Exhibit 10.4
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Securities and Exchange Commission without the Mark pursuant to
the Company's Application for Order Granting Confidential Treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.
WEST PHARMACEUTICAL SERVICES LOGO
WEST PHARMACEUTICAL SERVICES, INC.
And its wholly owned subsidiary
WEST PHARMACEUTICAL SERVICES DRUG DELIVERY
& CLINICAL RESEARCH CENTRE LTD.
and
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
- --------------------------------------------------------------------------------
LICENSE AGREEMENT
- --------------------------------------------------------------------------------
Dated August 25, 2000
LICENSE AGREEMENT
THIS IS A LICENSE AGREEMENT (the "Agreement"), dated as of August 25,
2000 (the "Effective Date"), among West Pharmaceutical Services, Inc., a
Pennsylvania corporation, ("West") with offices at 101 Gordon Drive, Lionville,
PA, 19341, its wholly owned subsidiary West Pharmaceutical Services Drug
Delivery & Clinical Research Centre Ltd., a corporation organized under the laws
of England and Wales, ("West/Nottingham") with offices at Albert Einstein
Centre, Nottingham Science and Technology Park, University Boulevard,
Nottingham, NG7 2TN, United Kingdom; and Innovative Drug Delivery Systems, Inc.,
a Delaware corporation, ("IDDS") with offices at 787 Seventh Avenue, New York,
New York 10019.
Background
West (directly and through its subsidiaries, including West/Nottingham)
is engaged in, among other things, the research and development of novel means
of delivering pharmaceutical compounds using its patented and proprietary
drug-delivery technology.
West/Nottingham is the owner of the entire right, title and interest in
certain issued letters. patent and pending patent applications as set forth in
Schedule 1 hereto relating to the use of chitosan for the transmucosal delivery
of pharmaceutical compounds.
IDDS desires to conduct and fund further research and development
activities with respect to West's drug delivery technology with a view toward
commercialization of certain identified products for the treatment of pain in
humans and animals. IDDS desires to secure, and West and West/Nottingham desire
to grant, an exclusive worldwide license under the patents and patent
applications, and a non-exclusive license to certain other related patented and
unpatented technology to make, use and sell such products, all on the terms and
subject to the conditions set forth below.
Agreement
Accordingly, intending to be legally bound, the parties agree as
follows:
1. Definitions. Terms defined in this Section 1 and parenthetically
elsewhere in this Agreement will throughout this Agreement have the
meanings here or there provided. Defined terms may be used in the
singular or in the plural, as sense shall require.
1.1 "Affiliate" means, with respect to any Party, an entity, over
50% of the voting securities of which are directly or
indirectly controlled by such Party, or an entity that
directly or indirectly controls over 50% of the voting
securities of such Party.
1.2 "Background IP" means know-how, knowledge, experience,
inventions, processes, technical information, trade secrets,
formulas, protocols, data and results (and any patents and
patent applications claiming any of the foregoing) arising
from or acquired outside the development activities covered by
this Agreement and the R&D Agreements that is necessary or
useful for practicing the art covered by the Licensed Patents
or Program IP.
1.3 "Chitosan-based Technology" means all of West's patented or
proprietary drug-delivery technology using chitosans, which is
appropriate for delivering drug compounds within the Field of
Use.
1.4 "Clinical Manufacturing Agreement" means the agreement between
IDDS and West Pharmaceutical Services Lakewood, Inc., a wholly
owned subsidiary of West ("West/Lakewood"), to be entered into
by the Parties providing for the manufacture of clinical
supplies of a Licensed Product containing Morphine.
1.5 "COX-2 Inhibitor" means any compound that inhibits the
cyclooxygenase-2 (COX-2) enzyme.
1.6 "Development Milestone and Option Agreement" means the
agreement between IDDS and West and West/Nottingham, to be
entered into by the Parties providing for the payment of
development milestones and granting an option for West to
manufacture commercial quantities of Licensed Products
containing Morphine.
1.7 "EMEA" means the European Agency for the Evaluation of Medical
Products.
1.8 "FDA" means the U.S. Food and Drug Administration.
1.9 "Field of Use" means the transmucosal delivery to humans or
animals of Identified Compounds for the treatment of pain and
with respect to Midazolam only, for sedation or the treatment
of pain or anxiety. As used in this Agreement, the term
"transmucosal" means via the nasal, sublingual, pulmonary,
rectal or vaginal mucosa.
1.10 "Identified Compound" means (a) opioid alkaloid morphine
and/or a salt thereof ("Morphine"), (b) Fentanyl, (c)
Midazolam, and (d) such other drug compound agreed to by the
parties in accordance with Section 3.2 hereof.
1.11 "Licensed Patents" means the letters patent and letters patent
that may issue from patent applications listed in Schedule 1
hereto, including all continuations, continuations-in-part,
divisionals, reissues and reexaminations thereof.
1.12 "Licensed Product" means an Identified Compound whose
composition, manufacture or use comes within the scope of any
unexpired claim of any of the Licensed Patents then in force
in the country iA which the activity at issue takes place.
1.13 "M-6-G Option Agreement" means the agreement to be entered
into among the Parties which provides for IDDS to have an
option to add morphine-6-glucuronide as an Identified Compound
under this Agreement.
2
1.14 "Major Market Country" means the United States, Japan, or any
European Union nation party to the EMEA Mutual Recognition
guidelines for pharmaceutical products.
1.15 "Net Sales Price" means the actual gross amount invoiced for
the sale of a Licensed Product by IDDS or any Sublicensee,
less: (i) trade, cash, promotional and quantity discounts;
(ii) recalls, credits and allowances on account of returned or
rejected Licensed Products including, but not limited to,
allowance for breakage and spoilage; (iii) rebates,
chargebacks and amounts paid on sale or dispensing of Licensed
Product; (iv) retroactive price reductions; and (v) sales,
excise, VAT or other taxes, transportation and insurance
charges and additional special transportation, customs duties
and other governmental charges actually paid by IDDS or any
Sublicensee.
