shall, to the
extent possible, minimize administrative burdens on Schering and Techniclone.
Firm purchase orders shall be placed by Schering's customers for Packaged
Product, and shall be placed with the distributor of the Packaged Product.
Section 7.08 DELIVERY AND SHIPMENT. Techniclone shall deliver Packaged
Product F.O.B. the manufacturer's loading dock to the common carrier specified
by Schering. At the time of such delivery title to the Packaged Product shall
pass to the Schering customer to whom the delivered Packaged Product is to be
shipped, and risk of loss with respect to such Packaged Product shall pass to
Schering. Schering shall be responsible for the costs of shipping and insurance.
In the case of Packaged Product for export from the country of manufacture,
Techniclone will cooperate with Schering in providing documentation needed by
customs and other governmental authorities relating to import and export. The
Parties will provide alternatives as needed for special situations relating to
international supply.
Section 7.09 WARRANTIES. Techniclone warrants that delivered Packaged
Product will comply with the specifications (established pursuant to Section
7.04) at the time of delivery and through the expiration date thereof, as well
as all other laws and manufacturing-related and packaging-related requirements
of applicable Regulatory Approvals (including without limitation, compliance
with applicable GMPs). Techniclone also warrants that its, and warrants that it
will use commercially reasonable best efforts to ensure that its Third Party
contractors', waste generation, storage, and disposal practices will comply with
all laws and regulations applicable at the time of manufacture or disposal.
Section 7.10 ACCEPTANCE AND PRICING. Techniclone shall supply all of
Schering's requirements of Packaged Product at Techniclone's Cost of Goods plus
10% (the "Price"), but in no event shall the Price exceed the following, to be
determined on a calendar year basis:
(i) if [...***...] Treatments or fewer are shipped in a
calendar year, then the Price shall not exceed
$[...***...] per Treatment;
(ii) if more than [...***...] Treatments but fewer than
[...***...] Treatments are shipped in a calendar year,
then the price shall not exceed $[...***...] per
Treatment; and
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
27
(iii) if more than [...***...] Treatments are shipped in a
calendar year, then the Price shall not exceed
$[...***...] per Treatment.
Charges shall be based on the number of Treatments expected to
be sold during the calendar year in the Schering forecast for such calendar
year. If following the close of a calendar year, Techniclone determines that
actual Treatments shipped in such calendar year failed to achieve the threshold
required for the Price charged to Schering, then Techniclone will recalculate
the amount owed by Schering to Techniclone and invoice Schering for such amount.
If Schering agrees with the Techniclone calculation, then Schering shall pay the
Techniclone invoice promptly following receipt. If Schering disagrees with the
Techniclone calculation, then the disagreement shall be resolved as if it was an
Audit Disagreement pursuant to Section 11.03(b).
(b) In the event that Techniclone's Price is below the
applicable maximum set forth in Section 7.10(a)(i), (ii), or (iii), then
Schering, in addition to paying Techniclone the Price, shall pay Techniclone a
sum equal to 50% of the difference between the Price and the applicable maximum
set forth in Section 7.10(a).
(c) Schering shall make payments for Packaged Products shipped
to Schering's customers which comply with the Techniclone warranty set forth in
Section 7.09 within thirty (30) days of receipt by Schering of Techniclone's
invoice. In the event that it is later determined that Packaged Product paid for
by Schering does not comply with the specifications and the Techniclone warranty
set forth in Section 7.09, Techniclone shall replace such Packaged Product free
of charge upon Schering's demonstration of such non-compliance to the reasonable
satisfaction of Techniclone.
Section 7.11 CONSTRUCTION OF COMMERCIAL RADIOLABELING SITES.(a) If the
Parties agree that it is necessary or desirable to construct one or more
commercial radiolabeling sites for Oncolym, then Techniclone shall be
responsible for the construction of such site or sites, subject to prior review
and approval of plans and budgets by Schering. Schering shall be responsible,
upon payment of an equal amount by Techniclone, for (i) fifty percent (50%) of
the total capitalized cost up to $4 million (i.e., the Schering contribution
will not exceed $2 million of developing the first commercial radiolabeling site
for Oncolym in the United States, Canada, Japan or Europe and Techniclone shall
be responsible for the remaining fifty percent (50%) or more of such capitalized
cost; and (ii) fifty percent (50%) of the total capitalized cost up to $2
million (i.e., the Schering contribution will not exceed $1 million) of
developing the second commercial radiolabeling site for Oncolym in the United
States, Canada, Japan or Europe and Techniclone shall be responsible for the
remaining fifty percent (50%) or more of such capitalized cost. Neither Party
will unreasonably withhold its agreement as set forth in the first sentence of
this Section 7.11. Neither Party will withhold its agreement as set forth in the
first sentence of this Section 7.11 if an additional radiolabeling site is
reasonably necessary for Schering to distribute packaged Product in the United
States, Canada, Japan or Europe.
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
28
(b) In the event that Schering determines in its sole
discretion that one or more commercial radiolabeling sites for Oncolym are
necessary or desirable, and Techniclone reasonably withholds its agreement
pursuant to Section 7.11 (a) (for example, because the radiolabeling site
proposed by Schering is not necessary for Schering to distribute Packaged
Product in the United States, Canada, Japan or Europe), then Schering shall have
the right to arrange for the construction or use of such site or sites at its
sole expense. Techniclone shall cooperate with Schering in the establishment of
such site or sites and, subject to the availability of Techniclone personnel,
shall provide such commercially reasonable assistance as Schering
shall request. In the event that Schering establishes one or more radiolabeling
sites pursuant to this Section 7.11(b), then at the request of Schering
Techniclone agrees to enter into a supply agreement with Schering for the supply
of Schering's requirements of Antibody at a price not to exceed Techniclone's
Cost of Goods plus ten percent (10%).
