EX-10.5 5 avir-ex105_908.htm EX-10.5 avir-ex105_908.htm

Exhibit 10.5

 

 

Confidential

 

[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and is treated by the Registrant as private or confidential.

 

EXECUTION VERSION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LICENSE AGREEMENT

 

 

by and between

 

 

MSD INTERNATIONAL GMBH

 

and

 

ATEA PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Confidential

 

 

 

 

 

 

 

 

 


Confidential

 

 

 

 

 

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (this “Agreement”), dated as of December 23, 2021 (the Effective Date”), is made by and between MSD International GmbH, a company organized and existing under the laws of Switzerland (“MSD”), and Atea Pharmaceuticals, Inc., a corporation organized and existing under the laws of Delaware (“Licensee”). MSD and Licensee are sometimes referred to herein individually as a Party and collectively as the Parties”.

 

WHEREAS, MSD together with its Affiliates, has certain rights to the Compound, and the Parties desire Licensee to further Develop and Commercialize the Compound and the Products in the Territory for use in the Field; and

 

WHEREAS, Licensee and MSD desire to enter into this Agreement pursuant to which, among other things, Licensee will Develop and Commercialize the Compound and the Products in the Territory for use in the Field.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, MSD and Licensee hereby agree as follows:

 

ARTICLE I DEFINITIONS

 

As used in this Agreement, the following capitalized terms, whether used in the singular or plural, will have the respective meanings set forth below or as otherwise defined in this Agreement:

 

1.01Accounting Principles” means, with respect to Licensee, MSD or any other Person, United States generally accepted accounting principles, or International Financial Reporting Standards, in each case as used by the relevant Party in its books and records, and consistently applied.

 

1.02Affiliate” means, with respect to a Party, any other Person that directly or indirectly controls, is controlled by or is under common control with such Party. A Person will be deemed to control another Person if such Person possesses the power to direct or cause the direction of the management, business and policies of such Person, whether through the ownership of fifty percent (50%) or more (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting securities of such Person, by contract or otherwise.

 

 

1.03

“Agents has the meaning set forth in Section 7.01(b).

 

 

1.04

“Agreement Payments” has the meaning set forth in Section 5.06(b).

 

 

1.05

Annual Net Sales-Based Milestone Payment has the meaning set forth in Section 5.03.

 

 

1.06

Annual Net Sales-Based Milestone Table has the meaning set forth in Section 5.03.

 

 

1.07

Annual Net Sales Milestone Threshold has the meaning set forth in Section 5.03.

 

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1.08Applicable Law means any and all laws of any jurisdiction that are applicable to any of the Parties or their respective Affiliates in carrying out activities hereunder or to which any of the Parties or their respective Affiliates carrying out the activities hereunder is subject, and will include all statutes, enactments, acts of legislature, laws, ordinances, rules, regulations, notifications, guidelines, policies, directions, directives and orders of any statutory authority, tribunal, arbitral body, board, or court or any central, state, or provincial government or local authority or other governmental entity in such jurisdictions, including Good Laboratory Practices, Good Clinical Practices and Good Manufacturing Practices.

 

1.09AT-511 means Licensee’s proprietary compound currently under development by Licensee, as set forth on Schedule 1.09.

 

1.10AT-527” means the hemisulfate salt form of AT-511 currently under development by Licensee, as set forth on Schedule 1.10.

 

1.11AT-527/511 Combination Grantback Field” means any Field in which an AT-527/511 Combination Product is [***] as of the effective date of termination, [***].

 

1.12AT-527/511 Combination Grantback Know-How” means Licensee Know-How and Know-How Improvements Controlled by Licensee or any of its Affiliates as of the effective date of termination that are reasonably necessary to Develop, Manufacture, or Commercialize any AT- 527/511 Combination Product.

 

1.13AT-527/511 Combination Grantback Patents means Licensee Patents and Improvement Patents Controlled by Licensee or any of its Affiliates as of the effective date of termination that are reasonably necessary to Develop, Manufacture, or Commercialize any AT- 527/511 Combination Product.

 

1.14AT-527/511 Combination Product” means any Product that contains the Compound in combination with AT-527 or AT-511, as such Product exists as of the effective date of termination.

 

 

1.15

“Auditor has the meaning set forth in Section 5.07(a).

 

1.16Business Day” means any day (other than a Saturday or Sunday) when banks are open for business in New York, New York.

 

1.17Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31, for so long as this Agreement is in effect; provided, however, that (a) the first Calendar Quarter of the Term will extend from the Effective Date to the end of the first full Calendar Quarter thereafter, and (b) the last Calendar Quarter of the Term will end upon the expiration of this Agreement.

 

1.18Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31, for so long as this Agreement is in effect; provided, however, that (a) the first Calendar Year of the Term will commence on the Effective Date and end on December 31, 2021 and (b) the last Calendar Year of the Term will commence on January

 

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1 of the Calendar Year in which this Agreement terminates or expires and end on the date of termination or expiration of this Agreement.

 

1.19Change of Control” means, with respect to a Party: (a) the sale of all or substantially all of such Party’s assets or business relating to this Agreement; (b) a merger, reorganization or consolidation involving such Party in which the voting securities of such Party outstanding immediately prior thereto cease to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization or consolidation; or

(c) a Person, or group of Persons acting in concert, acquires fifty percent (50%) or more of the voting equity securities or management control of such Party, in each case, directly or indirectly.

 

1.20Clinical Trial” means any human clinical study or clinical trial of a Product, including a Phase III Clinical Trial or post-Regulatory Approval study.

 

1.21Combination Product” means a Product which includes one or more active ingredients other than a Compound, in combination with a Compound, including any coformulation, co-pack or co-administration of such one or more active ingredients with a Compound and/or sold or promoted as a bundle or package. For clarity, this definition of “Combination Product”, and the use thereof in this Agreement, will not be interpreted as a grant of a license or any other rights by MSD to Licensee to any other proprietary compounds of MSD or any of its Affiliates other than the Compound (or any Patents, Know-How or other intellectual property rights related to such other proprietary compounds of MSD or any of its Affiliates) for use in a Combination Product.

 

1.22Commercialization” or “Commercialize” means, with respect to a product, any and all activities directed to the marketing, promotion, distribution, offering for sale and selling such product, importing and exporting such product for sale, including all post-launch regulatory activities and interactions with Regulatory Authorities regarding the foregoing.

 

1.23Commercially Reasonable Efforts means, with respect to the efforts to be expended by Licensee with respect to any objective (including Development or Commercialization of a Compound or Product, as applicable), [the performance of obligations or tasks in a manner consistent with the reasonable practices of companies having comparable resources in the biopharmaceutical industry to accomplish such objective, including, with respect to the Development or Commercialization (as applicable) of a Compound or Product, as applicable, such efforts consistent with the reasonable practices of companies having comparable resources in the biopharmaceutical industry for a product having similar technical and regulatory factors and similar market potential, profit potential and strategic value, and that is at a similar stage in its development or product life cycle as the Compound or Product, in each case based on conditions then prevailing and without regard to any competitive internal program of Licensee or the payment obligations of Licensee under this Agreement.]

 

1.24Compound” means (a) that certain MSD compound currently known as MK-8408, as more particularly described on Schedule 1.24[***].

 

1.25Confidential Information” means, as applicable, all Know-How and all proprietary or non-public scientific, clinical, regulatory, marketing, financial, commercial or other information

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or data, whether communicated in writing, verbally, electronically or by other means, that is provided by or on behalf of one Party to the other Party in connection with this Agreement. The Parties hereby agree and acknowledge that any information disclosed under the Existing Confidentiality Agreement will be deemed disclosed under this Agreement.

