x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
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11-1798614
(I.R.S. Employer
Identification No.)
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909 Third Avenue
New York, New York
(Address of principal executive offices)
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10022-4731
(Zip Code)
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Large accelerated filer x
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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(Do not check if a smaller reporting company)
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EXHIBIT 101.INS
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EXHIBIT 101.SCH
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EXHIBIT 101.PRE
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EXHIBIT 101.CAL
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EXHIBIT 101.LAB
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EXHIBIT 101.DEF
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(In thousands)
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September 30, 2011
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March 31, 2011
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||||||
Assets
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||||||||
Current assets:
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||||||||
Cash (including cash equivalent investments of $1,140,417 at September 30, 2011 and $2,128,006 at March 31, 2011)
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$ | 1,157,337 | $ | 2,137,838 | ||||
Marketable securities
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1,047,307 | 1,713,303 | ||||||
Accounts receivable, less allowance for doubtful accounts of $2,270 at September 30, 2011 and $2,298 at March 31, 2011
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573,293 | 535,486 | ||||||
Inventories, net
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430,519 | 451,365 | ||||||
Deferred income taxes
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228,430 | 217,432 | ||||||
Other current assets
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174,658 | 204,249 | ||||||
Total current assets
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3,611,544 | 5,259,673 | ||||||
Non-current assets:
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||||||||
Marketable securities and investments
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667,681 | 529,917 | ||||||
Property, plant and equipment
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672,203 | 636,187 | ||||||
Less: accumulated depreciation
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335,276 | 316,421 | ||||||
336,927 | 319,766 | |||||||
Other assets:
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||||||||
Goodwill
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713,091 | 14,965 | ||||||
License agreements, product rights and other intangibles, less accumulated amortization of $576,252 at September 30, 2011
and $537,147 at March 31, 2011 |
1,717,797 | 725,494 | ||||||
Deferred income taxes
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71,340 | |||||||
Other assets
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8,664 | 1,299 | ||||||
Total other assets
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2,439,552 | 813,098 | ||||||
Total assets
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$ | 7,055,704 | $ | 6,922,454 | ||||
(In thousands, except for par values)
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September 30, 2011
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March 31, 2011
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||||||
Liabilities and Stockholders' Equity
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 99,546 | $ | 190,767 | ||||
Accrued expenses and other liabilities
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909,220 | 747,091 | ||||||
Total current liabilities
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1,008,766 | 937,858 | ||||||
Long-term liabilities:
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||||||||
Income tax liabilities
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540,212 | 485,716 | ||||||
Contingent acquisition liabilities
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36,219 | |||||||
Deferred tax liabilities
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293,510 | |||||||
869,941 | 485,716 | |||||||
Contingencies (Note 11)
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||||||||
Stockholders' equity:
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||||||||
Series preferred stock, $1.00 par; shares authorized 1,000; no shares issued or outstanding
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||||||||
Common stock, $.10 par; shares authorized 1,000,000; issued 427,533 shares at September 30, 2011 and 424,982 shares
at March 31, 2011 |
42,753 | 42,498 | ||||||
Additional paid-in capital
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1,664,505 | 1,631,887 | ||||||
Retained earnings
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8,616,339 | 8,108,389 | ||||||
Accumulated other comprehensive (loss) income
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( 3,007 | ) | 7,996 | |||||
Treasury stock, at cost (160,383 shares at September 30, 2011 and 138,863 shares at March 31, 2011)
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( 5,143,593 | ) | ( 4,291,890 | ) | ||||
Total stockholders' equity
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5,176,997 | 5,498,880 | ||||||
Total liabilities and stockholders' equity
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$ | 7,055,704 | $ | 6,922,454 | ||||
Three Months Ended
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Six Months Ended
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|||||||||||||||
(In thousands, except per share amounts)
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September 30,
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September 30,
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||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Net sales
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$ | 1,130,250 | $ | 1,037,264 | $ | 2,234,385 | $ | 2,057,390 | ||||||||
Contract revenue
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33,579 | 42,402 | 74,218 | 82,206 | ||||||||||||
Interest income
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5,086 | 8,493 | 10,665 | 15,506 | ||||||||||||
Other income
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164 | 1,742 | ||||||||||||||
1,169,079 | 1,088,159 | 2,321,010 | 2,155,102 | |||||||||||||
Costs and expenses:
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||||||||||||||||
Cost of sales
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263,984 | 246,240 | 517,781 | 477,944 | ||||||||||||
Selling, general and administrative
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388,657 | 316,386 | 746,734 | 764,755 | ||||||||||||
Research and development
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197,331 | 154,511 | 391,774 | 374,168 | ||||||||||||
849,972 | 717,137 | 1,656,289 | 1,616,867 | |||||||||||||
Income before income tax expense
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319,107 | 371,022 | 664,721 | 538,235 | ||||||||||||
Income tax expense
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69,294 | 84,912 | 156,771 | 134,648 | ||||||||||||
Net income
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$ | 249,813 | $ | 286,110 | $ | 507,950 | $ | 403,587 | ||||||||
Net income per common share:
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||||||||||||||||
Basic
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$ | 0.91 | $ | 1.00 | $ | 1.82 | $ | 1.37 | ||||||||
Diluted
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$ | 0.91 | $ | 1.00 | $ | 1.81 | $ | 1.37 | ||||||||
Weighted average number of common shares outstanding:
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||||||||||||||||
Basic
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273,196 | 287,401 | 279,449 | 294,139 | ||||||||||||
Diluted
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273,753 | 287,491 | 280,015 | 294,222 | ||||||||||||
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Three Months Ended
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Six Months Ended
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|||||||||||||||
(In thousands)
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September 30,
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September 30,
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||||||||||||||
2011
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2010
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2011
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2010
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Net income
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$ | 249,813 | $ | 286,110 | $ | 507,950 | $ | 403,587 | ||||||||
Other comprehensive income (loss):
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||||||||||||||||
Foreign currency translation (losses) gains
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( 7,917 | ) | 15,442 | ( 5,116 | ) | 1,661 | ||||||||||
Pension liability adjustment, net of tax
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840 | 120 | 2,382 | ( 1,147 | ) | |||||||||||
Unrealized gains (losses) on securities:
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||||||||||||||||
Unrealized holding (losses) gains arising during the period, net of tax
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( 16,106 | ) | 2,403 | ( 8,269 | ) | ( 7,777 | ) | |||||||||
Other comprehensive (loss) income
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( 23,183 | ) | 17,965 | ( 11,003 | ) | ( 7,263 | ) | |||||||||
Comprehensive income
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$ | 226,630 | $ | 304,075 | $ | 496,947 | $ | 396,324 | ||||||||
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Six Months Ended
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(In thousands)
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September 30,
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2011
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2010
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Cash flows from operating activities:
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Net income
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$ | 507,950 | $ | 403,587 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation
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20,278 | 21,567 | ||||||
Amortization
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39,105 | 11,514 | ||||||
Stock-based compensation expense
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26,457 | 25,291 | ||||||
Deferred income tax benefit
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( 17,912 | ) | ( 14,891 | ) | ||||
Foreign currency transaction loss
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1,006 | 122 | ||||||
Net change in operating assets and liabilities:
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||||||||
Decrease (increase) in:
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Accounts receivable, net
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( 37,807 | ) | 23,774 | |||||
Inventories, net
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29,765 | 12,953 | ||||||
Other current assets
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30,799 | 35,747 | ||||||
Other assets
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1,285 | ( 856 | ) | |||||
Increase (decrease) in:
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Accounts payable
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( 102,612 | ) | ( 17,941 | ) | ||||
Accrued expenses and other liabilities
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136,345 | 40,098 | ||||||
Income tax liabilities
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54,496 | 49,851 | ||||||
Net cash provided by operating activities
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689,155 | 590,816 | ||||||
Cash flows from investing activities:
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Purchase of property, plant and equipment
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( 36,761 | ) | ( 16,550 | ) | ||||
Purchase of marketable securities
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( 1,137,528 | ) | ( 1,679,584 | ) | ||||
Redemption of marketable securities
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1,659,135 | 1,281,918 | ||||||
Acquisitions
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( 1,262,651 | ) | ||||||
Purchase of trademarks
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( 42,106 | ) | ||||||
Net cash used in investing activities
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( 819,911 | ) | ( 414,216 | ) | ||||
Cash flows from financing activities:
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Net proceeds from common stock options exercised by employees under stock option plans
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6,069 | 712 | ||||||
Tax benefit related to stock-based compensation
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346 | 32 | ||||||
Treasury stock transactions
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( 851,703 | ) | ( 501,290 | ) | ||||
Net cash used in financing activities
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( 845,288 | ) | ( 500,546 | ) | ||||
Effect of exchange rate changes on cash
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( 4,457 | ) | ( 395 | ) | ||||
Decrease in cash and cash equivalents
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( 980,501 | ) | ( 324,341 | ) | ||||
Cash and cash equivalents, beginning of period
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2,137,838 | 1,863,484 | ||||||
Cash and cash equivalents, end of period
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$ | 1,157,337 | $ | 1,539,143 | ||||
Supplemental disclosures of cash flow information:
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||||||||
Cash paid for income taxes
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$ | 86,008 | $ | 74,161 |
September 30, 2011
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March 31, 2011
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Trade
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$ | 520,881 | $ | 482,725 | ||||
Other
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52,412 | 52,761 | ||||||
$ | 573,293 | $ | 535,486 |
September 30, 2011
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March 31, 2011
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Raw materials
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$ | 67,044 | $ | 79,237 | ||||
Work in process
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6,255 | 18,569 | ||||||
Finished goods
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357,220 | 353,559 | ||||||
$ | 430,519 | $ | 451,365 |
Description
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Fair value at
September 30, 2011
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Quoted prices in active markets for identical assets
(Level 1)
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Significant other observable market inputs
(Level 2)
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Unobservable
market inputs
(Level 3)
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||||||||||||
Money market accounts
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$ | 856,898 | $ | 824,791 | $ | 32,107 |
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Municipal bonds and notes
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46,692 | 46,692 | ||||||||||||||
Commercial paper
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625,992 | 264,662 | 361,330 | |||||||||||||
Variable rate demand notes
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4,000 | 4,000 | ||||||||||||||
Floating rate notes
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427,702 | 427,702 | ||||||||||||||
Auction rate securities
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26,294 | $ | 26,294 | |||||||||||||
Certificates of deposit
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334,575 | 116,109 | 218,466 | |||||||||||||
Corporate bonds
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430,198 | 430,198 | ||||||||||||||
Government agency bonds
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97,473 | 97,473 |
Description
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Fair value at
March 31, 2011
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Quoted prices in active markets for identical assets
(Level 1)
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Significant other observable market inputs
(Level 2)
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Unobservable
market inputs
(Level 3)
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||||||||||||
Money market accounts
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$ | 1,560,484 | $ | 1,224,132 | $ | 336,352 | ||||||||||
Municipal bonds and notes
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158,484 | 158,484 | ||||||||||||||
Commercial paper
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807,604 | 349,067 | 458,537 | |||||||||||||
Variable rate demand notes
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201,025 | 201,025 | ||||||||||||||
Floating rate notes
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250,247 | 250,247 | ||||||||||||||
Auction rate securities
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34,539 | $ | 34,539 | |||||||||||||
Certificates of deposit
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595,713 | 293,978 | 301,735 | |||||||||||||
Corporate bonds
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518,513 | 518,513 | ||||||||||||||
Government agency bonds
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215,492 | 215,492 |
Six Months Ended September 30, 2011
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||||
Balance at March 31, 2011
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$ | 34,539 | ||
Sales
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( 8,245 | ) | ||
Balance at September 30, 2011
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$ | 26,294 |
September 30, 2011
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||||||||||||
(In thousands)
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Estimated fair value
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Gains in accumulated other comprehensive income
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Losses in accumulated other comprehensive income
|
|||||||||
Current:
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||||||||||||
Municipal bonds and notes
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$ | 21,809 | $ | 47 | ||||||||
Government agency bonds
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40,015 | 2 | $ | ( 23 | ) | |||||||
Commercial paper
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499,920 | 581 | ( 6 | ) | ||||||||
Certificates of deposit
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137,369 | 138 | ( 57 | ) | ||||||||
Corporate bonds
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137,188 | 37 | ||||||||||
Floating rate notes
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211,006 | 31 | ( 4,238 | ) | ||||||||
Total current securities
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1,047,307 | 836 | ( 4,324 | ) | ||||||||
Noncurrent:
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||||||||||||
Municipal bonds and notes
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24,883 | 14 | ||||||||||
Government agency bonds
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57,458 | 150 | ||||||||||
Commercial paper
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26,839 | ( 1 | ) | |||||||||
Corporate bonds
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293,010 | 53 | ( 1,396 | ) | ||||||||
Auction rate securities
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26,294 | ( 1,906 | ) | |||||||||
Floating rate notes
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216,696 | ( 14,747 | ) | |||||||||
Total noncurrent securities
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645,180 | 217 | ( 18,050 | ) | ||||||||
Total available-for-sale debt securities
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$ | 1,692,487 | $ | 1,053 | $ | (22,374 | ) |
March 31, 2011
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(In thousands)
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Estimated fair value
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Gains in accumulated other comprehensive income
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Losses in accumulated other comprehensive income
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|||||||||
Current:
|
||||||||||||
Variable rate demand notes
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$ | 178,435 | ||||||||||
Municipal bonds and notes
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144,950 | $ | 195 | |||||||||
Government agency bonds
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160,894 | 207 | ||||||||||
Commercial paper
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606,986 | 753 | $ | ( 107 | ) | |||||||
Certificates of deposit
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241,964 | 73 | ||||||||||
Corporate bonds
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252,146 | 289 | ( 71 | ) | ||||||||
Floating rate notes
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127,928 | ( 11,582 | ) | |||||||||
Total current securities
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1,713,303 | 1,517 | ( 11,760 | ) | ||||||||
Noncurrent:
|
||||||||||||
Municipal bonds and notes
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13,534 | 21 | ||||||||||
Government agency bonds
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54,598 | 4,504 | ( 122 | ) | ||||||||
Certificates of deposit
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9,436 | ( 1 | ) | |||||||||
Corporate bonds
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266,366 | ( 2,401 | ) | |||||||||
Auction rate securities
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34,539 | ( 1,906 | ) | |||||||||
Floating rate notes
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122,319 | 391 | ( 2,782 | ) | ||||||||
Total noncurrent securities
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500,792 | 4,916 | ( 7,212 | ) | ||||||||
Total available-for-sale debt securities
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$ | 2,214,095 | $ | 6,433 | $ | (18,972 | ) |
Estimated fair value
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||||
Within one year
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$ | 1,047,307 | ||
1-5 years
|
581,821 | |||
5-10 years
|
41,036 | |||
After 10 years
|
22,323 | |||
$ | 1,692,487 |
Three Months Ended
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Six Months Ended
|
|||||||||||||||
(In thousands)
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September 30,
|
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
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|||||||||||||
Basic
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273,196 | 287,401 | 279,449 | 294,139 | ||||||||||||
Effect of assumed conversion of employee stock options
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557 | 90 | 566 | 83 | ||||||||||||
Diluted
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273,753 | 287,491 | 280,015 | 294,222 |
Three Months Ended
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Six Months Ended
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|||||||||||||||
(In thousands)
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September 30,
|
September 30,
|
||||||||||||||
2011
|
2010
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2011
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2010
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Central nervous system
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$ | 967,592 | $ | 904,376 | $ | 1,910,174 | $ | 1,803,065 | ||||||||
Cardiovascular
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89,745 | 65,387 | 174,563 | 134,407 | ||||||||||||
Other
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72,913 | 67,501 | 149,648 | 119,918 | ||||||||||||
$ | 1,130,250 | $ | 1,037,264 | $ | 2,234,385 | $ | 2,057,390 |
·
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$1 per share if U.S. net sales of Viibryd, over four consecutive fiscal quarters within the first 5 years from the date of the close, reach or exceed $800 million,
|
·
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$2 per share if U.S. net sales of Viibryd, over four consecutive fiscal quarters within the first 6 years from the date of the close, reach or exceed $1.1 billion and;
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·
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$3 per share if U.S. net sales of Viibryd, over four consecutive fiscal quarters within the first 7 years from the date of the close, reach or exceed $1.5 billion.
|
Asset acquired/liability assumed
|
Fair value at acquisition date
|
|||
Cash
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$ | 14,214 | ||
Inventory
|
8,919 | |||
Prepaid and other current assets
|
1,208 | |||
Property, plant and equipment
|
906 | |||
Other assets
|
8,650 | |||
Short term debt
|
( 725 | ) | ||
Accounts payable
|
( 11,391 | ) | ||
Accrued expenses
|
( 25,059 | ) | ||
Deferred tax liabilities
|
( 371,764 | ) | ||
Acquired contingent acquisition liabilities
|
( 11,000 | ) | ||
Intangible assets
|
990,000 | |||
Goodwill
|
698,126 | |||
Total net assets acquired
|
$ | 1,302,084 | ||
Cash paid
|
$ | 1,276,865 | ||
Fair value of contingent consideration
|
25,219 | |||
Total purchase price
|
$ | 1,302,084 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
(In thousands)
|
September 30,
|
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Category
|
||||||||||||||||
Third party development costs
|
$ | 87,681 | $ | 79,347 | $ | 168,417 | $ | 160,161 | ||||||||
Internal and other development costs
|
79,650 | 72,164 | 153,357 | 140,957 | ||||||||||||
Milestone and upfront charges
|
30,000 | 3,000 | 70,000 | 73,050 | ||||||||||||
Total research and development expense
|
$ | 197,331 | $ | 154,511 | $ | 391,774 | $ | 374,168 |
|
Research and development expense reflects the following:
|
|
·
|
In December 2009, through an agreement with AstraZeneca, we amended our prior agreement with Novexel for the development, manufacture and commercialization of avibactam (formerly known as NXL104) in combination with ceftaroline, to include the combination of avibactam with all other products including ceftazidime. Avibactam is a novel broad-spectrum intravenous beta-lactamase inhibitor designed to be co-administered with select antibiotics to enhance their spectrum of activity by overcoming beta-lactamase-related antibacterial resistance. Avibactam is currently being developed in combination with ceftaroline (Teflaro) and ceftazidime. Ceftazidime is a cephalosporin antibiotic having a different spectrum of activity compared to ceftaroline. Data from two Phase II trials for ceftazidime/avibactam in patients with complicated intra-abdominal infections (cIAI) and complicated urinary tract infections (cUTI) demonstrated that ceftazidime/avibactam achieved high clinical cure rates and was well tolerated in patients with cIAI and cUTI. This data was presented at the European Congress of Clinical Microbiology and Infectious Diseases (ECCMID) conference in May 2011. Based on the results of these studies, we and AstraZeneca intend to initiate Phase III studies with the ceftazidime/avibactam program in the second half of calendar 2011.
|
|
·
|
In April 2006, we entered into an agreement with Almirall, S.A. (Almirall) for the U.S. rights to aclidinium (aclidinium bromide), a novel long-acting muscarinic antagonist which is being developed as an inhaled therapy for the treatment of COPD. In January 2011, we reported positive top-line results from a Phase III ATTAIN (Aclidinium To Treat Airway obstruction In COPD patieNts) study. The ATTAIN study is the last of three Phase III clinical studies investigating the twice daily (BID) administration of aclidinium. The results from this study confirm the efficacy reported in the ACCORD COPD I study which we reported in January 2010. The data from both studies served as the core for the monotherapy U.S. New Drug Application (NDA) filing submitted to the U.S. Food and Drug Administration (FDA) in June 2011. In January 2011, we also reported positive results from two Phase II(b) dose-ranging studies comparing fixed-dose combinations of aclidinium and the long-acting beta-agonist formoterol to aclidinium alone, formoterol alone and placebo administered BID in patients with moderate to severe COPD. Both studies showed statistically significant differences for the fixed-dose combination on the primary endpoint versus placebo. The fixed-dose combinations also provided a numerically higher bronchodilation effect compared to aclidinium alone and formoterol alone. Phase III studies with the fixed-dose combination commenced in September 2011 and we anticipate top-line results from the trials during the first half of calendar 2013.
|
|
·
|
In September 2007, we entered into a partnership with Ironwood Pharmaceuticals, Inc. to co-develop and co-market the proprietary compound linaclotide in North America. Linaclotide is an agonist of the guanylate cyclase type-C (GC-C) receptor being developed for the treatment of constipation-predominant irritable bowel syndrome (IBS-C) and chronic constipation (CC). Linaclotide increases fluid secretion leading to increased bowel movement frequency and modulates the activity of local nerves to reduce abdominal pain. In November 2009, we reported positive top-line data for two Phase III trials in CC. In October 2010, we reported positive top-line results from the second of two Phase III trials in IBS-C. Data from the studies in both indications showed clinically meaningful and statistically significant symptom improvement in linaclotide-treated patients compared to placebo on all four primary efficacy endpoints. Based upon these results, we filed an NDA with the FDA for both indications in August 2011. Additional linaclotide results from the four pivotal Phase III trials and one Phase II(b) study in patients with either IBS-C or CC was presented at the American College of Gastroenterology 2011 Annual Scientific Meeting held in Washington, DC from October 29, 2011 to November 2, 2011.
|
|
·
|
In December 2008, we entered into an agreement with Pierre Fabre Médicament to develop and commercialize levomilnacipran (F2695) in the United States and Canada. Levomilnacipran is a proprietary selective norepinephrine and serotonin reuptake inhibitor that is being developed for the treatment of depression. In July 2011, we reported top-line results from a randomized, double-blind, placebo-controlled, fixed-dose Phase III study of levomilnacipran for the treatment of adults with MDD. Data from this study indicated statistically significant improvement was achieved for levomilnacipran treated patients for all dose groups compared to placebo on the primary efficacy endpoint which was change from baseline to end of week 8 in the Montgomery-Asberg Depression Rating Scale-Clinician Rated (MADRS-CR) total score. Further analyses of the data are ongoing. This study is part of the ongoing development program for levomilnacipran for the treatment of MDD, which also includes a Phase III flexible-dose study reported in January 2011. Two additional placebo-controlled Phase III studies of levomilnacipran in patients with MDD are currently underway and results are expected to become available during the first half of 2012. If successful, we plan on filing an NDA with the FDA for F2695 in calendar 2012.