1.16 "NSAIDS" means non-steroidal anti-inflammatory drug compounds.
1.17 "Party" means a party to this Agreement.
1.18 "Person" means an individual, partnership, limited liability
company, corporation, trust or unincorporated organization or
other business entity, and a government or agency or political
subdivision thereof.
1.19 "Program IP" means know-how, knowledge, experience,
inventions, processes, technical information, trade secrets,
formulas, protocols, data and results (and any patents and
patent applications claiming any of the foregoing), arising
from or acquired specifically in the course of the development
activities covered by this Agreement and the R&D Agreements
that relate specifically to the Field of Use.
1.20 "R&D Agreement" means the research and development agreements
to be entered into among the Parties providing for, among
other things, the research and development activities to be
performed by or on behalf of the Parties and the milestone
payments to be paid to West by IDDS with respect to each
Identified Compound.
1.21 "Regulatory Agency" means any governmental regulatory
authority responsible for granting health or pricing
approvals, registrations, import permits and other approvals
required before a Licensed Product may be tested or marketed
in any country. Regulatory Agency shall include the FDA, EMEA
and any analogous agency in any other country or region.
1.22 "Royalty Payment Period" means (i) the period of time
commencing on the date of the first commercial sale of a
Licensed Product in any country and ending on the day
immediately before the first day of the seventh calendar month
thereafter and (ii) each subsequent period of six calendar
months.
1.23 "Royalty Reporting Period" means (i) the period of time
commencing on the date of the first commercial sale of a
Licensed Product in any country and ending on the day
immediately before the first day of the fourth calendar month
thereafter and (ii) each subsequent period of three calendar
months.
3
1.24 "Sublicensee" means any Person granted a sublicense by IDDS
under Section 2.1.3 hereof.
1.25 "Western Europe" means the countries of Andorra, Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Italy,
Ireland, Liechtenstein, Luxembourg, Monaco, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and the United
Kingdom.
2. Grant of Rights.
2.1 Subject to the terms and conditions of this Agreement, West
and West/Nottingham, as applicable, hereby grant, and IDDS
accepts, a license providing the following rights:
2.1.1 the worldwide exclusive right to use and practice the
art covered by the Licensed Patents and the Program
IP to develop, have developed, make, have made, use,
offer to sell, sell, have offered for sale, have
sold, import and have imported the Licensed Products
in the Field of Use;
2.1.2 the non-exclusive worldwide right to use and practice
the art covered by the Background IP to the extent
necessary to exploit the rights granted in Section
2.1.1; and
2.1.3 the right to sublicense any or all of the rights
granted in Sections 2.1.1 and 2.1.2 hereof.
2.2 For purposes of this Agreement, the expression "exclusive
right" means that neither West, West/Nottingham nor any of
their Affiliates have, nor will any of them grant, nor shall
any of them have authority to grant any Person, any right to
make, use, market or sell any Licensed Products within the
Field of Use. West and West/Nottingham reserve all rights not
expressly granted and not inconsistent with IDDS's full
exercise of the rights granted under this Agreement.
2.3 West's Right to Terminate Agreement. West may, in its sole and
absolute discretion, terminate this Agreement if:
2.3.1 within 30 days of the Effective Date the Parties,
following good faith negotiations, do not enter into
all of the following:
(a) the Clinical Manufacturing Agreement,
(b) the Development Milestone and Option
Agreement,
4
(c) an R&D Agreement with respect to Midazolam
(each of items a, b and c of this Section
2.3.1 to contain terms and conditions
consistent with those specified in the
Letter of Intent dated June 19, 2000 among
West, IDDS (f/k/a Alchemy Pharmaceuticals,
Inc.) and Paramount Capital Investments, LLC
(the "Letter of Intent") with respect to the
appropriate Identified Compound and subject
matter), and
(d) the M-6-G Option Agreement (which shall
contain terms and conditions consistent with
those set forth in Exhibit A hereto);
or
2.3.2 within 30 days of the Effective Date IDDS does not
obtain at least $10 million in equity financing, said
amount to be available to IDDS without restriction.
2.4 West's Right To Terminate Fentanyl License.
2.4.1 The Parties shall endeavor to enter into within 30
days of the Effective Date an R&D Agreement with
respect to Fentanyl, which shall contain terms and
conditions consistent with those specified in the
Letter of Intent with respect to Fentanyl with
chitosan, provided that such R&D Agreement shall also
provide that IDDS need not commence development work
on a Licensed Product containing Fentanyl and
chitosan until the FDA allows (by way of a pre-Phase
III meeting or otherwise) the commencement of Phase
III clinical studies with respect to a Licensed
Product containing opioid alkaloid morphine and/or a
salt thereof and chitosan.
2.4.2 If the Parties, despite continuing good faith
negotiations, are unable to complete the Fentanyl R&D
Agreement within 30 days of the Effective Date,
either Party may request an additional 30 days to
complete good faith negotiations and enter into such
an agreement.
2.4.3 If, within 60 days of the Effective Date, following
good faith negotiations, the parties do not enter
into the agreement referenced in Section 2.4.1, then
West may, in its sole and absolute discretion,
terminate the licenses granted hereunder with respect
to Fentanyl.
2.5 The provisions of Section 7.3 and 7.4 of this Agreement shall
apply to any termination under Section 2.3 or, with respect
only to Fentanyl, 2.4.