 

1.26Control”, “Controls” or “Controlled by” means, with respect to any Patents, Know- How or other intellectual property assets or rights, as applicable, the legal authority or right (whether by ownership or license or other right, other than pursuant to a license under this Agreement) of a Party to grant access to, or a license or sublicense of, such items or right, or otherwise disclose such proprietary or trade secret information to another Person without violating the terms of any agreement or other arrangement with any Third Party existing at the time such Party would be required hereunder to grant the other Party such access or license or sublicense or misappropriating the proprietary or trade secret information of a Third Party.

 

 

1.27

“Development Report” has the meaning set forth in Section 3.03.

 

1.28Development” or “Develop” means all preclinical drug development activities and all clinical drug development activities, including test method development, stability testing, assay development, audit development, toxicology, formulation, quality assurance/quality control development, statistical analysis and report writing, conducting Clinical Trials (including any post- marketing studies), packaging development, regulatory affairs, and the preparation, filing, and prosecution of all regulatory filings and documentation as necessary to obtain Regulatory Approval to market or sell a product.

 

 

1.29

Dollar and $ means a U.S. dollar.

 

1.30Existing Confidentiality Agreement means that certain Mutual Confidential Disclosure Agreement, [***].

 

1.31FDA” means the United States Food and Drug Administration, or any successor entity thereto.

 

 

1.32

Field means all therapeutic or prophylactic uses in humans.

 

1.33First Commercial Sale means, with respect to a given Product in a given country in the Territory, the first shipment of commercial quantities of such Product sold in such country to a Third Party on arm’s length terms by or on behalf of Licensee, its Affiliate or sublicensee for use in the Field after the receipt of Regulatory Approval in such country. Notwithstanding the foregoing, sales for sampling and promotional use, or compassionate use, will not be considered to constitute a First Commercial Sale. For clarity, First Commercial Sale will be determined on a Product-by-Product and country-by-country basis.

 

 

1.34

FTE means the equivalent of a normal full-time employee’s work time over a twelve

(12) month period, consisting of a total of [***] hours of work, related to conducting activities hereunder in accordance with this Agreement. In the event that an individual devotes less than such full time of [***] hours to conducting activities hereunder during such twelve (12) month period, then for purposes of this Agreement, such

 

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individual shall only count as a portion of an FTE which shall be determined by dividing the actual number of hours worked by [***].

 

1.35FTE Cost” means, for a given period, the number of FTEs for such period multiplied by the FTE Rate.

 

1.36FTE Rate” means [***] per one (1) full FTE per Calendar Year; provided, however, that if an alternative rate is specifically set forth herein for a given activity, then such alternative rate shall apply for such activity.

 

1.37Good Clinical Practices means the then-current Good Clinical Practices as such term is defined from time to time by the FDA, or analogous set of regulations, guidelines or standards as defined by other relevant Regulatory Authority having jurisdiction over the Development, Manufacture or Commercialization of Product in a particular jurisdiction of the Territory, as applicable.

 

1.38Good Laboratory Practices means the then-current good laboratory practice regulations of the FDA as described in the United States Code of Federal Regulations and all applicable FDA rules, regulations, order, and guidances, or analogous set of regulations, guidelines or standards as defined by other relevant Regulatory Authority having jurisdiction over the Development, Manufacture or Commercialization of Product in a particular jurisdiction of the Territory, as applicable.

 

1.39Good Manufacturing Practices means the then-current Good Manufacturing Practices as such term is defined from time to time by the FDA or analogous set of regulations, guidelines or standards as defined by other relevant Regulatory Authority having jurisdiction over the Development, Manufacture or Commercialization of Product in a particular jurisdiction of the Territory, as applicable.

 

1.40Grantback MK-8408 Product” means any Product that contains the Compound as the sole active ingredient, as such Product exists as of the effective date of termination.

 

1.41“Improvement Patents” means any and all Patents Controlled by a Party or any of its Affiliates claiming or covering any (a) composition of matter, use or manufacture of Compound alone or in combination with AT-511 or AT-527 with a first priority date that is on or after the Effective Date, regardless of the inventorship thereof, or (b) Know-How Improvement that is not already covered by (a) above, regardless of the inventorship thereof.

 

1.42IND means an Investigational New Drug application, Clinical Study Application, Clinical Trial Exemption, or similar application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory Authority in conformance with the requirements of such Regulatory Authority.

 

 

1.43

Indemnified Party has the meaning set forth in Section 9.03.

 

 

1.44

Indemnifying Party has the meaning set forth in Section 9.03.

 

 

1.45

Indirect Tax has the meaning set forth in Section 5.06(c).

 

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1.46Initiation” means, with respect to a Clinical Trial, the enrollment of the first patient in such Clinical Trial.

 

1.47Know-How means any and all proprietary information and materials (whether patentable or not) including (a) ideas, discoveries, inventions, improvements, technology or trade secrets, (b) pharmaceutical, chemical and biological materials, products, components or compositions, (c) methods, procedures, formulas, processes, tests, assays, techniques, regulatory requirements and strategies, (d) biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical or safety data and information, (e) technical and non-technical data and other information related to the foregoing, and (f) drawings, plans, designs, diagrams, sketches, specifications or other documents containing or relating to such information or materials.

 

1.48Know-How Improvement” means any and all Know-How (whether or not patentable) conceived, discovered, developed or reduced to practice by or on behalf of Licensee or any of its Affiliates in the performance of activities under this Agreement (including the Development, Manufacture or Commercialization of Compound or Product, or any data generated under any Clinical Trials) that (i) is an improvement, enhancement or other modification to Compound, Product or MSD Know-How or (ii) was otherwise discovered, developed or reduced to practice through the use of MSD Know-How or Confidential Information of MSD.

 

 

1.49

Liability has the meaning set forth in Section 9.01.

 

 

1.50

“Licensee Executive means Licensee’s chief executive officer.

 

 

1.51

“Licensee Indemnified Party has the meaning set forth in Section 9.01.

 

1.52Licensee Know-How” means any and all Know-How Controlled by Licensee or any of its Affiliates and incorporated into, or otherwise used in the Development, Manufacture or Commercialization of, any Compound or Product; provided that Licensee Know-How excludes all Know-How Improvements and any MSD Know-How.

 

1.53Licensee Grantback Know-How means Licensee Know-How and Know-How Improvements Controlled by Licensee or any of its Affiliates as of the effective date of termination that are reasonably necessary to Develop, Manufacture, or Commercialize any Grantback MK- 8408 Product.

 

1.54Licensee Grantback Patents means Licensee Patents and Improvement Patents Controlled by Licensee or any of its Affiliates as of the effective date of termination that are reasonably necessary to Develop, Manufacture, or Commercialize any Grantback MK-8408 Product.

 

1.55Licensee Patents” means any and all Patents that are Controlled by Licensee (or any of its Affiliates) that (a) claim or cover any Licensee Know-How or (b) are otherwise necessary for the Development, Manufacture or Commercialization of Compound or Product; provided that Licensee Patents excludes all Improvement Patents and any MSD Patents.

 

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1.56Major European Country means each of [***]; collectively “Major European Countries”.  

 

1.57Manufacture” or “Manufacturing” means all activities related to the manufacturing of a pharmaceutical product, or any ingredient thereof, including test method development and stability testing, formulation, process development, manufacturing for use in non-clinical or clinical studies, manufacturing scale-up, quality assurance and quality control development, quality control testing (including in-process release and stability testing), packaging, release of product or any component or ingredient thereof, quality assurance activities related to manufacturing and release of product, and regulatory activities related to all of the foregoing.

 

1.58Marketing Authorization” means all approvals from the relevant Regulatory Authority necessary to market and sell a pharmaceutical product in any country or region, as applicable.

