EXHIBIT 10.36
EXCLUSIVE SUBLICENSE AGREEMENT
THIS EXCLUSIVE SUBLICENSE AGREEMENT (the "Agreement") is made and entered
into as of the 9th day of June, 1999 ("Effective Date") by and between ALKERMES,
INC., having its principal place of business located at 64 Sidney Street,
Cambridge, Massachusetts 02139 ("Alkermes") and TARGETED GENETICS CORPORATION,
having its principal place of business located at 1100 Olive Way, Suite 100,
Seattle, Washington 98101 ("Targeted"). Alkermes and Targeted are each referred
to herein by name or as a "Party", or, collectively, as the "Parties".
WHEREAS, Alkermes is the exclusive licensee from the Children's Hospital
Research Foundation/Children's Hospital, Inc. ("Children's Hospital") of certain
"Licensed Patent Rights" and "Licensed Materials" relating to Adeno-Associated
Virus (AAV) packaged cell lines invented by Dr. Philip R. Johnson and has the
right to grant sublicenses under Licensed Patent Rights and to Licensed
Materials (the "AAV License Agreement");
WHEREAS, the Parties are also parties to that certain Exclusive Sublicense
Agreement effective as of July 23, 1996 (the "Prior Agreement"), pursuant to
which Targeted is an exclusive sublicensee of the "Licensed Patent Rights" and
"Licensed Materials" in certain Fields of Use; and
WHEREAS, the Parties desire to enter into this Agreement, pursuant to which
Alkermes will grant to Targeted an exclusive, worldwide license of the Licensed
Patents and Licensed Materials in all of the Fields of Use, terminate the Prior
Agreement and to enter into a related Common Stock and Warrants Issuance
Agreement of even date herewith ("Issuance Agreement"), pursuant to which
Targeted shall deliver to Alkermes shares of Targeted's common stock, par value
$0.01 per share ("Common Stock"), and warrants to acquire additional shares of
Common Stock in the future.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
Section 1 Definitions
1.1 "Additional Fields of Use" means the Fields of Use identified in
subsections (b)-(j) of the definition of Fields of Use herein.
1.2 "Affiliate" means any entity directly or indirectly controlling,
controlled by, or under common control with, either Alkermes or
Targeted. For
[*] Omitted, confidential material, which material has been separately filed
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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purposes of this definition, the term "control" shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of an entity, whether through
the ownership of at least 50% of the voting stock of such entity, by
contract, or otherwise. Without limiting the generality of the
foregoing, "Affiliate" shall include any research and development
partnership in which Targeted or any of its Affiliates has an interest
of 50% of more, or is the general partner, or any other funding entity
that Targeted or any of its Affiliates controls.
1.3 "Bankruptcy Event" means the Person in question becomes insolvent, or
voluntary or involuntary proceedings by or against such Person are
instituted in bankruptcy or under any insolvency law, or a receiver or
custodian is appointed for such Person, or proceedings are instituted
by or against such Person for corporate reorganization or the
dissolution of such Person, which proceedings, if involuntary, shall
not have been dismissed within sixty (60) days after the date of
filing, or such Person makes an assignment for the benefit of
creditors, or substantially all of the assets of such Person are
seized or attached and not released within sixty (60) days thereafter.
1.4 "FDA" means the United States Food and Drug Administration.
1.5 "Fields of Use" means the following: (a) treatment and prevention of
[*]; (b) treatment and prevention of [*]; (c) treatment of [*]; (d)
treatment and prevention of [*]; (e) treatment and prevention of [*];
(f) treatment and prevention of [*]; (g) [*]; (h) treatment and
prevention of [*]; (i) treatment of [*]; (j) [*]; and (k) [*].
1.6 "Licensed Patent Rights" means all of the following:
(a) U.S. Patent No. 5,658,785 issued August 19, 1997, U.S. Patent No.
5,786,211 issued July 28, 1998, U.S. Patent No. 5,858,775 issued
January 12, 1999, U.S. Patent Application Serial No. USSN
09/012,132 filed January 22, 1998, and U.S. Patent Application
(number to be assigned) filed April 15, 1999, "Adeno-Associated
Virus Materials and Methods", invented by Philip R. Johnson;
(b) to the extent that the following contain one or more claims to
the invention or inventions claimed in (a) above: divisions,
continuations and continuations-in-part of (a) above, all
divisions
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and continuations of these continuations-in-part, divisions and
continuations, and any reissues, extensions or reexaminations of
the foregoing patents;
(c) to the extent that the following contain one or more claims to
the invention or inventions claimed in (a) above: all counterpart
foreign applications and patents to (a) and (b) above;
(d) any other patent applications, including divisions,
continuations, continuations-in-part, reissues, extensions,
reexaminations and counterpart foreign applications thereof, that
contain one or more claims to the invention or inventions claimed
in (a) above or any improvements to such invention or inventions;
and
(e) any patents issuing in respect of any of the applications,
divisions, continuations, continuations-in-part, reissues,
extensions, reexaminations and counterpart foreign applications
referenced in clauses (a), (b), (c) and (d) above.
1.7 "Licensed Materials" means the C12 adeno-associated virus packaging
cell line developed by the Children's Hospital Research
Foundation/Children's Hospital, Inc. and any improvements thereto.