5
3. Rights to Additional Technology.
3.1 Right of First Refusal. West will promptly notify IDDS if a
third Person wants to begin negotiations with West or any of
its Affiliates for the development of Chitosan-based
Technology for the transmucosal delivery of any
non-proprietary drug compounds in the Field of Use. West may
negotiate with any such third Person, provided that IDDS will
have the right of first refusal, exercisable within 30 days
following receipt by IDDS of West's notice, to enter into
research, development, license and similar agreements on the
same terms and conditions as may result from such
negotiations. Notwithstanding the foregoing, the right of
first refusal shall not apply to (and West shall have no duty
of notification with respect to) the following: (i) COX-2
Inhibitors; (ii) NSAIDs; (iii) the indications of (A)
inflammation caused by osteo-arthritis and rheumatoid
arthritis, and (B) with respect to compounds contractually
under development as of June 13, 2000 on behalf of third-party
clients, migraine; (iv) in the event that the Parties do not
enter into the M-6-G Option Agreement within 30 days of the
Effective Date, or if entered into IDDS does not exercise the
option therein granted, morphine-6-glucuronide; and (v) in the
event of a Fentanyl license termination pursuant to Section
2.4, Fentanyl.
3.2 Extension of Grant of Rights to Certain Additional Compounds
for Pain.
3.2.1 IDDS may exercise the rights to the Chitosan-based
Technology granted in Section 2 hereof with respect
to any additional (i) non-proprietary or (ii)
proprietary or patented drug compounds either owned
outright or licensed by IDDS (including for this
purpose any of its Sublicensees) ("Additional
Compounds"), and such Additional Compounds shall be
included as Identified Compounds for all purposes of
this Agreement, provided that:
(a) any such Additional Compound is subject to
the Field of Use;
(b) IDDS shall pay to West/Nottingham royalty
payments with respect to each such
Additional Compound as if it were included
as an Identified Compound in this Agreement;
and
(c) IDDS shall pay to West/Nottingham
Proof-of-Concept and milestone payments with
respect to each such Additional Compound on
the same terms as specified in the Letter of
Intent with respect to Nasal Fentanyl;
provided, that nothing herein shall impose
any obligation on West or West/Nottingham to
perform any Proof-of-Concept study or other
research or development work in
consideration for such Proof-of-Concept or
milestone payments.
3.2.2 In connection with any such Additional Compound, IDDS
shall grant West, at West's option, an exclusive
right of first negotiation to negotiate an R&D
Agreement for the pre-clinical development of such
Additional Compound, as follows:
(a) Within 30 days after the date of receipt of
notice that IDDS wishes to extend the rights
granted hereunder to an Additional Compound,
West shall inform IDDS whether or not it
wishes to enter into negotiations towards
entering into an R&D Agreement for the
pre-clinical development of such Additional
Compound.
6
(b) If West does wish to enter into such an R&D
Agreement, West and IDDS shall negotiate in
good faith the terms of such R&D Agreement
for a period not to exceed 90 days.
(c) If West does not wish to enter into such an
R&D Agreement or West and IDDS fail to reach
agreement on the terms of such agreement
within such 90-day period, then IDDS shall
be free to proceed with third Persons with
pre-clinical development of such Additional
Compound.
3.2.3 West may license the Chitosan-based Technology and
Program IP in the Field of Use to third Persons that
either own outright or that have licensed proprietary
or patented compounds, excluding compounds being
developed by IDDS or any of its Sublicensees.
3.2.4 In the event that the Parties do not enter into the
M-6-G Option Agreement within 30 days of the
Effective Date, or if entered into IDDS does not
exercise the option therein granted, West may license
the Chitosan-based Technology and Program IP in the
Field of Use to third Persons for use with respect to
morphine-6-glucuronide.
3.2.5 In the event of a Fentanyl license termination
pursuant to Section 2.4, West may license the
Chitosan-based Technology and Program IP in the Field
of Use to third Persons for use with respect to
Fentanyl.
3.2.6 Notwithstanding the foregoing, the provisions of
Section 3.2.1 and 3.2.2 hereof shall not apply to (a)
compounds which are COX-2 Inhibitors or NSAIDS, (b)
in the event that the Parties do not enter into the
M-6-G Option Agreement within 30 days of the
Effective Date, or if entered into IDDS does not
exercise the option therein granted,
morphine-6-glucuronide, and (c) in the event of a
Fentanyl license termination pursuant to Section 2.4,
Fentanyl.
4. License Fees; Royalties.
4.1 License Fees. Within 30 days following the Effective Date,
IDDS shall pay to West the amount of $***.
4.2 Sublicensing Fees. In the event that IDDS sublicenses any
right granted hereunder to any Person listed on Schedule 2
hereto, then IDDS shall pay to West one-third the amount of
any up-front license fees (excluding royalties on sales
covered below) received by IDDS from such Sublicensees within
ten business days of receipt thereof.
*** Represents material which has been omitted pursuant to an Application for
Order Granting Confidential Treatment and filed separately with the
Commission.
7
4.3 Royalties on Sales by IDDS.
4.3.1 In consideration of the rights granted hereunder,
IDDS shall pay to West/Nottingham a semi-annual
royalty on the Net Sales Price of each Licensed
Product sold or otherwise disposed of by IDDS and its
Sublicensees pursuant to the applicable royalty rate
in the specified territories as set forth below, in
the case where West manufactures or packages the
Licensed Product and in the alternative case where
West does not perform manufacturing or packaging:
Western Rest of
Product U.S. Europe World
-----------------------------------------------------
West Manufactures ***% ***% ***%
Other Manufacturer ***% ***% ***%
Each Licensed Product shall be considered sold or
otherwise disposed of in the specified territory in
which it is distributed for use. With respect to any
sublicense granted by IDDS, IDDS shall be fully
responsible for the reporting and payment to
West/Nottingham of royalties and other payments due
as a result of such sublicensing activities.