 

1.59Marketing Authorization Application” means an application or submission for Marketing Authorization of a pharmaceutical product filed with a Regulatory Authority that is the equivalent of an NDA filed pursuant to the United States Food & Drug Act to obtain marketing approval for a pharmaceutical product in a given country or region, as applicable.

 

1.60“MSD Executive” means someone at the Vice-President level or higher at MSD with responsibility for the area of discussion.

 

 

1.61

“MSD Indemnified Party has the meaning set forth in Section 9.02.

 

1.62MSD Know-How means all Know-How that is (a) Controlled by MSD (or its Affiliate) as of the Effective Date, and (b) necessary or reasonably useful to Develop, Manufacture, or Commercialize a Compound or Product in the Field in the Territory. In all cases, MSD Know- How excludes [***].

 

1.63MSD Patents” means all Patents that (a) are Controlled by MSD (and/or any of its Affiliates) as of the Effective Date or thereafter during the Term, and (b)(i) have claims specifically covering the Compound or the Manufacture and/or use thereof or (ii) are necessary to Develop, Manufacture, or Commercialize a Compound or Product in the Field in the Territory [***].

 

1.64NDA” means a New Drug Application filed pursuant to the United States Food & Drug Act or any application or submission for Regulatory Approval of a pharmaceutical product filed with a Regulatory Authority that is the equivalent thereof.

 

1.65Net Sales” means, in respect of each Product, the total gross amounts invoiced for all commercial sales of such Product by or on behalf of Licensee, its Affiliates or sublicensees to Persons who or which are neither Licensee nor an Affiliate of Licensee, less the following deductions actually allowed or reserved in accordance with Licensee’s Accounting Principles, consistently applied:

 

 

(a)

normal and customary trade, quantity discounts, allowances and credits for such Product;

 

 

(b)

credits or allowances actually granted for [***];

 

 

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(c)

fees to [***] and chargebacks, rebates or similar payments to customers with respect to such Product, including [***];

 

 

 

(d)

[***] incurred or allowed, or other [***] imposed upon [***];

 

 

 

(e)

[***], freight, postage, shipping and insurance charges related to delivery of such Product, to the extent incurred;

 

 

 

(f)

[***]; and

 

 

 

(g)

[***].

 

 

There will be no double counting in determining the foregoing deductions from gross amounts invoiced to calculate Net Sales. The calculations set forth in this section will be determined in accordance with [***].

 

If any Product is, or is sold as part of, a Combination Product for a given indication, Net Sales will be calculated assuming that [***] is equal to the product of (i) [***], and (ii) the fraction (A/(A+B)), where:

 

“A” is [***]; and

 

“B” is [***].

 

(1)If “B” cannot be determined because [***], then the Net Sales shall be calculated by multiplying

 

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[***] by the fraction (A/C), where “A” is as defined above, and “C” is [***].

 

(2)If “A” cannot be determined because [***], then the Net Sales shall be calculated by multiplying [***] by the fraction ((D-E)/D), where “D” is [***], and “E” is [***].

 

(3)If both “A” and “B” cannot be determined by reference to [***], then Net Sales will be calculated as above, but the gross amount received in the above equation (A/(A+B)) [***] prior to the end of the accounting period in question based on an equitable method of determining the same that takes into account,

 

[***].  

 

1.66Patent” means (a) all patents and patent applications in any country or supranational jurisdiction worldwide, (b) any substitutions, divisionals, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates and the like of any such patents or patent applications, and (c) foreign counterparts of any of the foregoing.

 

1.67Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein.

 

1.68Phase III Clinical Trial means a human clinical trial that would satisfy the requirements of 21 CFR 312.21(c), or a comparable clinical study prescribed by the relevant Regulatory Authority in a country other than the United States.

 

1.69Product means any pharmaceutical or biological composition or preparation that contains Compound, including a Combination Product.

 

1.70Regulatory Approval” means all approvals from the relevant Regulatory Authority necessary to market and sell a pharmaceutical product in the applicable country or region.

 

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1.71Regulatory Authority” means any multinational, federal, state, or local government, or political subdivision thereof, or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any governmental arbitrator or arbitral body, in each case, where such entity has responsibility for granting licenses or approvals, including Regulatory Approvals, for the marketing, sale or manufacture of Product in any country.

 

 

1.72

“Royalties has the meaning set forth in Section 5.04(a).

 

 

1.73

Royalty Term has the meaning set forth in Section 5.04(b).

 

1.74Safety Issue” means, with respect to a Product, (a) a Regulatory Authority or safety data review board for the Clinical Trials of such Product has required (i) termination of a Clinical Trial of such Product [***], or (ii) the withdrawal or withholding of a Regulatory Approval of such Product [***], in each case where such requirement is attributable to such Product in whole or in part, or (b) [***].

 

 

1.75

Subcontract Agreement has the meaning set forth in Section 2.06.

 

 

1.76

“Sublicense Agreement has the meaning set forth in Section 2.06.

 

 

1.77

Tax Action has the meaning set forth in Section 5.06(b).

 

 

1.78

Term has the meaning set forth in Section 10.01.

 

 

1.79

Territory means the world.

 

 

1.80

Third Party Claim has the meaning set forth in Section 9.01.

 

 

1.81

Third Party License Agreement has the meaning set forth in Section 5.04(c)(ii).

 

1.82Third Party” means any Person other than (a) MSD and its Affiliates and (b) Licensee and its Affiliates.

 

 

1.83

Transferred Compound has the meaning set forth in Section 3.08(a).

 

1.84United States or U.S. means the United States of America, including its territories and possessions.

 

1.85Valid Claim means a claim of

 

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[***].

 

 

1.86

VAT means any value added tax, sales tax or any other similar type of turnover tax.

 

 

1.87

Withholding Taxes has the meaning set forth in Section 5.06(b).

 

ARTICLE II

LICENSE AND COVENANTS; AMENDMENT AND RESTATEMENT

 

2.01License Grant to Licensee. Subject to the terms and conditions of this Agreement (including Section 2.03), MSD hereby grants to Licensee, during the Term, a royalty-bearing license, with the right to grant sublicenses as provided herein (including Section 2.06), under the MSD Patents and MSD Know-How, in each case, solely to research, Develop, Manufacture, have Manufactured, use, import, export, sell, offer for sale, and otherwise Commercialize the Compound and the Products in the Field in the Territory during the Term. Subject to the retained rights of MSD set forth in Section 2.03, the license set forth in this Section 2.01 shall be exclusive, even as to MSD and its Affiliates.

 

2.02No Non-Permitted Use. Licensee hereby covenants that it will not, and will require its Affiliates and sublicensees not to, use or practice, directly or indirectly, any MSD Know-How or MSD Patents for any purposes other than those expressly permitted by Section 2.01. Without limiting the foregoing, no rights or licenses are granted to Licensee hereunder with respect to any compound that is not the Compound or any product that is not a Product.

 

2.03Retained Rights. Notwithstanding anything to the contrary contained herein, MSD hereby retains the right, for itself and its Affiliates, sublicensees and other designees, including under the MSD Patents and MSD Know-How, to use the Compound solely for MSD’s and its Affiliates’ internal research purposes (but excluding any clinical Development activities, including the conduct of Clinical Trials). [***]

 

2.04Know-How Unrelated to Compound or Products. Licensee acknowledges that some of the MSD Know-How disclosed by MSD to Licensee under this Agreement may include documents or materials that include information, data, or Know-How which is unrelated to the Compound or the Products, and MSD will use commercially reasonable efforts to delete such information, data, or Know-How prior to disclosure or to otherwise exclude portions of such documents or materials

 

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from disclosure to the extent such portions are unrelated to the Compound or Products. Notwithstanding such efforts, to the extent such information, data, or Know-How is disclosed to Licensee or its Affiliates, no license is granted to Licensee to use such information, data, or Know- How for any purpose or to disclose such information, data, or Know-How to any Person. Any such information, data, or Know-How shall be deemed to be MSD’s Confidential Information and subject to ARTICLE VII. [***]

 

2.05No Other Licenses. Neither Party grants to the other Party any rights or licenses in or to any Know-How or other intellectual property, whether by implication, estoppel, or otherwise, other than the license rights that are expressly granted under this Agreement.