1.8 "Licensed Product(s)" means any product which cannot be manufactured,
used or sold without utilizing Licensed Materials or which, in the
course of manufacture, use or sale would, in the absence of this
Agreement, infringe one or more issued claims of the Licensed Patent
Rights that have not been held invalid or unenforceable by an
unappealed or unappealable judgment of a court of competent
jurisdiction or expired.
1.9 "Net Sales" means the gross invoice prices received from customers on
sales of Licensed Products by Targeted, its Affiliates, or
Sublicensee(s) (as defined in Section 2.1 below), as applicable, less
any customary discounts allowed and actually taken, sales and/or use
tax, excise and similar taxes, import or export duties or their
equivalent, outbound transportation prepaid or allowed, insurance, and
amounts allowed or credited due to returns (not exceeding the original
billing). Transfer of a Licensed Product between Targeted and its
Affiliates and/or Sublicensees for resale to end users shall not be
used for the basis of computing royalties.
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1.10 "Non-Therapeutic Field of Use" means the Field of Use identified in
subsection (k) of the definition of Fields of Use herein.
1.11 "Phase I Clinical Trial" means that portion of the FDA submission and
approval process which provides for the first introduction into
humans of a product with the purpose of determining human toxicity,
metabolism, absorption, elimination and other pharmacological action
as more fully defined in 21 C.F.R. (S) 312.21(a) or equivalent in a
foreign country.
1.12 "Phase II Clinical Trial" means that portion of the FDA submission
and approval process which provides for the initial trials of product
on a limited number of patients for the purpose of determining dose
and evaluating safety and efficacy in the proposed therapeutic
indication as more fully defined in 21 C.F.R. (S) 312.21(b) or
equivalent in a foreign country. Phase I/II or equivalent in a
foreign country will be considered a Phase I trial.
1.13 "Phase III Clinical Trial" means that portion of the clinical
development program which provides for continued trials of a product
on sufficient numbers of patients to establish the safety and
efficacy of a product and generate, if required, pharmacoeconomics
data to support regulatory approval in the proposed therapeutic
indication as more fully defined in 21 C.F.R. (S) 312.21(c) or
equivalent in a foreign country.
1.14 "Person" means an individual, a partnership, a corporation, limited
liability company, an association, a joint stock company, a trust, a
joint venture, any other form of business organization, an
unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
1.15 "PLA" means a Product Licensing Application as that term is used in
Title 21 of the Code of Federal Regulations or any other applicable
FDA filing.
1.16 "Prior Field of Use" means the Field of Use identified in subsection
(a) of the definition of Fields of Use herein.
1.17 "Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations
of any federal, state or local regulatory agency, department, bureau
or other
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governmental entity, necessary for the manufacture and sale of a
Licensed Product in a regulatory jurisdiction.
Section 2 Grant of License
2.1 Grant of License to Targeted. Subject to the terms and conditions of
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this Agreement, Alkermes hereby grants to Targeted: (a) a worldwide
exclusive sublicense under Licensed Patent Rights and to Licensed
Materials to make, have made, use, lease, have sold and sell Licensed
Products in the Fields of Use; (b) the exclusive right to grant one
or more sublicenses to its rights under Licensed Patent Rights and to
Licensed Materials to make, have made, use, lease, have sold and sell
Licensed Products in the Fields of Use (each such sublicense, a
"Sublicense", the sublicensee thereunder, a "Sublicensee", and the
agreement or contract pursuant to which a Sublicense is granted, a
"Sublicense Agreement").
2.2 Reserved Rights of Alkermes. Alkermes reserves unto itself the
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personal, non-transferable right to make, have made, and use Licensed
Product(s) and Licensed Material in the Fields of Use for internal
research purposes only, and for no other purpose in the Fields of
Use.
2.3 Grant of License to Alkermes. Automatically upon termination of this
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Agreement, Targeted hereby grants to Alkermes an exclusive, worldwide
royalty-free license to make, have made, use and sell products under
any patent rights owned by Targeted as of the date of such
termination for improvements on the C12 cell line.
2.4 Grant of Sublicenses at Option of Targeted. Any Sublicense granted by
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Targeted of its rights hereunder shall be subject to the terms of
this Agreement and shall provide for the payment of royalties and
other consideration by the Sublicensee as specified in Section 3
below. Targeted shall be responsible for its Sublicensees and shall
not grant any rights which are inconsistent with the rights granted
to and obligations of Targeted hereunder. Any event, act or omission
of a Sublicensee which would be a breach of this Agreement if
performed by Targeted shall be deemed to be a breach by Targeted of
this Agreement. Each Sublicense Agreement granted by Targeted shall
include an audit right by Alkermes of the same scope as provided in
Section 4 below with respect to Targeted. No Sublicense Agreement
shall contain any provision which would be inconsistent with the
terms of this Agreement
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or the AAV License Agreement. Targeted shall give Alkermes prompt
notification of the identity and address of each Sublicensee with
whom it concludes a Sublicense Agreement and shall supply Alkermes
with a copy of each such Sublicense Agreement. To the extent that any
term or provision of any Sublicense Agreement is found to be
inconsistent with the terms or provisions of this Agreement, Targeted
shall use its best efforts to amend such Sublicense Agreement such
that it is in compliance with the terms or provisions of this
Agreement.