Section 7.12 SCHERING OPTION TO TAKE OVER MANUFACTURING. Notwithstanding
anything to the contrary herein, Schering may, at any time, by delivery of
written notice to Techniclone elect to become the Manufacturing Party hereunder
either in respect of Antibody or in respect of Product. Subject to the terms of
all relevant Third Party contracts related to manufacture of the Product, such
election shall become effective on the date specified in such notice, whereupon
Techniclone will be deemed to have transferred and assigned to Schering (and
will promptly transfer to Schering) all Information regarding Techniclone
Know-How and all Third Party contracts related to manufacture of the Product. In
the event that Schering shall so elect, it shall indemnify and hold Techniclone
harmless against any non-cancelable costs, expenses or fees payable to Third
Parties that Techniclone may become subject to as a result of such termination
of manufacturing obligations. In connection with any such election Schering
shall offer to purchase from Techniclone the property, plant and equipment
dedicated by Techniclone for the manufacture of Product, as the case may be, at
a purchase price equal to the book value of such property, plant and equipment.
SECTION 7.13 SCHERING MANUFACTURING STEP-IN RIGHTS. Without prejudice to
any other remedies available to Schering under this Agreement or at law, if
Techniclone materially fails to carry out its responsibilities regarding
CMC/Manufacturing allocated to it under this Agreement, Schering may, after
forty-five (45) days prior written notice to Techniclone, undertake the
particular task and complete it at Schering's own expense if Techniclone has not
at such time begun to carry out such task in a manner reasonably likely to cure
its default. Schering shall be entitled to commercially reasonable cooperation
and assistance from Techniclone to accommodate its efforts. All costs reasonably
incurred by Schering in carrying out such tasks will be reimbursed by
Techniclone on a quarterly basis as invoiced by Schering or may, at Schering's
option, be set off against any payments otherwise due to Techniclone under this
Agreement.
29
ARTICLE VIII
CONFIDENTIALITY
---------------
Section 8.01 CONFIDENTIALITY; EXCEPTIONS. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing, the Parties agree
that the receiving Party shall keep confidential and shall not publish or
otherwise disclose or use for any purpose other than as provided for in this
Agreement any Information and other information and materials furnished to it by
the other Party pursuant to this Agreement or any Information developed during
the course of the collaboration hereunder, or any provisions of this Agreement
that are the subject of an effective order of the Securities Exchange Commission
granting confidential treatment pursuant to the Securities Act of 1934, as
amended (collectively, "CONFIDENTIAL INFORMATION"), except to the extent that it
can be established by the receiving Party that such Confidential Information:
(a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others; or
(e) was independently discovered and/or developed by the
receiving Party as documented in its corporate records.
Section 8.02 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is reasonably necessary in
filing or prosecuting patent applications, prosecuting or defending litigation,
filing or updating any Drug Approval Application, complying with applicable
governmental laws, rules and regulations or conducting pre-clinical or clinical
trials, PROVIDED, that if a Party is required by law or regulation to make any
such disclosures of the other Party's Confidential Information it will, except
where impracticable for necessary disclosures, for example in the event of
medical emergency, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, will use its reasonable efforts to secure confidential
treatment of such Confidential Information required to be disclosed. In
addition, and with prior written notice to the other Party of each Third Party
with whom a confidential disclosure agreement is being entered into, each Party
shall be entitled to disclose, under a binder of confidentiality, Confidential
Information to any Third Party for the purpose of carrying out the purposes of
this Agreement. Nothing in this Article VIII shall restrict any Party from using
for any purpose any Confidential Information independently developed by it
during the course of the collaboration hereunder, or from using Confidential
Information that is specifically derived from pre-clinical or clinical trials to
carry out Regulatory Approval, marketing, sales or professional services support
functions as is customary in the pharmaceutical industry. Where materiality of
disclosure requires a press release or other disclosure pertaining to this
agreement by one Party, the disclosing Party shall give at least two (2)
business days' advance notice to the other Party.
30
Section 8.03 SURVIVAL. This Article VIII shall survive the termination or
expiration of this Agreement for a period of three (3) years.
Section 8.04 TERMINATION OF PRIOR AGREEMENT. This Agreement supersedes the
Confidentiality Agreements between Techniclone and Berlex Laboratories, Inc.
dated as of October 23, 1997. All Information exchanged between the Parties
under those Agreements shall be deemed Confidential Information and shall be
subject to the terms of this Article VIII, and shall be included within the
definitions of Techniclone Know-How.
Section 8.05 PUBLICATIONS. Schering shall determine the overall strategy
for publication in support of the Product in the Territory.
Section 8.06 PUBLICITY REVIEW. Subject to the further provisions of this
Section and Section 11.04, no Party shall originate any written publicity, news
release, or other announcement or statement relating to this Agreement or to
performance hereunder or the existence of an arrangement between the Parties
(collectively, "WRITTEN DISCLOSURE"), without the prior prompt review and
written approval of the other, which approval shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing provisions of this Section 8.06, any
Party may make any public Written Disclosure it believes in good faith based
upon the advice of counsel is required by applicable law or any listing or
trading agreement concerning its publicly traded securities, PROVIDED that prior
to making such Written Disclosure, the disclosing Party shall provide the other
Party with a copy of the materials proposed to be disclosed and provide the
receiving Party with an opportunity to promptly review the proposed Written
Disclosure.
ARTICLE IX
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
----------------------------------------------------
Section 9.01 OWNERSHIP. Each Party shall solely own, and it alone shall
have the right to apply for, Patents within and outside of the Territory for any
inventions made solely by that Party's employees or consultants in the course of
performing work under this Agreement. Inventions made jointly by employees or
consultants of Techniclone and Schering and any Patents resulting therefrom
shall be owned by Schering, subject to the licenses granted to Techniclone
pursuant to Article II.
Section 9.02 DISCLOSURE OF JOINT INVENTIONS. Any such patent application
disclosing inventions made jointly by the Parties shall be provided by one Party
to the other reasonably in advance of the intended date for submission of such
application to a governmental patent authority.