 

 

2.06

Sublicenses; Subcontracts.

 

 

(a)

Sublicenses. Subject to the provisions of this Section 2.06(a), Licensee may grant sublicenses (through multiple tiers) in the Territory under the licenses granted to Licensee in Section 2.01. For each such sublicense, Licensee will enter into a written and enforceable sublicense agreement with the sublicensee that is consistent with the terms of this Agreement, including this Section 2.06(a) (each, a Sublicense Agreement”). In each Sublicense Agreement, Licensee will use reasonable efforts to require that in the event of termination of this Agreement, the Sublicense Agreement will be assignable by Licensee to MSD (at MSD’s request, subject to Section 10.05(c)(iv). Licensee will (i) ensure that all Sublicense Agreements will include provisions for the benefit of MSD corresponding to the applicable provisions of this Agreement, including Section 6.01(b), (ii) require in each such Sublicense Agreement the performance by its sublicensees of the applicable obligations of Licensee hereunder, and (iii) require that its sublicensees comply with the applicable terms and conditions of this Agreement. The grant of any such sublicense will not relieve Licensee of its obligations under this Agreement and Licensee will be liable for the performance or non-performance of its sublicensees hereunder. Licensee will promptly (but in all cases within [***] Business Days after entering into any Sublicense Agreement) provide MSD with a fully executed copy of each Sublicense Agreement, [***].

 

 

 

(b)

Subcontracts. Subject to the provisions of this Section 2.06(b), Licensee will be entitled to engage the services of its Affiliates and Third Parties to perform the Development and Commercialization and other activities on behalf of Licensee with respect to the Compound and the Products in the Field in the Territory hereunder. For each such engagement, Licensee will enter into a written and enforceable subcontract agreement with the Affiliates or Third Party that is consistent with the terms of this Agreement, including this Section 2.06(b) (each, a Subcontract Agreement”). In each Subcontract Agreement that primarily relates to the Compound or Products, Licensee will use reasonable efforts to require that in the event of termination of this Agreement, the Subcontract Agreement (or portion thereof relating to the Compound or Products) will be assignable by Licensee to MSD (at MSD’s request). Licensee will (i) require in each such Subcontract Agreement

 

 

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the performance by its subcontractors of the applicable obligations of Licensee hereunder, and (ii) require that its subcontractors comply with the applicable terms and conditions of this Agreement, including ownership and allocation of intellectual property rights consistent with Section 6.01. The subcontracting of any such activities will not relieve Licensee of its obligations under this Agreement and Licensee will be liable for the performance or non-performance of its subcontractors hereunder. If Licensee is granting a sublicense to a Third Party other than a distributor to Commercialize Compound or Product(s) under the licenses granted to Licensee in Section 2.01 in the Territory, then the provisions of Section 2.06(a), and not the provisions of this Section 2.06(b), will apply to such Third Party agreement.

 

ARTICLE III

DEVELOPMENT, MANUFACTURE, AND COMMERCIALIZATION

 

 

3.01

Development, Manufacture, and Commercialization.

 

 

(a)

Overview. During the Term, Licensee will be solely responsible for the Development, Manufacture, and Commercialization, including all costs thereof, of Compound and the Products in the Field in the Territory.

 

 

 

(b)

Diligence. Licensee will use Commercially Reasonable Efforts to Develop (including filing NDAs and seeking Regulatory Approval) at least one Product in the Field in [***]. Following receipt of Regulatory Approval in any such countries, Licensee will use Commercially Reasonable Efforts to Commercialize at least one Product in the Field in such countries.

 

 

3.02Development and Development Plan. The initial development plan for the Compound and the Products is attached hereto as Exhibit A. If [***], Licensee will promptly submit to MSD an updated development plan (such initial development plan, as updated, the Development Plan”). Licensee will Develop the Compound and the Products in the Field in the Territory (i) [***], and (ii) in a [***] and in compliance with Good Laboratory Practices, Good Clinical Practices, and Good Manufacturing Practices and all other Applicable Laws.

 

3.03Development Reports. Licensee will provide MSD with reasonably detailed written reports describing its progress with respect to its Development efforts (each, a “Development Report”). Such Development Reports will be furnished on [***].

 

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3.04

Know-How Transfer.

 

 

(a)

MSD Know-How. MSD shall promptly provide to Licensee, but no later than [***] days after the Effective Date, a copy (in electronic format, if it is available in electronic format, or, if it is not available in electronic format, a hard copy) of the documentation listed in Schedule 1.62. The Parties acknowledge that the disclosure of such Know-How by MSD will consist of the disclosure of data residing in MSD’s databases, and will not include any database architecture or require any experimental work to be performed by MSD for the purpose of the technology transfer. During the [***] period following the Effective Date, if either Party [***]. After expiration of such [***] period specified in the immediately foregoing sentence, [***].

 

 

 

(b)

Know-How Transfer Assistance. [***]. Except as otherwise agreed by the Parties, all assistance pursuant to this Section 3.04(b) will be provided [***]. MSD’s [***] will be limited to [***] unless the Parties otherwise agree in writing.

 

 

3.05Regulatory Filings and Regulatory Approvals. If any regulatory filings or Regulatory Approvals for the Compound or any Product are required for any of Licensee’s (or its Affiliate’s, sublicensee’s or subcontractor’s, as applicable) activities hereunder (including INDs, NDAs and other Regulatory Approvals, as applicable) with respect to the Compound or any Product in the Field in the Territory, then as between the Parties, Licensee will be solely responsible for obtaining, maintaining and complying with such regulatory filings or Regulatory Approvals and for communicating with Regulatory Authorities. All such regulatory filings and regulatory approvals will be filed in the name of and owned by Licensee or its designee, and Licensee or its designee will hold all Regulatory Approvals for Products throughout the Territory for use in the Field.

 

3.06Recalls and Withdrawals. In the event that any Regulatory Authority (a) threatens or initiates any action to recall or withdraw a Product from the market in any country in the Field in the Territory or (b) requires Licensee, its Affiliates, or its sublicensees to distribute a “Dear Doctor” letter or a similar letter or notification regarding use of Product in the Field in the Territory, Licensee will notify MSD of such event within [***] Business Days after Licensee becomes aware of the action, threat, or requirement (as applicable). In all cases, Licensee will be responsible, at its sole expense, for conducting any recalls or withdrawals or taking such other necessary remedial action with respect to Product in the Field in the Territory.

 

 

3.07

Pharmacovigilance.

 

 

(a)

Adverse Events. Licensee will be solely responsible for the collection, review, assessment, tracking and filing of information related to adverse events associated with Product in the Field in the Territory, in accordance with all Applicable Law and will, upon request of MSD, provide MSD with copies of adverse event reports and information related thereto.

 

 

 

(b)

Global Safety Database. From and after the Effective Date, Licensee will assume responsibility for maintaining a global safety database for the Compound and the Products consistent with industry practices. [***].

 

 

 

3.08

Materials Transfer.

 

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(a)

Transfer of Compound. Promptly after the Effective Date and not later than [***] days after the Effective Date, MSD will make available for pickup ([***], Incoterms 2020) the quantity of available physical inventory of Compound solely as listed in Schedule 3.08(a) (the “Transferred Compound”), in the form as such Transferred Compound currently exists, from MSD’s or its Affiliates’ facilities where such Transferred Compound is currently stored, [***]. It is understood that MSD shall retain any remaining quantity of Compound for research purposes pursuant to Section 2.03. Transfer of the Transferred Compound shall be [***], which schedule shall be [***] (and upon such delivery, shall be attached to and become part of this Agreement). The pickup of the Transferred Compound must be   [***] days [***]. Any Transferred Compound [***].