4.3.2 Royalties under this Section will be paid to
West/Nottingham within 30 days following the end of
each Royalty Payment Period. For purposes of
computing royalties payable hereunder, amounts in
currencies other than U.S. dollars will be converted
into U.S. dollars at the official exchange rate of
that country on the last business day of the
applicable Royalty Payment Period under this
Agreement. If transfer restrictions exist or are
imposed that prevent payments from IDDS to
West/Nottingham in U.S. dollars, upon receipt of
regulatory approval of a Licensed Product the Parties
agree to cooperate to procure whatever licenses or
permits are required to obtain the waiver of those
restrictions or otherwise to facilitate the
conversion to U.S. dollars or to place the royalties
on deposit at interest with a bank or like
institution in such country in local currency for the
account of West/Nottingham until such payments can be
made.
4.4 Minimum Royalties.
4.4.1 As a condition of maintaining the licenses (including
without limitation the exclusivity thereof) granted
hereunder, IDDS shall pay to West/Nottingham a
minimum annual royalty equal to $*** per year for
each Licensed Product that receives approval by a
Regulatory Agency to be marketed (such as FDA
approval of a New Drug Application) in any Major
Market Country; provided, that IDDS shall pay only
one minimum annual royalty for each Licensed Product
if that Licensed Product receives such regulatory
approval in more than one Major Market Country.
*** Represents material which has been omitted pursuant to an Application for
Order Granting Confidential Treatment and filed separately with the
Commission.
8
4.4.2 The minimum annual royalty requirement for each
Licensed Product shall commence one year after the
first such approval (the "Minimum Royalty
Commencement Date") for such Licensed Product. If
total royalty payments pursuant to Section 4.3 hereof
for any Licensed Product in any one-year period
commencing on the applicable Minimum Royalty
Commencement Date or an anniversary thereof are less
than $***, IDDS shall pay to West/Nottingham the
shortfall within 30 days of the end of the following
Royalty Reporting Period.
4.5 Limitations on Payment of Royalties.
4.5.1 All existing monetary obligations of IDDS to
West/Nottingham will cease with respect to any
Licensed Product manufactured or sold in a given
country where the activity in that country is no
longer covered by at least one valid claim of a
Licensed Patent then in force.
4.5.2 If in any proceeding before any court, agency, or
tribunal involving the validity, infringement, or
enforceability of any claim of any Licensed Patents,
such claims have been held to be invalid, or not
infringed, or unenforceable, by a final judgment,
decrees, or decision from which no appeal can be
taken, or from which no appeal is taken, then in that
event IDDS and its Sublicensees shall thereafter be
free of any royalty obligation hereunder as and to
the invalid, non-infringed or unenforceable claims in
the jurisdiction in which the underlying patent was
granted, until or unless such coverage resumes.
4.6 Manner of Payment. All amounts payable under this Agreement
shall be in United States dollars by wire transfer of
immediately available funds to an account or accounts
specified in writing by West at least five days prior to the
due date thereof
4.7 Interest. Any required royalty payments not made for any
reason on or before the due date specified in Section 4.3.2
shall bear interest at the U.S. prime interest rate for
short-term funds plus two percentage points from such due date
until the date it is received. The interest will be calculated
on a daily average basis.
4.8 Tax Withholding. No federal, state or local taxes, assessments
or other charges owed by West/Nottingham on any royalty
payments made under this Agreement shall be withheld or
deducted by IDDS from such payments, except as hereinafter
provided. If IDDS shall be required by the laws of any
jurisdiction to deduct or withhold from any payment to West or
West/Nottingham any income taxes that may be levied against
them, IDDS may deduct such income taxes, provided that it
promptly furnishes to West an original or duplicate tax
receipt evidencing the payment of such taxes to the
appropriate authority.
*** Represents material which has been omitted pursuant to an Application for
Order Granting Confidential Treatment and filed separately with the
Commission.
9
4.9 Reports and Audit.
4.9.1 Periodic Reports. IDDS will deliver to West,
simultaneously with the payment of royalties, and
otherwise within 30 days after the end of each
Royalty Report Period, a written report signed by a
responsible officer of IDDS showing the amount of
Licensed Products sold during the applicable period
and sums received, as the case may be, and
calculation of the Net Sales Price for such Licensed
Products and the payment due. If no payments are due
for the period, the report will so state.
4.9.2 Record Keeping. IDDS will keep at its principal place
of business (or such other address as it notifies to
West) accurate records showing the total amount of
Licensed Products sold or otherwise disposed of
during the immediately preceding three years and all
items of deduction in arriving at the Net Sales
Price.
4.9.3 Audit. IDDS and each Sublicensee that makes any sales
of Licensed Products will permit its books and
records of sales of Licensed Products to be examined
from time to time, no more often than annually, upon
30 days' written notice, and to the extent necessary
to verify the accuracy of the royalty reports
hereunder, such examination to be made by
an-independent auditor appointed by West and
reasonably acceptable to IDDS and the Sublicensees
whose books are to be examined. Such auditor may
review any book, record, voucher, receipt or invoice
relating to the manufacture, sale or other
disposition of the Licensed Products, or of the
make-up of the invoice therefor; and all other facts
or matters relating to the calculation of the amount
of royalty due (including papers and vouchers
received from all Sublicensees). IDDS shall include
in each sublicense granted by it pursuant to this
Agreement a provision requiring the Sublicensee to
make reports to IDDS, to keep and maintain books and
records of sales made pursuant to such sublicense and
to grant access to such books and records by West's
independent auditor to the same extent and under the
same obligations as required of IDDS under this
Agreement.