Section 9.03 PATENT FILINGS. Each Party, at its sole discretion, cost and
responsibility, shall prepare, file, prosecute and maintain Patents to cover
discoveries and inventions made solely by its own employees or consultants
relating to Antibody or Product and use commercially reasonable efforts to file
initially all such applications in the Territory or the appropriate forum under
the circumstances wherein such a Party determines it is commercially reasonable
to do so. Schering shall file, prosecute and maintain Patents to cover
inventions relating to the discovery, evaluation, manufacture, use or sale of
the Antibody or the Product that are made jointly by personnel of Techniclone
and Schering in the course of the collaboration (herein referred to as "JOINT
PATENTS"). The determination of the countries in the Territory in which to file
Joint Patents shall be made by Schering. Schering shall have the right to direct
and control all material actions relating to the prosecution or maintenance of
Joint Patents in the Territory, including interference proceedings,
reexaminations, reissue opposition and revocation proceedings.
31
(b) The Parties agree to use commercially reasonable efforts
to ensure that any Patent filed outside of the United States prior to a filing
in the United States will be in a form sufficient to establish the date of
original filing as a priority date for the purposes of a subsequent filing in
the United States. Schering shall bear all costs related to the filing of Joint
Patents. The Parties agree to use commercially reasonable efforts to ensure that
any Patent filed in the United States prior to filings outside of the United
States will be in a form sufficient to establish the date of original filing as
a priority date for the purpose of a subsequent filing in any contracting state
of the Paris Convention.
Section 9.04 THIRD PARTY PATENT RIGHTS. Each Party agrees to bring to the
attention of the other Party any Third Party Patent it discovers, or has
discovered, and which relates to the subject matter of this Agreement.
Section 9.05 ENFORCEMENT RIGHTS. NOTIFICATION OF INFRINGEMENT. If either
Party learns of any infringement or threatened infringement by a Third Party of
the Techniclone Patents, or Joint Patents, such Party shall promptly notify the
other Party and shall provide such other Party with all available evidence of
such infringement.
(b) ENFORCEMENT IN THE TERRITORY. Subject to the next
sentence, Techniclone shall be obligated, at its own expense, to defend
Techniclone Patents and Schering shall be obligated, at its own expense, to
defend Joint Patents in the Territory. Schering shall have the right, but not
the obligation, to institute, prosecute and control at its own expense any
action or proceeding with respect to infringement of any Techniclone Patents, or
Joint Patents covering the manufacture, use, importation, sale or offer for sale
of the Product being developed or marketed in the Territory, by counsel of its
own choice. Techniclone shall have the right, at its own expense, to be
represented in any action by counsel of its own choice. If Schering fails to
bring an action or proceeding or otherwise take appropriate action to abate such
infringement within a period of one hundred eighty (180) days of notice by
Techniclone to Schering requesting action, Techniclone will have the right to
bring and control any such action or proceeding relating to Techniclone Patents
by counsel of its own choice and Schering will have the right to be represented
in any such action by counsel of its own choice and at its own expense. If one
Party brings any such action or proceeding, the other Party agrees to be joined
as a party plaintiff if necessary to prosecute the action or proceeding and to
give the first Party commercially reasonable assistance and authority to file
and prosecute the suit. Any damages or other monetary awards recovered pursuant
to this Section 9.05(b) shall be allocated first to the costs and expenses of
the Party bringing suit, then to the costs and expenses, if any, of the other
Party. In the event that Schering brings such action, any amounts remaining
shall be distributed as follows: compensatory damages shall be treated as Net
Sales in the country and calendar quarter received and punitive and exemplary
damages shall be paid equally to Schering and Techniclone. In the event that
Techniclone brings such action, sixty percent (60%) of any amounts remaining
shall be payable to Techniclone and the remaining forty percent (40%) payable to
Schering.
(c) SETTLEMENT WITH A THIRD PARTY. The Party that controls the
prosecution of a given action shall also have the right to control settlement of
such action; PROVIDED, HOWEVER, that if one Party controls, no settlement shall
be entered into without the written consent of the other Party (which consent
shall not be unreasonably withheld) if such settlement would materially and
adversely affect the interests of such other Party.
32
Section 9.06 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. If a Third Party
asserts that a patent, trademark or other intangible right owned by it is
infringed by any Product in the Territory, Techniclone will be solely
responsible for defending against any such assertions at its cost and expense
(subject to the provisions of Section 9.05(b)), but no settlement may be entered
into without the written consent of Schering, which shall not be unreasonably
withheld. The costs of any such settlement (including, without limitation,
damages, expense reimbursements, compliance, future royalties or other amounts)
shall be paid exclusively by Techniclone. If any Third Party is successful in
any such claim, and Schering is ordered to make any payments to such Third Party
in connection therewith, any such payments may be offset or deducted from the
payment obligations of Schering under the Agreement.
Section 9.07 PATENT EXPENSES. All worldwide Patent Expenses with respect to
Techniclone's Patents shall be borne by Techniclone, subject to the terms of
this Agreement. All worldwide Patent expenses with respect to Joint Patents
shall be borne by Schering, subject to the terms of this Agreement.
Section 9.08 TRADEMARKS. Schering shall be responsible for the selection,
registration and maintenance of all trademarks which it employs in connection
with the Product and shall own (or license in the case of "Oncolym") and control
such trademarks (and pay any costs in connection therewith). Techniclone
recognizes the exclusive ownership by Schering of any proprietary Schering name,
logotype or trademark furnished by Schering (including Schering's Affiliates)
for use in connection with the Product. Techniclone shall not, either while this
Agreement is in effect, or at any time thereafter, register, use or attempt to
obtain any right in or to any such name, logotype or trademark or in and to any
name, logotype or trademark confusingly similar thereto.