 

 

 

(b)

Disclaimer. Any Transferred Compound transferred to Licensee is provided “as is” and “where is”, and without representation or warranty of any kind, and MSD hereby expressly disclaims any and all other warranties with respect to such Transferred Compound, including any implied warranties of merchantability and fitness for a particular purpose.  

 

 

 

(c)

Documentation and Transfer Process. [***]

 

 

 

(i)

[***].

 

 

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(ii)

[***].

 

 

 

(iii)

[***].

 

 

 

(iv)

[***].

 

 

 

(v)

[***].

 

 

ARTICLE IV COMPLIANCE

 

4.01Compliance with Legal and Ethical Requirements. Licensee will conduct, and will ensure that its Affiliates, sublicensees, and Third-Party contractors conduct, all activities hereunder, including all Development, Manufacturing and Commercialization of Compound and Product, in compliance with all Applicable Law and ethical business practices. Licensee hereby certifies that it has not employed or otherwise used in any capacity, and will not employ or otherwise use in any capacity, the services of any person debarred under United States law (including 21 U.S.C. § 335a) or any foreign equivalent thereof, in performing any portion of the activities hereunder, including any Development, Manufacturing and Commercialization of Compound or Product. Licensee will notify MSD in writing of any material deviations from Applicable Law or if any such debarment occurs or comes to its attention, and will, with respect to any person or entity so debarred promptly remove such person or entity from performing any such activities, function or capacity related to any such activities.

 

4.02Anti-Corruption and Anti-Bribery. Licensee will have in place formal anti-corruption and anti-bribery compliance policies, with terms that comply with Applicable Law and that are consistent with reasonable practices of prudent companies having comparable resources in the biopharmaceutical industry, and will ensure that it, its Affiliates and their respective employees, agents, officers and other members of its management, and any employees, agents, officers and other members of management of any of their respective sublicensees or contractors acting on their behalf in connection with this Agreement, comply with such compliance policies.

 

ARTICLE V

FINANCIAL PROVISIONS; REPORTS

 

5.01Upfront Payment. In accordance with the terms and conditions of this Agreement, Licensee will pay to MSD a non-refundable, non-creditable, up-front payment of twenty-five million Dollars ($25,000,000), which will be wire transferred within [***] days after the Effective Date.

 

 

5.02

Development and Regulatory Milestones.

 

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(a)

In accordance with the terms and conditions of this Agreement, upon the achievement of each of the following milestones set forth below for [***]Products developed by or on behalf of Licensee, its Affiliates, or its or their sublicensees (as applicable), the corresponding one-time milestone payment will be due to MSD, [***]:

 

 

Milestone

[***]

[***]

Initiation of Phase III Clinical Trial

$[***]

$[***]

[***]

$[***]

$[***]

[***]

$[***]

$[***]

[***]

$[***]

$[***]

[***]

$[***]

$[***]

[***]

$[***]

$[***]

[***]

$[***]

$[***]

 

 

(b)

[***].

 

 

 

(c)

[***].

 

 

 

(d)

[***].

 

 

5.03Sales-Based Milestone Payments. In accordance with the terms and conditions of this Agreement, in the event that the aggregate of all Net Sales of all Products made by Licensee or any of its Affiliates or sublicensees (as applicable) in a given Calendar Year exceeds a threshold

 

18

 


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(each, an Annual Net Sales Milestone Threshold”) set forth in the left-hand column of the table immediately below (the Annual Net Sales-Based Milestone Table”), Licensee shall pay to MSD a one-time milestone payment (each, an “Annual Net Sales-Based Milestone Payment”) in the corresponding amount set forth in the right-hand column of the Annual Net Sales-Based Milestone Table with respect to the first time such milestone event is achieved. In the event that in a given Calendar Year more than one (1) Annual Net Sales Milestone Threshold is exceeded, Licensee shall pay to MSD a separate Annual Net Sales-Based Milestone Payment with respect to each Annual Net Sales Milestone Threshold that is exceeded in such Calendar Year. Each such milestone payment shall be due within [***] days of the end of the Calendar Year in which such milestone was achieved.

 

Annual Net Sales Milestone Thresholds

Annual Net Sales-Based Milestone Payments

Annual Net Sales by Licensee or its Affiliates or sublicensees of all Products exceeds $[***] in any single Calendar Year

$[***]

Annual Net Sales by Licensee or its Affiliates or sublicensees of all Products exceeds $[***] in any single Calendar Year

$[***]

Annual Net Sales by Licensee or its Affiliates or sublicensees of all Products exceeds $[***] in any single Calendar Year

$[***]

 

 

5.04

Royalties.

 

 

(a)

Royalties; Royalty Rates. In accordance with the terms and conditions of this Agreement, Licensee will pay to MSD, on a Product-by-Product and country-by-country basis, royalties on total annual aggregate Net Sales of each Product by Licensee, its Affiliates, and its and their sublicensees (as applicable), at the rates set forth below (the Royalties”):

 

 

Annual Net Sales of Product

Royalty Rate

Portion of Net Sales up to $[***]

[***]%

Portion of Net Sales equal to or exceeding $[***] up to $[***]

[***]%

Portion of Net Sales equal to or exceeding

$[***] up to $[***]

[***]%

Portion of Net Sales equal to or exceeding

$[***]

[***]%

 

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(b)

Term of Royalty Obligation. Royalties on a given Product will be payable commencing upon the First Commercial Sale of such Product in a particular country in the Territory and will continue, on a Product-by-Product and country-by-country basis, until the later of

 

(i)the expiration of the last to expire Valid Claim of a MSD Patent claiming such Product (or a Compound contained in such Product) (which Valid Claim may include a MSD Patent claiming [***], as applicable) and (ii) the [***] year anniversary of the date of the First Commercial Sale of such Product in such country (collectively, the Royalty Term”).

 

 

(c)

Royalty Adjustments.

 

 

(i)

Know-How Royalty. Notwithstanding Section 5.04(a), in the event that, in a given country in the Territory, a given Product (or a Compound contained in such Product, as applicable) is not claimed by a Valid Claim of a MSD Patent (which Valid Claim may include a MSD Patent claiming [***], as applicable) during a given portion of the Royalty Term for such Product in such country pursuant to Section 5.04(b), then the royalty rate set forth in Section 5.04(a) will be reduced by [***] solely with respect to Net Sales of such Product in such country solely during such portions of the Royalty Term, which reduced royalty will be in consideration for, among other things, the continuing license to MSD Know-How during such period.

 

 

 

(ii)

Anti-Stacking. If, after the Effective Date of this Agreement, (x) Licensee reasonably determines that, in order to avoid infringement of a Patent not licensed hereunder that covers or claims a given Product (or Compound contained in such Product), or the manufacture, use, sale or other exploitation thereof in a country, Licensee or its Affiliate or sublicensee is required to acquire or license rights under such Patent from a Third Party, (y) Licensee or its Affiliate or sublicensee actually enters into an agreement to acquire or license such Patent rights (such agreement, a “Third Party License Agreement”), and (z) Licensee reasonably determines that Licensee or its Affiliate or sublicensee is required to pay a royalty or sales-based milestone payment to such Third Party under the Third Party License Agreement, then Licensee will have the right to deduct such payments actually paid by Licensee or its Affiliate or sublicensee to such Third Party under the Third Party License Agreement from the Royalties payable under this Agreement. For the avoidance of doubt, any Patent rights that are licensed or acquired by Licensee to exploit any ingredient in a Product other than a Compound shall not be subject to this provision.