4.9.4 Audit Report and Disputes Thereon. The auditor will
report in writing to West the Net Sales Price of all
Licensed Products sold or otherwise disposed of, and
the calculation of royalties payable, for the period
under audit, and other appropriate information
reviewed in the course of the audit. West shall share
this audit report with IDDS. If such auditor
concludes that an overpayment or underpayment was
made, then the owing Party shall pay the amount due
within 30 days of the date West delivers such
auditor's written report ~to IDDS. If IDDS disputes
the conclusion of the auditor, then the parties will
resolve the dispute according to Section 9.7 hereof
The fees charged by such auditor shall be paid by
West unless the audit discloses that the additional
payments payable by IDDS for the audited period
differ by more than 5% of the payments actually made
for such period, in which case IDDS shall pay the
reasonable fees and expenses charged by the auditor.
Upon expiration or termination of this Agreement for
any reason, West will have the right to have a final
audit conducted by an independent auditor appointed
by West and paid for in accordance with the
foregoing.
10
4.9.5 Delivery of Final Report. IDDS will deliver to West a
final written report within 30 days after the date of
the termination of this Agreement detailing sales or
other dispositions of each Licensed Product upon
which royalty payments are payable to
West/Nottingham. Concurrent with the delivery of such
written report, IDDS will pay to West/Nottingham the
balance of all royalties due and payable to
West/Nottingham.
5. Patents.
5.1 Filing. Prosecution and Maintenance of Patents. West and
West/Nottingham shall, at their own cost and expense:
5.1.1 take all commercially reasonable steps required to
maintain the Licensed Patents in full force and
effect;
5.1.2 be responsible for the day-to-day activities
associated with filing and prosecuting applications
for the Licensed Patents;
5.1.3 at IDDS's reasonable request, provide IDDS copies of
any papers relating to the filing, prosecution and
maintenance of the Licensed Patents.
5.2 Cooperation of IDDS. IDDS shall, at its own cost and expense,
cooperate in providing information to assist West with the
prosecution of the Licensed Patents.
5.3 Abandonment of Patents. In the event that West and/or
West/Nottingham desires to discontinue maintenance or
prosecution of any Licensed Patent, West and/or
West/Nottingham shall so inform IDDS and, if IDDS requests,
West and/or West/Nottingham shall assign to IDDS such Licensed
Patent. IDDS shall thereafter be responsible for all costs and
expenses relating to such patent, and any obligation by IDDS
to pay royalties with respect to such patent shall terminate.
11
5.4 Infringement.
5.4.1 West and IDDS each shall give immediate notice to the
other of any potential or actual infringement by a
third Person of any Licensed Patent of which they
become aware or of any certification of which they
become aware filed under the United States "Drug
Price Competition and Patent Term Restoration Act of
1984" claiming that any Licensed Patents covering the
Licensed Products are invalid or unenforceable or
that infringement will not arise from the
manufacture, use or sale of Licensed Products by a
third Person.
5.4.2 West shall have the first right to settle with the
infringer or to bring suit or other proceeding
against the infringer in its own name, or after
consultation with IDDS, in the name of IDDS where
necessary. IDDS shall be kept advised at all times of
such suit or proceeding brought by West. IDDS may, in
its discretion, join West as party to the suit or
other proceeding, provided that West shall retain
control of the prosecution of such suit or
proceedings. IDDS agrees to cooperate with West in
its efforts to protect such Licensed Patents.
5.4.3 If West does not settle with the infringer or bring
suit or other proceeding u against the infringer
within 45 days of receipt of notice of such
infringement, IDDS may in its discretion, bring suit
or other proceeding at its expense against the
infringer, provided that IDDS shall first consult
with West as to whether such act(s) by a third Person
reasonably constitute infringement and whether it is
commercially advisable to bring such suit or
proceeding, as reasonably determined by West and
IDDS, jointly. West shall be kept advised at all
times of such suit or proceedings brought by IDDS.
West may, in its discretion, join IDDS as party to
the suit or other proceeding, provided that IDDS
shall retain control of the prosecution of such suit
or proceedings. West agrees to cooperate with IDDS in
its efforts to protect the Licensed Patents,
including joining as a party where necessary. IDDS
agrees to prosecute diligently any suit or proceeding
it initiates under this Section.
5.4.4 Each Party will bear its own expenses with respect to
any suit or other proceeding against an infringer.
Any recovery in connection with such suit or
proceeding will first be applied to reimburse West
and IDDS for their out-of-pocket expenses, including
attorney's fees. The balance of any recovery shall be
divided between t?ie Parties in proportion to the
respective loss suffered or as would be suffered by
the Parties resulting from the infringement.
12
6. Certain Covenants.
6.1 Post-Launch Promotion. IDDS will use commercially reasonable
efforts to promote and sell Licensed Products in Major Market
Countries and in all other countries either directly or
through Affiliates or Sublicensees, where a commercially
attractive market opportunity exists. For the sake of
certainty and the avoidance of doubt, the parties agree that,
as used herein, "commercially reasonable efforts" are those
commercial efforts IDDS uses in promoting and selling similar
products in the Field of Use, provided that such efforts are
no less than those typically used in the pharmaceutical
industry for promoting and selling products of similar value
in the Field of Use.
6.2 Reporting to West. IDDS shall provide to West, no less
frequently than semiannually, the following information:
6.2.1 a report to West in a format reasonably acceptable to
West describing the status of IDDS's development and
commercialization efforts with respect to the
Licensed Products, and
6.2.2 provide West with a summary balance sheet for the
previous six months.
6.3 Use of Up-Front Sublicensing Fees. In the event that IDDS
sublicenses any rights granted hereunder and receives any
up-front license fees with respect thereto, IDDS shall use
such fees (including without limitation the two-thirds of the
fees retained by IDDS pursuant to Section 4.2 hereof) for the
development, commercialization, promotion and sale of Licensed
Products to the extent necessary to satisfy its then existing
obligations under this Agreement and all other agreements
among the Parties and consistent with its fiduciary
responsibilities to its stockholders.