2.5 AAV License Agreement. Targeted hereby acknowledges, on behalf of
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itself, its Affiliates and any existing or future Sublicensee, that
it is aware of the AAV License Agreement and the obligations of
Alkermes under the AAV License Agreement. Targeted hereby further
acknowledges and agrees, that, in the event Alkermes or Targeted
shall become aware of any fact or circumstance related to this
Agreement or any Sublicense Agreement which is inconsistent with the
obligations of Alkermes under the AAV License Agreement, Alkermes and
Targeted shall cooperate in good faith to amend this Agreement or any
such Sublicense Agreement to insure that Alkermes shall be in
compliance with the terms and provisions of the AAV License
Agreement.
2.6 Grant of Sublicenses at Option of Alkermes. At any time after the
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date which is the [*] anniversary of the Effective Date, Targeted
shall, upon receipt of notice from Alkermes to such effect, enter
into good faith negotiations to enter into a sublicense agreement
with a proposed sublicensee designated by Alkermes in such notice,
with respect to any of the Additional Fields of Use for which
Targeted, its Affiliates or Sublicensee(s) have not initiated Phase I
Clinical Trials; provided that entering into such negotiations is not
inconsistent with obligations of Targeted to any Sublicensee. Such
sublicense agreement, if entered into, shall be subject to Section
2.4 above.
Section 3 Payments to Alkermes
3.1 Issuance of Common Stock and Warrants. Upon the execution of this
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Agreement and in consideration of the grant of the license hereunder,
Targeted and Alkermes shall enter into the Issuance Agreement in the
form attached hereto as Exhibit A, pursuant to which Targeted shall
issue and deliver to Alkermes 500,000 shares of Common Stock of
Targeted (the "Shares") and two warrants to acquire an aggregate of up
to 2,000,000 additional shares of Common Stock of Targeted (the
[*] Confidential treatment requested
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"Warrants"), in each case, subject to the terms and provisions of the
Issuance Agreement and the warrants attached thereto.
3.2 Milestone Payments. Subject to Sections 3.2(c) and (d), Targeted
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shall pay Alkermes the aggregate of the amounts calculated in
accordance with Sections 3.2(a)(i) or 3.2(a)(ii) below with respect to
each Licensed Product whether such Licensed Product is developed by
Targeted, its Affiliates or by any Sublicensee (the "Non Royalty
Fees"). Whether Targeted shall pay to Alkermes the Non-Royalty Fees
pursuant to Section 3.2(a)(i) or 3.2(a)(ii) shall be determined by
Alkermes within twenty (20) days of (i) receipt by Alkermes of written
notice from Targeted advising Alkermes that Targeted has initiated a
Phase I Clinical Trial with respect to a Licensed Product being
developed by Targeted or its Affiliates, and such other relevant
information related to such Phase I Clinical Trial that Alkermes may
reasonably request, or (ii) receipt by Alkermes from Targeted of a
copy of a Sublicense Agreement entered into by Targeted pursuant to
Section 2.4 above, and such other relevant information related to such
Sublicense Agreement that Alkermes may reasonably request.
(a) Upon the election by Alkermes pursuant to Section 3.2 above,
Targeted shall, within thirty (30) days of (x) receipt of Non-
Royalty Fees from a Sublicensee pursuant to Section 3.2(a)(i)
below or (y) the occurrence of each event described in Section
3.2(a)(ii), pay Alkermes the following Non-Royalty Fees:
(i) [*] of any proceeds received by Targeted as consideration
pursuant to any Sublicense Agreement for each Licensed
Product, including without limitation, licensee fees,
milestone payments or other property deemed compensation
(but excluding research and development funding, royalties
and Common Stock purchases at market value) under such
Sublicense Agreement, such as any premium paid over the
market value of Common Stock in the event such Sublicense
Agreement incorporates an equity component; or
(ii) Milestone payments in accordance with the following
schedules of events achieved by Targeted or a Sublicensee
for each Licensed Product related to any Additional Field of
Use and the Prior Field of Use, as the case may be:
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(A) With respect to any Licensed Product in any Additional
Field of Use:
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Milestone
Event Payment
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1. Completion of first Phase I Clinical Trial $ [*]
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2. Completion of first Phase II Clinical Trial [*]
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3. Completion of first Phase III Clinical Trial [*]
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4. Completion of first Phase III Clinical Trial for which [*]
payment not made pursuant item 2 above
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5. First filing of PLA with the FDA (or comparable filing with a [*]
foreign agency, if first)
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6. First approval of a PLA by the FDA (or comparable approval of [*]
a foreign agency, if first)
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Total: $ [*]
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(B) With respect to any Licensed Product in the Prior Field
of Use:
Milestone
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Event Payment
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1. Completion of first Phase I Clinical Trial $ [*]
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2. Completion of first Phase II Clinical Trial [*]
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3. Completion of first Phase III Clinical Trial [*]
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4. Completion of first Phase III Clinical Trial for which [*]
payment not made pursuant item 2 above
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5. First filing of PLA with the FDA (or comparable filing with a [*]
foreign agency, if first)
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Total: $ [*]
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(b) Notwithstanding anything in this Section 3 to the contrary, the
Parties agree and acknowledge that Targeted is obligated to pay
Alkermes, with respect to each License Product developed by
Targeted, its Affiliates or by any Sublicensee the greater of the
aggregate Non-Royalty Fees calculated pursuant to Sections
3.2(a)(i) and 3.2(a)(ii) above (each a "Non-Royalty Fee Payment
[*] Confidential treatment requested
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Option"). The Parties agree that to assist Alkermes in the
determination of which Non-Royalty Fee Payment Option shall
result in greater Non-Royalty Fees to Alkermes, Targeted shall,
on an annual basis and with respect to each Licensed Product,
beginning one (1) year following receipt by Alkermes of the
initial payment pursuant to this Section 3.2 with respect to each
Licensed Product, deliver to Alkermes a written status report
with respect to such Licensed Product (each a "Status Report").