 

 

 

(iii)

Limitations. The reductions set forth in this Section 5.04(c) are cumulative and shall apply, in each case, to the maximum extent applicable; provided that in no event shall any Royalty payment due to MSD from Licensee in respect of any given Calendar Quarter be reduced by more than [***] through operation of Section 5.04(c)(i) and Section 5.04(c)(ii).

 

 

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(d)

Net Sales Reporting and Payment. From and after the First Commercial Sale of a Product, within [***] days following the end of each Calendar Quarter thereafter, Licensee will furnish to MSD a written report for the Calendar Quarter showing the Net Sales of Product, on a Product-by-Product and country-by-country basis, sold by Licensee or its Affiliates or sublicensees during such Calendar Quarter and Calendar Year-to-date, together with the Royalties and, if applicable, the Annual Net Sales-Based Milestone Payment payable under this Agreement with respect to such Calendar Quarter (each, a Net Sales Report”). Each such Net Sales Report will also include the [***]. Each Net Sales Report will also include [***]. Simultaneously with the submission of each Net Sales Report, Licensee will pay to MSD a sum equal to [***].

 

 

5.05Third Party Obligations. In the event that the grant of any license by MSD to Licensee with respect to any MSD Know-How or MSD Patents or the exercise of such license by Licensee (or its sublicensees) could trigger any royalties or other payments to a Third Party(ies) pursuant to, or could require compliance with any provision of, any license or other agreement between MSD (or its Affiliate) and a Third Party(ies), MSD may notify Licensee in writing thereof, and in such case, such MSD Know-How or MSD Patents, as applicable, will only be included in the licenses to Licensee hereunder if, within [***] days following receipt of such notice, Licensee agrees in writing to reimburse MSD for all such payments to such Third Party(ies) and comply with any such provisions. [***]

 

 

5.06

Payments; Payment Exchange Rate and Currency Conversions.

 

 

(a)

Method of Payment. All payments to be made by Licensee to MSD under this Agreement will be paid by bank wire transfer in immediately available funds to such bank account as is designated by MSD, in writing on letterhead with MSD signature, from time to time upon at least [***] Business Days’ prior written notice.

 

 

All payments will be made in Dollars. With respect to Net Sales invoiced in a currency other than Dollars, currency conversions will be performed in accordance with the monthly rate of exchange utilized by Licensee in its worldwide accounting system as applied to its external reporting. If, due to restrictions or prohibitions imposed by national or international authority, payments cannot be made as set forth herein, the Parties will consult with a view to finding a prompt and acceptable solution, and Licensee will make such payments in any manner as MSD may lawfully direct. Notwithstanding the foregoing, if Royalties or other payments in any country or any other payments due to MSD under this Agreement cannot be remitted to MSD for any reason within [***] months after the end of the Calendar Quarter to which they relate, then, at the request of MSD, Licensee will be obligated to deposit the Royalties or other payments, as applicable, in a bank account in such country in the name of MSD.

 

 

(b)

Withholdings. If Applicable Laws require Licensee to withhold income or other similar taxes (“Withholding Taxes”), from the payments made by Licensee to MSD under this Agreement (“Agreement Payments”), then Licensee will make such withholding payments and will subtract the amount thereof from the Agreement Payments. It is understood by the Parties that German law requires withholding of taxes related to German registered or exploited intellectual property in the absence of a current German withholding tax exemption certificate. [***]. Licensee will submit to MSD appropriate proof of

 

21

 


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payment of the withheld Taxes as well as the official receipts and other information received by Licensee and reasonably requested by MSD in order for MSD to obtain a refund for any such Withholding Taxes within a reasonable period of time. In addition, upon written request from MSD, Licensee will provide MSD reasonable information in its possession and will otherwise provide reasonable assistance to MSD in order to allow MSD to obtain the benefit of any present or future treaty against double taxation which may apply to the Agreement Payments. MSD shall provide to Licensee, at the time or times reasonably requested by Licensee or as required by Applicable Law, such properly completed and duly executed documentation (for example, IRS Form W-9 or applicable Form W-8) as will permit payments made under this Agreement to be made without, or at a reduced rate of, Withholding Taxes. Notwithstanding anything in this Agreement to the contrary,

 

[***].

 

(c) Indirect Tax. All prices and amounts are exclusive of sales, use, GST, VAT, excise, and other taxes, duties or charges of a similar nature (such taxes “Indirect Taxes”) imposed by any federal, state, provincial, or local government, or other taxing authority. If any such Indirect Tax is chargeable, Licensee shall pay, or upon receipt of invoice from MSD, shall reimburse, these in addition to the sums otherwise payable, at the rate in force at the due time for payment or such other time as is stipulated under the relevant legislation. The Parties shall cooperate in accordance with Applicable Law to minimize any Indirect Taxes

 

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incurred in connection with this Agreement.

 

 

5.07

Maintenance of Records; Audits.

 

 

(a)

Record-Keeping by Licensee; Audits. Licensee will keep, and will cause its Affiliates and sublicensees to keep, complete and accurate records in accordance with its Accounting Principles and in sufficient detail to enable the Royalties and other amounts payable hereunder to be calculated and determined for at least [***] months after the end of the period to which such records pertain, or such longer period as may be required under Applicable Law. Upon reasonable prior written notice from MSD, Licensee will permit an independent certified public accounting firm selected by MSD and reasonably acceptable to Licensee (the “Auditor”) to have access during normal business hours to examine the pertinent books and records of Licensee and its Affiliates as may be reasonably necessary to verify the accuracy of the Net Sales Reports or other reports hereunder. An audit under this Section 5.07(a) will not occur more than [***] in any Calendar Year and [***]. Upon completion of the audit, the Auditor shall provide a report to both Parties, [***].  

 

 

 

(b)

Expense of Audit. Any audit conducted pursuant to this Section 5.07 shall be at MSD’s expense; provided, that if the audit reveals an underpayment that exceeds the lesser of [***] and [***] of the sums correctly due to MSD, then the costs of the audit will be paid by Licensee (including any fees charged by any Third Party Auditor for the work associated with the audit).

 

 

 

(c)

Underpayments/Overpayments. If the audit indicates that additional Royalties or other amounts were owed during a given period, Licensee will pay such additional amounts within [***] days after the date the Auditor provides the audit results to MSD and Licensee. Any overpayments by Licensee will be credited against future payment obligations or refunded within [***] days after the date the Auditor provides the audit results to MSD and Licensee if no amounts payable remain outstanding.

 

 

 

(d)

Record-Keeping by Sublicensee. Licensee will include in each Sublicense Agreement a provision requiring the sublicensee to make reports available to Licensee and to keep and maintain records to the same extent required of Licensee under this Agreement. Licensee will include audit rights in each Sublicense Agreement and exercise their audit rights no less than [***] every [***] years to ensure the accuracy of sublicensee reporting. Licensee will communicate and compensate MSD for any findings with respect to such sublicensee audits.

 

 

 

(e)

Confidentiality. MSD will treat all financial information subject to review under this Section 5.07 in accordance with the confidentiality provisions of ARTICLE VII of this Agreement, and will cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with Licensee obligating it to retain all such financial information in confidence pursuant to such confidentiality agreement.

 

 

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5.08Late Payments. Any amount owed by Licensee to MSD under this Agreement that is not paid within the applicable time period set forth herein will accrue interest at a rate equal to [***].

 

5.09Licensee Third Party Agreements. For the avoidance of doubt, notwithstanding anything to the contrary herein but subject to Licensee’s right to deduct payments under Section 5.04(c)(ii), Licensee will be solely responsible for (and will reimburse MSD for, to the extent paid or payable by MSD or any of its Affiliates) all costs and payments of any kind (including all upfront fees, annual payments, milestone payments and royalty payments) arising under any agreements between Licensee (or any of its Affiliates) and any Third Party arising in connection with the activities hereunder, including the Development, Manufacture or Commercialization of Compound or Product in the Field in the Territory.