Section 9.09 USE OF NAMES. Neither Party shall use the name of the other
Party in relation to this transaction in any public announcement, press release
or other public document without the written consent of such other Party, which
consent shall not be unreasonably withheld or delayed; PROVIDED, HOWEVER, that
either Party may use the name of the other Party in any document filed with any
regulatory agency or authority, including the FDA and the Securities and
Exchange Commission, in which case Schering shall be referred to as "Schering
AG, Germany". Techniclone agrees not to use the name "Schering" in relation to
this transaction in any press release, public announcement or other public
document without the approval of Schering, which approval shall not be
unreasonably withheld or delayed.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 10.01 REPRESENTATIONS AND WARRANTIES. Each of the Parties hereby
represents and warrants to the other Party as follows:
(i) The Agreement is a legal and valid obligation binding
upon such Party and enforceable in accordance with its
terms. The execution, delivery and performance of the
Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written,
to which it is a party or by which it is bound, nor to
such Party's knowledge, violate any law or regulation of
any court, governmental body or administrative or other
agency having jurisdiction over it.
33
(ii) Techniclone has not granted (except with respect to
Existing Licenses referred to in Section 2.02 above), and
during the term of the Agreement neither Party will grant,
any right to any Third Party relating to the Techniclone
Patents, Techniclone Know-How and Joint Patents in the
Field which would conflict with the rights granted to
either Party hereunder.
(b) Techniclone hereby represents and warrants to Schering
that Techniclone:
(i) Has provided to Schering all information in its
possession or control or of which it is aware as of the
Effective Date, concerning efficacy, side effects, injury,
toxicity, or sensitivity, reaction and incidents or
severity thereof, associated with any clinical use,
studies, investigations, or tests with the Product (animal
or human), whether or not determined to be attributable to
the Product;
(ii) Has conducted or has caused its contractors or
consultants to conduct, and will in the future conduct,
the preclinical and clinical studies of the Product in
accordance with applicable United States law, known or
published standards of the FDA and EMEA, and the
scientific standards applicable to the conduct of studies
in the United States and the European Union;
(iii) Has employed and will in the future employ
individuals of appropriate education, knowledge, and
experience to conduct or oversee the conduct of
Techniclone's clinical and preclinical studies of the
Product;
(iv) Has not employed (and, to the best of its knowledge,
has not used a contractor or consultant that has employed)
and in the future will not employ (or, to the best of its
knowledge, use any contractor or consultant that employs)
any individual or entity debarred by the FDA (or subject
to a similar sanction of EMEA), or, to the best knowledge
of Techniclone, any individual who or entity which is the
subject of an FDA debarment investigation or proceeding
(or similar proceeding of EMEA), in the conduct of the
preclinical or clinical studies of the Product;
(v) In the course of Developing the Product, has not
conducted, and during the course of this Agreement it will
not conduct, any Development activities in violation of
applicable GCPs, GLPs or GMPs; PROVIDED, HOWEVER, that
with respect to periods prior to the Effective Date, this
representation is limited to Information included or to be
included in a Drug Approval Application or matters
relevant to Oncolym;
34
(vi) As of the Effective Date, except as it may have
previously disclosed to Schering in writing, has not
received any notices of infringement or any written
communications relating in any way to a possible
infringement with respect to Oncolym and any potential
Products, and that it is not aware that the manufacture,
use or sale of Oncolym or any potential Products infringes
any Third Party patent rights;
(vii) As of the Effective Date, is not aware of any prior
act or any fact which causes it to conclude that any
Techniclone Patent is invalid or unenforceable;
(viii) Has complied in all material respects with each
license listed on Exhibit C hereto, and during the term
hereof will comply in all material respects, and use all
reasonable efforts to keep in full force and effect, each
such license; neither this Agreement, nor any of the
transactions contemplated hereby will, with the giving of
notice or the lapse of time, or both, constitute a default
or breach of any such license; and
(ix) Techniclone has obtained all right, title and
interest in and to all rights to Oncolym and the
Techniclone Patents and Techniclone Know-How, free and
clear of any liens, encumbrances or rights to repurchase;
and
(x) During the term hereof, Techniclone will not grant a
lien on this Agreement or on any of Techniclone's rights
or obligations hereunder or on the Techniclone Patents or
Techniclone Know-How related to the Product.
Section 10.02 INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND
WARRANTIES. Each Party hereby agrees to save, defend and hold the other Party
and its directors, officers, agents and employees harmless from and against any
and all Losses resulting directly or indirectly from the breach of any
representation or warranty made by such Party hereunder. In the event that a
Party is seeking indemnification under this Section 10.02, it shall inform the
other Party of a claim as soon as reasonably practicable after it receives
notice of the claim, shall permit the indemnifying Party 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 the indemnifying Party) in the defense of the claim.
Section 10.03 PERFORMANCE BY AFFILIATES. The Parties recognize that each
Party may perform some or all of its obligations under this Agreement through
Affiliates, PROVIDED, HOWEVER, that each Party shall remain responsible for and
be a guarantor of the performance by its Affiliates and shall cause its
Affiliates to comply with the provisions of this Agreement in connection with
such performance.
35
ARTICLE XI
INFORMATION AND REPORTS
-----------------------
Section 11.01 INFORMATION AND REPORTS DURING DEVELOPMENT AND
COMMERCIALIZATION. Schering and Techniclone will disclose and make available
(subject to any confidentiality agreements or requirements of law) to each other
without charge all preclinical, clinical, regulatory, and other Information,
including copies of all preclinical and clinical reports, known by Schering or
Techniclone directly concerning the Product within the Field at any time during
the term of this Agreement. Each Party shall own and maintain its own database
of clinical trial data accumulated from all clinical trials of the Product for
which it was responsible and of adverse drug event information for the Product.
At the option of the requesting Party, such data shall be provided in a computer
readable or other electronic format by the providing Party, to the extent
available, which shall also assist in the transfer and validation of such data
to the receiving Party. Without limitation of the foregoing, each Party shall
supply to the other the Information required by the other Party and requested by
it (either as a routine practice or as a specific request) for purposes of
compliance with regulatory requirements. With respect to information concerning
Commercialization, Schering agrees to keep Techniclone regularly informed on all
post marketing activities, but shall have no obligation, except as specifically
set forth in this Agreement, to share pricing, marketing or sales information
with Techniclone.