Each Status Report shall contain sufficient information to enable
Alkermes to calculate the Non-Royalty Fee that Alkermes would be
entitled to receive with respect to the applicable Licensed
Product pursuant to each Non-Royalty Fee Payment Option. The
Parties further agree that, upon receipt of such Status Report
with respect to each Licensed Product, Alkermes may, upon due
notice to and prior consultation with Targeted, require Targeted
to pay to Alkermes the Non-Royalty Fees payable pursuant to the
Non-Royalty Fee Payment Option which would, in the aggregate,
yield to Alkermes greater Non-Royalty Fees with respect to such
Licensed Product; provided, however, that if Alkermes shall
exercise its right pursuant to this Section 3.2(b) to receive
Non-Royalty Fees pursuant to Section 3.2(a)(i) or 3.2(a)(ii), all
amounts received by Alkermes under the previously applicable Non-
Royalty Fee Payment Option shall be credited to the newly
selected Non-Royalty Fee Payment Option.
(c) The payment schedule set forth in Sections 3.2(a)(i) and
3.2(a)(ii) shall apply to the first product to be developed in
each of the Additional Fields of Use and to receive approval of a
PLA by the FDA (or comparable filing with a foreign agency, if
first) (each such product, the "First Product"). In no event
shall the aggregate payments under this Section 3.2 for each
First Product be less than $[*].
(d) With respect to any product in each of the Additional Fields of
Use which is not the First Product, and only after a First
Product is identified (each such product, an "Additional
Product"), the payments made pursuant to Sections 3.2(a) and (b)
shall be reduced by [*] so long as the First Product is being
marketed and has generated royalties to Alkermes in excess of
$[*] in the twelve-month period preceding the scheduled payment
pursuant to Sections 3.2(a) and (b) with respect to an Additional
Product.
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3.3 Royalties; Other Payments
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(a) For the rights, privileges and license granted hereunder,
Targeted shall pay royalties to Alkermes in the manner
hereinafter provided to the end of the term of the Licensed
Patent Rights on a country-by-country basis or until this
Agreement shall be terminated as hereinafter provided, whichever
occurs first. Subject to Section 3.3(a)(iv) below:
(i) With respect to any Licensed Product in any Additional Field
of Use, Targeted agrees to pay to Alkermes a royalty of [*]
on the amount of annual Net Sales of Licensed Products
related to any of the Additional Fields of Use that is less
than or equal to [*] and a royalty of [*] on the amount of
annual Net Sales of Licensed Products related to any of the
Additional Fields of Use that exceeds [*].
(ii) With respect to any Licensed Product in the Non-Therapeutic
Field of Use, Targeted agrees to pay to Alkermes:
(A) A royalty of [*] on the amount of annual Net Sales of
Licensed Products from sales by Targeted or its
Affiliates (but not Sublicensees) of Licensed Products
related to the Non-Therapeutic Field of Use that is
less than or equal to [*] and a royalty of [*] on the
amount of annual Net Sales of Licensed Products on
sales by Targeted or its Affiliates (but not
Sublicensees) of Licensed Products related to the Non-
Therapeutic Field of Use that exceeds [*]; and
(B) [*] of any proceeds received by Targeted from
Sublicensees from sales by such Sublicensees (but not
Targeted or its Affiliates) of Licensed Products
related to the Non-Therapeutic Field of Use, including
without limitation, licensee fees, milestone payments
or other property deemed compensation (but excluding
research and development funding, royalties and Common
Stock purchases at market value), such as any premium
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paid over the market value of Common Stock in the event
the applicable arrangement incorporates an equity
component.
(iii) With respect to any Licensed Product in the Prior Field of
Use, Targeted agrees to pay to Alkermes a royalty of [*]
on the amount of annual Net Sales of Licensed Products
related to the Prior Field of Use that is less than or
equal to [*] and a royalty of [*] on the amount of annual
Net Sales of Licensed Products related to the Prior Field
of Use that exceeds [*].
(iv) For sales in any country in which no Licensed Patent
Rights exist, such royalty shall be reduced [*] on the
amount of annual Net Sales of Licensed Products
incorporating, based upon or made by employing the
Licensed Material or the technology described in the
Licensed Patent Rights.
(b) Notwithstanding Section 3.3(a) above, if Targeted is required to
pay royalties to non-Affiliates for sale of any Licensed Product
for which payments are also due to Alkermes ("Third Party
Royalties"), then the amount of royalties to be paid by Targeted
to Alkermes shall be reduced by the amount that the sum of
royalties for such Licensed Product to be paid to Alkermes and
Third Party Royalties for such Licensed Product, collectively,
exceeds [*] of Net Sales of Licensed Products, but in no event
shall Alkermes' royalty percentage be reduced to less than [*] of
Net Sales for such Licensed Product.