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|
·
|
In November 2004, we entered into an agreement with Gedeon Richter Ltd. (Richter) for the North American rights to cariprazine, an oral D2/D3 partial agonist, and related compounds, being developed as an atypical antipsychotic for the treatment of schizophrenia, bipolar mania and other psychiatric conditions. In October 2011, we reported preliminary top-line results from a Phase III study of cariprazine in patients with acute mania associated with bipolar I disorder. The data showed that cariprazine-treated patients with acute manic episodes experienced significant symptom improvement compared to placebo-treated patients at each subsequent time point studied. We expect to report top-line results from the second acute mania program and a Phase III schizophrenia program during the first half of calendar 2012. We expect to file an NDA for cariprazine for those two indications in calendar 2012. Cariprazine is also under development in Phase III studies for bipolar depression and as an adjunct treatment for MDD.
|
|
·
|
In December 2009, we entered into a license agreement with Almirall to develop, market and distribute LAS100977 in the United States. LAS100977 is Almirall’s highly-potent, inhaled, once-daily administered long-acting beta-2 agonist being developed in combination with an undisclosed corticosteroid for the dual indications of both asthma and COPD. In Phase II testing, LAS100977 administered once-daily demonstrated that it has a fast onset of action and long-lasting efficacy and was well tolerated in patients with stable asthma. Additional Phase II studies are planned to begin in the second half of calendar 2011.
|
|
·
|
In connection with our acquisition of Clinical Data completed in April 2011, we acquired apadenoson, a potent agonist of the adenosine A2A receptor subtype with improved selectivity for this receptor over other subtypes. Apadenoson is a coronary vasodilator in Phase III development as a pharmacologic stress agent for radionuclide myocardial perfusion. ASPECT 1 and ASPECT 2 are non-inferiority studies comparing apadenoson to Adenoscan™ and the primary endpoint is image concordance. Enrollment is underway for both studies.
|
|
·
|
In December 2010, we entered into a license agreement with Grünenthal GmbH (Grünenthal) for the co-development and commercialization of GRT 6005 and its follow-on compound GRT 6006, small molecule analgesic compounds being developed by Grünenthal for the treatment of moderate to severe chronic pain. GRT 6005 and GRT 6006 are novel first-in-class compounds with unique pharmacological and pharmacokinetic profiles that may enhance their effect in certain pain conditions. The unique mode of action of these compounds builds on the ORL-1 receptor and, supported by the established mu opioid receptor, is particularly suitable for the treatment of moderate to severe chronic pain. GRT 6005 has successfully completed initial proof-of-concept studies in nociceptive and neuropathic pain with further Phase II studies planned prior to initiation of Phase III studies.
|
|
·
|
In June 2010, we entered into a license agreement with TransTech for the development and commercialization of TTP399, a functionally liver selective glucokinase activator discovered and being developed by TransTech for the treatment of Type II diabetes. Early Phase I testing suggests that pharmacological enhancement of glucokinase activity may lower blood glucose in diabetic patients. We expect to initiate a Phase II clinical program during calendar 2011.
|
|
·
|
In April 2011, we entered into an agreement with Blue Ash for the worldwide rights to azimilide, a novel class III antiarrhythmic agent. Azimilide has been studied in over 5,300 patients to investigate its potential as an antiarrhythmic agent. Based on its mechanism of action and results of clinical trials, azimilide was determined to be best suited for use in patients with a history of life-threatening ventricular arrhythmias and who have an implantable cardioverter defibrillator. In 2006, following submission of data from the SHIELD 1 Phase III clinical study, the FDA, under its then operable review practices, issued an Approvable Letter requesting an additional clinical trial for azimilide. In 2010, the FDA agreed to one additional Phase III study to support a regulatory submission for azimilide in the U.S. SHIELD 2 will be conducted under a Special Protocol Assessment with the FDA and we plan to start the study before the end of this calendar year.
|
September 30, 2011
|
September 30, 2010
|
|||||||
Beginning balance
|
$ | 330,998 | $ | 301,382 | ||||
Provision for rebates
|
443,333 | 326,873 | ||||||
Settlements
|
( 388,107 | ) | ( 314,205 | ) | ||||
55,226 | 12,668 | |||||||
Provision for returns
|
10,797 | 6,122 | ||||||
Change in estimates
|
( 5,600 | ) | ||||||
Settlements
|
( 6,938 | ) | ( 5,408 | ) | ||||
3,859 | ( 4,886 | ) | ||||||
Provision for chargebacks and discounts
|
197,491 | 185,049 | ||||||
Settlements
|
( 194,376 | ) | ( 188,450 | ) | ||||
3,115 | ( 3,401 | ) | ||||||
Ending balance
|
$ | 393,198 | $ | 305,763 |
1.
|
Our Consolidated Financial Statements may be impacted in future periods based on the accuracy of our valuations of our acquired businesses.
|
2.
|
We have significant goodwill and other intangible assets. Consequently, potential impairment of goodwill and other intangibles may significantly impact our profitability.
|
Period
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
|
Maximum number of shares that may yet be purchased under the program
|
|||||||||||||
7/1/11
through
7/31/11
|
- | - | - | - | |||||||||||||
8/1/11
through
8/31/11
|
7,103,508 | $ | 32.83 | 7,103,508 | 19,879,834 | ||||||||||||
9/1/11
through
9/30/11
|
2,588,292 | $ | 32.83 | 2,588,292 | 17,291,542 | ||||||||||||
9,691,800 | 9,691,800 |
Item 6.
|
||
Fixed Dollar Collared Accelerated Share Repurchase Transaction Agreement between Forest Laboratories, Inc. and Morgan Stanley & Co. LLC dated August 15, 2011.
|
||
Fixed Dollar Collared Accelerated Share Repurchase Transaction Agreement between Forest Laboratories, Inc. and Morgan Stanley & Co. LLC dated June 3, 2011, as amended and restated August 15, 2011.
|
||
License, Development and Cooperation Agreement, dated September 22, 2004, between Merck KGaA and Genaissance Pharmaceuticals, Inc.
|
||
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
XBRL Instance Document**
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document**
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document**
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document**
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document**
|
|
**Attached as Exhibit 101 to this Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 are the following materials, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.
|
[Missing Graphic Reference]
|
MORGAN STANLEY & CO. LLC
1585 BROADWAY
NEW YORK, NY 10036-8293
(212) 761-4000
|
Trade Date:
|
As specified in Schedule I
|
Buyer:
|
Issuer
|
Seller:
|
MSCO
|
Shares:
|
Common Stock of Issuer (Ticker: FRX)
|
Number of Shares:
|
The number of Shares delivered in accordance with Physical Settlement below.
|
Tranches:
|
The Transaction will be divided into multiple Tranches, each with the terms set forth in this Confirmation, and in particular with the Prepayment Amount, Observation Dates, the Scheduled Valuation Date and the Lock-Out Date set forth in Schedule I. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Tranche as if each Tranche were a separate Transaction under the Agreement.
|
Forward Price:
|
A price per Share (as determined by the Calculation Agent) equal to (i) the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Observation Date that is a Trading Day during the Calculation Period minus (ii) the Discount (as specified in Schedule I); provided, however, that if the Forward Price would otherwise be: (A) greater than the Forward Cap Price, the Forward Price shall equal the Forward Cap Price (as specified in Schedule I), or (B) less than the Forward Floor Price, the Forward Price shall equal the Forward Floor Price (as specified in Schedule I)
|
10b-18 VWAP:
|
For each Observation Date that is a Trading Day during the Calculation Period or the Initial Hedge Period, a price per share (as determined by the Calculation Agent) equal to the volume-weighted average price of the Rule 10b-18 eligible trades in the Shares for the entirety of such Trading Day as determined by reference to the screen entitled “FRX <Equity> AQR SEC” or any successor page as reported by Bloomberg L.P. (without regard to pre-open or after hours trading outside of any regular trading session for such Trading Day or block trades (as defined in Rule 10b-18(a)(5) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) on such Trading Day).
|
Calculation Period:
|
The period from and including the first Observation Date that is a Trading Day that occurs after the Initial Hedge Period Completion Date to but excluding the relevant Valuation Date.
|
Trading Day:
|
Any Exchange Business Day that is not a Disrupted Day or an Excluded Day (as defined below)
|
Initial Shares:
|
As specified in Schedule I
|
Initial Share Delivery Date:
|
One Exchange Business Day following the Trade Date. On the Initial Share Delivery Date, Seller shall deliver a number of Shares equal to the Initial Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4. Such delivery shall be “delivery versus payment.”
|
Initial Hedge Period:
|
The period from and including the first Observation Date that
|
is a Trading Day that occurs on or after the Trade Date to and including the Initial Hedge Completion Date
|
|
Initial Hedge Completion Date:
|
The Observation Date on which MSCO completes its initial hedge, as determined by MSCO in its sole discretion; provided that such date shall occur no more than 33 Observation Dates following the Trade Date (subject to extension or suspension in the event of one or more Disrupted Days during the Initial Hedge Period).
|
Initial Hedge Period Reference Price:
|
An amount in USD equal to the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Observation Date that is a Trading Day from, and including, the first Observation Date that is a Trading Day immediately following the Trade Date to, and including, the Initial Hedge Completion Date.
|
Additional Shares:
|
A number of Shares equal to (i) the Prepayment Amount (as defined below) divided by (ii) the Forward Cap Price minus (iii) the Initial Shares
|
Additional Share Delivery Date:
|
One Exchange Business Day following the Initial Hedge Completion Date. On the Additional Share Delivery Date, Seller shall deliver a number of shares equal to the Additional Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with the Additional Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4. Such delivery shall be “free.”
|
Prepayment:
|
Applicable
|
Prepayment Amount:
|
As specified in Schedule I
|
Prepayment Date:
|
The Trade Date. On the Prepayment Date, Buyer shall pay to Seller the Prepayment Amount. Such payment shall be “receipt versus payment.”
|
Exchange:
|
New York Stock Exchange
|
Related Exchange:
|
The primary exchange on which options or futures on the relevant Shares are traded.
|
Market Disruption Event:
|
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time” in the third line thereof with the words “at any time on any “Observation Date during the Valuation Period or” after the word “material”.
Notwithstanding anything to the contrary in the Equity Definitions, if any Observation Date in the Calculation Period or the Initial Hedge Period is a Disrupted Day, the Calculation Agent shall have the option in its sole discretion either (i) to determine the weighting of each Rule 10b-18 eligible
|
transaction in the Shares on the relevant Disrupted Day using its commercially reasonable judgment for purposes of calculating the Forward Price, as applicable, (ii) to elect to extend the Calculation Period or the Initial Hedge Period by a number of Observation Dates equal to the number of Disrupted Days during the Calculation Period or the Initial Hedge Period or (iii) to suspend the Calculation Period or the Initial Hedge Period, as appropriate, until the circumstances giving rise to such suspension have ceased. For the avoidance of doubt, if Calculation Agent elects the option described in clause (i) above, then such Disrupted Day shall be deemed to be a Trading Day for purposes of calculating the Forward Price or the Initial Hedge Period Reference Price, as the case may be.
|
|
Excluded Days:
|
None
|
VALUATION:
|
|
Valuation Time:
|
The Scheduled Closing Time on the relevant Exchange
|
Valuation Date:
|
The earlier of (i) the Scheduled Valuation Date (as specified in Schedule I) and (ii) any date after the Lock-Out Date (as specified in Schedule I) specified by MSCO to Issuer by 9:00pm EST on such date as a Valuation Date, in each case, subject to extension in accordance with “Market Disruption Event” above or Section 9 or Section 10 below; provided, however, that if a Valuation Date occurs pursuant to clause (ii) above, then (A) the Calculation Period for this Transaction (or portion thereof) shall be deemed to end as of the Trading Day immediately preceding the relevant Valuation Date and (B) MSCO shall have the right to specify a Valuation Date with respect to any portion of this Transaction as it selects (any such Valuation Date on a portion of this Transaction for less than the full Prepayment Amount, a “Partial Acceleration Date”); provided, however, that MSCO can only elect to declare a Partial Acceleration Date if the portion of the transaction subject to the Partial Acceleration Date is in an increment of USD25,000,000.
In the case of a Partial Acceleration Date, MSCO shall specify in its notice to Issuer designating a Valuation Date in connection with a Partial Acceleration Date the percentage of the Prepayment Amount that is subject to such Valuation Date and Calculation Agent shall adjust all terms of this Transaction as it deems reasonable in order to take into account the occurrence of any Partial Acceleration Date (including cumulative adjustments to take into account all Partial Acceleration Dates that occur during the term of this Transaction).
On each Valuation Date, Calculation Agent shall calculate the Settlement Amount.
|
Physical Settlement:
|
Applicable.
On the relevant Settlement Date, Seller shall deliver to Buyer a number of Shares equal to (a) (i) the Prepayment Amount divided by (ii) the Forward Price as determined on the relevant Valuation Date, minus (b) the Initial Shares minus (c) the Additional Shares, rounded to the nearest whole number of Shares (such number of Shares, the “Settlement Amount”).
|
Settlement Currency:
|
USD
|
Settlement Date:
|
Three Exchange Business Days after the relevant Valuation Date, or if such date is not a Clearance System Business Day or if there is a Settlement Disruption Event on such day, the immediately succeeding Clearance System Business Day on which there is no Settlement Disruption Event.
|
Potential Adjustment Event:
|
Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event
|
Extraordinary Dividend:
|
Any dividend or distribution on the Shares with an ex-dividend date occurring during the period from and including the first day of the Hedge Period to and including the Termination Date (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “Dividend”) that is either (i) a non-regularly scheduled Dividend or (ii) the amount or value of which (as determined by the Calculation Agent) exceeds the Ordinary Dividend Amount.
|
Ordinary Dividend Amount:
|
For any calendar quarter, USD 0.00
|
Method of Adjustment:
|
Calculation Agent Adjustment; provided that if an Observation Date within the Calculation Period is a Disrupted Day, Seller’s suspension of trading in the Shares pursuant to “Market Disruption Event” above shall be treated as a Potential Adjustment Event subject to Calculation Agent Adjustment. In the case of a suspension pursuant to Section 10, the Calculation Agent shall make such adjustments prior to the period of suspension, if it is practical to do so. Otherwise, and in all cases of a suspension as contemplated under “Market Disruption Event” above, the Calculation
|
Agent shall make such adjustments promptly following the period of suspension.
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Tender Offer:
|
Applicable
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Composition of Combined Consideration:
|
Applicable
|
Nationalization, Insolvency or Delisting:
|
Cancellation and Payment (Calculation Agent Determination)
|
Change in Law:
|
Applicable
|
Insolvency Filing:
|
Applicable
|
Loss of Stock Borrow:
|
Applicable
|
Maximum Stock Loan Rate:
|
100 bps
|
Determining Party:
|
For all Extraordinary Events, Calculation Agent
|
Hedging Party:
|
For all Additional Disruption Events, MSCO
|
Non-Reliance:
|
Applicable
|
Regarding Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
3. Calculation Agent:
|
MSCO
|
4. Account Details:
|
To be provided.
|
(a)
|
during the period from (and including) the Trade Date to (and including) the Settlement Date, Seller and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the transactions contemplated by this Transaction;
|
(b)
|
Seller and its affiliates also may be active in the market for the Shares other than in connection with hedging activities in relation to the transactions contemplated by this Transaction;
|
(c)
|
Seller shall make its own determination as to whether, when and in what manner any hedging or market activities in the Issuer’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to 10b-18 VWAP; and
|
(d)
|
any market activities of Seller and its affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the 10b-18 VWAP, each in a manner that may be adverse to Buyer.
|
Account for Payments to MSCO:
|
To be provided separately
|
|
Account for Payments to Issuer:
|
To be provided by Issuer
|
FOREST LABORATORIES, INC.
|
MORGAN STANLEY & CO. LLC
|
By: /s/ Francis I. Perier, Jr.
Name: Francis I. Perier, Jr.