Section 11.02 ADVERSE DRUG EXPERIENCES; COMPLAINTS. The Parties agree to
enter into a standard operating procedure by and between the Parties to govern
the exchange of Information relating to adverse drug experiences, Product
quality, and Product complaints.
Section 11.03 RECORDS OF REVENUES AND EXPENSES. Each Party will maintain
complete and accurate records which are relevant to revenues, costs, expenses
and payments on a country-by-country basis in the Territory under this Agreement
and such records shall be open during reasonable business hours for a period of
two (2) years from creation of individual records for examination at the other
Party's expense and not more often than once each year by a certified public
accountant selected by the other Party, or the other Party's internal
accountants unless the first Party objects to the use of such internal
accountants, for the sole purpose of verifying for the inspecting Party the
correctness of calculations and classifications of such revenues, costs,
expenses or payments made under this Agreement. Each Party shall bear its own
costs related to such audit; PROVIDED that, for any underpayments greater than
five (5) percent by Schering, Schering shall pay Techniclone the amount of
underpayment, interest as provided for in Section 6.03 from the time the amount
was due and Techniclone's out-of-pocket expenses. For any underpayments less
than five (5) percent by Schering found under this Section, Schering shall pay
Techniclone the amount of underpayment. Any overpayments by Schering will be
refunded to Schering or credited to future royalties, at Schering's election.
Any records or accounting information received from the other Party shall be
Confidential Information for purposes of Article VIII. Results of any such audit
shall be provided to both Parties, subject to Article VIII.
(b) If there is a dispute between the Parties following any
audit performed pursuant to Section 11.03(a), either Party may refer the issue
(an "AUDIT DISAGREEMENT") to an independent certified public accountant for
resolution. In the event an Audit Disagreement is submitted for resolution by
either Party, the Parties shall comply with the following procedures:
(i) The Party submitting the Audit Disagreement for
resolution shall provide written notice to the other Party
that it is invoking the procedures of this Section
11.03(b).
36
(ii) Within thirty (30) business days of the giving of
such notice, the Parties shall jointly select a recognized
international accounting firm to act as an independent
expert to resolve such Audit Disagreement.
(iii) The Audit Disagreement submitted for resolution
shall be described by the Parties to the independent
expert, which description may be in written or oral form,
within ten (10) business days of the selection of such
independent expert.
(iv) The independent expert shall render a decision on the
matter as soon as practicable.
(v) The decision of the independent expert shall be final
and binding unless such Audit Disagreement involves
alleged fraud, breach of this Agreement or construction or
interpretation of any of the terms and conditions hereof.
(vi) All fees and expenses of the independent expert,
including any Third Party support staff or other costs
incurred with respect to carrying out the procedures
specified at the direction of the independent expert in
connection with such Audit Disagreement, shall be borne by
each Party in inverse proportion to the disputed amounts
awarded to the Party by the independent expert through
such decision (e.g. Techniclone disputes $100, the
independent expert awards Techniclone $50, then each Party
pays 1/2 of the independent expert's costs) in all other
cases.
ARTICLE XII
TERM AND TERMINATION
--------------------
Section 12.01 TERM. This Agreement shall commence as of the Effective Date
and, unless sooner terminated as provided herein shall continue in effect until
such time as (i) no royalties are payable under Article VI hereunder to
Techniclone; and (ii) Techniclone's manufacturing obligations described in
Article VII shall have terminated, provided that the license granted pursuant to
Section 6.01(e) shall survive such termination.
Section 12.02 TERMINATION AT WILL.
(a) Notwithstanding any other term or provision hereof
expressly or impliedly to the contrary, Schering may terminate this Agreement in
its entirety or on a country-by-country basis, and be fully released of any
obligations hereunder (except as is expressly provided for herein) as follows:
(i) immediately at any time if Schering determines, in its
reasonable judgment, that there are issues of Safety or
Tolerability;
37
(ii) immediately if (A) the FDA requires that the Existing
Trials be repeated before a Phase III Clinical Trial can
begin; (B) the FDA requires that a new Phase II Clinical
Trial be conducted before a Phase III Clinical Trial can
begin; (C) the FDA has not allowed the commencement of a
Phase III Clinical Trial by [...***...]; (D) the FDA
Conversion Meeting does not occur by [...***...]; or (E)
Techniclone fails to deliver or it becomes reasonably
clear that Techniclone will fail to deliver in time
appropriate quantities of clinical supplies of Antibody,
Product and Packaged Product such that Clinical
Development is or will be delayed by a period of three (3)
months or more beyond the date anticipated in the
Development Plan.
(iii) upon ten days' written notice to Techniclone, if,
based upon data from, or the results of, the first Phase
III Clinical Trial of the Product, Schering determines,
using its reasonable judgment, that such results do not
support the submission of the Product for Regulatory
Approval based upon the criteria for Regulatory Approval
established at the Conversion Meeting or subsequently by
the FDA (the "Approval Criteria");
(iv) upon ten days' written notice, given at any time
prior to the receipt of Regulatory Approval, if Schering
determines that for reasons of efficacy or risk/benefit
therapeutic ratio, that the Product, in Schering's
reasonable scientific or business discretion, is not
considered acceptable, applying the standard of medical
care and/or business judgment of major international
pharmaceutical companies engaged in the oncology business,
and taking into account the standard of medical care then
applicable at major international oncology treatment
centers;
(v) upon thirty days' written notice given at any time
prior to Regulatory Approval, for any reason;
(vi) at any time after Regulatory Approval, upon
twelve (12) months notice to Techniclone, for any reason;
and
(vii) immediately if Techniclone has not concluded a
definitive agreement (in compliance with Section 7.01)
providing for a radiolabeling site for the production of
Product and Packaged Product by [...***...].