 

ARTICLE VI INTELLECTUAL PROPERTY

 

 

6.01

Ownership and Disclosure.

 

 

(a)

Licensee. As between the Parties, Licensee (or its Affiliate) will own all right, title and interest in and to the Licensee Know-How, the Licensee Patents, the Know-How Improvements, and the Improvement Patents, and all other intellectual property rights in and to the foregoing. MSD is not acquiring any ownership interest in any Licensee Know- How, Licensee Patents, Know-How Improvements, or Improvement Patents hereunder. MSD shall and hereby does assign to Licensee all of MSD’s right, title and interest in and to any Know-How Improvements and Improvement Patents. MSD shall take (and cause its Affiliates and its and their employees, contractors and agents to take) such further actions reasonably requested by Licensee to evidence such assignment, including the execution of any assignments or other legal documentation, and to assist Licensee in obtaining Patent and other intellectual property rights protection for such Know-How Improvements.

 

 

 

(b)

MSD. As between the Parties, MSD (or its Affiliate) will own all right, title and interest in and to the MSD Know-How and MSD Patents, and Licensee is not acquiring any ownership interest in any MSD Know-How or MSD Patents hereunder.

 

 

 

6.02

Prosecution and Maintenance of Patents.

 

 

(a)

MSD Patents. Subject to the provisions of this Section 6.02, as between the Parties, MSD will prosecute and maintain in the Territory, on its own or through outside counsel, the MSD Patents, provided that Licensee will reimburse MSD for its FTE Costs and reasonable out-of-pocket expenses, including legal fees, relating to such patent prosecution and maintenance in all countries. MSD shall keep Licensee advised of such patent prosecution and maintenance and consider in good faith any comments by Licensee. Upon the written request of the Licensee, MSD will provide advance copies of any substantive papers related

 

 

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to the prosecution and maintenance of such patent filings. MSD shall give prior written notice to Licensee of any desire to abandon or cease prosecution and/or maintenance of the MSD Patents reasonably in advance of any relevant deadlines to continue such prosecution and maintenance and, in such case, shall permit Licensee, at Licensee’s sole discretion, to continue the prosecution or maintenance at its own expense.

 

 

(b)

Improvement Patents. As between the Parties, Licensee will have the sole right to file, prosecute and maintain any and all Improvement Patents at its own expense. Licensee will consult with MSD with respect to the preparation, filing, prosecution and maintenance of the Improvement Patents in the Territory, to the extent such Improvement Patents claim Compound, Product or uses thereof, reasonably prior to any deadline for an action with respect thereto, and will consider in good faith any comments of MSD. Notwithstanding the foregoing, Licensee will have the right to discontinue the prosecution and maintenance of one or more Improvement Patents in the Territory, and in such case, Licensee will give notice to MSD thereof and will permit MSD to continue the prosecution or maintenance of such Improvement Patent(s) in the Territory at its own expense; provided that [***]; and provided, further that MSD consults with Licensee with respect thereto prior to any deadline for an action, including providing to Licensee a copy of any filings or submissions in connection therewith.

 

 

 

(c)

Licensee Patents. As between the Parties, Licensee will have the sole right, but not the obligation, to file, prosecute and maintain Licensee Patents, at its sole discretion and expense.

 

 

6.03Enforcement and Defense of MSD Patents and Improvement Patents. In the event that either Licensee or MSD becomes aware of any alleged or threatened infringement of any issued patent within the MSD Patents or Improvement Patents, or misappropriation of Know-How within the Merck Know-How or the Know-How Improvements, it will promptly notify the other Party in writing to that effect. Licensee shall have [***] months from the date of said notice to obtain a discontinuance of such infringement or misappropriation or bring a legal action against the Third Party infringer to obtain a discontinuance of, and/or to seek damages for, such infringement or misappropriation. Each Party shall have the right to be represented by counsel of its own choice at its own expense.

 

 

(a)

First Right of Licensee; Backup Right of MSD to Assume. Licensee shall have the first right to initiate, prosecute or control any such legal action, at its own expense. Licensee shall keep MSD advised of such legal action and consider in good faith any comments by MSD. MSD shall have the right to join as a party to such legal action and participate with its own counsel at its own expense, provided that Licensee shall retain control of the prosecution and settlement of such legal action. If Licensee fails, within the foregoing [***]-month period, to obtain a discontinuance of such infringement or misappropriation, or to bring a legal action, or if Licensee notifies MSD in writing that it elects not to exercise such first right, then MSD shall thereafter have the right, but not the obligation, to either initiate, prosecute or control, entirely under its own direction, any such legal action at its own expense, in the name of MSD and, if necessary, Licensee.

 

 

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(c)

Recovery. Any recovery or damages derived from any legal action brought under Section 6.03(a) shall be used first to reimburse each of Licensee and MSD for its documented out- of-pocket legal expenses relating to the legal action (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses), with any remaining amounts to be allocated as follows: (i) if Licensee is the Party bringing legal action, then [***]; and (ii) if MSD is the Party bringing legal action, then [***]

 

 

 

6.04

Infringement and Third-Party Licenses.

 

 

(a)

Course of Action. In the event that either Party becomes aware that Licensee’s, its Affiliates’ or its sublicensees’ Developing, Manufacturing or Commercializing Compound or Product in the Field in the Territory infringes, will infringe, or is alleged by a Third Party to infringe, a claim of a patent that specifically covers the Compound or Product, the Party becoming aware of same will promptly notify the other. The Parties will thereafter consult and cooperate to determine a course of action that may include (i) obtaining a license or assignment from said Third Party or (ii) taking action to invalidate said patent.

 

 

 

(b)

Licensee Right to Negotiate. In the event the Parties cannot agree on taking action to invalidate the patent pursuant to Section 6.04(a), Licensee shall have the right to negotiate with said Third Party for a suitable license or assignment with respect to the Compound or Product in the Field in the Territory. Licensee shall bear all expenses associated with such Third Party License Agreement, except as set forth in Section 5.04(c)(ii).

 

 

 

(c)

Third Party Infringement Suit. In the event that a Third Party brings an action against Licensee alleging that Licensee's, its Affiliates' or its sublicensees' developing, making, having made, importing, exporting, using, manufacturing, or having manufactured Compound or Product, or distributing, marketing, promoting, commercializing, offering for sale or selling Product infringes or will infringe a claim of a patent that covers the Compound, Product or the manufacture or use thereof, then Licensee shall have the first right to elect to defend such action at its expense. Licensee shall keep MSD advised of such action and consider in good faith any comments by MSD. Licensee shall promptly notify MSD in writing if it elects not to defend such action, in which case, the Parties shall confer.

 

 

 

(d)

No Limitation. For clarity, the provisions of this Section 6.04 will not limit the rights and obligations of the Parties under ARTICLE IX.

 

 

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6.05Interference,Derivation,Opposition,Reexamination,Reissue,Supplemental Examination, Inter Partes Review and Post-Grant Review Proceedings.

 

 

(a)

Third Party Initiated Proceedings. Each Party shall, within [***] days of learning of such event, inform the other Party of any request for, or filing or declaration of, any interference, derivation proceeding, opposition, reexamination requested by a Third Party, inter partes review, post-grant review or similar contested administrative proceeding involving a Third Party relating to the MSD Patents and the Improvement Patents. The Parties shall thereafter consult and cooperate fully to determine a course of action with respect to any such proceeding. Licensee shall have the first right, but not the obligation, to control such proceedings relating to the MSD Patents, and shall have the sole right at its discretion, but not the obligation, to control such proceedings relating to the Improvement Patents, and MSD shall have the right to review and comment on any submission to be made in connection with such proceedings, which Licensee will consider in good faith. In the event Licensee determines not to control any such proceedings relating to the MSD Patents, then it shall so notify MSD and MSD shall have the right, but not the obligation, to assume control of such action.