Title: Executive Vice President & Administration and
Chief Financial Officer |
By: /s/ Serkan Savasoglu
Name: Serkan Savasoglu
Title: Managing Director
|
[Missing Graphic Reference]
|
MORGAN STANLEY & CO. LLC
1585 BROADWAY
NEW YORK, NY 10036-8293
(212) 761-4000
|
Trade Date:
|
As specified in Schedule I
|
Buyer:
|
Issuer
|
Seller:
|
MSCO
|
Shares:
|
Common Stock of Issuer (Ticker: FRX)
|
Number of Shares:
|
The number of Shares delivered in accordance with Physical Settlement below.
|
Tranches:
|
The Transaction will be divided into multiple Tranches, each with the terms set forth in this Confirmation, and in particular with the Prepayment Amount, Observation Dates, the Scheduled Valuation Date and the Lock-Out Date set forth in Schedule I. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Tranche as if each Tranche were a separate Transaction under the Agreement.
|
Forward Price:
|
A price per Share (as determined by the Calculation Agent) equal to (i) the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Observation Date that is a Trading Day during the Calculation Period other than Observation Dates that occur during the Initial Hedge Period (as defined in the Other Transaction (as defined below)) of the Fixed Dollar Collared Accelerated Share Repurchase Transaction dated August 15, 2011 between Counterparty and MSCO (the "Other Transaction")" minus (ii) the Discount (as specified in Schedule I); provided, however, that if the Forward Price would otherwise be: (A) greater than the Forward Cap Price, the Forward Price shall equal the Forward Cap Price (as specified in Schedule I), or (B) less than the Forward Floor Price, the Forward Price shall equal the Forward Floor Price (as specified in Schedule I)
|
10b-18 VWAP:
|
For each Observation Date that is a Trading Day during the Calculation Period or the Initial Hedge Period, a price per share (as determined by the Calculation Agent) equal to the volume-weighted average price of the Rule 10b-18 eligible trades in the Shares for the entirety of such Trading Day as determined by reference to the screen entitled “FRX <Equity> AQR SEC” or any successor page as reported by Bloomberg L.P. (without regard to pre-open or after hours trading outside of any regular trading session for such Trading Day or block trades (as defined in Rule 10b-18(a)(5) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) on such Trading Day).
|
Calculation Period:
|
The period from and including the first Observation Date that is a Trading Day that occurs after the Initial Hedge Period Completion Date to but excluding the relevant Valuation Date.
|
Trading Day:
|
Any Exchange Business Day that is not a Disrupted Day or an Excluded Day (as defined below)
|
Initial Shares:
|
As specified in Schedule I
|
Initial Share Delivery Date:
|
The Trade Date. On the Initial Share Delivery Date, Seller shall deliver a number of Shares equal to the Initial Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4. Such delivery shall be “delivery versus payment.”
|
Initial Hedge Period:
|
The period from and including the Trade Date to and including the Initial Hedge Completion Date
|
Initial Hedge Completion Date:
|
The Observation Date on which MSCO completes its initial hedge, as determined by MSCO in its sole discretion; provided that such date shall occur no more than 18 Observation Dates following the Trade Date (subject to extension or suspension in the event of one or more Disrupted Days during the Initial Hedge Period).
|
Initial Hedge Period Reference Price:
|
An amount in USD equal to the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Observation Date that is a Trading Day from, and including, the Trade Date to, and including, the Initial Hedge Completion Date.
|
Additional Shares:
|
A number of Shares equal to (i) the Prepayment Amount (as defined below) divided by (ii) the Forward Cap Price minus (iii) the Initial Shares
|
Additional Share Delivery Date:
|
One Exchange Business Day following the Initial Hedge Completion Date. On the Additional Share Delivery Date, Seller shall deliver a number of shares equal to the Additional Shares to Buyer in accordance with Section 9.4 of the Equity Definitions, with the Additional Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4. Such delivery shall be “free.”
|
Prepayment:
|
Applicable
|
Prepayment Amount:
|
As specified in Schedule I
|
Prepayment Date:
|
The Trade Date. On the Prepayment Date, Buyer shall pay to Seller the Prepayment Amount. Such payment shall be “receipt versus payment.”
|
Exchange:
|
New York Stock Exchange
|
Related Exchange:
|
The primary exchange on which options or futures on the relevant Shares are traded.
|
Market Disruption Event:
|
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time” in the third line thereof with the words “at any time on any “Observation Date during the Valuation Period or” after the word “material”.
|
Notwithstanding anything to the contrary in the Equity Definitions, if any Observation Date in the Calculation Period or the Initial Hedge Period is a Disrupted Day, the Calculation Agent shall have the option in its sole discretion either (i) to determine the weighting of each Rule 10b-18 eligible transaction in the Shares on the relevant Disrupted Day using its commercially reasonable judgment for purposes of calculating the Forward Price, as applicable, (ii) to elect to extend the Calculation Period or the Initial Hedge Period by a number of Observation Dates equal to the number of Disrupted Days during the Calculation Period or the Initial Hedge Period or (iii) to suspend the Calculation Period or the Initial Hedge Period, as appropriate, until the circumstances giving rise to such suspension have ceased. For the avoidance of doubt, if Calculation Agent elects the option described in clause (i) above, then such Disrupted Day shall be deemed to be a Trading Day for purposes of calculating the Forward Price or the Initial Hedge Period Reference Price, as the case may be.
|
|
Excluded Days:
|
None
|
VALUATION:
|
|
Valuation Time:
|
The Scheduled Closing Time on the relevant Exchange
|
Valuation Date:
|
The earlier of (i) the Scheduled Valuation Date (as specified in Schedule I) and (ii) any date after the Lock-Out Date (as specified in Schedule I) specified by MSCO to Issuer by 9:00pm EST on such date as a Valuation Date, in each case, subject to extension in accordance with “Market Disruption Event” above or Section 9 or Section 10 below; provided, however, that if a Valuation Date occurs pursuant to clause (ii) above, then (A) the Calculation Period for this Transaction (or portion thereof) shall be deemed to end as of the Trading Day immediately preceding the relevant Valuation Date and (B) MSCO shall have the right to specify a Valuation Date with respect to any portion of this Transaction as it selects (any such Valuation Date on a portion of this Transaction for less than the full Prepayment Amount, a “Partial Acceleration Date”); provided, however, that MSCO can only elect to declare a Partial Acceleration Date if the portion of the transaction subject to the Partial Acceleration Date is in an increment of USD25,000,000.
In the case of a Partial Acceleration Date, MSCO shall specify in its notice to Issuer designating a Valuation Date in connection with a Partial Acceleration Date the percentage of the Prepayment Amount that is subject to such Valuation Date and Calculation Agent shall adjust all terms of this Transaction as it deems reasonable in order to take into account the occurrence of any Partial Acceleration Date (including cumulative adjustments to take into account all Partial Acceleration Dates that occur during the term of this
|
Transaction).
On each Valuation Date, Calculation Agent shall calculate the Settlement Amount.
|
Physical Settlement:
|
Applicable.
On the relevant Settlement Date, Seller shall deliver to Buyer a number of Shares equal to (a) (i) the Prepayment Amount divided by (ii) the Forward Price as determined on the relevant Valuation Date, minus (b) the Initial Shares minus (c) the Additional Shares, rounded to the nearest whole number of Shares (such number of Shares, the “Settlement Amount”).
|
Settlement Currency:
|
USD
|
Settlement Date:
|
Three Exchange Business Days after the relevant Valuation Date, or if such date is not a Clearance System Business Day or if there is a Settlement Disruption Event on such day, the immediately succeeding Clearance System Business Day on which there is no Settlement Disruption Event.
|
Potential Adjustment Event:
|
Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event
|
Extraordinary Dividend:
|
Any dividend or distribution on the Shares with an ex-dividend date occurring during the period from and including the first day of the Hedge Period to and including the Termination Date (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “Dividend”) that is either (i) a non-regularly scheduled Dividend or (ii) the amount or value of which (as determined by the Calculation Agent) exceeds the Ordinary Dividend Amount.
|
Ordinary Dividend Amount:
|
For any calendar quarter, USD 0.00
|
Method of Adjustment:
|
Calculation Agent Adjustment; provided that if an Observation Date within the Calculation Period is a Disrupted Day, Seller’s suspension of trading in the Shares pursuant to “Market Disruption Event” above shall be treated as a Potential Adjustment Event subject to Calculation Agent
|
Adjustment. In the case of a suspension pursuant to Section 10, the Calculation Agent shall make such adjustments prior to the period of suspension, if it is practical to do so. Otherwise, and in all cases of a suspension as contemplated under “Market Disruption Event” above, the Calculation Agent shall make such adjustments promptly following the period of suspension.
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Tender Offer:
|
Applicable
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Composition of Combined Consideration:
|
Applicable
|
Nationalization, Insolvency or Delisting:
|
Cancellation and Payment (Calculation Agent Determination)
|
Change in Law:
|
Applicable
|
Insolvency Filing:
|
Applicable
|
Loss of Stock Borrow:
Maximum Stock Loan Rate:
|
Applicable
100 bps
|
Determining Party:
|
For all Extraordinary Events, Calculation Agent
|
Hedging Party:
|
For all Additional Disruption Events, MSCO
|
Non-Reliance:
|
Applicable
|
Regarding Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
3. Calculation Agent:
|
MSCO
|
4. Account Details:
|
To be provided.
|
(a)
|
during the period from (and including) the Trade Date to (and including) the Settlement Date, Seller and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the transactions contemplated by this Transaction;
|
(b)
|
Seller and its affiliates also may be active in the market for the Shares other than in connection with hedging activities in relation to the transactions contemplated by this Transaction;
|
(c)
|
Seller shall make its own determination as to whether, when and in what manner any hedging or market activities in the Issuer’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to 10b-18 VWAP; and
|
(d)
|
any market activities of Seller and its affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the 10b-18 VWAP, each in a manner that may be adverse to Buyer.
|
Account for Payments to MSCO:
|
To be provided separately
|
|
Account for Payments to Issuer:
|
To be provided by Issuer
|
FOREST LABORATORIES, INC.
|
MORGAN STANLEY & CO. LLC
|
By: /s/ Francis I. Perier, Jr.
Name: Francis I. Perier, Jr.
Title: Executive Vice President Finance & Administration and
Chief Financial Officer
|
By: /s/ Serkan Savasoglu
Name: Serkan Savasoglu
Title: Managing Director
|
PREAMBLE
|
|||
1.
|
DEFINITIONS
|
||
2.
|
LICENSES
|
||
3.
|
RESEARCH AND DEVELOPMENT
|
||
4.
|
DILIGENCE AND CAPABILITIES, PLANS AND REPORTING
|
||
5.
|
MARKETING AND OPTIONS TO CO-COMMERCIALIZE
|
||
6.
|
LICENSE GRANT TO MERCK KGAA
|
||
7.
|
PAYMENTS AND ROYALTIES
|
||
8.
|
SUPPLY OF VILAZODONE AND PRODUCTION OF PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS
|
||
9.
|
GOVERNMENTAL APPROVALS / REGULATORY AFFAIRS.
|
||
10.
|
JOINT COMMITTEE
|
||
11.
|
INTELLECTUAL PROPERTY
|
||
12.
|
PATENT PROSECUTION, INFRINGEMENTS AND LITIGATION
|
||
13.
|
RIGHT OF FIRST NEGOTIATION
|
||
14.
|
PUBLICATIONS
|
||
15.
|
CONFIDENTIALITY
|
||
16.
|
TERM
|
||
17.
|
TERMINATION
|
||
18.
|
OBLIGATIONS ON TERMINATION
|
||
19.
|
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
|
||
20.
|
LIMITATION OF LIABILITY
|
||
21.
|
INDEMNIFICATION AND INSURANCE
|
||
22.
|
RELATIONSHIP
|
||
23.
|
ASSIGNMENT
|
||
24.
|
ENTIRE AGREEMENT
|
||
25.
|
SEVERABILITY
|
||
26.
|
WAIVER AND AMENDMENT
|
||
27.
|
COUNTERPARTS
|
||
28.
|
FORCE MAJEURE
|
||
29.
|
DISPUTE RESOLUTION
|
||
30.
|
ATTORNEYS’ FEES
|
||
31.
|
Governing Law
|
||
32.
|
NOTICES
|
||
LIST OF SCHEDULES
|
|||
Schedule 1
|
|||
Schedule 2
|
|||
Schedule 3
|
|||
Schedule 3A
|
|||
Schedule 3B
|
|||
Schedule 4
|
|||
Schedule 6
|
|||
Schedule 7
|
|||
Schedule 8
|
|||
Schedule 9
|
Between
|
Merck KGaA
|
Frankfurter Strasse 250
|
|
64293 Darmstadt
|
|
Germany
|
|
(hereinafter referred to as “MERCK KGAA”)
|
|
and
|
Genaissance Pharmaceuticals, Inc.
|
Five Science Park
|
|
New Haven, CT 06511
|
|
USA
|
|
(hereinafter referred to as “GENAISSANCE”)
|
|
(GENAISSANCE and MERCK KGAA are also referred to herein as the “PARTIES” or a “PARTY”)
|
1.1
|
“AFFILIATE” shall mean any corporation, partnership or other entity, whether de jure or de facto, that, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership or control with, a PARTY, where ownership or control means the ownership or voting control of at least fifty per cent (50%) of the outstanding voting stock or other equity interests of a corporation, partnership or entity (or such lesser percentage that is in a particular jurisdiction the maximum percentage allowed to be owned by a foreign owner).
|
1.2
|
“AGREEMENT” shall mean this License, Development and Cooperation Agreement between GENAISSANCE and MERCK KGAA and all Schedules and Exhibits hereto.
|
1.3
|
“CHANGE OF CONTROL” as to a PARTY shall mean that: (i) any person or entity acquires, directly or indirectly, the beneficial ownership of any voting security of such
|
1.4
|
“CO-COMMERCIALIZE” or CO-COMMERCIALIZATION” shall mean (a) co-promotion meaning that each co-promoting PARTY promotes sales of the same product under the same trademark and revenues are shared based on the relative contributions of both PARTIES, (b) if the co-promotion activities described in (a) are commercially impractical or illegal in a particular country, or if the PARTIES so agree, then CO-COMMERCIALIZATION shall mean co-marketing, meaning that each co-marketing PARTY performs marketing of the same product under different trademarks for its own account, (c) if the PARTIES so agree, MERCK KGAA marketing a PRODUCT alone on a country-by-country basis, or (d) any other joint promotion, or marketing arrangement with respect to a PRODUCT, and (e) if MERCK KGAA elects to CO-COMMERCIALIZE pursuant to Section 5.3.1, co-development whereby the PARTIES share in development costs, whether by funding or by sharing in development activities.
|
1.5
|
“CO-COMMERCIALIZATION AGREEMENT” means any agreement entered into between the PARTIES for CO-COMMERCIALIZATION.
|
1.6
|
“COMMERCIALLY REASONABLE EFFORTS” means that effort customarily exerted by a PARTY on a substantially continuous basis under similar circumstances to achieve its objectives with respect to its own products of similar scientific merit, stage of development and commercial potential, taking into account, by example and without limitation, such factors as intellectual property position, the cost of development, regulatory risk, safety and efficacy, reimbursement factors, parallel importation considerations, competitiveness of alternative products in the marketplace, pricing, product life cycle and cost of sales and marketing, and other relevant factors.
|
1.7
|
“DERIVATIVE” shall mean any compound, other than VILAZODONE, claimed under the MERCK KGAA PATENTS existing as of the EFFECTIVE DATE.
|
1.8
|
“DEVELOPMENT PLAN” shall mean the detailed pre-clinical and clinical plans describing developmental activities intended to gain GOVERNMENTAL APPROVAL for the production, marketing and sale of PRODUCT(S), including the steps GENAISSANCE will take and the resources it will devote to the development and scale-up of the production and packaging of VILAZODONE and PRODUCTS from VILAZODONE, both for clinical uses and for commercial supplies. An initial DEVELOPMENT PLAN for the initial INDICATION is attached hereto as Schedule 2.
|
1.9
|
“DIAGNOSTIC PRODUCT” SHALL MEAN ANY PRODUCT, SERVICE OR TEST (A) THAT IS BASED UPON GENETIC MARKERS COMPRISING THE RESULTING IP AND (B) THAT IS INTENDED FOR THE USE IN DIAGNOSING THE PRESENCE OF, OR SUSCEPTIBILITY FOR, ANY DISEASE OR CONDITION IN HUMANS, OTHER THAN A THERANOSTIC PRODUCT.
|
1.10
|
“DISCOVERY STUDY” shall mean all retrospective and prospective studies, as set forth in the DEVELOPMENT PLAN for the initial INDICATION, in which an objective is to discover or validate correlations between genetic markers for candidate genes and defined clinical phenotypes related to response to VILAZODONE, whereby (a) if a second prospective DISCOVERY STUDY, which is a well-designed, adequately powered, placebo-controlled study, confirms a correlation between any genetic markers and a response to VILAZODONE in a sub-group of patients or b) if a prospective DISCOVERY STUDY succeeds in showing formal proof of efficacy of VILAZODONE
|
1.11
|
“EFFECTIVE DATE” shall mean September 22nd, 2004.
|
1.12
|
“EMEA” shall mean the European Agency for the Evaluation of Medicinal Products.
|
1.13
|
“EU” shall mean in the aggregate those countries that are at the EFFECTIVE DATE members of the European Union.
|
1.14
|
“EURO” shall mean the European currency Euro.
|
1.15
|
“EXTENSION” shall mean any rule, process or policy whereby either the duration of any patent may be extended or the expiration thereof may be delayed, and/or any form of governmentally-recognized marketing, data or regulatory exclusivity that may be obtained or continued for a PRODUCT, together with the result of pursuing or applying such rule, process or policy, including Supplementary Protection Certificates, data package exclusivity and other patent term extensions (including those available under the Hatch Waxman Act (United States Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417) and any amendments thereto, patent term adjustments under 35 USC § 154, and extensions under 35 USC § 156), orphan drug designations, and marketing exclusivity rights based on pediatric testing or applications.
|
1.16
|
“FDA” shall mean the Food and Drug Administration of the US.
|
1.17
|
“FIRST CLINICAL TRIAL” shall mean the initiation of a) the first prospective clinical trial of VILAZODONE that is started after the initiation of the final DISCOVERY STUDY (which initiation shall occur when the first patient receives the first dose), or b) completion of a prospective DISCOVERY STUDY which is recognized as being a PHASE II CLINICAL TRIAL as defined in Section 1.10.
|
1.18
|
“GAAP” shall mean United States generally accepted accounting principles applied in the ordinary course of business by the applicable Selling party referred to in Section 1.31
|
1.19
|
“GOVERNMENTAL APPROVAL” shall mean all approvals, product and/or establishment licenses, registrations, permits, or authorizations, including pricing and reimbursement approvals, of any federal, state or local regulatory agency, department, bureau or other GOVERNMENTAL AUTHORITY, necessary for the manufacture, packaging, distribution, use, storage, importation, export, transport, marketing and sale of a PRODUCT for therapeutic use in humans, including THERANOSTIC PRODUCT and DIAGNOSTIC PRODUCT, in a country or countries .
|
1.20
|
“GOVERNMENTAL AUTHORITY” SHALL MEAN ANY NATIONAL, SUPRA-NATIONAL (E.G., THE EUROPEAN COMMISSION, THE COUNCIL OF THE EUROPEAN UNION, OR THE EMEA), REGIONAL, STATE OR LOCAL REGULATORY AGENCY, DEPARTMENT, BUREAU OR OTHER GOVERNMENTAL ENTITY RESPONSIBLE FOR ISSUING ANY TECHNICAL, MEDICAL OR SCIENTIFIC LICENSES, REGISTRATIONS, AUTHORIZATIONS AND/OR APPROVALS OF VILAZODONE, THERANOSTIC PRODUCT AND DIAGNOSTIC PRODUCT OR PRODUCTS INCLUDING ANY MARKETING AUTHORIZATIONS BASED UPON SUCH APPROVALS AND PRICING, THIRD PARTY REIMBURSEMENT OR LABELLING APPROVALS THAT ARE NECESSARY FOR THE MANUFACTURE, DISTRIBUTION, USE, STORAGE, IMPORTATION, EXPORT, TRANSPORT, MARKETING AND SALE OF VILAZODONE OR PRODUCT, THERANOSTIC PRODUCT AND DIAGNOSTIC PRODUCT.
|
1.21
|
“IMPROVEMENT” shall mean any invention, improvement, or technology (other than any RESULTING IP or RESULTING IP PATENTS), patentable or not, that are owned or controlled by the PARTIES or their AFFILIATES or any of them and that are conceived in the course of this AGREEMENT to the extent relating to VILAZODONE or to the VILAZODONE component of a PRODUCT or to a PRODUCT itself, including the formulation, manufacture and use thereof.
|
1.22
|
“INDICATION” shall mean the disease or condition that a particular PRODUCT is intended to treat. Potential INDICATIONS for PRODUCTS include (among others) those listed in Schedule 4 to this AGREEMENT. A PRODUCT will be deemed for purposes of this AGREEMENT to be intended to treat the disease or condition for which GOVERNMENTAL APPROVAL for such PRODUCT is then being sought or is obtained, whether or not the PRODUCT may also have other uses or applications.
|
1.23
|
“JOINT COMMITTEE” shall mean the committee described in Section 10.
|
1.24
|
“MAA” or “NDA” means a new drug, biologic or other application for product license approval, health registration, marketing authorization application, common technical document, regulatory submission, notice of compliance or similar application required to be approved before commercial sale or use of a PRODUCT as a pharmaceutical or medicinal product in any formulation or dosage form (excluding all pricing and reimbursement approvals).
|
1.25
|
“MAJOR COUNTRY” means the United States, France, Germany, Italy, Spain, and the United Kingdom.