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
38
(b) TERMINATION FOR MATERIAL BREACH. Failure by Schering or
Techniclone to comply with any of the respective material (which, for the
purposes hereof, shall not include Section 3.05) obligations and conditions
contained in this Agreement shall entitle the other Party to give the Party in
default notice requiring it to cure such default. If such default is not cured
within ninety (90) days after receipt of such notice, the notifying Party shall
be entitled (without prejudice to any of its other rights conferred on it by
this Agreement) to terminate this Agreement or in the event of an uncured
material breach by Techniclone, effect the rights of Schering set forth in
Section 12.02(e) by giving a notice to take effect immediately. Notwithstanding
the foregoing, in the event of a non-monetary default, if the default is not
reasonably capable of being cured within the ninety (90) day cure period by the
defaulting Party and such defaulting Party is making a good faith effort to cure
such default, the notifying Party may not terminate this Agreement, provided,
however, that the notifying Party may terminate this Agreement if such default
is not cured within one hundred eighty (180) days of such original notice of
default. The right of either Party to terminate this Agreement as hereinabove
provided shall not be affected in any way by its waiver of, or failure to take
action with respect to any previous default.
(c) TERMINATION FOR INSOLVENCY. In the event that one of the
Parties hereto shall go into liquidation, a receiver or a trustee be appointed
for the property or estate of that Party and said receiver or trustee is not
removed within sixty (60) days, or the Party makes an assignment for the benefit
of creditors (collectively, a "BANKRUPTCY EVENT"), and whether any of the
aforesaid Bankruptcy Events be the outcome of the voluntary act of that Party,
or otherwise, the other Party shall be entitled to terminate this Agreement (or
in the event Techniclone suffers such a Bankruptcy Event, Schering may effect
its rights described in Section 12.02(e) forthwith by giving a written notice to
Techniclone). Each Party agrees (to the extent it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim to
take the benefit or advantage of, any stay or extension law or any other law
wherever enacted, now or at any time hereafter in force, which would prohibit
the termination of this Agreement or in any way modify the effects thereof as
provided herein; and each Party (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the other Party, but will suffer and permit the execution of every power as
though no such law had been enacted.
(d) EFFECT OF TERMINATION. (A) In the event that this
Agreement is terminated by Schering in one or more countries or in its entirety
in accordance with Section 12.02(a), or commercialization of the Product is
discontinued by Schering in one or more countries pursuant to Section 6.01(d),
or this Agreement is terminated by Techniclone pursuant to Section 12.02(b) in
one or more countries if Schering either fails to use commercially reasonable
efforts to enable the Product to obtain Regulatory Approval in those countries
where Schering is obligated to do so pursuant to Section 3.03(b), or fails to
Commercialize the Product in the countries where Schering is obligated to do so
pursuant to Section 5.02, and in the event that the Agreement is terminated by
either Party in its entirety in accordance with Sections 12.02(a),(b) or (c)
hereof, as applicable, subject to Section 12.02(e), Schering will with respect
to each country, as a whole, for which the termination applies:
39
(i) deliver to Techniclone the Techniclone Know-How and
assign to Techniclone its rights in said Techniclone
Know-How and Techniclone Patents if any, in either case
relating solely to the country that is the subject of the
termination;
(ii) not use the Techniclone Know-How as long as it has to
be kept confidential pursuant to Article VIII hereof in
such country;
(iii) not infringe any of the Techniclone Patents in such
country;
(iv) make all payments incurred under this Agreement with
respect to such country prior to the effective termination
date;
(v) transfer all regulatory filings and approvals related
to the Product in such country to Techniclone upon
Techniclone's written request for same;
(vi) transfer to Techniclone responsibility for and
control of ongoing work of Schering related to the
Product, Affiliates and Third Parties in an expeditious
and orderly manner with the costs for such work assumed by
Techniclone as of the date of notice;
(vii) reconvey to Techniclone all rights to the trademark
for "Oncolym" granted pursuant to Section 2.01; and
(viii) sell to Techniclone, at any time within ninety (90)
days of such termination, at Techniclone's election, all
or any portion of the inventory of the Product owned by
Schering or its Affiliates which are intended for sale in
such country at a price equal to Schering's or its
Affiliate's cost for such inventory; such election shall
be made by Techniclone in writing and within thirty (30)
days of such election, Schering shall ship at
Techniclone's cost and direction such inventory to
Techniclone. Techniclone shall pay for such inventory
within forty-five (45) days of receipt of such inventory.
(B) If as a result of the operation of Section 12.02(d)(A) Techniclone
has the right to Commercialize the Product in one or more countries while
Schering is Commercializing the Product in the United States or Europe, then
upon written notice from Schering, Techniclone agrees to refrain from
Commercializing the Product in any country in which such Commercialization, in
the reasonable opinion of Schering, would have a material negative impact on
Schering's Commercialization in the United States or Europe.
(e) EFFECT OF TERMINATION BY SCHERING PURSUANT TO SECTIONS
12.02(b) AND (c). In the event of a Bankruptcy Event or a material default
described in Sections 12.02(b) and (c) by Techniclone (which default is not
cured as provided therein), Schering may elect in lieu of terminating this
Agreement to declare the license granted pursuant to this Agreement to be
irrevocable. From the date of receipt of notice of such election, Techniclone
shall have no further rights or obligations under this Agreement, except that
Techniclone may enforce any financial obligations of Schering, including those
arising under Section 3.04, Articles IV and VI herein before or after such
election, and Schering may enforce any manufacturing and supply obligations of
Techniclone, including those arising under Section 12.02(g); PROVIDED that if
such election occurs prior to the First Commercial Sale of the Product, any
additional Development Expenses and reasonable costs incurred by Schering to
Commercialize the Product as a result of such election shall be credited against
amounts payable by Schering to Techniclone.
40
(f) EFFECT OF TERMINATION BY SCHERING PURSUANT TO CERTAIN
SUBSECTIONS OF SECTION 12.02(a). If Schering terminates this Agreement pursuant
to:
A. Section 12.02(a)(i), (iii), or (iv), THEN Schering
shall reimburse Techniclone for eighty percent (80%) of
the non-cancellable Third Party Costs ("Non-cancellable
Costs") that Techniclone may incur after the effective
time of termination with respect only to clinical trials
underway at such effective time; PROVIDED, HOWEVER, that
Schering's eighty percent (80%) share of Non-cancellable
Costs shall not exceed $1,500,000; or
B. Section 12.02(a)(v), THEN Schering shall, if a Phase
III Clinical Trial is then underway for the Product, be
obligated to fund all one hundred percent (100%) of the
costs of completing all then ongoing Phase III Clinical
Trials for the Product ("Completion Costs"); PROVIDED,
HOWEVER, that amounts payable under this subsection (B)
shall not exceed $3,000,000.