(c) No multiple royalties shall be payable because any Licensed
Product, its manufacture, use, lease or sale is or shall be
covered by multiple claims or more than one Licensed Patent Right
licensed under this Agreement.
(d) Royalty payments due pursuant to Section 3.3(a) above, shall be
calculated quarterly for the three (3) month periods ending March
31, June 30, September 30 and December 31 of each calendar year
and shall be due and payable by Targeted within forty five (45)
days of the end of each calendar quarter (that is on or before
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May 15, August 14, November 15 and February 14 in each calendar
year).
(e) All monies due to Alkermes hereunder shall be paid in United
States Dollars by bank wire transfer in immediately available
funds to the account designated by Alkermes. Targeted shall be
responsible for making the payment to Alkermes. The rate of
exchange to be used in computing the amount of currency
equivalent to United States Dollars due to Alkermes shall be made
at the rate of exchange at Chase Manhattan Bank for the three (3)
month trailing average for the calendar quarter for which payment
is due. All payments hereunder shall be made net of any
withholding taxes, duties, levies, fees or charges required to be
withheld under the law, on behalf of Alkermes. Targeted shall
make any withholding payments due on behalf of Alkermes and shall
promptly provide Alkermes with written documentation of any such
payment sufficient to satisfy any requirements of the United
States Internal Revenue Service related to an application by
Alkermes for a foreign tax credit for such payment. Targeted
agrees to take reasonable and lawful steps as Alkermes may
request to minimize the amount of tax to which payments to
Alkermes are subject, if such steps are not detrimental to
Targeted.
Section 4 Record Keeping and Reports
4.1 Records. Targeted shall keep accurate records in sufficient detail to
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enable the royalties payable by Targeted to Alkermes hereunder to be
determined, and shall permit said records to be examined from time to
time during the life of this Agreement and for one (1) year after the
expiration and termination of this Agreement, at reasonable intervals
(but not more than once per calendar year) by an independent auditor
designated by Alkermes and reasonably acceptable to Targeted (the
"Auditor"), during normal business hours, and to the extent necessary
to verify the reports and payments required hereunder. The Auditor
shall only disclose to Alkermes whether or not royalties payable
hereunder have been accurately computed and paid, and no other
information. In the event any such audit reveals an underpayment,
Targeted shall promptly remit the deficiency to Alkermes. In the
event any such audit reveals an overpayment, the excess shall be
credited against any further payments due to Alkermes hereunder.
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4.2 Reports. Targeted shall furnish to Alkermes quarterly written
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reports, which shall be delivered to Alkermes together with the
royalty payments pursuant to Section 3.3(d) (each such report, a
"Report") setting forth separately by Licensed Product or other
identifying designation, the total number of Licensed Products
theretofore made and sold hereunder during the preceding calendar
quarter and the royalties due thereon. Each such Report shall be
accompanied by a copy of any Sublicensee's Report received subsequent
to Targeted's prior Report and prior to Targeted's current Report.
4.3 Confidentiality. Alkermes shall maintain in confidence, and shall not
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disclose to any Person or use for any purpose not expressly authorized
by this Agreement, any information provided to Alkermes and/or the
Auditor pursuant to this Section 4 and Section 6. Alkermes shall
obtain written agreement from the Auditor, for Targeted's benefit, to
be bound by the foregoing confidentiality obligation. Such
confidentiality obligation shall survive any termination or expiration
of this Agreement. Notwithstanding the foregoing, the confidentiality
obligation shall not extend to the disclosure of data, documents or
information to judicial, governmental or other official agencies, or
in accordance with common practice, to the extent that such disclosure
is required by any applicable securities laws or self regulatory
agencies.
Section 5 Patent Rights
5.1 Patent Prosecution. Subject to the rights of Children's Hospital
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pursuant to the AAV License Agreement to prepare, file and prosecute
patent applications related to the Licensed Patent Rights made solely
by the employees of Children's Hospital, Targeted shall, in the first
instance, have the sole and exclusive right to file any and all patent
applications, both foreign and domestic, in the Licensed Patent Rights
falling within the scope of this Agreement, and Targeted shall be
responsible for all costs, fees and expenses incurred in connection
with the filing, prosecution and maintenance of any such patent
application and the maintenance of any patent issuing thereon. Any
such patent shall be included within this Agreement as part of the
Licensed Patent Rights.
5.2 Notice of Patents. Targeted shall notify Alkermes of the issuance of
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any Licensed Patent Rights, and any expiration, lapse, revocation,
surrender, invalidation or abandonment of any Licensed Patent Rights.
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5.3 Alkermes' Right to Prosecute Patents. If, at any time during the term
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of this Agreement, Targeted elects not to file a patent application or
to abandon any pending patent application or any patent issued
thereon, either foreign or domestic, in the Licensed Patent Rights it
shall notify Alkermes of that decision at least two (2) months prior
to any deadline for filing any response or taking any other action
necessary to file or maintain any such application and/or patent in
existence. Thereafter, Alkermes shall have the right and option to
participate in the filing or prosecution of any such patent
application and/or the maintenance of any such patent, at Alkermes'
expense.