|
1.26
|
“MAJOR MILESTONE EVENT” shall mean each of those events that are specifically designated as such in a particular DEVELOPMENT PLAN, and that mark significant milestones demonstrating progress by GENAISSANCE in the development of a PRODUCT, such as [***], and the filing of an NDA, in each case [***].
|
1.27
|
“MARKETING PLAN” means the plans with regard to the commercialization of PRODUCTS, THERANOSTIC PRODUCTS or DIAGNOSTIC PRODUCTS in particular INDICATIONS. Each MARKETING PLAN will cover a period of [***] of active commercialization of PRODUCTS for the applicable INDICATION. Each MARKETING PLAN will include the major features described in Schedule 5 to this AGREEMENT. The first MARKETING PLAN for PRODUCT in the initial INDICATION will be [***].
|
1.28
|
“MERCK KGAA KNOW-HOW” shall mean inventions, discoveries, processes, methods (including PK and other assay methods), compositions, formulae, procedures, protocols, techniques, results of experimentation and testing, information, data and know-how
|
1.29
|
“MERCK KGAA PATENT(S)” shall mean (a) the patent applications and patents listed in Schedule 7, all continuation, continuation-in-part (to the extent the claims thereof are directed to subject matter specifically described in a patent or patent application listed on Schedule 7), divisional, re-examination, and reissue patent applications and patents and counterpart patent applications and patents in any country that claim priority therefrom, (b) MERCK KGAA’s interest in any and all patents claiming IMPROVEMENTS and (c) EXTENSIONS to (a) and (b). A MERCK KGAA PATENT will be considered to exist in any country during the period in which an application for a patent is pending in such country or in which any patent has been issued and has not expired or been declared invalid or unenforceable in a final judgment or administrative ruling of a forum with jurisdiction, as to which there either is no appeal or all rights of appeal have been exhausted.
|
1.30
|
“NET SALES” shall mean the gross amount invoiced by GENAISSANCE or its AFFILIATES and/or sub-licensees (“the Selling party”) to THIRD PARTIES for the sale of PRODUCT and/or THERANOSTIC PRODUCT and/or DIAGNOSTIC PRODUCT, less deductions that are actually allowed by the Selling party, to the extent allocated to the PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT under GAAP, for:
|
|
a)
|
customary trade, quantity and cash discounts;
|
|
b)
|
customary rebates and charge backs including those granted to governmental agencies and managed care entities;
|
|
c)
|
returns, rebates and allowances, including credits to customers on account of retroactive price reductions;
|
|
d)
|
excise, sales, VAT or use taxes, customs duties and other tariffs or duties, and
|
|
e)
|
actual transportation and insurance charges.
|
1.31
|
“NONEXCLUSIVE PERIOD” shall mean a period when a THIRD PARTY has a market share in a country of more than [***] percent ([***]%) on a units basis for sales of (i) an UNLICENSED PRODUCT or (ii) an UNLICENSED THERANOSTIC PRODUCT or UNLICENSED DIAGNOSTIC PRODUCT, the manufacture, sale or use of which would infringe the claims of a RESULTING IP PATENT if such patent were issued and existing during such period in such country.
|
1.32
|
“PACKAGED PRODUCT” shall mean the packaged form of VILAZODONE tablets as described in Schedule 2 and Schedule 3 for use in the DISCOVERY STUDY.
|
1.33
|
“PHASE II CLINICAL TRIAL” shall mean a well controlled clinical study, as set forth in the DEVELOPMENT PLAN, that is conducted during or after the DISCOVERY STUDY by or for GENAISSANCE or its sublicensees and that involves the administration of the PRODUCT to human beings, and in which the primary objective is to obtain formal proof of efficacy of the PRODUCT in a sub-group of patients or in a general population as described in Section 1.10 for the treatment of the INDICATION as identified in the DISCOVERY STUDY.
|
1.34
|
“PHASE III CLINICAL TRIAL” shall mean any clinical study, as set forth in the DEVELOPMENT PLAN for any INDICATION, that is conducted after the PHASE II
|
1.35
|
“PRODUCT” shall mean any product containing VILAZODONE as either the single active ingredient or as one of multiple active ingredients.
|
1.36
|
“QUARTER” shall mean each of the three-month periods ending on March 31, June 30, September 30 and December 31 of any YEAR.
|
1.37
|
“REGULATORY APPLICATION” shall mean all applications and phases of the process of seeking and obtaining GOVERNMENTAL APPROVAL for the PRODUCTS, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS, including INDs and NDAs in the US and their equivalent or analogous applications or filings in other countries or before other GOVERNMENTAL AUTHORITIES.
|
1.38
|
“RESULTING IP” shall mean all intellectual property relating to VILAZODONE or any PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT that is conceived or generated in the course of any DISCOVERY STUDY or any subsequent clinical study in any INDICATION (including PHASE II CLINICAL TRIALS, PHASE III CLINICAL TRIALS and post-approval clinical trials) conducted pursuant to this AGREEMENT or any CO-COMMERCIALIZATION AGREEMENT, including any and all information and know-how, inventions, discoveries, processes, methods, compositions, formulae, procedures, protocols, techniques, results of experimentation and testing, information and data, that are not generally and publicly known.
|
1.39
|
“RESULTING IP PATENTS” shall mean all patents and patent applications claiming RESULTING IP and all continuation, continuation-in-part (to the extent the claims thereof are directed to subject matter specifically described in a patent or patent application from which such continuation-in-part claims priority), divisional, re-examination, and reissue patent applications and patents and counterpart patent applications and patents in any country that claim priority therefrom, and EXTENSIONS thereto. A RESULTING IP PATENT will be considered to exist in any country during
|
1.40
|
“TERRITORY” shall mean worldwide.
|
1.41
|
“THERANOSTIC PRODUCT” shall mean a home-brew test or FDA or EMEA approved kit or device for detecting genetic markers that are correlated to VILAZODONE response in humans.
|
1.42
|
“THIRD PARTY” shall mean any person or entity other than the PARTIES and their AFFILIATES.
|
1.43
|
“TRADEMARK” SHALL MEAN ONE OR MORE TRADEMARKS, TRADE NAMES, TRADE DRESS, DOMAIN NAMES, INCLUDING BACK-UPS IF NECESSARY, USED BY GENAISSANCE FOR THE COMMERCIALIZATION OF PRODUCT, THERANOSTIC PRODUCT OR DIAGNOSTIC PRODUCT IN THE TERRITORY, OTHER THAN “GENAISSANCE” AND ANY OTHER GENAISSANCE CORPORATE TRADEMARK.
|
1.44
|
“US” shall mean the United States of America and its territories and possessions, including the Commonwealth of Puerto Rico.
|
1.45
|
“USD” and “$” shall mean the United States Dollar.
|
1.46
|
“UNLICENSED PRODUCT” shall mean a PRODUCT marketed or sold by a THIRD PARTY who does not have a sublicense from GENAISSANCE or its sublicensee to market or sell such PRODUCT.
|
1.47
|
“UNLICENSED DIAGNOSTIC PRODUCT” shall mean a DIAGNOSTIC PRODUCT marketed or sold by a THIRD PARTY who does not have a sublicense from GENAISSANCE or its sublicensee to market or sell such DIAGNOSTIC PRODUCT.
|
1.48
|
“UNLICENSED THERANOSTIC PRODUCT” shall mean a THERANOSTIC PRODUCT marketed or sold by a THIRD PARTY who does not have a sublicense from GENAISSANCE or its sublicensee to market or sell such THERANOSTIC PRODUCT.
|
1.49
|
“VILAZODONE” shall mean the active pharmaceutical ingredient internally referred to by MERCK KGAA as “EMD 68843” as further described in Schedule 1 to this AGREEMENT and all salts, esters, prodrugs, metabolites, hydrates solvates, polymorphs and isomers thereof.
|
1.50
|
“VILAZODONE MANUFACTURING TECHNOLOGY” shall mean all know-how owned or controlled by MERCK KGAA and its AFFILIATES relating to the production of VILAZODONE API (as defined in Section 3.1) and VILAZODONE drug products laid down in a) a development report including identification of critical steps and a description of polymorphism including conditions for formation and transformation and stability thereof (if a report is not available, all available information to enable preparation of a report); and b) manufacturing instructions of the most recent manufacturing campaign including amount and ratio of all materials, equipment, operating parameters (e.g., time, temperature, pressure) expected yields for all steps starting from commercially available starting materials, in-process controls including analytical methods, specifications for intermediates, starting materials, solvents, reagents, and ancillary materials if defined; and c) batch analysis results for batches used in toxicity and clinical studies, including impurity profile, date of manufacture, manufacturing process information and batch size. VILAZODONE MANUFACTURING TECHNOLOGY also includes all know-how MERCK KGAA and its AFFILIATES own or control at the time the VILAZODONE MANUFACTURING TECHNOLOGY is transferred to GENAISSANCE related to the production of VILAZODONE tablets, i.e. the development report (if a report is not available, all available information to enable preparation of a report), manufacturing instructions including equipment operating parameters; and in-process controls including analytical methods.
|
1.51
|
“YEAR” shall mean a calendar year or a portion thereof during the term of this AGREEMENT, ending either on December 31 or on the termination of this AGREEMENT.
|
1.52
|
Word Usage. References to a “day” or “days” are to calendar day(s) unless otherwise indicated. The words “including”, “includes”, “e.g.”, and “such as” are used in their non-limiting sense and have the same meaning as “including without limitation” and “including but not limited to”. References to Sections, subsections, and clauses in this AGREEMENT are to the same with all their subparts. “Herein” means anywhere in this AGREEMENT. “Hereunder” and “hereto” means under or pursuant to any provision of this AGREEMENT. The headings used in this AGREEMENT shall not be used as an instrument of interpretation or definition, but shall only serve for purposes of convenience.
|
2.1
|
MERCK KGAA PATENT and KNOW-HOW license. MERCK KGAA hereby grants to GENAISSANCE, and GENAISSANCE hereby accepts, the exclusive right and license throughout the TERRITORY under the MERCK KGAA PATENTS and MERCK KGAA KNOW-HOW to research, develop, use, sell, offer for sale, have sold, and import PRODUCTS and THERANOSTIC PRODUCTS for all INDICATIONS, subject to [***]. GENAISSANCE shall also have the right to sublicense after completion of the first prospective DISCOVERY STUDY and expiry of the First Option Period referred to in Section 5.3.1 [***]; provided, that GENAISSANCE may sublicense its rights hereunder at any time to a THIRD PARTY contract research organization for performing clinical development on behalf of GENAISSANCE; provided, further, that such THIRD PARTY contract research organization shall not be considered a sublicensee (except to the extent it is granted the right to market, promote or sell the PRODUCT). For the avoidance of doubt and except as otherwise provide in Section 2.5 or otherwise in this AGREEMENT, MERCK KGAA retains the exclusive right to use the MERCK KGAA KNOW-HOW for all other purposes.
|
2.2
|
Data License. Such exclusive know-how license will include a license to use all preclinical and clinical data that MERCK KGAA owns or has the right to license to GENAISSANCE (including toxicology, pharmacology and animal data, and previous phase I and phase II clinical trial clinical data, i.e., the study master file, specifically including all data generated by GSK), and reports related to the foregoing data. MERCK KGAA shall supply GENAISSANCE with paper copies and/or electronic copies (if
|
2.3
|
RESULTING IP. Subject to any rights granted to MERCK KGAA pursuant to the terms of a separate CO-COMMERCIALIZATION AGREEMENT with GENAISSANCE, MERCK KGAA hereby grants and agrees to grant to GENAISSANCE a worldwide, exclusive right and license, with right to sublicense (subject, in the case of PRODUCTS and THERANOSTIC PRODUCTS, to same sublicensing terms set forth in Section 2.1), to use the RESULTING IP and RESULTING IP PATENTS for all purposes, including the research, development, manufacture, marketing and sale of PRODUCTS, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS.
|
2.4
|
MERCK KGAA PATENTS. Except in respect of RESULTING IP, MERCK KGAA PATENTS owned by MERCK KGAA prior to the EFFECTIVE DATE and other intellectual property rights that will be or are filed by MERCK KGAA that are not the result of any inventive contribution by GENAISSANCE remain the sole property of MERCK KGAA and shall be part of the license grant hereunder to the extent necessary or useful to practice the licenses granted GENAISSANCE herein.
|
2.5
|
VILAZODONE MANUFACTURING TECHNOLOGY Option. Subject to the following provisions of this paragraph, MERCK KGAA hereby grants GENAISSANCE an option to obtain a semi-exclusive, paid-up, license under the VILAZODONE MANUFACTURING TECHNOLOGY, MERCK KGAA PATENTS and MERCK KGAA KNOW-HOW to make and have made VILAZODONE and PRODUCTS for so long as GENAISSANCE has a license to the MERCK KGAA PATENTS and MERCK KGAA KNOW-HOW under Section 2.1 (which is also applicable in the case MERCK KGAA is a contract manufacturer for GENAISSANCE). For the purpose of this Section 2.5, “semi-exclusive” shall mean that MERCK KGAA retains the right to use the VILAZODONE MANUFACTURING TECHNOLOGY only to manufacture and supply VILAZODONE and PRODUCT to GENAISSANCE and its sublicensees pursuant to Section 8.1.1, a separate CO-COMMERCIALIZATION AGREEMENT between the PARTIES pursuant to Section 5.3, a separate license agreement between the PARTIES
|
2.6
|
MERCK KGAA Technical Assistance. Upon written requests from GENAISSANCE, MERCK KGAA shall provide GENAISSANCE with reasonable access to those employees of MERCK KGAA who have participated in any significant manner in VILAZODONE’s discovery, development, manufacturing development and patenting, at no charge to GENAISSANCE, other than reasonable travel expenses incurred by such employees in connection with providing such assistance. To the extent legally or contractually permitted, MERCK KGAA shall also supply GENAISSANCE with contact information for outside experts, clinical investigators, regulatory authorities and other persons involved with or consulted during VILAZODONE’s discovery, clinical development, and patenting who are known to MERCK KGAA, and MERCK KGAA shall, upon GENAISSANCE’s request and at no charge to GENAISSANCE, use COMMERCIALLY REASONABLE EFFORTS to support GENAISSANCE to persuade such persons to cooperate with GENAISSANCE in developing a detailed research, development and patenting plan, or provide other assistance or information as reasonably requested by GENAISSANCE. If GENAISSANCE exercises its option to obtain a license to the VILAZODONE MANUFACTURING TECHNOLOGY, MERCK KGAA shall provide GENAISSANCE with reasonable manufacturing technical assistance to enable GENAISSANCE’s contract manufacturer (which shall be reasonably experienced, i.e. at the same technological level as regards e.g. machines, maintenance, etc as MERCK KGAA´s VILAZODONE manufacturing facilities at the EFFECTIVE DATE) to use the VILAZODONE MANUFACTURING TECHNOLOGY to manufacture VILAZODONE API.
|
2.7
|
Acknowledgement and Trademarks. GENAISSANCE shall and shall cause its sublicensees (if any), to the extent legally permissible, acknowledge the license from MERCK KGAA on each package of PRODUCT by using the words “Licensed by MERCK KGaA, Darmstadt (Germany)” in a manner and placement reasonably approved by MERCK KGAA. GENAISSANCE shall be responsible for the selection and development of TRADEMARKs for use with the PRODUCTS, THERANOSTIC PRODUCTS AND DIAGNOSTIC PRODUCTS IN THE TERRITORY, AND FOR ALL ASSOCIATED RISKS AND COSTS.
|
3.1
|
GENAISSANCE will assume full financial risk and cost and regulatory responsibility for the further preclinical and clinical development, the manufacture of VILAZODONE as active pharmaceutical ingredient (“VILAZODONE API”) and dosage forms for the commercialization of PRODUCTS.
|
3.2
|
IND applications. MERCK KGAA will transfer ownership of the current IND and the equivalent regulatory filings in countries outside the US to GENAISSANCE; to the extent permitted by law, GENAISSANCE shall then be the holder of the IND and such equivalent filings and responsible for compliance with all regulatory requirements, including those related to synthesis of VILAZODONE API and production of VILAZODONE and PRODUCT dosage forms.
|
3.3
|
DMFs. To the extent MERCK KGAA supplies VILAZODONE API to GENAISSANCE, MERCK KGAA will grant GENAISSANCE reasonable access to and a right to cross-reference the technical information contained in the then current drug master file (“DMF”) relevant for VILAZODONE API so that GENAISSANCE can include or cross reference that information in its IND directly or through a GENAISSANCE DMF. If necessary, MERCK KGAA will update and maintain its DMF with VILAZODONE MANUFACTURING TECHNOLOGY before PHASE III CLINICAL TRIALS and again before NDA submission, and as may be otherwise necessary to reflect current manufacturing methods, until such time when GENAISSANCE submits its own IND or DMF.
|
3.4
|
DEVELOPMENT PLAN. The DEVELOPMENT PLAN shall be implemented by GENAISSANCE with the assistance of MERCK KGAA as described below. Each DEVELOPMENT PLAN will specify in good faith the MAJOR MILESTONE EVENTS to be applicable to PRODUCT(S) in the applicable INDICATION, and shall include a reasonable projected time schedule for the achievement of such MAJOR MILESTONE EVENTS. The DEVELOPMENT PLAN for a PRODUCT in the initial INDICATION is set forth in Schedule 2 to this AGREEMENT and may be amended from time to time pursuant to Section 10.1. Any such amendments shall be attached to Schedule 2.
|
3.5
|
DISCOVERY STUDY. GENAISSANCE agrees to fund and perform the DISCOVERY STUDY as described in the DEVELOPMENT PLAN. GENAISSANCE will define the genetic, clinical, and statistical parameters of the DISCOVERY STUDY and will prepare any documents necessary to perform the DISCOVERY STUDY (including, but not limited to, the study protocol and appropriate informed consent forms). GENAISSANCE agrees to perform at least one prospective DISCOVERY STUDY, and in addition may choose at its sole discretion to perform a retrospective DISCOVERY STUDY, both as outlined below.
|
3.5.1
|
Retrospective DISCOVERY STUDY. If conducted, the retrospective DISCOVERY STUDY will use the clinical data collected during the previous phase II clinical trials conducted by MERCK KGAA or its former licensee GSK. However, since the phase II clinical trials did not include collection of patient samples and informed consent for genetic analysis, GENAISSANCE and MERCK KGAA will collaborate to obtain such samples and informed consent. GENAISSANCE will devise an informed consent, a study protocol and other documents providing details on identification of subjects, the sample handling process and how the samples may be utilized for future research, and will submit the informed consent forms, protocols and/or amendments and other documents as required to appropriate IRBs/Ethics Committees. MERCK KGAA will use COMMERCIALLY REASONABLE EFFORTS to provide as far as legally and contractually allowed, GENAISSANCE with a list of all investigators (and their contact information) used in all clinical studies. GENAISSANCE will collaborate with these investigators to locate the patients who participated in these trials and to obtain their informed consents and samples for genetic analyses. GENAISSANCE will extract DNA from the samples, determine the patients’ haplotypes for the candidate genes, and
|
3.5.2
|
Prospective DISCOVERY STUDY. In the prospective DISCOVERY STUDY, GENAISSANCE will recruit patients and obtain their informed consent for a new clinical trial of a PRODUCT and which will include administration of the PRODUCT and collection of samples for genetic analyses and clinical data relevant to the defined clinical phenotypes of interest to GENAISSANCE. GENAISSANCE will extract DNA from the samples, determine the patients’ haplotypes for the candidate genes, and perform a genetic association analysis using the newly collected clinical data and the results of the haplotype analysis.
|
3.6
|
Further Clinical Development. Based on the results of the DISCOVERY STUDY contained in the report provided to MERCK KGAA in accordance with Section 5.3.1, GENAISSANCE will decide whether to proceed with further clinical development of VILAZODONE. GENAISSANCE will consult with appropriate GOVERNMENTAL AUTHORITIES to develop a plan for conducting one or more additional clinical studies designed to support [***]. Such clinical development may include PHASE II CLINICAL TRIALS or PHASE III CLINICAL TRIALS. If GENAISSANCE decides not to proceed with further clinical development after completion of the DISCOVERY STUDY or does not use COMMERCIALLY REASONABLE EFFORTS to start such clinical development by initiating a clinical trial (first patient first visit) within [***] from MERCK KGAA’s receipt of GENAISSANCE’s final report on the final DISCOVERY STUDY, and GENAISSANCE has not commenced such trial within [***] after MERCK KGAA’s notice to GENAISSANCE of its failure to comply with this Section 3.6, then the worldwide rights to VILAZODONE shall revert to MERCK KGAA in accordance with Section 18.2; provided however, that this [***] deadline shall be suspended during the time MERCK engages GENAISSANCE in discussions regarding a CO-COMMERCIALIZATION AGREEMENT pursuant to Section 5.3 following. Notwithstanding the foregoing, GENAISSANCE shall have the right to extend the [***] deadline for delays caused by significant events or circumstances beyond GENAISSANCE’s reasonable control.
|
3.7
|
Development Activities. GENAISSANCE shall design, fund and perform the activities set forth in the DEVELOPMENT PLAN which includes all clinical trials as set forth in the DEVELOPMENT PLAN, and preparing the study protocol, appropriate informed consent forms and any other necessary documents for these studies. If GENAISSANCE decides to enrich the patient cohort of any of these studies for response by identifying patients with predictive genetic markers that are correlated with response to VILAZODONE, then GENAISSANCE may develop, solely or in collaboration with a THIRD PARTY diagnostic partner, a THERANOSTIC PRODUCT for identifying patients who have the correlated genetic markers.
|
4.2
|
Capability. GENAISSANCE shall demonstrate to MERCK KGAA by [***] after the EFFECTIVE DATE that GENAISSANCE will have the financial resources, whether from cash on hand, expected future cash flow, committed or reasonably confident equity or debt financing or other sources, to fund the anticipated [***] dollar ($[***]) budget (less the amount expended prior to such [***] after the EFFECTIVE DATE) for research and development activities scheduled for 2005. If MERCK KGAA reasonably determines that GENAISSANCE has not demonstrated such financial resources then MERCK KGAA may terminate this AGREEMENT and the rights to VILAZODONE shall revert to MERCK KGAA in accordance with Section 18.2.