(g) OBLIGATIONS OF MANUFACTURING PARTY. In the event of
termination of this Agreement pursuant to this Section 12.02 where the Party
terminating this Agreement is the Manufacturing Party, the Manufacturing Party
shall continue to provide for manufacture of the Antibody, Product and/or
Packaged Product, as applicable, to the extent provided prior to notice of such
termination, from the effective date of such termination until such reasonable
time as the Non-Manufacturing Party is able to secure an equivalent alternative
commercial manufacturing source, as requested by the Non-Manufacturing Party.
(h) GENERAL. Except where expressly provided for otherwise in
this Agreement, termination of this Agreement shall not relieve the Parties
hereto of any liability, including any obligation to make payments hereunder,
which accrued hereunder prior to the effective date of such termination, nor
preclude any Party from pursuing all rights and remedies it may have hereunder
or at law or in equity with respect to any breach of this Agreement nor
prejudice any Party's right to obtain performance of any obligation.
41
(i) TECHNICLONE ROYALTY TO SCHERING. In the event that
Schering terminates this Agreement under Section 12.02(a)(ii), or terminates
this Agreement and pays Completion Costs to Techniclone under Section 12.02(f),
and, after such termination by Schering, either Techniclone or a Techniclone
Affiliate or a Techniclone licensee or distributor or an acquirer of all or
substantially all of the shares or assets of Techniclone markets the Product in
any country of the Territory, then: (i) Techniclone (in the case of marketing by
Techniclone or a Techniclone Affiliate, licensee, or distributor) or such
acquirer of the shares or assets of Techniclone shall pay Schering a royalty of
three (3%) percent of Techniclone's or such Affiliate's, licensee's,
distributor's or acquirer's Net Sales of the Product until Schering receives (A)
if Schering terminates pursuant to Section 12.02(a)(ii), an amount in cash equal
to $3,000,000.00 or (B) if Schering terminates and pays Completion Costs to
Techniclone under Section 12.02(f), an amount in cash equal to one-half of the
amount of Completion Costs paid to Techniclone under Section 12.02(f); (ii) the
royalty payable by Techniclone or such acquirer to Schering shall be paid on the
terms (except for the royalty rate) set forth in Sections 6.02 through 6.06 for
the payment of the royalty from Schering to Techniclone; and (iii) Techniclone
shall contractually obligate any acquirer of all or substantially all of the
shares or assets of Techniclone to abide by the terms of this Agreement,
including without limitation this Section 12.02(i).
Section 12.03 SURVIVING RIGHTS. The rights and obligations set forth in
this Agreement shall extend beyond the term or termination of the Agreement only
to the extent expressly provided for herein, or the extent that the survival of
such rights or obligations are necessary to permit their complete fulfillment or
discharge.
ARTICLE XIII
INDEMNIFICATION
---------------
Section 13.01 INDEMNIFICATION. With respect to the Product (determined on a
country by country basis):
(a) Except as provided in Article 13.01(b) and in the
exception specified below, Schering hereby agrees to save, defend and hold
Techniclone and its directors, officers, agents and employees harmless from and
against any and all suits, claims, actions, demands, liabilities, expenses
and/or losses, including reasonable legal expenses and attorneys' fees
(collectively, "LOSSES"), resulting from the commercial sale of the Product
except to the extent such Losses result from the negligence or willful
misconduct of Techniclone or a breach by Techniclone of any warranty, covenant
or obligation under Article VII, in which case Techniclone hereby agrees to
save, defend and hold Schering and its directors, officers, agents and employees
harmless from any and all such Losses.
(b) Except as provided in Article 13.01(a), Schering and
Techniclone hereby agree to save, defend and hold the other Party and its
directors, officers, agents and employees harmless from and against any and all
Losses resulting directly from the Development of the Product to the extent such
Development was performed by such Party except to the extent such Losses result
from the negligence or willful misconduct of the other Party, in which case such
Party hereby agrees to save, defend and hold the other Party and its agents and
employees harmless from any and all such Losses.
42
(c) Each indemnified Party agrees to give the indemnifying
Party prompt written notice of any Loss or discovery of fact upon which such
indemnified Party intends to base a request for indemnification under Sections
13.01(a) or (b). Each Party shall furnish promptly to the other copies of all
papers and official documents received in respect of any Loss. With respect to
any Loss relating solely to the payment of money damages and which will not
result in the indemnified Party becoming subject to injunctive or other relief
or otherwise adversely affecting the business of the indemnified Party in any
manner, and as to which the indemnifying Party shall have acknowledged in
writing the obligation to indemnify the indemnified Party hereunder, the
indemnifying Party shall have the sole right to defend, settle or otherwise
dispose of such Loss, on such terms as the indemnifying Party, in its sole
discretion, shall deem appropriate. The indemnifying Party shall obtain the
written consent of the indemnified Party, which shall not be unreasonably
withheld or delayed, prior to ceasing to defend, settling or otherwise disposing
of any Loss if as a result thereof the indemnified Party would become subject to
injunctive or other equitable relief, or any remedy other than the payment of
money which is the responsibility of the indemnifying Party. The indemnifying
Party shall not be liable for any settlement or other disposition of a Loss by
the indemnified Party which is reached without the written consent of the
indemnifying Party. The reasonable costs and expenses, including reasonable fees
and disbursements of counsel incurred by any indemnified Party in connection
with any Loss, shall be reimbursed on a quarterly basis by the indemnifying
Party, without prejudice to the indemnifying Party's right to contest the
indemnified Party's right to indemnification and subject to refund in the event
the indemnifying Party is ultimately held not to be obligated to indemnify the
indemnified Party.