 

 

 

(b)

Party Initiated Proceedings. Licensee shall have the first right, but not the obligation, to initiate and control a reexamination, supplemental examination, reissue or similar administrative proceeding relating to the MSD Patents, and shall have the sole right at its discretion, but not the obligation, to initiate and control a reexamination, supplemental examination, reissue or similar administrative proceeding relating to the Improvement Patents. MSD shall have the right to review and comment on any submission to be made in connection with such proceedings, which Licensee will consider in good faith. In the event Licensee determines not to initiate or control any such proceedings relating to the MSD Patents, then it shall so notify MSD and MSD shall have the right, but not the obligation, to assume control of such actions.

 

 

 

(c)

Notwithstanding the foregoing, neither Party shall initiate any such proceedings relating to the MSD Patents without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. The non-initiating Party shall have the right to review and approve any submission to be made in connection with such proceedings, which approval will not be unreasonably withheld or delayed. If there is disagreement regarding whether a reexamination, supplemental examination, reissue or similar administrative proceeding related to MSD Patents should be initiated, such disagreement shall be referred to the senior intellectual property officers of the Parties. In the event that these two executives do not, after good faith efforts, reach agreement, [***].

 

 

 

(d)

Cooperation. In connection with any administrative proceeding under Sections 6.05(a) or 6.05(b), MSD and Licensee shall cooperate fully and provide each other with any information or assistance that either may reasonably request. The Parties shall keep each other informed of developments in any such action or proceeding, including the status of any settlement negotiations and the terms of any offer related thereto. For any proceeding not controlled by MSD, Licensee shall obtain MSD’s prior written consent for any settlement offer or settlement agreement that could adversely affect MSD, which consent

 

 

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shall not be unreasonably withheld.

 

 

(e)

Expenses. The Party controlling any administrative proceeding pursuant to Sections 6.05(a) or 6.05(b) shall bear all expenses related thereto.

 

 

6.06Patent Extensions; Supplementary Protection Certificates. Notwithstanding anything to the contrary in this ARTICLE VI, with respect to each Compound or Product, Licensee shall have the right at its sole expense and as further set forth in this paragraph to make decisions regarding patent term extensions in the Territory, including in the United States with respect to extensions pursuant to 35 U.S.C. § 156 et. seq. and in Europe and other jurisdictions pursuant to supplementary protection certificates, and in all jurisdictions with respect to any other extensions (including pediatric exclusivity) that are now or become available in the future, wherever applicable, for any MSD Patents, Improvement Patents or Licensee Patents, in each case including whether or not to so apply. Licensee shall have the sole right to apply for such patent term extensions with respect to Improvement Patents and Licensee Patents, and the first right to apply for such patent term extensions with respect to MSD Patents. If Licensee decides not to apply for patent term extensions with respect to any MSD Patents, then MSD shall have the right, but not the obligation to apply for such patent term extensions following review and approval by Licensee of the documents for submission in connection therewith. MSD shall provide prompt and reasonable assistance, as requested by Licensee, including by taking such action as Patent holder as is required under any Applicable Law, to obtain extensions under this Section 6.06.

 

ARTICLE VII CONFIDENTIALITY AND PUBLICATION

 

 

7.01

Confidentiality.

 

 

(a)

Nondisclosure Obligation. Each of MSD and Licensee will use Confidential Information received by it from, or on behalf of, the other Party only as permitted by and in accordance with this Agreement and, except as otherwise set forth in Sections 7.01(b) or 7.01(c), will not disclose to any Third Party any such Confidential Information without the prior written consent of the other Party. The foregoing obligations will survive the expiration or termination of this Agreement for a period of [***] years. These obligations will not apply to Confidential Information that the receiving Party can reasonably demonstrate:

 

 

 

(i)

is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by the receiving Party’s written records;

 

 

 

(ii)

is at the time of disclosure, or thereafter becomes, published or otherwise part of the public domain without breach of this Agreement by the receiving Party;

 

 

 

(iii)

is subsequently disclosed to the receiving Party by a Third Party who has the right to make such disclosure, as documented by the receiving Party’s written records; or

 

 

 

(iv)

is independently developed by the receiving Party or its Affiliates and without the aid, use or application of any of the disclosing Party’s Confidential Information, and such independent development can be documented by the receiving Party’s written records.

 

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Any combination of features or disclosures will not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of the receiving Party unless the combination itself and principle of operation are published or available to the general public or in the rightful possession of the receiving Party, as applicable.

 

 

(b)

Disclosure to Agents. Notwithstanding the provisions of Section 7.01(a) and subject to the other terms of this Agreement, each of Licensee and MSD will have the right to disclose Confidential Information of the other Party to their respective sublicensees, agents, employees, contractors, consultants, collaboration partners, Affiliates or other Third Parties (collectively Agents”) who are directly involved in the Development, Manufacturing or Commercialization of the Compound or Products (or for any such potential Agents to determine their interest in performing such activities), and who have a need to know such Confidential Information in order for the receiving Party to perform its obligations and exercise its rights under this Agreement. A Party disclosing Confidential Information of the other Party to its Agents will ensure that such Agents are bound in writing, prior to disclosure, by confidentiality and non-use obligations no less restrictive than those contained in this Agreement and will be fully liable to the other Party for breach of such confidentiality and non-use obligations of its Agents.

 

 

 

(c)

Additional Permitted Disclosures. Notwithstanding the provisions of Section 7.01(a), the following disclosures of the other Party’s Confidential Information is permitted as follows:

 

 

 

(i)

a Party may disclose Confidential Information of the other Party to any Regulatory Authority to gain approval to conduct Clinical Trials for Product or to market Product, or other governmental authority in order to obtain, enforce or defend MSD Patents, Improvement Patents or Licensee Patents, or in connection with prosecuting or defending litigation under ARTICLE VI or ARTICLE IX, in each case, in accordance with this Agreement; provided that such disclosure may be made only to the extent reasonably necessary to obtain such Patents or authorizations or to prosecute or defend such litigation; and provided, further, that notice of the intended disclosure is provided to the disclosing Party and the disclosing Party’s comments or concerns are considered in good faith by the receiving Party to the extent that the receiving Party’s good faith consideration does not result in any delay that materially prejudices the disclosing Party’s right to obtain such Patents or authorizations or to prosecute or defend such litigation;

 

 

 

(ii)

a Party may disclose Confidential Information of the other Party to such Party’s attorneys, independent accountants or financial advisors for the sole purpose of enabling such attorneys, independent accountants or financial advisors to provide advice to the receiving Party, on the condition that such attorneys, independent accountants and financial advisors are bound by confidentiality and non-use obligations that substantially are no less stringent than those confidentiality and non-use provisions contained in this Agreement or are otherwise bound by substantially similar confidentiality and non-use obligations under professional codes of conduct or the like;

 

 

 

(iii)

a Party may disclose such Confidential Information as is required to be disclosed

 

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by Applicable Law (including rules of any securities exchange); provided that notice is promptly delivered to the other Party in order to provide an opportunity to seek a protective order or other similar order with respect to such Confidential Information and thereafter the receiving Party discloses to the requesting entity only the minimum information required to be disclosed in order to comply with the request, whether or not a protective order or other similar order is obtained by the other Party; and

 

 

(iv)

Licensee may disclose Confidential Information of MSD to bona fide potential or actual acquirers of all or substantially all of the business to which this Agreement relates, as may be necessary in connection with their evaluation of such potential or actual acquisition; provided that any such Third Party is bound in writing, prior to disclosure, by confidentiality and non-use obligations no less restrictive than those contained in this Agreement.