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4.3
|
Additional indications. If at any time or times during the term of this AGREEMENT, GENAISSANCE commences or intends to commence any development activities for any PRODUCT(S), THERANOSTIC PRODUCTS or DIAGNOSTIC PRODUCTS for INDICATIONS other than the initial INDICATION, GENAISSANCE shall promptly design and submit to MERCK KGAA (through the JOINT COMMITTEE) a DEVELOPMENT PLAN and at an appropriate time a MARKETING PLAN for each of such PRODUCT(S), THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS.
|
4.4
|
Progress Reports. GENAISSANCE will provide at least [***], written reports to MERCK KGAA throughout the term of this AGREEMENT, summarizing
|
4.5
|
Achievement of MAJOR MILESTONE EVENTS. Without limiting its general obligations under Section 4.1, GENAISSANCE specifically commits to use its COMMERCIALLY REASONABLE EFFORTS to achieve each MAJOR MILESTONE EVENT under each DEVELOPMENT PLAN in substantial conformity with the time schedule contained in such DEVELOPMENT PLAN; provided, however, that (i) in determining whether GENAISSANCE is complying with this obligation, the PARTIES will take into account any material adverse condition or event related to safety, bio-availability, or efficacy of the PRODUCT, as well as any impediments caused by formulation, manufacturing, regulatory, or other technical or governmental issues related to the PRODUCT or its approval outside the reasonable control of GENAISSANCE; and (ii) each PARTY will cooperatively and in good faith agree from time to time on reasonable alterations of such time schedules to reflect unexpected deceleration or acceleration of the developmental process, so long as the other PARTY has in each case notified such PARTY as soon as the other PARTY becomes aware that a particular MAJOR MILESTONE EVENT is not likely to be achievable within the expected time frame, or that a particular MAJOR MILESTONE EVENT is not likely to require as much time to achieve as was expected.
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4.6
|
Information exchange. During the [***] following the EFFECTIVE DATE, MERCK KGAA will disclose to GENAISSANCE the existing MERCK KGAA KNOW-HOW. MERCK KGAA shall disclose to GENAISSANCE all other MERCK KGAA KNOW-
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4.7
|
Product Launch. Without limiting its general obligations under Section 4.1, GENAISSANCE will exert its COMMERCIALLY REASONABLE EFFORTS to obtain, as rapidly as possible, all required pricing approvals and approvals of labelling and marketing materials for a PRODUCT and THERANOSTIC PRODUCTS in each MAJOR COUNTRY and each other country in which a GOVERNMENTAL APPROVAL for such PRODUCT and THERANOSTIC PRODUCTS has been granted, and to launch such PRODUCT in such country. Notwithstanding the foregoing, MERCK KGAA acknowledges that it may not be commercially reasonable for GENAISSANCE to seek pricing approvals or launch a PRODUCT or THERANOSTIC PRODUCT in every country.
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5.1
|
Marketing responsibility. Except for activities undertaken by MERCK KGAA pursuant to a CO-COMMERCIALIZATION AGREEMENT, GENAISSANCE shall be solely responsible for the formulation and execution of a marketing strategy for the PRODUCTS and for all promotional, marketing and commercialization of the PRODUCTS in the MAJOR COUNTRIES and those other countries in the TERRITORY that GENAISSANCE determines, using commercial reasonable judgment, to market PRODUCTS in, either using its own resources or by partnering with a THIRD PARTY in a co-commercialization arrangement, or by sublicensing such rights to a THIRD PARTY.
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5.2
|
Successor MARKETING PLANS. GENAISSANCE shall, no later than [***] prior to the expiration of the period covered by a MARKETING PLAN for a PRODUCT, design and submit to MERCK KGAA (through the JOINT COMMITTEE) a MARKETING PLAN to cover the [***] period following such expiration.
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5.3
|
Option to co-develop and to CO-COMMERCILIZE.
|
5.3.1
|
After the DISCOVERY STUDY. For a period of [***] from MERCK KGAA’s receipt of GENAISSANCE’s final report on the final prospective DISCOVERY STUDY (the “First Option Period”), MERCK KGAA, at its sole discretion, shall have the exclusive right,
|
5.3.2
|
After PHASE III CLINICAL TRIALs. If, prior to completion of PHASE III CLINICAL TRIALS, GENAISSANCE has not granted a THIRD PARTY any commercialization rights in a particular territory, then for a period of [***] from MERCK KGAA’s receipt of GENAISSANCE’s final report on the final PHASE III CLINICAL TRIAL (the “Second Option Period”), MERCK KGAA shall have the exclusive option to negotiate in good faith toward a CO-COMMERCIALIZATION AGREEMENT with GENAISSANCE to CO-COMMERCIALIZE, with GENAISSANCE, the PRODUCT for all INDICATIONS in such territory. Such a final report shall be made available to MERCK KGAA within [***] after the statistical evaluation of such trial. MERCK KGAA may exercise this right by providing written notice to GENAISSANCE during the Second Option Period, such notice, to specify which territory MERCK KGAA is electing. The PARTIES will negotiate the terms of the CO-COMMERCIALIZATION AGREEMENT in good faith, with the understanding that the financial terms will [***], as well as the [***]. If the PARTIES do not enter into a CO-COMMERCIALIZATION AGREEMENT by the end of the Second Option Period for such territory, or agree in
|
5.4
|
Theranostic Products. If GENAISSANCE is developing or marketing the PRODUCT in a particular country and INDICATION solely or with a THIRD PARTY, then GENAISSANCE shall have the sole right to decide whether to develop and to use a THERANOSTIC PRODUCT in connection with GOVERNMENTAL APPROVAL or marketing of the PRODUCT in any such countries and INDICATIONS. If GENAISSANCE HAS SO DECIDED, GENAISSANCE WILL DEVELOP AND COMMERCIALIZE A THERANOSTIC PRODUCT AT ITS EXPENSE, EITHER SOLELY OR IN COLLABORATION WITH ONE OR MORE THIRD PARTY DIAGNOSTIC COMPANIES. IF GENAISSANCE AND MERCK KGAA ARE CO-COMMERCIALIZING THE PRODUCT IN A PARTICULAR COUNTRY, THEN ISSUES RELATING TO THE DEVELOPMENT AND USE OF THERANOSTIC PRODUCTS IN SUCH COUNTRIES SHALL BE RESOLVED BY THE JOINT COMMITTEE, AND GENAISSANCE SHALL RETAIN THE SOLE RIGHT TO DEVELOP ANY THERANOSTIC PRODUCTS AND TO PROVIDE RELATED THERANOSTIC TESTING SERVICES, BY ITSELF OR WITH ONE OR MORE THIRD PARTY DIAGNOSTIC COMPANIES. IN CASE OF A CO-COMMERCIALIZATION AGREEMENT FOR THE PRODUCT BETWEEN GENAISSANCE AND MERCK KGAA, GENAISSANCE SHALL [***] AS DETERMINED BY THE JOINT COMMITTEE, FOR THE DEVELOPMENT OF VILAZODONE.
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5.5
|
NDA FILINGS. SUBJECT TO THE TERMS OF ANY CO-COMMERCIALIZATION AGREEMENT WITH MERCK KGAA PURSUANT TO SECTION 5.3, GENAISSANCE WILL PREPARE AND FILE, AT ITS EXPENSE, ALL REGULATORY APPLICATIONS.
|
6.1
|
VILAZODONE therapeutic rights. If MERCK KGAA and GENAISSANCE enter into a CO-COMMERCIALIZATION AGREEMENT as described in Section 5.3 for a particular country, then GENAISSANCE will grant back to MERCK KGAA an exclusive (except as to GENAISSANCE and its AFFILIATES) right and license, (to be governed by the separate agreement) to use the MERCK KGAA PATENTS and RESULTING IP and RESULTING IP PATENTS for the research, development, marketing and sale of the PRODUCT in such country(s); provided that the scope of such right and license will be equivalent to the scope of such co-development or CO-COMMERCIALIZATION AGREEMENT.
|
6.2
|
VILAZODONE THERANOSTIC RIGHTS. IF MERCK KGAA AND GENAISSANCE ENTER INTO A CO-COMMERCIALIZATION AGREEMENT AS DESCRIBED IN SECTION 5.3 FOR A PARTICULAR COUNTRY(S), THEN GENAISSANCE WILL GRANT BACK TO MERCK KGAA AN EXCLUSIVE (EXCEPT AS TO GENAISSANCE AND ITS AFFILIATES) RIGHT AND LICENSE (TO BE GOVERNED BY A SEPARATE AGREEMENT) TO USE THE MERCK KGAA PATENTS AND RESULTING IP AND RESULTING IP PATENTS FOR USE IN THE MARKETING AND SALE OF THERANOSTIC PRODUCTs in each such country(s); provided that the scope of such right and license will be equivalent to the scope of CO-COMMERCIALIZATION AGREEMENT.
|
7.1
|
Initial payment. Upon execution of this AGREEMENT, GENAISSANCE shall pay MERCK KGAA a non-refundable up-front fee of €1 million (€1,000,000) in the form of GENAISSANCE equity shares for the patent license, with two hundred and fifty thousand EUROS (€250,000) already paid following signature of the Letter of Intent dated April, 29th 2004 and seven hundred and fifty thousand EUROS (€750,000) to be paid within [***] following the execution of this AGREEMENT.
|
7.2
|
Milestone payments. In addition, GENAISSANCE shall pay to MERCK KGAA each of the following milestone payments, on a non-refundable, non-creditable basis, provided that GENAISSANCE develops VILAZODONE from the EFFECTIVE DATE through the indicated milestone without the assistance of a sublicensee:
|
|
a.
|
[***] EURO (€[***]) within [***] following the FIRST CLINICAL TRIAL in the TERRITORY.
|
|
b.
|
[***] EURO (€[***]) within [***] of the acceptance (as defined by the FDA or EMEA, as appropriate) of a filing for the first NDA or MAA in the US or the EU for any PRODUCT for the first INDICATION.
|
|
c.
|
[***] EURO (€[***]) within [***] of receipt of the first approval of an MAA or NDA in the US or EU for any PRODUCT in any INDICATION.
|
|
d.
|
[***] EURO (€[***]) within [***] of first commercial sale of any PRODUCT in the US or EU.
|
7.3
|
Payments. All payments agreed under Sections 2.5, 7.1 and 7.2 shall be in the form of equity shares of GENAISSANCE, which shall consist of common shares of GENAISSANCE and the number of shares to be transferred to MERCK KGAA shall be calculated by dividing the respective payments due by the average closing price of GENAISSANCE shares at the NASDAQ during the ten (10) trading days prior to the respective milestone date, provided, however, that if MERCK KGAA´s and its AFFILIATES total share of common stock would exceed 19.9% of the total outstanding shares of the total issued stock of GENAISSANCE, or if the average closing price at the respective milestone date is below US$ 2.25, subject to adjustment for stock splits or other re-capitalization of stock as a result of the issuance of stock as a stock dividend or subdivision or combination of the outstanding shares of stock or in connection with acquisitions or joint ventures, then MERCK KGAA shall receive the payment in cash.
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7.4
|
In each case under Sections 7.1-7.3, it is agreed and understood by GENAISSANCE that:
|
7.4.1
|
GENAISSANCE will deliver the respective stock certificates to the address as directed by MERCK KGAA within the given time-frame. The terms applicable to the equity shares of GENAISSANCE to be transferred to MERCK KGAA hereunder shall be as set forth in the Pre-emptive Rights Rider in Schedule 8 and as otherwise provided in a Registration Rights Agreement as set forth in Schedule 9.
|
7.4.2
|
MERCK KGAA shall not be limited in its decision which of its AFFILIATES will receive the shares at the time of receipt and later on.
|
7.4.3
|
For the purpose of determining the number of GENAISSANCE shares to be transferred, the price of the GENAISSANCE shares which is set out in USD shall be changed to EURO at the EURO exchange reference rate to the USD of the European Central Bank Frankfurt at the date the respective payment is due.
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7.5
|
Royalties. In addition to the payments provided for in Sections 7.1 and 7.2 GENAISSANCE shall, pay to MERCK KGAA a royalty of [***] percent ([***]%) of the aggregate NET SALES by GENAISSANCE or its AFFILIATES under this AGREEMENT from all PRODUCTS on a country-by-country basis as long as the manufacture, use and/or sale of PRODUCTS in such country would infringe at least one claim of a MERCK KGAA PATENT or [***] years after the first commercial sale in such country, whichever is longer (the “First Royalty Period”). Upon expiration of the First Royalty Period in a particular country, if the RESULTING IP PATENTS is the basis for (1) a grant by the applicable agency in such country of a market exclusivity period that effectively prevents THIRD PARTIES from making or selling any drug product containing VILAZODONE, for which an exclusivity is granted, and/or (2) for so long as the manufacture, use by others than the prescribing physician, and/or sale of PRODUCT in such country would infringe RESULTING IP PATENTS, then GENAISSANCE shall pay MERCK KGAA a reduced fee of [***]% royalties on the NET SALES by GENAISSANCE or its AFFILIATES in such country for so long as the circumstances described in clauses (1) or (2) exist (the “Second Royalty Period”). Should MERCK KGAA and GENAISSANCE enter into a CO-COMMERCIALIZATION AGREEMENT pursuant to Sections 5.3 and 5.4; such agreement will set forth any milestone and royalty payments by GENAISSANCE to MERCK KGAA. Each of the aggregate time period of the First and Second Royalty Periods and of the time periods during which royalties are payable under Sections 7.6.2 and 7.7.2 are referred to as a “ROYALTY TERM”.
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7.6
|
Payments by GENAISSANCE for THERANOSTIC PRODUCTs
|
7.6.1
|
GENAISSANCE shall pay MERCK KGAA a royalty of [***]% ([***] percent) on the NET SALES for each THERANOSTIC PRODUCT that the manufacture, use or sale of
|
7.6.2
|
This royalty shall be payable on a country-by-country basis until the expiration of all RESULTING IP PATENT claims that would be infringed by the manufacture, use or sale of such THERANOSTIC PRODUCT or [***] years after the first commercial sale of the THERANOSTIC PRODUCT in such country, whichever is the longer period.
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7.6.3
|
If GENAISSANCE grants a license under the RESULTING IP or RESULTING IP PATENTS to a THIRD PARTY to use or sell a THERANOSTIC PRODUCT, then GENAISSANCE agrees to share with MERCK KGAA equally any and all license issue fees and milestone payments received by GENAISSANCE from such THIRD PARTY allocable to such license.
|
7.6.4
|
SHOULD MERCK KGAA AND GENAISSANCE ENTER INTO A CO-COMMERCIALIZATION AGREEMENT PURSUANT TO SECTION 5.3; SUCH AGREEMENT WILL SET FORTH ANY MILESTONE AND royalty payments by GENAISSANCE to MERCK KGAA.
|
7.7
|
Payments by GENAISSANCE for DIAGNOSTIC PRODUCTs.
|
7.7.1
|
GENAISSANCE shall pay to MERCK KGAA a royalty of [***]% ([***] percent) on the NET SALES of GENAISSANCE and its sublicensees for each DIAGNOSTIC PRODUCT that the manufacture, use or sale of which would infringe at least one claim of a RESULTING IP PATENT or that uses MERCK KGAA KNOW-HOW incorporated in or resulting from the VILAZODONE studies performed by MERCK KGAA or any former licensee of MERCK KGAA.
|
7.7.2
|
This royalty shall be payable on a country-by-country basis until the expiration of all RESULTING IP PATENT claims that would be infringed by the manufacture, use or sale of such DIAGNOSTIC PRODUCT or [***] years after the first commercial sale of the DIAGNOSTIC PRODUCT in such country, whichever is the longer period.
|
7.7.3
|
If GENAISSANCE grants a license under the RESULTING IP or RESULTING IP PATENTS to a THIRD PARTY to use or sell a DIAGNOSTIC PRODUCT, then GENAISSANCE agrees to share with MERCK KGAA equally any and all license issue fees and milestone payments received by GENAISSANCE from such THIRD PARTY allocable to such license.
|
7.7.4
|
If GENAISSANCE, directly or indirectly, commercializes a DIAGNOSTIC PRODUCT or a THERANOSTIC PRODUCT for use with a pharmaceutical product other than a PRODUCT, the same royalties payable under Sections 7.6 and 7.7 shall be paid to MERCK KGAA. If GENAISSANCE grants a license under the RESULTING IP PATENTS to a THIRD PARTY and receives revenues from such THIRD PARTY that are allocable to the practice of such RESULTING IP PATENTS, GENAISSANCE shall share such revenues with MERCK KGAA in the same manner as provided in Section 7.8(e).