43
ARTICLE XIV
MISCELLANEOUS
-------------
Section 14.01 ASSIGNMENT. Schering may assign any of its rights or
obligations under this Agreement in any country to any of its Affiliates or to
any sublicensee as provided in Section 2.01; PROVIDED, HOWEVER, that such
assignment shall not relieve Schering of its responsibilities for performance of
its obligations under this Agreement.
(b) This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties. Any assignment
not in accordance with this Agreement shall be void.
Section 14.02 RETAINED RIGHTS. Nothing in this Agreement shall limit in any
respect the right of either Party to conduct research and development and to
market products using such Party's technology other than as herein expressly
provided.
Section 14.03 FURTHER ACTIONS. Each Party agrees to execute, acknowledge
and deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
Section 14.04 NO TRADEMARK RIGHTS. Except as otherwise provided herein, no
right, express or implied, is granted by the Agreement to use in any manner the
name "Schering," "Schering," or "Techniclone" or any other trade name or
trademark of the other Party or its Affiliates in connection with the
performance of the Agreement.
Section 14.05 NOTICES. All notices hereunder shall be in writing and shall
be deemed given if delivered personally or two days after mailed by registered
or certified mail (return receipt requested), postage prepaid, or sent by
express courier service, to the Parties at the following addresses (or at such
other address for a Party as shall be specified by like notice; PROVIDED that
notices of a change of address shall be effective only upon receipt thereof).
(a) If to Techniclone:
President
Techniclone Corporation
14282 Franklin Avenue
Tustin, CA 92680
With a copy to:
Rutan & Tucker, LLP
611 Anton Boulevard
Suite 1400
Costa Mesa, CA 92626
Attention: Thomas J. Crane
44
(b) If to Schering:
Schering Aktiengesellschaft
13342 Berlin
Germany
Attention: Head of Oncology SBU
With a copy to:
Schering Aktiengesellschaft
13342 Berlin
Germany
Attention: Legal Department
With a copy to:
Brobeck, Phleger & Harrison LLP
One Market
Spear Street Tower
San Francisco, CA 94105
Attention: Michael J. Kennedy
Section 14.06 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 operate or be construed as a
continuing waiver of same or any other of such Party's rights or remedies
provided in this Agreement.
Section 14.07 SEVERABILITY. If any term, covenant or condition of this
Agreement or the application thereof to any Party or circumstances shall, to any
extent or in any country, 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, illegal or unenforceable, shall not be affected thereby and each other
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.
Section 14.08 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not
be construed against any Party, irrespective of which Party may be deemed to
have authored the ambiguous provision.
45
Section 14.09 GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the State of New York as applied to contracts
entered into and performed entirely in New York by New York residents.
Section 14.10 HEADINGS. The sections and paragraph headings contained
herein are for the purposes of convenience only and are not intended to define
or limit the contents of said sections or paragraphs.
Section 14.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (and by facsimile), each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Section 14.12 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including all
Exhibits attached hereto and thereto, and all documents delivered concurrently
herewith and therewith, set forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersede and terminate all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as set forth herein and 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. This Agreement, including without limitation
the exhibits, schedules and attachments thereto, are intended to define the full
extent of the legally enforceable undertakings of the Parties hereto, and no
promise or representation, written or oral, which is not set forth explicitly
herein or therein is intended by either party to be legally binding. Both
Parties acknowledge that in deciding to enter into the Agreement and to
consummate the transaction contemplated hereby neither has relied upon any
statement or representations, written or oral, other than those explicitly set
forth herein.
Section 14.13 EXPENSES. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, travel, lodging, meals and
entertainment incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
Section 14.14 INDEPENDENT CONTRACTORS. The status of the Parties under this
Agreement shall be that of independent contractors. Neither Party shall have the
right to enter into any agreements on behalf of the other Party, nor shall it
represent to any person that it has any such right or authority. Nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship between the Parties. This Agreement is not intended to be a
partnership between Techniclone and Schering for federal, state or local income
tax purposes.
46
IN WITNESS WHEREOF, Techniclone and Schering have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TECHNICLONE CORPORATION
By: \S\ LARRY O. BYMASTER
-------------------------------------------
Name: LARRY O. BYMASTER
Title: PRESIDENT & CHIEF EXECUTIVE OFFICER
SCHERING AG
By: \S\ G. STOCK
-------------------------------------------
Name: PROF. G. STOCK
Title: MEMBER OF EXECUTIVE BOARD OF DIRECTORS
By: \S\ J. F. KAPP
-------------------------------------------
Name: DR. J. F. KAPP
Title: HEAD OF STRATEGIC BUSINESS UNIT,
THERAPEUTIC
47
EXHIBIT A-1
TECHNICLONE PATENTS
1. USP 4,724,213 issued February 9, 1988; Epstein, "Murine Hypridoma LYM-1
and Diagnostic Antibody Produced Thereby."
EXHIBIT A-2
THIRD PARTY AGREEMENTS (EXCLUDING LICENSES)
------------------------------------------
None.
48
EXHIBIT B
DEVELOPMENT PLAN AND BUDGET
[...***...]
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
49
EXHIBIT C
THIRD PARTY LICENSES
--------------------
License Agreement dated June 12, 1985 by and between Northwestern University and
Techniclone ("Hybrid-Clone 173-9, Lym-1" (NU 8314-A) only).
Agreement dated October 28, 1992 by and among Techniclone, Cancer Biologics,
Inc. and American Cyanamid.
Termination and Transfer Agreement dated as of November 14, 1997 by and between
Techniclone and Alpha Therapeutic Corporation.
Option Agreement dated October 23, 1998 by and between Techniclone and
Biotechnology Development, Ltd., as amended.
Option Agreement dated February 29, 1996 by and between Techniclone and
Biotechnology Development Limited.
Distribution Agreement dated as of February 29, 1996 by and between
Biotechnology Development, Ltd. and Techniclone.
50
Page 1 of 3
EXHIBIT D
VTA TERM SHEET
[...***...]
[...***...] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
51