5.4 Patent Prosecution after Bankruptcy Event or Termination.
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Notwithstanding anything herein to the contrary and subject to the
provisions of the AAV License Agreement, in the event Targeted shall
become subject to a Bankruptcy Event or upon termination of this
Agreement, all rights granted or deemed granted to Targeted under this
Section 5 shall immediately terminate and Alkermes shall thereafter
have the sole and exclusive right to file any and all patent
applications, both foreign and domestic, in the Licensed Patent Rights
falling within the scope of this Agreement.
Section 6 Due Diligence
6.1 Targeted, during the entire term of this Agreement, shall utilize
commercially reasonable efforts in proceeding with the development,
manufacture, sale and commercial exploitation of Licensed Product(s),
and in creating a supply and demand for same; provided, however, that
Targeted shall be entitled to exercise prudent business judgment in
meeting its reasonable diligence obligations hereunder.
6.2 Targeted agrees to keep Alkermes informed of its progress on the
commercial exploitation of Licensed Product(s) hereunder by annual
reports due within sixty (60) days following the end of each calendar
year.
Section 7 Patent Marking
7.1 Targeted shall mark, and shall require its Sublicensee(s) to mark,
each Licensed Product made and sold by it or by them with an
appropriate patent marking identifying the pendency of any U.S.
application and/or any issued U.S. or foreign patent forming any part
of Licensed Patent Rights.
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Section 8 Term and Termination
8.1 Term. This Agreement, and the rights, privileges and license granted
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herein, shall be in force from the Effective Date hereof and shall
remain in full force and effect thereafter until the last to expire of
Licensed Patent Rights unless sooner terminated in accordance with the
provision set forth herein below.
8.2 Termination by Targeted. Targeted may terminate this Agreement and
-----------------------
concomitant future obligations upon thirty (30) days written notice to
Alkermes.
8.3 Termination by Alkermes.
-----------------------
(a) If Targeted shall cease to carry on its business, this
Agreement shall terminate upon notice by Alkermes.
(b) Should Targeted fail to make any payment whatsoever due and
payable to Alkermes hereunder, Alkermes shall have the right
to terminate this Agreement effective on thirty (30) days
written notice, unless Targeted shall make all such payments
to Alkermes within said thirty (30) day period. Upon the
expiration of such thirty (30) day period, if Targeted shall
not have made all such payments to Alkermes, the rights,
privileges and license granted hereunder shall automatically
terminate.
8.4 Material Breach. Upon any material breach or default of this
---------------
Agreement by Targeted other than those occurrences set out in Section
8.3 above, Alkermes shall have the right to terminate this Agreement
and the rights, privileges and license granted hereunder effective on
sixty (60) days written notice to Targeted. Such termination shall
become automatically effective unless Targeted shall have cured any
such material breach or default prior to the expiration of such sixty
(60) day period. In the event that Alkermes asserts a breach of this
Agreement under Section 6.1, this Agreement shall remain in full force
and effect until the matter is resolved by the parties themselves or
under arbitration as provided for under Section 18.
8.5 AAV License Agreement. This Agreement, and the rights, privileges and
---------------------
licenses granted herein, shall terminate automatically upon the
termination of the AAV License Agreement for any reason whatsoever.
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8.6 Survival. In the event that this Agreement is terminated in
---------
accordance with Section 8.2 or Section 8.3 or Section 8.4, the
obligation of Targeted pursuant to Section 2.3 and of Targeted to
deliver the Shares, the shares of Common Stock issuable upon the
exercise of the Warrants, and the Issuance Agreement shall survive.
In addition, Sections 4 and 15 shall survive expiration or
termination of this Agreement for any reason. The Parties understand
and agree that Targeted's obligation to pay royalties to Alkermes
under this Agreement shall terminate in the event of a judicial
determination by a decision of a tribunal of competent authority,
where such decision is final or by lapse of time becomes final and
unappealable, that no portion of the Licensed Patent Rights are valid
and/or enforceable.
Section 9 Disposition of Licensed Products On Hand Upon Termination
9.1 In the event of any termination of this Agreement, Targeted and its
Sublicensees shall have the right to use or sell all the Licensed
Products on hand at the time of such termination, provided that
Targeted shall be obligated to pay to Alkermes a royalty on such
sales as set forth in this Agreement if, at that time, there remains
in existence any of Licensed Patent Rights covering the manufacture,
use or sale of such Licensed Product(s).
Section 10 Patent Enforcement
10.1 AAV License Agreement. The Parties hereby acknowledge that under AAV
---------------------
License Agreement, Alkermes has the affirmative obligation to inform
the Children's Hospital of any infringement of any Licensed Patent
Rights. Accordingly, each Party will promptly notify the other Party
of any infringement or possible infringement of any of the Licensed
Patent Rights or Licensed Materials. The Parties hereby further agree
and acknowledge that under AAV License Agreement, Alkermes has the
initial option to prosecute any such infringement, which option shall
be assumed herein by Targeted.
10.2 Defense of Licensed Patent Rights by Targeted. If Alkermes shall
---------------------------------------------
have supplied Targeted with written evidence demonstrating
infringement of the Licensed Patent Rights by a third party, Alkermes
may, by written notice, request Targeted to take steps to assert such
Licensed Patent Rights against such infringing product. Targeted
shall within ninety
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(90) days of the receipt of such notice either (a) cause such
infringement to terminate or (b) initiate and continue legal
proceedings against the infringer, or pursue other equivalent legal
or patent remedies. Alkermes shall cooperate with Targeted, at
Targeted's expense, in connection with any such action. Such
cooperation shall include (without limitation) Alkermes' permitting
Targeted to bring the action in Alkermes' name and Alkermes'
executing any consents or assignments necessary or useful to permit
Targeted to enforce the Licensed Patent Rights against the infringer.