|
7.8
|
Third Party Payments
|
|
Should GENAISSANCE grant a sublicense of the MERCK KGAA PATENTS and RESULTING IP PATENTS to a THIRD PARTY to develop, market, promote or sell the PRODUCT, either solely or jointly with GENAISSANCE, then GENAISSANCE shall share with MERCK KGAA revenues received by GENAISSANCE, which are allocable to the PRODUCT, as follows:
|
|
a)
|
Issue Fees. GENAISSANCE agrees to pay MERCK KGAA a share, as calculated pursuant to Section 7.8(e), of any up-front license issue fee within [***] upon GENAISSANCE’s receipt of such fee;
|
|
b)
|
Milestone Payments. GENAISSANCE agrees to pay MERCK KGAA the greater of (i) a share, as calculated in Section 7.8(e), of each milestone payment received from a THIRD PARTY; or (ii) the corresponding milestone payments described in Section 7.2;
|
|
c)
|
Equity. If, as part of a such a sublicense transaction, GENAISSANCE issues equity to a sublicensee, the portion of cash received in exchange for such equity that exceeds [***]% of the then fair market value of such equity (based on the
|
|
d)
|
Royalties. In addition, GENAISSANCE shall pay MERCK KGAA, on a country by country basis, royalties based on the total NET SALES of the PRODUCT (i.e. sublicensee alone or sublicensee plus GENAISSANCE NET SALES in case of co-commercialization) equal to the greater of (i) [***]% of NET SALES for the First Royalty Period and [***]% for the Second Royalty Period, or (ii) a share, as calculated in Section 7.8(e), of the royalties that GENAISSANCE receives from such sublicensee. If GENAISSANCE receives from a sublicensee a price for the supply of VILAZODONE (i.e., bulk powder, tablets or final drug product) that is higher than GENAISSANCE’s cost of goods supplied (“COGS”) as defined below in supplying the VILAZODONE to such sub-licensee (subject to audit by MERCK KGAA), then this additional amount shall also be considered as part of a royalty payment to GENAISSANCE as considered in this subsection d. “COGS” means GENAISSANCE’s actual cost paid to THIRD PARTIES, including any profits paid to such THIRD PARTIES, to manufacture VILAZODONE API or the PRODUCT in the final packaged form, or to the extent not procured from a THIRD PARTY, its Fully Absorbed Standard Costs. “Fully Absorbed Standard Cost” or “FASC” means the fully allocated cost of manufacturing, which shall comprise all direct costs (including labor, materials, energy, utilities, quality control or other costs incurred directly in the manufacturing of PRODUCT) and indirect costs (including administrative labor costs, manufacturing facility and equipment maintenance, relevant insurances, and depreciation of manufacturing equipment and manufacturing) specifically allocable to the production of the PRODUCT. Such calculation shall be based upon accepted contract manufacturing industry standards (including those relating to the allocation of idle capacity and overhead) and GAAP. Prior to the commencement of any manufacturing by GENAISSANCE,
|
|
(e)
|
Revenue Share. In each of the revenue categories in this Section 7.8, the share paid to MERCK KGAA shall be based on the development stage at which such sublicense is granted, as follows:
|
|
(i)
|
If such sublicense is granted by GENAISSANCE after the completion of the last prospective DISCOVERY STUDY, then the share shall be [***]% to GENAISSANCE and [***]% to MERCK KGAA.
|
|
(ii)
|
If such sublicense is granted by GENAISSANCE after completion of the last PHASE II CLINICAL TRIAL following achievement of the primary objective as defined in Section 1.33, then the share shall be [***]% to GENAISSANCE and [***]% to MERCK KGAA.
|
|
(iii)
|
If such sublicense is granted by GENAISSANCE after the completion of the first prospective PHASE III CLINICAL TRIAL in which the primary endpoint as defined in the DEVELOPMENT PLAN for the INDICATION is reached, then the share shall be [***]% to GENAISSANCE and [***]% to MERCK KGAA.
|
7.9
|
Third Party Royalty Offset. If the manufacture, use, marketing, or sale of a PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT would infringe a valid THIRD PARTY patent claim in a certain country of the TERRITORY and therefore it is necessary for GENAISSANCE or its sublicensee to obtain a license under such THIRD PARTY patent in such country from one or more THIRD PARTIES to practice the licenses granted under Sections 2.1, 2.3 or 2.5, then MERCK KGAA agrees to share in the aggregate [***]% of the royalties to be paid by GENAISSANCE to the THIRD
|
7.10
|
Royalty Rate Reduction for PRODUCTS. During any NON-EXCLUSIVE PERIOD in respect of a particular country and a PRODUCT in which either:
|
|
(i)
|
all claims of and rights under all issued MERCK KGAA PATENTS covering the manufacture, sale or use of such PRODUCT in such country (as then practiced by GENAISSANCE or its sublicensees) have been declared unpatentable, invalid or unenforceable by a final and non-appealable judgment of a court or administrative agency having jurisdiction thereof or have expired or have been finally abandoned, or
|
|
(ii)
|
there were at no time on or since the EFFECTIVE DATE any such claims under any issued MERCK KGAA PATENTS in such country,
|
7.11
|
Royalty Rate Reduction for THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS. During any NON-EXCLUSIVE PERIOD in respect of a particular country and a THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT in which either:
|
|
(i)
|
all claims of and rights under all issued RESULTING IP PATENTS covering the manufacture, sale or use of such THERANOSTIC PRODUCT or
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|
(ii)
|
there were at no time on or since the EFFECTIVE DATE any such claims under any issued RESULTING IP PATENTS in such country,
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7.12
|
Payment terms. The royalty payments under Section 7.5, 7.6, and 7.7 shall be due and payable to MERCK KGAA within [***] after the end of each QUARTER with respect to NET SALES during such QUARTER. The royalties shall be paid in EURO and shall be directly deposited to a bank account designated for this purpose from time to time by MERCK KGAA. To the extent paid in cash, the initial payment under Section 7.1 shall be transferred within [***] following the EFFECTIVE DATE to a bank account designated for this purpose by MERCK KGAA. To the extent paid in cash, the milestone payments under Section 7.2 shall be transferred within [***] following the occurrence of the respective stated events and shall be directly deposited to a bank account designated for this purpose from time to time by MERCK KGAA. The PARTIES may vary the method of payment set forth herein at any time upon mutual agreement; said change, if any, will be consistent with the local law at the place of payment or remittance.
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7.13
|
Exchange rate. In those cases where an amount due hereunder is payable in EURO but is to be calculated based upon one or more currencies other than EURO, such amount due shall be determined on the basis of conversion of such other currencies to EURO, at an exchange rate (the “Agreed Exchange Rate”) equal to the average of the daily exchange rates for the QUARTER in which the applicable NET SALES occurred as quoted each day by the European Central Bank in Frankfurt for the EURO. The PARTIES agree to cooperate to procure whatever licenses or permits are required to obtain the waiver of restrictions or to otherwise facilitate the conversion and transfer of all amounts payable hereunder.
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7.14
|
Late payment. All payments under this AGREEMENT shall earn interest from the date due until paid at a rate equal to the lesser of the maximum rate permissible under applicable law or two percent (2%) above the 3-months EURIBOR per annum.
|
7.15
|
Tax withholding. All payments required under this contract shall be made without any deductions for whatever reasons; however, if local law requires GENAISSANCE to withhold tax on payments u nder this AGREEMENT, GENAISSANCE may withhold such taxes. Such withholdings on payments under this AGREEMENT are only allowed if GENAISSANCE reasonably cooperates with MERCK KGAA in benefiting from the reduced withholding tax laid down in the Double Taxation Convention between Germany and the US (the “DTC”) and shall in no case exceed the withholding tax rate for royalty payments mentioned in the DTC irrespective of whether the payments are made by GENAISSANCE a sub-licensee or any other party, such that for the tax purpose all payments due under this AGREEMENT by GENAISSANCE shall either be made or deemed to have been made by GENAISSANCE, being a US company. MERCK KGAA will reasonably assist GENAISSANCE in benefiting from the reduced withholding tax rate as laid down in the DTC, which withholding tax rate is currently 0%. In case the Double Taxation Convention should be amended in the future, GENAISSANCE will(i) promptly notify MERCK KGAA of such requirement, (ii) remit such amount to the proper tax authorities, and (iii) provide MERCK KGAA with the necessary tax receipts in a timely manner.
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7.16
|
Other taxes. Except as provided in Section 7.15 with respect to withholding taxes, any sales taxes, turnover taxes, value added taxes and indirect taxes, which are applicable to the royalty and milestones payments or any of the activities of GENAISSANCE or its AFFILIATES or distributors, shall, as between GENAISSANCE and MERCK KGAA be borne or reimbursed by GENAISSANCE; provided that GENAISSANCE shall not be responsible for any income taxes (or any other taxes levied on MERCK KGAA’s receipt of any payments) assessed on MERCK KGAA as a result of any royalty, milestone or other payments made to it pursuant to this AGREEMENT. The PARTIES shall co-operate in good faith to reduce as far as law permits in a given country the taxes imposed on any payment or activities under this AGREEMENT.
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7.17
|
NET SALES Reports. Concurrently with each quarterly royalty due date under Section 7.5 to 7.7, GENAISSANCE shall provide MERCK KGAA with a detailed written report of gross sales of PRODUCT, THERAPEUTIC PRODUCT AND DIAGNOSTIC PRODUCT invoiced by GENAISSANCE or its AFFILIATES or sub-licensees since the last such report, the NET SALES with respect thereto, and the royalties payable under this AGREEMENT.
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7.18
|
Right to audit. GENAISSANCE shall keep and maintain, and shall cause its AFFILIATES and Selling party to keep and maintain detailed and accurate books and records with regard to all sales of PRODUCTS, THERANOSTIC PRODUCT and DIAGNOSTIC PRODUCT, NET SALES, and payments to be made under this AGREEMENT, and the basis of calculation thereof, for a period of at least [***] years after the applicable payment of royalties. MERCK KGAA shall have the right, at its own expense, on reasonable notice and not more often than once annually, to have GENAISSANCE’s and/or its AFFILIATES’ or Selling parties’ royalty reports, inspected and audited by an independent auditor appointed by MERCK KGAA and reasonably acceptable to GENAISSANCE, during normal business hours for the purposes of verifying the amount of royalties, payments and other charges due. MERCK KGAA shall maintain the confidentiality of confidential information obtained in any such inspection or audit, and shall put the information and records inspected to no other use than the verification of amounts due hereunder and the enforcement of this AGREEMENT. If such an audit determines that payments due to MERCK KGAA made during any QUARTER were [***] percent ([***] %) or more below the amount actually due, then the reasonable expense of the audit shall be borne by GENAISSANCE, and GENAISSANCE shall pay to MERCK KGAA any amount shown to be due by the audit (together with interest pursuant to Section 7.11) within [***] after receipt of a notice from MERCK KGAA, containing a copy of the audit report and setting forth the amount due.
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8.
|
SUPPLY OF VILAZODONE AND PRODUCTION OF PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS
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8.1
|
Development supplies and commercial supplies.
|
8.1.1
|
CLINICAL SUPPLIES OF VILAZODONE. MERCK KGAA WILL USE COMMERCIALLY REASONABLE EFFORTS TO PROVIDE AS FURTHER DESCRIBED IN SCHEDULE 3, AT ITS COST, GENAISSANCE WITH CLINICAL SUPPLIES OF VILAZODONE BULK TABLETS AND PLACEBO BULK TABLETS IN AMOUNTS SUFFICIENT FOR CONDUCTING THE DISCOVERY STUDY, PROVIDED THAT MERCK KGAA SHALL NOT BE OBLIGED TO MANUFACTURE ADDITIONAL VILAZODONE API DURING THIS AGREEMENT. SUCH TABLETS, WHICH SHALL BE MANUFACTURED FROM MERCK KGAA’S EXISTING SUPPLY OF ABOUT ONE HUNDRED AND EIGHTY KILOGRAMS (180KG) OF VILAZODONE API, SHALL COMPLY WITH THE PRODUCT SPECIFICATIONS VALID AT THE EFFECTIVE DATE AS SET FORTH IN SCHEDULE 3. MERCK KGAA SHALL ALSO CONDUCT IDENTITY TESTING TO DETERMINE THE POLYMORPH IV/V RATIOS AND STABILITY STUDIES OF THE VILAZODONE TABLES AND PACKAGED PRODUCT NECESSARY FOR THE DISCOVERY STUDY IN ACCORDANCE WITH PROCEDURES AND METHODS SET FORTH IN SCHEDULE 3, OR AS OTHERWISE MUTUALLY AGREED. AFTER COMPLETION OF THE DISCOVERY STUDY, MERCK KGAA WILL SUPPLY GENAISSANCE UPON WRITTEN REQUEST WITH ITS REMAINING STOCK OF VILAZODONE API. EXCEPT AS STATED ABOVE, GENAISSANCE WILL BE RESPONSIBLE FOR ASSURING ADEQUATE SUPPLIES OF VILAZODONE FOR REMAINING CLINICAL TRIALS. GENAISSANCE SHALL ALSO HAVE THE RIGHT TO NEGOTIATE A SUPPLY AGREEMENT WITH MERCK KGAA FOR THE SUPPLY OF VILAZODONE API FOR CLINICAL TRIALS AND FOR COMMERCIAL USE.
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8.1.2
|
Commercial Production, Marketing and Distribution. Subject to any rights granted to MERCK KGAA in a CO-COMMERCIALIZATION AGREEMENT pursuant to Section 5.3 and any separately negotiated supply agreement, GENAISSANCE shall be responsible for manufacture and production of VILAZODONE API and dosage forms in sufficient quantities to service worldwide sales of PRODUCTS, marketing and distribution of PRODUCTS upon GOVERNMENTAL APPROVAL, either using its own resources or by partnering with a THIRD PARTY in a co-commercialization arrangement, or by sublicensing such rights to a THIRD PARTY. GENAISSANCE shall
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8.2
|
Production of PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS. Except as otherwise provided herein, GENAISSANCE shall be fully responsible at its risk and expense for all manufacturing, development, scale-up, facilities certification, production, packaging, labelling, storage, and shipment of PRODUCTS throughout the TERRITORY.
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8.3
|
PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS Recall. Except as provided in any supply agreement or CO-COMMERCIALIZATION AGREEMENT, any and all recall decisions with respect to VILAZODONE or PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS distributed by GENAISSANCE shall be the responsibility of GENAISSANCE, at its risk and expense. Whenever a recall of PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS is to be effected, GENAISSANCE shall immediately (but in any case in advance of any such recall) so notify MERCK KGAA, together with a statement of any actions planned in connection with such recall.
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9.1
|
MERCK KGAA regulatory transfer. With the reasonable assistance of GENAISSANCE, MERCK KGAA will effect the transfer to GENAISSANCE, within [***] after the EFFECTIVE DATE, of the existing clinical trial license (i.e. IND) for the PRODUCT previously or currently being tested where MERCK KGAA is the sponsor. Thereafter, GENAISSANCE will take responsibility for reporting adverse drug reactions and updating all clinical trial licenses.
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9.2
|
Regulatory affairs related to VILAZODONE. Except as the PARTIES may otherwise agree, GENAISSANCE will be responsible, at its risk and expense, for preparing, filing, and prosecuting any and all regulatory filings required for the production of VILAZODONE.
|
9.3
|
Responsibility for REGULATORY APPLICATIONS. GENAISSANCE is responsible, at its risk and expense, for preparing, filing, and prosecuting all REGULATORY
|
9.4
|
General responsibility. GENAISSANCE shall have exclusive authority and responsibility FOR COMPLYING WITH ALL REGULATORY REQUIREMENTS AND MAINTAINING ALL GOVERNMENTAL AUTHORITY CONTACTS RELATING TO REGULATORY APPLICATIONS OR OTHERWISE WITH RESPECT TO THE PRODUCT, THERANOSTIC PRODUCTS AND DIAGNOSTIC PRODUCTS IN THE TERRITORY, INCLUDING OBTAINING ALL REQUIRED GOVERNMENTAL APPROVALS, THE MAINTAINING AND UPDATING OF THE GOVERNMENTAL APPROVALS, THE REPORTING OF PRODUCT COMPLAINTS OR ANY ADVERSE DRUG REACTIONS, THE COMPLIANCE OF PROMOTIONAL MATERIALS WITH APPLICABLE RULES AND REGULATIONS, AND THE FILING OF PROMOTIONAL MATERIALS WITH GOVERNMENTAL AUTHORITIES, IF PERMISSIBLE ACCORDING TO MANDATORY APPLICABLE LAWS.
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9.5
|
Regulatory communications. As part of GENAISSANCE’s periodic reports pursuant to Section 4.4, GENAISSANCE shall provide to MERCK KGAA summaries of all major communications from or to any GOVERNMENTAL AUTHORITY regarding any REGULATORY APPROVALS relating to the PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS or their manufacture or sale, and shall promptly report to MERCK communications from or to any GOVERNMENTAL AUTHORITY regarding any recalls, facility suspensions or closures, or serious adverse events relating to the PRODUCT, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS.
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9.6
|
APPROVAL OWNERSHIP. EXCEPT AS PROVIDED IN A CO-COMMERCIALIZATION AGREEMENT, ALL GOVERNMENTAL APPROVALS WITHIN THE TERRITORY RELATING TO THE PRODUCT, THERANOSTIC PRODUCTS AND DIAGNOSTIC PRODUCTS OBTAINED BY GENAISSANCE SHALL BE THE PROPERTY OF GENAISSANCE OR ANY APPLICABLE
|
9.7
|
Delegation. GENAISSANCE may delegate any of its rights or obligations under this Section 9 to any sublicensee or THIRD PARTY with which GENAISSANCE is developing or commercializing any PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT.
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10.1
|
JOINT COMMITTEE responsibilities. The JOINT COMMITTEE, which shall remain in place during the term of this AGREEMENT and shall act as a vehicle to facilitate the exchange of information and knowledge about VILAZODONE, collaborate to expedite the retrospective DISCOVERY STUDY described in Section 3.5.1, supervise progress in development, and approve any changes in the DEVELOPMENT PLAN which may become necessary. To the extent legally permissible, the JOINT COMMITTEE will also facilitate the exchange of information about the commercialization of VILAZODONE, including sales and marketing plans, and business opportunities for sublicensing and decide the course of action about sublicensing issues, potential partners, and lifecycle management for VILAZODONE. The responsibilities of the JOINT COMMITTEE include the following:
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10.2
|
FORMATION OF THE JOINT COMMITTEE. THE JOINT COMMITTEE SHALL BE ESTABLISHED NO LATER THAN NINETY (90) DAYS FOLLOWING THE EFFECTIVE DATE AND SHALL INITIALLY HAVE UP TO EIGHT (8) MEMBERS. EACH PARTY SHALL APPOINT UP TO FOUR OF THE MEMBERS, AND IN DOING SO, SHALL ATTEMPT TO INSURE THAT EACH MEMBER IS QUALIFIED, KNOWLEDGEABLE, AND EXPERIENCED IN THE FUNCTIONAL
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10.3
|
JOINT COMMITTEE meetings. The JOINT COMMITTEE shall meet in-person at least twice per year during the initial five (5) years following the EFFECTIVE DATE, at least once thereafter. The initial meeting shall be held without undue delay following the establishment of the JOINT COMMITTEE. The JOINT COMMITTEE may hold meetings, and shall also address issues as they arise in the interim between meetings, via telephone conference, videoconference and/or electronic mail. If MERCK KGAA exercises its option under Section 5.3 to CO-COMMERCIALIZE, the JOINT COMMITTEE shall thereafter meet at least once each QUARTER, either by telephone conference or videoconference, or in-person, provided that it shall in any case hold in-person meetings at least annually.
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10.4
|
JOINT COMMITTEE roles. The JOINT COMMITTEE will facilitate the exchange of information and will discuss commercialization of the PRODUCT, including MARKETING PLANS and business opportunities for sublicense issues, potential partners, reasons for the decision on PRODUCT launches in the TERRITORY according to Sections 4.1 and 4.7 and lifecycle management for the PRODUCT, and discuss the status of development, regulatory and marketing activities. Except to the extent otherwise provided in a CO-COMMERCIALIZATION AGREEMENT, all development and commercialization issues and all other issues coming before the JOINT COMMITTEE shall be resolved by consensus, with GENAISSANCE having the casting vote. In all cases, each PARTY shall be bound by this AGREEMENT and its obligations of good faith and fair dealing.
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10.5
|
JOINT COMMITTEE Chairperson. Upon the formation of the JOINT COMMITTEE, GENAISSANCE will appoint the chairperson of the JOINT COMMITTEE who shall have sole authority to: (i) collect issues for the meeting agendas with due regard to the interests and requests of MERCK KGAA’s representatives; (ii) call emergency meetings of the JOINT COMMITTEE at the request of any JOINT COMMITTEE member; (iii) have minutes of the JOINT COMMITTEE meetings recorded, prepared and, within a reasonable time, issued, which meeting minutes shall be submitted for approval of the members of the JOINT COMMITTEE.