7. Term and Termination.
7.1 Term and Expiration. This Agreement shall become effective as
of the Effective Date and, unless terminated earlier pursuant
to this Section, shall remain in effect until the last to
expire of the Licensed Patents.
7.2 Termination. As used in this Section 7, West and/or
West/Nottingham are sometimes referred to as "Licensor" and
IDDS is sometimes referred to as "Licensee." This Agreement
and the licenses herein granted may be terminated as follows:
7.2.1 By mutual consent of the Parties at any time.
7.2.2 By either Licensee or Licensor upon written notice
to the other Party:
(a) in the event of a default by the other Party
in the due observance or performance of any
covenant, condition or limitation of this
Agreement, any R&D Agreement, the Clinical
Manufacturing Agreement, the Development
Milestone and Option Agreement or the M-6-G
Option Agreement, but only if the defaulting
Party will not have remedied its default
within 30 days (or within five business days
in the event of a default under Section 4.1,
4.2, 4.3 or 4.4) after receipt of written
notice of such default from the
non-defaulting party; or
13
(b) if the other Party is adjudicated a
bankrupt, if insolvency, bankruptcy,
reorganization, debt adjustment or
liquidation proceedings are instituted
against such Party and not dismissed within
60 days after the institution thereof if a
receiver or trustee is appointed for such
party and its assets, or if such Party makes
a general assignment for the benefit of its
creditors.
7.2.3 By Licensee, in whole or in part with respect to
those Identified Compounds the use of which requires
chitosan, in the event that the FDA does not allow
the use of chitosan in Licensed Products as
contemplated hereunder.
7.3 Effect of Termination.
7.3.1 Upon termination of this Agreement under Section 7.2
hereof Licensee and all Sublicensees hereunder shall
cease and desist from any and all manufacture, use
and sale of any Licensed Product that actually
infringes any then-existing Licensed Patent in the
country of manufacture, use or sale. The restriction
of this Section 7.3.1 shall not apply to any Licensed
Products in inventory or in the manufacturing process
before notice of termination was given.
7.3.2 In the event of termination of this Agreement by
Licensor pursuant to Section 7.2.2(b), the
restriction of Section 7.3.1 shall not apply to the
manufacture, use and sales of any Licensed Product by
any Sublicensee under any sublicense in effect prior
to the date of Licensee's insolvency, bankruptcy,
reorganization, debt adjustment or liquidation
proceedings, provided that (a) such Sublicensee is
not in breach of any provision of its sublicense and
such sublicense is not subject to termination by
Licensee, and (b) such Sublicensee agrees to make
royalty payments to Licensor with respect to the
manufacture, use and sales of Licensed Products by
such Sublicensee. Such sublicensd shall terminate and
any such Sublicensees shall cease and desist from any
and all manufacture, use and sale of any Licensed
Product if such Sublicensee fails to make or is
prohibited from making royalty payments to Licensor
with respect to such manufacture, use or sale.
14
7.3.3 In addition, in the event of such termination for any
reason other than breach of this Agreement by
Licensor:
(a) Licensee shall transfer to Licensor all
final or pending approvals from and all
filings with any Regulatory Agency for all
Licensed Products (including without
limitation the Investigational New Drug
Application held by West with respect to
morphine if IDDS cross-files such IND
pursuant to the Development Milestone and
Option Agreement to be entered into among
the Parties; and
(b) Licensee and Licensor shall enter into a
written license agreement, containing such
terms and conditions as are usual and
customary in agreements of the type, whereby
Licensee, to the extent it has grantable
rights, shall grant to Licensor an exclusive
(with right to sublicense), worldwide, fully
paid-up, royalty-free, perpetual license to:
(i) All inventions and patents
worldwide made by Licensee
arising out of activities under
this Agreement to the-extent
they relate to Identified
Compounds in the Field of Use;
(ii) To the extent they relate to
Identified Compounds in the
Field of Use, all licenses,
rights, permissions and
freedom-to-operate grants
worldwide acquired from third
parties by Licensee; and
(iii) All Program IP arising under
this Agreement and the
R&D Agreements.
7.4 Survival. Notwithstanding the termination of this Agreement,
all rights and obligations that by their terms survive
termination shall remain unaffected until the complete
satisfaction or expiration thereof including Licensee's
obligation to submit all required reports and to pay all
amounts due and payable as of the date of termination in the
manner provided by this Agreement.
8. Representations and Disclaimer.
8.1 Representations by West and West/Nottingham. Each of West and
West/Nottingham represents and warrants to IDDS:
8.1.1 It has the full legal right, power and authority to
enter into this Agreement.
8.1.2 It has not entered, and will not enter, into any
agreement that conflicts with the provisions of this
Agreement.
15
8.1.3 To its knowledge, the Licensed Patents do not
infringe any valid right of any third Person.
8.1.4 To its knowledge, West/Nottingham has all right,
title and interest in and to the Licensed Patents,
free and clear of all liens, charges and encumbrances
of any kind whatsoever.
8.1.5 To its knowledge, there is no pending, and it has
received no written notice of any, claim of
infringement, interference or invalidity regarding
any part or all of the Licensed Patents and their use
as contemplated in the underlying patent applications
as presently drafted.
8.1.6 It has not granted any license, option or other
rights under the Licensed Patents in the Field of Use
to third Persons, and to their knowledge, no third
Person has any valid claim with respect thereto.
8.2 Representations by Paramount and IDDS. IDDS represents and
warrants to West and West/Nottingham:
8.2.1 It has the full legal right, power and authority to
enter in this Agreement.
8.2.2 It has not entered, and will not enter, into any
agreement that conflicts with the provisions of this
Agreement.