10.3 Defense of Licensed Patent Rights by Alkermes. In the event
----------------------------------------------
Targeted fails to terminate the infringement within the ninety (90)
days of written notification from Alkermes informing Targeted of an
alleged infringement, and does not institute litigation against the
infringer for that purpose within such period, then Alkermes shall
have the right to bring an action against the infringer for that
purpose. Targeted shall cooperate fully with Alkermes, at Targeted's
expense, in connection with any such action. Such cooperation shall
include (without limitation) Targeted permitting Alkermes to bring
the action in Targeted's name and Targeted's executing any consents
or assignments necessary or useful to permit Alkermes to enforce the
Licensed Patent Rights against the infringer.
10.4 Patent Enforcement after Bankruptcy Event or Termination.
---------------------------------------------------------
Notwithstanding anything herein to the contrary and subject to the
AAV License Agreement, in the event Targeted shall become subject to
a Bankruptcy Event or upon termination of this Agreement, all rights
granted or deemed granted to Targeted under this Section 10 shall
immediately terminate and Alkermes shall thereafter have the sole and
exclusive right to assert the Licensed Patent Rights against any
infringing product.
Section 11 Publicity
11.1 The Parties agree that neither Party will use the name of the other
Party, or any abbreviation thereof, expressly or by implication, or
disclose the existence or nature of this Agreement, in any news,
publicity release, advertisement or other public disclosure, without
the express prior written approval of the other Party, such approval
not to be unreasonably withheld. Notwithstanding the foregoing, each
Party hereby consents to references to it (a) in such reports or
documents sent
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to stockholders or filed with or submitted to any governmental
regulatory agencies or bodies or stock exchanges or as may be
required to obtain investment capital, or (b) pursuant to any
requirements of applicable law or governmental regulations, provided
that, in the event of any such disclosure, the Party making such
disclosure shall afford the other party the prior opportunity to
review the text of such disclosure, the other party shall promptly
respond to the disclosing party, and the disclosing Party shall use
its best efforts to comply with any reasonable requests by the other
party regarding changes. The Parties agree that an announcement or
press release relating to this Agreement will be made, and that they
will coordinate such announcement or press release so that, to the
extent both Parties intend to make such announcement or press
release, such announcement or press release can be made
contemporaneously by each Party.
Section 12 Waiver
12.1 No omission or delay of either party hereto in requiring due and
punctual fulfillment of the obligations of the other party hereto
shall be deemed to constitute a waiver by such party of its rights to
require such due and punctual fulfillment, or of any other of its
remedies hereunder.
Section 13 Warranties
13.1 Representations and Warranties by Alkermes. Alkermes represents and
------------------------------------------
warrants that:
(a) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly
authorized by all appropriate Alkermes corporate action;
(b) this Agreement is a legal and valid obligation binding upon
Alkermes and enforceable in accordance with its terms, and the
execution, delivery and performance of the Agreement by Alkermes
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 violate any law or regulation of any
court, governmental body or administrative or other agency
having jurisdiction over it;
(c) Alkermes has the lawful right to grant the sublicense set forth
herein; and
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(d) to the best of Alkermes' knowledge, Alkermes is the exclusive
licensee of the Children's Hospital Research
Foundation/Children's Hospital, Inc. in respect of the Licensed
Patent Rights and the Licensed Materials in all fields and that
neither Alkermes nor to the best of Alkermes' knowledge, the
Children's Hospital has granted any licenses, sublicenses, or
other rights in respect of the Licensed Patent Rights or the
Licensed Materials in the Fields of Use.
13.2 Limitations on Warranties of Alkermes.
-------------------------------------
(a) ALKERMES MAKES NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS OF THE LICENSED PRODUCTS FOR ANY
PARTICULAR PURPOSE.
(b) Nothing in this Agreement shall be construed as: (i) a warranty
or representation by Alkermes as to the patentability, validity
or scope of any of the Licensed Patent Rights; (ii) except as
provided in Section 13.1, a warranty or representation that
anything made, used, sold or otherwise disposed of under any
license granted in this Agreement is or will be free from
infringement of patents or proprietary rights of third parties;
or (iii) an obligation to bring or prosecute actions or suits
against third parties for infringement.
13.3 Representations and Warranties of Targeted. Targeted represents and
------------------------------------------
warrants that:
(a) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly
authorized by all appropriate Targeted corporate action; and
(b) this Agreement is a legal and valid obligation binding upon
Targeted and enforceable in accordance with its terms; the
execution, delivery and performance of the Agreement by Targeted
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 violate any law or regulation of any
court, governmental body or administrative or other agency
having jurisdiction over it.
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Section 14 Succession and Assignability
14.1 This Agreement and the rights and benefits conferred upon Targeted
hereunder may not be assigned nor transferred by Targeted without
the prior written consent of Alkermes, except in the event of sale
of all or a portion of the business of Targeted, in which event
Targeted, upon written notification to Alkermes, may assign this
Agreement to a wholly owned subsidiary or to a purchaser of
substantially all of its assets relating to the subject matter of
the Agreement.