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11.1
|
Ownership of RESULTING IP. Any and all RESULTING IP and RESULTING IP PATENTS will be jointly owned by GENAISSANCE and MERCK KGAA, with each PARTY having an equal undivided interest. During the term of, and for the purposes of, this AGREEMENT and except for the purposes of Sections 7.5 and 7.10 or as otherwise provided hereunder, MERCK KGAA’s interest in RESULTING IP and RESULTING IP PATENTS shall be deemed to be part of MERCK KGAA KNOW-HOW or MERCK KGAA PATENTS (as appropriate) licensed to GENAISSANCE hereunder; provided, however, that the addition of such MERCK KGAA PATENTS on such RESULTING IP shall not automatically extend the duration of the exclusivity in the EU of GENAISSANCE’s license under Section 2.1, unless and to the extent that EU law or rules at any time permit such an extension.
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11.2
|
OWNERSHIP OF IMPROVEMENTS. MERCK KGAA SHALL BE THE OWNER OF ANY IMPROVEMENT MADE SOLELY BY MERCK KGAA AND SHALL OWN AN EQUAL UNDIVIDED INTEREST WITH GENAISSANCE IN ANY IMPROVEMENT MADE JOINTLY WITH GENAISSANCE. MERCK KGAA’S INTERESTS IN IMPROVEMENTS SHALL BE DEEMED TO BE PART OF THE MERCK KGAA PATENTS OR THE MERCK KGAA KNOW-HOW (AS APPROPRIATE) LICENSED TO GENAISSANCE HEREUNDER; PROVIDED, HOWEVER, THAT THE ADDITION OF SUCH MERCK KGAA PATENTS ON SUCH IMPROVEMENTS SHALL NOT AUTOMATICALLY EXTEND THE DURATION OF THE EXCLUSIVITY IN THE EU OF GENAISSANCE’S LICENSE UNDER SECTION 2.1, UNLESS AND TO THE EXTENT THAT EU LAW OR RULES AT ANY TIME
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11.3
|
Information exchange. Each PARTY shall inform the other promptly upon the discovery or creation of any IMPROVEMENT or RESULTING IP conceived or acquired by it, together with all available details of such IMPROVEMENT and RESULTING IP.
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11.4
|
Inventors’ fees. Each PARTY shall bear the costs of sums payable to its own past, present or future employees or contractors in respect of any IMPROVEMENT or RESULTING IP made or discovered during the term of this AGREEMENT.
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12.1
|
Patent Prosecution. Except in respect of RESULTING IP, MERCK KGAA shall retain the responsibility for the prosecution and maintenance of the MERCK KGAA PATENTS. The pursuit of patent protection for IMPROVEMENTS solely owned by a PARTY shall be the responsibility of the owning PARTY, who shall bear all the costs of such pursuit. For jointly owned IMPROVEMENTS, the PARTIES shall consult in good faith as to which of them is the most appropriate PARTY to pursue patent protection, with the out of pocket costs for such pursuit to be shared equally by the PARTIES. Unless otherwise agreed, GENAISSANCE shall pursue patent protection for the RESULTING IP, with the out of pocket costs for such pursuit [***]. The PARTY designated in the preceding sentences of this Section 12.1 as responsible for pursuing patent protection for a particular category of inventions (the “Prosecuting PARTY”) shall exert its COMMERCIALLY REASONABLE EFFORTS to secure the broadest possible scope and coverage for that invention category throughout the TERRITORY. The Prosecuting Party shall inform the other PARTY of the plan for the filing, prosecution and maintenance of patent applications and patents for that invention category and any significant changes thereto. The Prosecuting Party shall consider in good faith any comments made by the other PARTY with respect to such plan.
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12.2
|
Information and cooperation. Each PARTY agrees to cooperate with the other with respect to the patent prosecution activities described in this Section 12, including, without limitation, the execution of all such documents and instruments and the performance of such acts as may be reasonably necessary in order to permit the Prosecuting PARTY
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12.3
|
EXTENSIONS. The Prosecuting PARTY for a particular patent pursuant to Section 12.1 shall be responsible for obtaining all available EXTENSIONS to such patent, other than any EXTENSIONS based on a marketing, data or regulatory exclusivity (e.g, pediatric exclusivity, data package exclusivity and SPCs) relating to PRODUCTS, THERANOSTIC PRODUCTS, and DIAGNOSTIC PRODUCTS, which shall be the responsibility of GENAISSANCE. If the PARTY responsible for obtaining a particular EXTENSION (the “Extending PARTY”) is not eligible to seek such EXTENSION, then the other PARTY shall take on such responsibility in consultation with the Extending PARTY and with the mutual agreement of the PARTIES as to any material choices to be made with respect thereto. Each PARTY shall provide the other PARTY with copies of all relevant information, data, documentation and assistance which is reasonably necessary for such PARTY to obtain those EXTENSIONS for which it is responsible pursuant to this Section 12.3. Any such assistance, supply of information and consultation shall be performed promptly and in a manner that will insure that all EXTENSIONS are obtained wherever, and to the maximum extent, they may be available. Notwithstanding the foregoing, MERCK KGAA shall not seek any EXTENSION to any patent in respect of any product other than PRODUCTS, THERANOSTIC PRODUCTS, and DIAGNOSTIC PRODUCTS if GENAISSANCE reasonably believes that such EXTENSION might adversely affect GENAISSANCE’s
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12.4
|
Abandonment or forfeiture. If a PARTY intends to not file, abandon or otherwise cause or allow to be forfeited in any country a patent application or patent for which it is the Prosecuting PARTY pursuant to Section 12.1, or any claim within such patent application or patent, then such PARTY shall notify the other PARTY of such intention at least [***] in advance of any filing date or bar date or any other applicable deadline, and the other PARTY shall have the right to assume responsibility for the prosecution, defense, or maintenance of such claim, patent application or patent in such country. Should GENAISSANCE assume responsibility for prosecuting or maintaining any MERCK KGAA PATENT, or claim therein, pursuant to this Section 12.4, then GENAISSANCE may deduct its out of pocket costs for such prosecution and maintenance from any payments due to MERCK under this AGREEMENT.
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12.5
|
THIRD PARTY infringement suits. In the event of the institution of any suit by a THIRD PARTY against MERCK KGAA, GENAISSANCE, or their respective AFFILIATES, sub-licensees or distributors for patent infringement involving the manufacture, use, sale, distribution or marketing of VILAZODONE or PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT anywhere in the TERRITORY, the PARTY sued (or whose AFFILIATES or distributors are sued) shall promptly notify the other PARTY in writing. The commercializing PARTY shall have the right to defend such suit at its own option and expense, but it shall in any event reasonably consult with the other PARTY with respect to such defense. MERCK KGAA and GENAISSANCE shall assist one another and co-operate in any such litigation at the other’s reasonable request without expense to the requesting PARTY.
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12.6
|
Patent enforcement. In the event that MERCK KGAA or GENAISSANCE becomes aware of actual, suspected or threatened infringement of a MERCK KGAA PATENT or RESULTING IP PATENT anywhere in the TERRITORY, that PARTY shall promptly notify the other PARTY thereof, with all available information about the situation. GENAISSANCE shall have the first right, but not the obligation, to bring, at its own expense, an appropriate action against any THIRD PARTY and to defend any opposition or declaratory judgment action for non-infringement or invalidity, to use MERCK
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12.7
|
Indemnification. In any action brought pursuant to Section 12.6, the PARTY bringing the action shall indemnify the other PARTY, its officers, directors, shareholders, employees, agents, successors and assigns from any damages or liability awarded by a court, including for reasonable attorney’s fees and costs, which may result from claims, counterclaims or cross-claims asserted by a defendant, except to the extent that such damages or liabilities result from the gross negligence or wilful misconduct of the other PARTY.
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12.8
|
Recoveries. MERCK KGAA and GENAISSANCE shall recover their respective reasonable out-of-pocket expenses associated with any litigation or settlement thereof from any recovery made by any PARTY as described in this Section 12. Notwithstanding Section 7, the PARTIES will share any recovery for patent infringement as follows: first, the PARTY initiating an infringement suit shall be reimbursed for all its reasonable out-of-pocket expenses of the action, second, the other PARTY shall be reimbursed for all its reasonable out-of-pocket expenses of such suit, and third, the PARTY initiating the suit shall receive [***]% of any remaining balance and the other PARTY will receive the other [***]% of any remaining balance.
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12.9
|
Information about enforcement. The PARTIES shall keep one another informed in a timely manner of the status of, and of their respective activities regarding, any litigation or settlement thereof concerning PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT in the TERRITORY; provided, however, that no settlement or consent judgment or other voluntary final disposition of any suit defended or action brought by a MERCK KGAA pursuant to this Section 12 may be entered into without the consent of the GENAISSANCE (such consent not to be unreasonably withheld or delayed). To the extent that either PARTY initiates an action pursuant to Section 12.7, if the PARTIES reasonably fail to agree upon the terms of any such settlement, consent judgment or other voluntary final disposition, the PARTY wishing to continue any litigation shall solely bear the monetary loss or monetary benefit from the future outcome of such litigation and shall guarantee to the other PARTY that wished to make such settlement that such other PARTY will obtain, either from the proceeds of such litigation (if any) or from the PARTY an amount at least as large as it would have obtained from such settlement had it been entered.
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13.1
|
UNTIL THE FIRST COMMERCIAL SALE, BY GENAISSANCE OR A SUB-LICENSEE OF GENAISSANCE, OF THE FIRST PRODUCT OR THE TERMINATION OF THIS AGREEMENT, WHATEVER COMES EARLIER, MERCK KGAA SHALL NOTIFY GENAISSANCE PRIOR TO THE COMMENCEMENT OF HUMAN CLINICAL TRIALS IF IT WANTS TO DEVELOP OR COMMERCIALLY EXPLOIT, DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, ANY PHARMACEUTICAL PRODUCT CONTAINING A DERIVATIVE OR ANY DUAL SSRI AND 5-HT1A PARTIAL AGONIST OR ANY SSRI OR ANY 5-HT1A PARTIAL AGONIST FOR THE TREATMENT OF ANY INDICATION LISTED IN SCHEDULE 4 (“MERCK COMPOUND”). THEREAFTER, GENAISSANCE WILL HAVE THE FIRST RIGHT FOR A PERIOD OF [***] AFTER SUCH NOTIFICATION TO NEGOTIATE A DEVELOPMENT AND COMMERCIALIZATION AGREEMENT FOR SUCH COMPOUND OR PRODUCT. MERCK KGAA MAY NOT ENTER INTO AN AGREEMENT WITH ANY THIRD PARTY IN RESPECT OF SUCH MERCK COMPOUND BASED UPON INFORMATION MATERIALLY DIFFERENT THAN
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13.2
|
Until the first commercial sale, by GENAISSANCE or a sub-licensee of GENAISSANCE, of the first PRODUCT or the termination of the AGREEMENT for VILAZODONE, whatever comes earlier, GENAISSANCE shall notify MERCK KGAA prior to the commencement of human clinical trials, if it wants to develop or commercialize, by itself or with a THIRD PARTY, a pharmaceutical product containing a Dual SSRI and 5-HT1A Partial Agonist (other than VILAZODONE) or any SSRI or any 5-HT1A Partial Agonist for the treatment of any INDICATION listed in Schedule 4 (“Genaissance Compound”). Thereafter, MERCK KGAA will have the first right for a period of [***] to negotiate a development and commercialization agreement for such compound or product. GENAISSANCE may not enter into an agreement with any THIRD PARTY in respect of such Genaissance Compound based upon information materially different than that given MERCK KGAA with respect to such Genaissance Compound, without providing MERCK KGAA with such different information and granting MERCK KGAA an additional [***] after providing such information to negotiate a development and commercialization agreement for such GENAISSANCE
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13.3
|
If GENAISSANCE, using the RESULTING IP, identifies a DERIVATIVE that GENAISSANCE believes may show potential as the active ingredient in a pharmaceutical product, GENAISSANCE shall notify MERCK KGAA of the identity of such DERIVATIVE and MERCK KGAA shall grant GENAISSANCE an exclusive option to negotiate in good faith for a period of [***] the terms of a license agreement for the development and commercialization of a product containing such DERIVATIVE. If the PARTIES do not enter into such a license agreement, MERCK KGAA shall return and may not use or disclose any of the information or data GENAISSANCE may have disclosed in connection with such negotiations in respect of such DERIVATIVE and may not directly or indirectly with THIRD PARTIES grant rights to or develop such DERIVATIVE.
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14.1
|
Neither MERCK KGAA nor GENAISSANCE shall disclose to the public or any THIRD PARTY the existence of this AGREEMENT or the terms described herein except with the prior written consent of the other or as required by law. Notwithstanding the foregoing, (a) either PARTY may disclose such terms as are required to be disclosed in its publicly-filed financial statements or other public statements pursuant to applicable laws, regulations and stock exchange rules (e.g., the U.S. Securities and Exchange Commission or any other stock exchange on which securities issued by GENAISSANCE or MERCK KGAA may be issued); provided, that in making such disclosures, each PARTY shall redact the terms of this AGREEMENT to the extent reasonably possible, (b) either Party shall have the further right to disclose the material financial terms of this AGREEMENT under confidentiality undertakings to any potential acquirer, merger partner or potential providers of financing and their advisors, and (c) either PARTY shall
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14.2
|
Neither PARTY shall make any form of scientific publication which discloses Confidential Information of the other PARTY or information to which the other PARTY has an exclusive license without the prior written consent of the other PARTY, but GENAISSANCE acknowledges the interest of MERCK KGAA and the former licensee GSK to publish preclinical scientific data relating to VILAZODONE obtained before the EFFECTIVE DATE which shall be made available to GENAISSANCE reasonably in advance before such publication in which case the written consent of GENAISSANCE shall not be unreasonably withheld or delayed. Following any reversion of rights to MERCK KGAA under Sections 3.6, 3.7 or 4.2 or any termination under Sections 17.1 – 17.3, GENAISSANCE (in the case of any such reversion of rights), the non-terminating party (in the case of a termination under Section 17.1(b)) or both parties (in the case of a termination under Sections 17.1(a), 17.2 or 17.3), shall not make any such publications about a PRODUCT, except to the extent required by law or a manuscript was submitted for publication prior to the date of notice of termination.
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15.
|
CONFIDENTIALITY
|
15.1
|
Each PARTY agrees that (i) all information disclosed by the PARTIES and identified as, or acknowledged to be, confidential, and (ii) all results achieved under this AGREEMENT, ((i) and (ii) to be understood as “Confidential Information” under this
|
15.2
|
The receiving party (“the Recipient”) shall not be obligated under this Section 15 to the extent that (a) the Recipient is required to disclose information by law, order or regulation of an administrative agency or a court of competent jurisdiction, provided in either case that the Recipient shall provide notice thereof to the disclosing party and sufficient opportunity to object, time permitting, to any such disclosure or to request confidential treatment thereof; or (b) the Recipient can demonstrate that (i) the information was public knowledge, other than as a result of acts attributable to the Recipient in violation hereof; (ii) the information was rightfully known by the Recipient (as shown by its written records) prior to the date of disclosure to the Recipient by the other party hereunder; (iii) the information was disclosed to the Recipient on an unrestricted basis from a THIRD PARTY not under a duty of confidentiality to the disclosing party; or (iv) the information was independently developed by employees or agents of the Recipient without access to the Confidential Information of the disclosing party.
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15.3
|
Notwithstanding the foregoing, both PARTIES shall have the right to disclose Confidential Information (i) to those persons, entities and/or contractors that such PARTY employs for the purposes of testing, evaluation, demonstration, development, production, sale and/or development of the PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT or VILAZODONE to the extent that such persons, entities and/or contractors require such information to comply with their obligations towards such PARTY (ii) to any administrative agency for purposes of obtaining approval to manufacture, test or market a PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT, or obtain patent protection and (iii) as reasonably necessary to protect or practice its licenses hereunder, including disclosure to potential sublicensees. Such PARTY shall bind these persons, entities, contractors and potential sublicensees, other than any governmental agency, by confidentiality obligations similar to the ones contained in this Section 15. Each PARTY shall inform the other PARTY prior to providing Confidential Information to such persons, entities, and/or contractors, other than any governmental agency, and such PARTY may object to passing on the
|
16.
|
TERM
|
16.1
|
This AGREEMENT becomes effective on the EFFECTIVE DATE and, subject to earlier termination under Section 17, shall remain in full force until expiration of all ROYALTY TERMS. On a country-by-country, product-by-product basis, for the period commencing upon expiration of the applicable ROYALTY TERM and ending on the second anniversary date of such expiration, GENAISSANCE shall have an exclusive license under the MERCK KGAA KNOW-HOW, RESULTING IP, RESULTING IP PATENTS and VILAZODONE MANUFACTURING TECHNOLOGY to make, use and sell PRODUCTS, THERANOSTIC PRODUCTS and DIAGNOSTIC PRODUCTS as long as GENAISSANCE pays to MERCK a know-how royalty at a royalty rate equal to [***] percent ([***]%) of the last royalty rate payable in the immediately preceding ROYALTY TERM, but not less than a royalty of [***] percent of NET SALES. After the second anniversary date of such expiration, or upon earlier notification by GENAISSANCE to MERCK that it is terminating such exclusive license, each PARTY shall have the non-exclusive right, including the right to sub-license, to use the MERCK KGAA KNOW-HOW, RESULTING IP, RESULTING IP PATENTS and VILAZODONE MANUFACTURING TECHNOLOGY to make, have made, use have used, sell or have sold the PRODUCTS and the obligation to make royalty payment as set forth in the preceding sentence ends simultaneously.
|
17.
|
TERMINATION
|
17.1
|
Termination for breach. If either PARTY is in breach or default of any of its material obligations hereof (which includes GENAISSANCE’s obligations under Sections 4.1 and 4.5) or a material breach of a representation or warranty and does not reasonably remedy such breach or default within sixty (60) days after receipt of notice from the other PARTY of such breach or default, the other PARTY may either:
|
17.2
|
Termination for commercial infeasibility. If GENAISSANCE reasonably determines, based on the DISCOVERY STUDY or the results of clinical trials for the PRODUCTS or (despite GENAISSANCE’s exertion of the efforts required hereunder) obtaining unsatisfactory labelling, pricing, or reimbursement authorizations for the PRODUCTS or if GENAISSANCE otherwise determines, in the exercise of its reasonable judgment, that the patent, medical, scientific, technical, regulatory or commercial profile of the PRODUCT does not justify continued development or commercialization, that no PRODUCT in the INDICATION can be developed or economically commercialized by it, GENAISSANCE shall have the right to terminate this AGREEMENT in its entirety upon ninety (90) days written notice to the MERCK KGAA.
|
17.3
|
Termination of license to contested patents. If during the term of this AGREEMENT, either PARTY or its AFFILIATES, or any other party related to such PARTY or acting under its authority or sublicensees, for its benefit or with its support, challenges the validity of any of the MERCK KGAA PATENTS or RESULTING IP PATENTS in any forum (including a court, a patent office, or an arbitral tribunal, and whether in the form
|
17.4
|
Insolvency. Each PARTY shall have the right to terminate this AGREEMENT for cause for any of the following reasons:
|
|
a)
|
Insolvency of the other PARTY;
|
|
b)
|
Appointment of a trustee or receiver with respect to all any material part of the assets of the other PARTY; or
|
|
c)
|
Filing of application for bankruptcy, composition, liquidation, public auction, or any other similar procedure in respect of the other PARTY or its assets if, in the case of filing made without the other PARTY’s consent, such application is not dismissed within ninety (90) days after filing.
|
17.5
|
CHANGE OF CONTROL. In the event of a CHANGE OF CONTROL of a PARTY, the other PARTY shall have, in addition to its other rights provided in this AGREEMENT, the right to terminate this AGREEMENT if the surviving PARTY does not acknowledge compliance with this AGREEMENT upon request of the other PARTY and such other PARTY can reasonably object to the ability or willingness of the PARTY subject to the CHANGE OF CONTROL to perform such PARTY’s obligations under this AGREEMENT following the CHANGE OF CONTROL. Promptly following public notice of any proposed CHANGE OF CONTROL of a PARTY, it shall discuss such proposed change with, and consider the reasonable concerns expressed by the other PARTY to protect each PARTY’s interests in the PRODUCT and assure, in the case of a CHANGE OF CONTROL involving GENAISSANCE, that its obligations to use COMMERCIALLY REASONABLE EFFORTS are not diminished as a result thereof.