8.3 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, NEITHER WEST NOR WEST/NOTTINGHAM
MAKES ANY REPRESENTATIONS, GUARANTEE OR WARRANTY OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
REPRESENTATIONS OR WARRANTIES TO THE VALIDITY OR SCOPE OF ANY
LICENSED PATENT OR THE RESULTS TO BE EXPECTED FROM IDDS'S USE
OF ANY INVENTION OR PROCESS CONTAINED IN THE LICENSED PATENTS
OR FROM THE MANUFACTURE, USE OR SALE OF THE LICENSED PRODUCTS.
NEITHER WEST NOR WEST/NOTTINGHAM NOR ANY AFFILIATE OF EITHER
OF THEM SHALL HAVE ANY RESPONSIBILITY TO IDDS OR OTHERS UNDER
ANY LEGAL PRINCIPLE FOR THE ABILITY OF IDDS TO USE ANY
LICENSED PATENTS; FOR THE QUALITY OR PERFORMANCE OF ANY
LICENSED PRODUCT MANUFACTURED UNDER THE LICENSED PATENTS; FOR
CLAIMS OF THIRD PERSONS RELATING TO ANY LICENSED PRODUCT
MANUFACTURED OR SOLD BY IDDS OR ANY SUBLICENSEE HEREUNDER, OR
FOR ANY FAILURE IN PRODUCTION, DESIGN OR OPERATION OF ANY
LICENSED PRODUCT MANUFACTURED OR SOLD BY ANY OF THEM. WEST AND
WEST/NOTTINGHAM DISCLAIM ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE. IN NO EVENT SHALL WEST,
WEST/NOTTINGHAM OR ANY AFFILIATE OF EITHER OF THEM BE LIABLE
TO IDDS OR ANY SUBLICENSEE FOR INDIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES UNDER THIS AGREEMENT OR OTHERWISE,
REGARDLESS OF WHETHER WEST OR WEST/NOTTINGHAM OR ANY AFFILIATE
OF EITHER OF THEM KNEW OR HAD REASON TO KNOW OF THE
POSSIBILITY OF SUCH DAMAGES.
16
8.4 Indemnification.
8.4.1 West and West/Nottingham shall indemnify, defend and
hold IDDS harmless from and against all costs and
damages (including reasonable attorneys' fees) to the
extent arising from West's or West/Nottingham's
breach of any representation contained in Section 8.1
hereof
8.4.2 IDDS shall indemnify, defend and hold West and
West/Nottingham harmless from and against all costs
and damages (including reasonable attorneys' fees) to
the extent arising from IDDS's breach of any
representation contained in Section 8.2 hereof
8.4.3 If any Party hereto intends to seek indemnity under
this Section 8.4, it shall promptly notify the
indemnifying Party of such claim. The Parties shall
cooperate and shall use their best efforts to find a
suitable defense to and/or resolution of any such
claim. The indemnifying Party shall be entitled to
settle or assume the defense of any such claim,
provided that any settlement (other than a settlement
involving solely the payment of money) shall be
subject to the approval of the indemnified Party,
which shall not be unreasonably withheld or delayed.
9 Miscellaneous Provisions.
9.1 Force Majeure. No Party hereto shall be held liable or
responsible to any other Party nor be deemed to have defaulted
under or breached this Agreement for failure or delay in
fulfilling or performing any term of the Agreement when such
failure or delay is caused by or results from causes beyond
the reasonable control of the Party failing to perform or
delayed in performing including, but not limited to, fire,
floods, embargoes, war, acts of war (whether war be declared
or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or
any other Party.
9.2 Assignment. This Agreement may not be assigned or otherwise
transferred by any Party without the consent of the other
parties; provided, however that either Party may, without such
consent, assign this Agreement and its rights and obligations
hereunder to its Affiliates or in connection with the transfer
or sale of all or substantially all of its business, or in the
event of its merger or consolidation or change in control or
similar transaction. Any purported assignment in violation of
the preceding sentence shall be void. Any permitted assignee
shall assume all obligations of its assignor under this
Agreement.
17
9.3 Marking. IDDS agrees that all Licensed Products that are sold
by IDDS or any Sublicensees will be marked with the number(s)
of the applicable Licensed Patents licensed hereunder in
accordance with each country's patent laws.
9.4 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby, unless
the absence of the invalidated provision(s) adversely affect
the substantive rights of the parties. The parties shall in
such an instance use reasonable efforts to replace the
invalid, illegal or unenforceable provision(s) with valid,
legal and enforceable provision(s) which, insofar as
practical, implement the purposes of this Agreement.
9.5 Notices Any notice or other communication pursuant to this
Agreement will be deemed duly made or given: (i) when
delivered by hand; (ii) five business days after it is mailed,
certified or return receipt request, with postage prepaid;
(iii) when sent, if sent by telecopy (with receipt confirmed)
or (iv) when receipt is signed for when sent by Federal
Express, DHL or other express delivery service. Notices will
be addressed as follows:
If to West or West/Nottingham to:
West Pharmaceutical Services, Inc.
101 Gordon Drive
Lionville, Pennsylvania 19341
Attention: Division President, Drug Delivery Systems
Telecopier: 610 594-3013
With a required copy to:
West Pharmaceutical Services, Inc.
101 Gordon Drive
Lionville, Pennsylvania 19341
Attention: General Counsel
Telecopier: 610 594-3013
If to IDDS, to:
Innovative Drug Delivery Systems, Inc.
787 Seventh Avenue
New York, NY 10019
Attention: David M. Tanen
Telecopier: 212 554-4355
18
9.6 Governing Law/Jurisdiction. This Agreement is acknowledged to
have been made in and shall be construed, governed,
interpreted and applied in accordance with the federal patent
laws and the laws of the Commonwealth of Pennsylvania, without
giving effect to its conflict of laws provisions. The state
and federal courts in Pennsylvania shall have exclusive
jurisdiction over any litigation arising under this Agreement.