14.2 This Agreement shall be binding upon and inure to the benefit of the
successors, representatives and assigns of the parties hereto.
Section 15 Indemnity
15.1 Targeted agrees to indemnify, hold harmless and defend Alkermes, its
officers, employees and agents, against any and all claims, suits,
losses, damages, costs, fees and expenses, including reasonable
attorneys' fees, resulting from or arising out of Targeted's
exercise of its rights granted under this Agreement including, but
not limited to, product liability, any damages, losses or
liabilities whatsoever with respect to death or injury to any person
and damage to any property arising from the production, manufacture,
sale, lease, consumption, advertisement, possession, user or
operation of Licensed Products by Targeted its Affiliates or its
Sublicensees or their customers in any manner whatsoever.
15.2 Alkermes agrees to indemnify, hold harmless and defend Targeted and
its officers, employees and agents against any and all claims,
suits, losses, damages, costs, fees and expenses, including
reasonable attorneys' fees, resulting from or arising out of
Alkermes' grant of the Sublicense granted under this Agreement
including, but not limited to, any amounts payable by Alkermes to
its licensor(s) of the Licensed Patent Rights or the Licensed
Materials or other persons or entities having rights in respect of
the Licensed Patent Rights or the Licensed Materials.
15.3 In the event of any claim for which indemnification will be sought
pursuant to Section 15.1 or 15.2, the indemnified party will give
the indemnifying party prompt written notice of such claim. The
indemnifying party shall have the sole right to control the defense
and settlement of any such claim and shall not be liable for any
settlement that the indemnifying party does not approve in writing
in advance. The
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indemnified party will cooperate fully with the indemnifying party,
at the indemnifying party's expense, in connection with the defense
and settlement of any such claim.
15.4 Prior to entering clinical trials, Targeted further agrees to obtain
and maintain in force a comprehensive or commercial form general
liability insurance policy supporting its obligations under Section
15.1. This insurance shall provide Alkermes with insurance coverage
that is commensurate with the insurance coverage that Alkermes would
have otherwise been provided had Alkermes been named as additional
insured on the Targeted's comprehensive general liability insurance,
and provided for prior notice to Alkermes before cancellation. The
limits of such insurance shall be commercially reasonable amounts
for personal injury or death, and for property damage. Upon request,
Targeted shall provide Alkermes with Certificates of Insurance
evidencing the same.
Section 16 Notices
16.1 Any payment, notice or other communication required or permitted to
be given by either party hereto shall be deemed to have been properly
given and be effective on the date of delivery if delivered, in
writing, in person, by facsimile, by overnight mail or by first class
certified mail with postage prepaid and return receipt requested to
the respective address set forth below, or to such other address as
either party shall designate by written notice given to the other
party:
In the case of Alkermes:
Alkermes, Inc.
64 Sidney Street
Cambridge, MA 02139
Telephone No. 617-494-0171
Fax No. 617-494-9255 Attn: Chief Financial Officer
In the case of Targeted:
Targeted Genetics Corporation
1100 Olive Way, Suite 100
Seattle, WA 98101
Telephone No. 206-623-7612
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Fax No. 206-623-7064
Attn: President
Section 17 Arbitration; Applicable Law
17.1 Arbitration. All disputes that may arise, including, but not
-----------
limited to, disputes arising under Article 6.1, in connection with
this Agreement and that are not resolved by the Parties shall be
submitted to binding arbitration under the commercial rules and
regulations then in effect under the American Arbitration
Association rules relating to voluntary arbitrations. All costs of
arbitration shall be divided equally between the Parties. The award
shall be binding and conclusive on each of the Parties, and it may
be enforced by the prevailing Party runs in any court of competent
jurisdiction.
17.2 Applicable Law. In the event of any arbitration as provided in
--------------
Section 18.1 above, (i) the venue for the arbitration shall lie
exclusively in the state and county of the principal executive
offices of the Party against whom the arbitration is initiated, and
(ii) the law governing this Agreement for purposes of the
arbitration shall be the law of the state of the principal executive
offices of the Party against whom the arbitration is initiated .
Section 18 Miscellaneous
18.1 Headings. The headings of the sections of this Agreement are
--------
inserted for convenience and reference only and are not intended to
be a part of or to affect the meaning or interpretation of this
Agreement.
18.2 Effective Date. This Agreement will not be binding upon the Parties
--------------
until it has been signed by, or on behalf of, each Party, in which
event it shall be effective as of the Effective Date.
18.3 Amendments. No amendment or modification of this Agreement shall be
----------
valid or binding upon the Parties unless made in writing and signed
by each Party.
18.4 Merger. This Agreement embodies the entire understanding of the
-------
Parties and supersedes all previous communications, representations
or understandings, either oral or written, including the Prior
Agreement, between the Parties relating to the subject matter
hereof.
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18.5 Severability. If any provision, or provisions, of this Agreement
------------
shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not be
in any way affected or impaired thereby.
18.6 Counterparts. This Agreement, may be executed in counterparts by
------------
the Parties duly authorize respective officers, which counterparts
collectively shall be deemed a single contract.
[Signatures appear on following page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement through duly
authorized representatives as of the date first above written.
ALKERMES, INC
By _________________________________
Name: ___________________________
Title: __________________________
TARGETED GENETICS CORPORATION
By _________________________________
Name: ___________________________
Title: __________________________
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