9.7 Arbitration Clause. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof which remains
unsettled following diligent efforts by each Party to reach a
mutually acceptable resolution of such claim or. controversy,
shall be settled by arbitration administered by the American
Arbitration Association and judgment on the award rendered by
the arbitrator(s) may be entered in any court having
jurisdiction thereof In any arbitration hereunder the
non-prevailing Party shall bear the costs of the prevailing
Party. This Section shall not prevent any Party from seeking
equitable relief
9.8 Entire Agreement. This Agreement, the Confidentiality
Agreement among the Parties entered into as of the Effective
Date and the Letter of Intent constitute the entire Agreement
between the parties with respect to the subject matter hereof
and supersede all proposals, oral or written, purchase orders,
confidentiality agreements and all other communications
between the parties with respect to such subject matter.
9.9 Modifications The terms and conditions of this Agreement may
be amended only by a written instrument duly executed by the
parties.
9.10 Headings. The headings and captions preceding the Sections
hereof are inserted solely for convenience of reference, and
will not constitute part of this Agreement, nor will they
affect its meaning, construction or effect.
9.11 Independent Contractors. It is expressly agreed that West and
West/Nottingham, on one hand, and Paramount and IDDS, on the
other hand, are independent contractors with respect to this
Agreement and that the relationship between them created by
this Agreement shall not constitute a partnership, joint
venture or agency. No Party hereto shall have the authority to
make any statements, representations or commitments of any
kind, or to take any action, which shall be binding on any
other Party, without the prior consent of the Party to do so.
19
9.12 Waiver. The waiver by any Party of any right hereunder or the
failure to perform or of a breach by any other Party shall not
be deemed a waiver of any other right hereunder or of any
other breach or failure by said other Party whether of a
similar nature or otherwise.
9.13 Counterparts. The Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
to bc executed by their respective duly authorized officers.
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
By: /s/ Mark C. Rogers, M.D.
---------------------------------------------------------------
Mark C. Rogers, M.D.
Chainman
WEST PHARMACEUTICAL SERVICES, INC.
By: /s/ Donald E. Morel Jr.
---------------------------------------------------------------
Donald E. Morel Jr.,
Division President,
Drug Delivery Systems
WEST PHARMACEUTICAL SERVICES DRUG DELIVERY &
CLINICAL RESEARCH CENTRE LTD.
By: /s/ Donald E. Morel Jr
---------------------------------------------------------------
Donald E. Morel Jr.,
Chairman
21
Schedule 1
Patent Portfolio
- --------------------------------------------------------------------------------
Patent No. Granted Expiry
- --------------------------------------------------------------------------------
Composition for Nasal Administration
(WESR/P11435,); Nasal Morphine and M-6-G
5629011 USA July 12, 2013
665806 Australia February 4, 2013
2277682 UK February 4,2013
306283 Norway February 4,2013
0625044 EPO February 4,2013
5554388 USA September 2013
0460020 EPO February 2010
301692 Norway February 2010
2127805 Canada Examination Requested
5-513869 Japan Examination Requested
Intranasal Fentanyl
98/47535 PCT
Intranasal Midazolam
2317562 UK July 20l6
712621 Australia July 2016
- --------------------------------------------------------------------------------
1-1
Schedule 2
Certain Identified Sublicensees
Baxter Healthcare Corporation
Ethypharm
Helsinn Healthcare SA.
Kyowa Hakko Kogyo Co., LTD
Grunenthal GmbH
Laboratorios Andromaco SA.
Link Pharmaceuticals, LTD
Nycomed Pharma
Pohl-Boskamp Co.
2-1
EXHIBIT A
Summary of Terms of M-6-G Option
Pursuant to the Letter of Intent, IDDS and West intended to develop several
products, including Morphine-6-glucuronide ("M-6-G"), for treating pain and in a
formulation employing the technologies licensed under this Agreement. IDDS has
concluded not to proceed to develop a product incorporating M-6-G and West's
technologies at the present time, but wants the right to decide in the near
future whether to do so.
West desires to grant IDDS the right to develop an M-6-G product employing
West's technologies, provided that West is compensated for the delay and
provided further that provisions are made for the mitigation of the effects of
the delay on the ultimate timeliness and value of an M-6-G Licensed Product,
according to the following terms and conditions:
OPTION: West shall grant to IDDS an option to license the Licensed Patents
respecting M-6-G as if M-6-G were included as an Identified Compound in this
Agreement. IDDS may exercise the option at any time for a period of 90 days
following the execution of the M-6-G Option Agreement.
OPTION CONSIDERATION: In consideration of the grant of the option, IDDS shall
pay to West the amount of $*** upon signing of the option agreement.
TERMS OF LICENSE: If IDDS exercises the option, the license with respect to
M-6-G shall provide for a license fee of $*** payable at signing of the
license agreement, and milestone payments as follows:
Completion of Phase I/II clinical trial $ ***
Start of Phase III trial ***
First NDA or similar filing ***
NDA Approval ***
Definitions respecting the Milestones will be conformed with those provided in
the Letter of Intent for other Identified Compounds requiring comparable
milestone payments.
TERMS OF R&D AGREEMENT: If IDDS exercises the option, the Parties will enter
into a research and development agreement pursuant to which West will perform
pre-clinical development services, which shall contain terms and conditions
consistent with those specified in the Letter of Intent with respect to M-6-G,
provided that such R&D Agreement shall also provide that IDDS need not commence
development work on a Licensed Product containing M-6-G and chitosan until the
FDA allows (by way of a pre-Phase III meeting or otherwise) the commencement of
Phase III clinical studies with respect to a Licensed Product containing opioid
alkaloid morphine and/or a salt thereof and chitosan.
Unless separately defined herein, all capitalized terms used herein have the
same meaning as those terms used in the License Agreement.
*** Represents material which has been omitted pursuant to an Application for
Order Granting Confidential Treatment and filed separately with the
Commission.
2-1