|
18.
|
OBLIGATIONS ON TERMINATION
|
18.1
|
Return of materials. Immediately following the valid termination of this AGREEMENT for any reason, GENAISSANCE and its AFFILIATES and/or sublicensees shall cease any and all use of the MERCK KGAA PATENTS, MERCK KGAA KNOW-HOW and VILAZODONE MANUFACTURING TECHNOLOGY, and all related documentation, and all other information and materials including all documents, raw data, files, study protocols and results, remaining clinical supply of VILAZODONE provided by MERCK KGAA to GENAISSANCE (not to include VILAZODONE provided pursuant to a separate supply agreement), and GENAISSANCE shall return all of the foregoing items and materials to MERCK KGAA within [***] of such termination at no cost to MERCK KGAA. Furthermore, GENAISSANCE shall supply to MERCK KGAA all raw data and results from all studies conducted pursuant to any DEVELOPMENT PLAN in the form such data and results are in as of the date of termination, including any available reports of such data or results.
|
18.2
|
Post-reversion license.
|
18.2.1
|
Licenses to MERCK KGAA to the PRODUCT. If MERCK KGAA terminates this AGREEMENT according to Section 17.1, or if the rights to VILAZODONE or the PRODUCT revert to MERCK KGAA in accordance with Sections 3.6, 3.7 or 4.2, GENAISSANCE shall grant to MERCK KGAA and its AFFILIATES, a perpetual, transferable, worldwide, royalty-free, exclusive (subject to applicable laws) license (with right to sublicense) to make, use, sell, and import PRODUCTS under GENAISSANCE’s interest in all RESULTING IP and RESULTING IP PATENTS. Except in respect of RESULTING IP and RESULTING IP PATENTS, GENAISSANCE’s licenses to the MERCK KGAA PATENTS, the MERCK KGAA KNOW-HOW and the VILAZODONE MANUFACTURING TECHNOLOGY shall terminate and GENAISSANCE shall transfer rights in any IND and all data and documents relating to the PRODUCT to MERCK KGAA within [***] of such reversion or termination.
|
18.2.2
|
DIAGNOSTIC PRODUCT Rights. Notwithstanding the provisions of Section 18.2.1 and subject to Section 18.6, MERCK KGAA’s grant to GENAISSANCE of the exclusive right to use the RESULTING IP for DIAGNOSTIC PRODUCTS shall survive such reversion or termination.
|
18.2.3
|
THERANOSTIC PRODUCT Rights. If the rights to VILAZODONE and the PRODUCT revert to MERCK KGAA as set forth in Section 18.2.1, then GENAISSANCE will grant back to MERCK KGAA a fully paid exclusive (subject to applicable laws) right and license to use the RESULTING IP for the research, development, marketing and sale of THERANOSTIC PRODUCTs. If thereafter, MERCK KGAA decides to market the PRODUCT in conjunction with a THERANOSTIC PRODUCT, GENAISSANCE shall have a right of first negotiation and right of first refusal to commercialise (including developing, marketing or selling) such THERANOSTIC PRODUCT in partnership with MERCK KGAA’s marketing of the PRODUCT. These rights shall operate according to the following procedure. If MERCK KGAA decides to market the PRODUCT in conjunction with a THERANOSTIC PRODUCT, MERCK KGAA shall provide GENAISSANCE with written notice of such decision. If GENAISSANCE notifies MERCK KGAA in writing within [***] of its receipt of such notice (“First Notice Period”) that it wishes to exercise its right of first negotiation, then the PARTIES shall negotiate in good faith for a period of up to [***] commencing with the date of GENAISSANCE’s notice (“Negotiation Period”), a commercially reasonable term sheet for partnering with MERCK KGAA to commercialise such THERANOSTIC PRODUCT. During the First Notice Period and the Negotiation Period, MERCK KGAA shall not, directly or indirectly, solicit bids for such commercialisation. MERCK KGAA shall be free to negotiate with THIRD PARTIES to provide such THERANOSTIC PRODUCT if (a) GENAISSANCE does not notify MERCK KGAA within the First Notice Period that it wishes to exercise its right of first negotiation or (b) the PARTIES do not agree on commercially reasonable terms within the Negotiation Period. If the PARTIES conduct unsuccessful negotiations for such THERANOSTIC PRODUCT, and MERCK KGAA is subsequently prepared to accept terms and conditions from a THIRD PARTY for commercializing substantially the same THERANOSTIC PRODUCT, then prior to entering into an agreement with such THIRD PARTY, MERCK KGAA shall first submit to GENAISSANCE such terms and conditions and GENAISSANCE shall have the right, within [***] after receipt of such terms and conditions (“Second Notice Period”), to notify MERCK KGAA that GENAISSANCE elects to enter into an agreement with MERCK KGAA on equivalent terms and conditions, in which event the PARTIES shall enter into an agreement on such terms and conditions. If GENAISSANCE does not notify MERCK KGAA within the Second Notice Period that it wishes to enter into such agreement, then MERCK KGAA shall be free to enter into an agreement with the THIRD PARTY on such terms and conditions.
|
18.3
|
Payments made or due. Except to the extent remedies are available to GENAISSANCE in respect of fraud or rescission, any payments by GENAISSANCE already made or due on or before the date of termination of this AGREEMENT shall be non-refundable and GENAISSANCE’s obligation to pay the same shall not be affected by such termination.
|
18.4
|
Post-term liability. GENAISSANCE shall be liable to MERCK KGAA for all damages and all other available remedies for any unauthorized use or exploitation by GENAISSANCE or its AFFILIATES or sublicensees of the MERCK KGAA PATENTS, RESULTING IP, MERCK KGAA KNOW-HOW and VILAZODONE MANUFACTURING TECHNOLOGY after the date of the valid termination of this AGREEMENT.
|
18.5
|
No continuing use of Know-How. GENAISSANCE and its AFFILIATES or sub-licensees shall not, following the termination of this AGREEMENT under Article 17, develop, manufacture, use or sell products, whether or not they are PRODUCTS or THERANOSTIC PRODUCTS, or services based on or use or application of any of the MERCK KGAA KNOW-HOW that remains confidential.
|
18.6
|
Survival. All rights and obligations that by their nature are intended to survive expiration or termination of this AGREEMENT, including the provisions of Section 7 (Payments and Royalties), Section 15 (Confidentiality), Section 18.2 (Post-term license), Section 19 (Warranties and Disclaimers), Section 20 (Limitation of Liability), Section 21 (Indemnification and Insurance), and Section 29 (Dispute Resolution), shall survive any termination or expiration of this AGREEMENT.
|
19.
|
REPRESENTATIONS, WARRANTIES AND DISCLAIMERS
|
19.1
|
Representations and Warranties of MERCK KGAA. MERCK KGAA hereby represents and warrants as follows as of the EFFECTIVE DATE (or, in the case of the VILAZODONE MANUFACTURING TECHNOLOGY, the date of its transfer to GENAISSANCE):
|
19.1.1
|
The sale, manufacture or use of VILAZODONE and the PRODUCTS contemplated hereunder do not infringe any patent owned or controlled by MERCK KGAA or its AFFILIATES (other than the MERCK KGAA PATENTS licensed hereunder) and, to MERCK KGAA’s knowledge, (a) the sale and use of VILAZODONE and PRODUCTS does not infringe any existing valid and enforceable rights of any THIRD PARTY and (b) the manufacture of VILAZODONE using the starting materials, intermediates, solvents, reagents, and any ancillary materials set forth in the manufacturing instructions described in Section 1.50 (b) does not infringe any existing valid and enforceable rights of any THIRD PARTY.
|
19.1.2
|
MERCK KGAA owns or controls all the MERCK KGAA PATENTS, MERCK KGAA KNOW-HOW and VILAZODONE MANUFACTURING TECHNOLOGY, free and clear of any liens, licenses, obligations, transfer agreements, transfer restrictions, enforceable claims, royalties, reversionary rights or encumbrances whatsoever. MERCK KGAA is unaware of any assertion or claim challenging the ownership, use, validity or enforceability of any of the MERCK KGAA PATENTS, MERCK KGAA KNOW-HOW or the ownership, validity or enforceability of the VILAZODONE MANUFACTURING TECHNOLOGY and, to MERCK KGAA’s knowledge, there is no basis for any such claim. Any licenses associated with the MERCK KGAA PATENTS, MERCK KGAA KNOW-HOW and VILAZODONE MANUFACTURING TECHNOLOGY are valid and binding and are enforceable in accordance with their respective terms, and there are no material breaches or defaults thereunder.
|
19.1.3
|
MERCK KGAA is unaware of any infringement of the MERCK KGAA PATENTS by any THIRD PARTY.
|
19.1.4
|
Any data and information provided to GENAISSANCE by MERCK KGAA prior to the EFFECTIVE DATE relating to the pre-clinical studies and clinical studies of VILAZODONE and the PRODUCT accurately represent the underlying raw data in all material respects. The data and information provided to GENAISSANCE or to be transferred hereunder includes all information and data relating to any pre-clinical or clinical study conducted by MERCK KGAA or any of its licensees, including GSK. MERCK KGAA has provided to, or made available for review by, GENAISSANCE all material reports and data collections containing information about adverse safety issues (including adverse drug experiences) related to VILAZODONE and the PRODUCT of which it has knowledge.
|
19.1.5
|
MERCK KGAA represents and warrants that the VILAZODONE MANUFACTURING TECHNOLOGY transferred to GENAISSANCE shall be all material know how and methods used by MERCK KGAA to manufacture VILAZODONE, and, to MERCK KGAA’s knowledge, the VILAZODONE MANUFACTURING TECHNOLOGY provided hereunder is sufficient to enable a reasonably experienced contract manufacturer to manufacture the VILAZODONE API.
|
19.1.6
|
MERCK KGAA represents and warrants that it has made all payments to past and present employees and contractors in respect of any MERCK KGAA PATENTS, MERCK KGAA KNOW-HOW and VILAZODONE MANUFACTURING TECHNOLOGY made prior to the EFFECTIVE DATE.
|
19.1.7
|
EXCEPT TO THE EXTENT PROVIDED HEREIN, MERCK KGAA DOES NOT WARRANT THE VALIDITY OF THE MERCK KGAA PATENTS, THE USEFULNESS OF THE MERCK KGAA KNOW-HOW, VILAZODONE MANUFACTURING TECHNOLOGY OR THE COMMERCIAL EXPLOITABILITY OR READINESS FOR PRODUCTION OF VILAZODONE OR ANY PRODUCT.
|
19.2
|
Representations and Warranties of GENAISSANCE. GENAISSANCE hereby represents and warrants as follows as of the EFFECTIVE DATE:
|
19.2.1
|
To GENAISSANCE´s knowledge, the experiments and pharmacogenetic studies contemplated hereunder and specifically the use of the HAP™ Technology and the proprietary database (the HAP™ Database) of gene specific SNPs and haplotypes (HAP™ Markers) do not infringe any existing valid and enforceable right of any THIRD PARTY.
|
19.3
|
Representations and Warranties of both PARTIES. Each or MERCK KGAA and GENAISSANCE hereby represent and warrants to the other PARTY that as of the EFFECTIVE DATE as follows:
|
19.3.1
|
It is duly organized, validly existing and in good standing under the laws of the jurisdiction of incorporation. It has the requisite legal and company power and authority to conduct its business as presently being conducted and as proposed to be conducted by it and is duly qualified to do business in those jurisdictions where its ownership of property or the conduct of its business requires.
|
19.3.2
|
It has all requisite legal and company power and authority to enter into this Agreement and to perform the services contemplated hereunder. All company actions on its part, its boards of director or managers, or similar governing body and its equity holders necessary for (i) the authorization, execution, delivery and performance by it of this Agreement, and (ii) the consummation of the transactions contemplated hereby, have been duly taken.
|
19.3.3
|
EXCEPT TO THE EXTENT PROVIDED HEREIN, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE MERCK KGAA PATENTS, THE MERCK KGAA KNOW-HOW, THE RESULTING IP, IMPROVEMENTS, VILAZODONE, THE PRODUCT, OR ANY OTHER SUBJECT MATTER OF THIS AGREEMENT. EACH PARTY HEREBY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
|
20.
|
LIMITATION OF LIABILITY
|
21.
|
INDEMNIFICATION AND INSURANCE
|
21.1
|
Indemnification. Each PARTY shall indemnify and hold harmless the other PARTY and its AFFILIATES and the officers, directors, employees, agents, counsel, successors, and assigns thereof from and against any and all losses, claims, damages and liabilities (and all expenses associated therewith, including attorneys’ fees, experts’ fees, and other defense costs at all levels of proceedings and preparation) arising out of any breaches of any representation or warranty of such PARTY, or out of any activities of or for such PARTY or its AFFILIATES, distributors or contractors under or in connection with this AGREEMENT, including any production, testing, regulatory approvals (or failure to obtain regulatory approvals), promotion, sale, labelling, recall, or use of any PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT, including liabilities for personal injury or product liability, except to the extent such losses, claims, damages, and liabilities are the result of the negligence or intentional conduct of the Indemnitee (as hereinafter defined).
|
21.2
|
Indemnification procedures. The person or entity (“the Indemnitee”) that intends to claim indemnification under this Section 21 shall promptly notify the PARTY required to indemnify hereunder (“the Indemnitor”) of any loss, liability, damage or expense, or any claim, demand, action or other proceeding with respect to which the Indemnitee intends to claim such indemnification. The Indemnitor’s indemnity obligations under this Section 21 shall not apply to amounts paid in any settlement if effected without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The Indemnitor shall not settle or consent to an adverse judgment in any such claim, demand, action or other proceeding that adversely affects the rights or interests of any Indemnitee or imposes additional obligations on such Indemnitee, without the prior express written consent of such Indemnitee. The Indemnitee shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.
|
21.3
|
Insurance. During the term of this AGREEMENT and for a period of [***] after its termination or expiration, each PARTY shall obtain and maintain, respectively, at its sole cost and expense, product liability insurance in amounts, respectively, which are reasonable and customary in the pharmaceutical industry for companies of comparable size and activities at the respective place of business of each PARTY. Such product liability insurance to be maintained by GENAISSANCE shall insure against all liability, including personal injury, physical injury, or property damage arising out of the manufacture, sale, distribution, or marketing of any PRODUCT, THERANOSTIC PRODUCT or DIAGNOSTIC PRODUCT. Such product liability insurance to be maintained by MERCK KGAA shall insure against all liability, including personal injury, physical injury, or property damage arising out of the manufacture, sale, distribution, or marketing of any VILAZODONE supplied by it. Each PARTY shall provide written proof of the existence of such insurance to the other PARTY upon request.
|
22.
|
RELATIONSHIP
|
23.
|
ASSIGNMENT
|
23.1
|
This AGREEMENT shall be binding upon and inure to the benefit of the PARTIES and their respective successors and permitted assigns. Neither party shall assign its rights and obligations hereunder unless: (i) such assignment is to an AFFILIATE or sublicensee of GENAISSANCE and GENAISSANCE remains obligated for all its obligations hereunder, (ii) such assignment is to an AFFILIATE of MERCK KGAA and MERCK KGAA remains obligated for all its obligations hereunder or (iii) such assignment is in connection with the merger or sale of all or substantially all of the assets of a PARTY or relating to VILAZODONE or the PRODUCT, or (iii) such assignment is made with the prior written consent of the other PARTY, which consent shall not be unreasonably withheld or delayed.
|
23.2
|
The PARTIES hereby acknowledge that neither the use of contractors (following the exercise of the option in Section 2.5) to make or package PRODUCTS for sale by GENAISSANCE or its AFFILIATES nor the appointment of distributors or other resellers of PRODUCTS shall constitute the grant of sublicenses by GENAISSANCE.
|
24.
|
ENTIRE AGREEMENT
|
25.
|
SEVERABILITY
|
26.
|
WAIVER AND AMENDMENT
|
26.1
|
No waiver of this AGREEMENT or any of the provisions hereof, shall be valid unless made in writing and signed by a duly authorized representative of the PARTY sought to be bound thereby. The waiver by either PARTY of any right hereunder or of a breach by the other PARTY shall not be deemed a waiver of any other right hereunder or of any other breach by said other PARTY whether of a similar nature or otherwise.
|
26.2
|
This AGREEMENT may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of both PARTIES.
|
27.
|
COUNTERPARTS
|
28.
|
FORCE MAJEURE
|
29.
|
DISPUTE RESOLUTION
|
29.1
|
If a dispute arising out of or in connection with this AGREEMENT, including any question regarding its existence, validity or termination arises between the PARTIES relating to the interpretation or performance of this AGREEMENT or any other matter arising under this AGREEMENT, including the grounds for the termination hereof, the PARTIES agree to hold a meeting within [***] after notification by one PARTY to the other PARTY of such dispute expressly referring to this provision, attended by individuals from their respective senior management with decision-making authority, to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies.
|
29.2
|
If, within [***] after such meeting, or, if such meeting does not occur, within [***] after the notification of the dispute, the PARTIES have not succeeded in resolving the dispute, such dispute, on the written request of one party delivered to the other party, shall be submitted to and settled by final and binding arbitration, in accordance with the Rules of the London Court of International Arbitration in effect on the date that a request for arbitration is filed, by three arbitrators. The seat of arbitration shall be London, England and the language of the proceedings shall be English. Judgment on the award of the arbitrators may be entered in any court having jurisdiction thereof. Without prejudice to the foregoing, either PARTY may seek appropriate preliminary or interim equitable relief from a court of competent jurisdiction.
|
29.3
|
Each PARTY is required to continue to perform its obligations under this AGREEMENT pending final resolution of any such dispute.
|
30.
|
ATTORNEYS’ FEES
|
31.
|
Governing Law
|
32.
|
NOTICES
|
New Haven, September 22, 2004
|
|
Darmstadt, September 22, 2004
|
Genaissance Pharmaceuticals, Inc.
|
Merck KGaA
|
|||||
ppa.
|
||||||
By
|
/s/ Ben Kaplan
|
By
|
/s/ Dr. Inge Lues
|
|||
Ben Kaplan
|
Dr. Inge Lues
|
|||||
CFO
|
Executive Vice President
|
|||||
Global Preclinical R&D
|
||||||
ppa.
|
||||||
By
|
/s/ Klaus-Peter Brandis
|
|||||
Klaus-Peter Brandis
|
||||||
Head Corporate Legal Department
|
||||||
Schedule 1:
|
EMD 68843
|
|
Schedule 2:
|
DEVELOPMENT PLAN
|
|
Schedule 3:
|
CLINICAL TRIAL SUPPLY AND PRODUCT SPECIFICATIONS
|
|
Schedule 4:
|
INDICATIONS
|
|
Schedule 5:
|
NECESSARY CONTENT OF MARKETING PLANS
|
|
Schedule 6:
|
MARKETING PLAN for initial INDICATION (to be attached later)
|
|
Schedule 7:
|
MERCK KGAA PATENTS
|
|
Schedule 8: PRE-EMPTIVE RIGHTS RIDER.
|
||
Schedule 9: REGISTRATION RIGHTS AGREEMENT
|
|
I.
|
Prospective DISCOVERY STUDY
|
|
A.
|
Study Design
|
|
1)
|
Genetic Marker Discovery
|
|
2)
|
Primary Objective
|
|
B.
|
Clinical Trial Operations
|
|
[***]
|
|
II.
|
THERANOSTIC PRODUCT Development
|
|
III.
|
Regulatory Strategy
|
|
IV.
|
Additional Clinical Development
|
|
A.
|
Phase II/III
|
|
B.
|
[***] Trials
|
|
C.
|
[***] Studies
|
|
D.
|
Drug Supply
|
|
E.
|
Development Outside the US
|
|
First Patient First Visit: [***] 2005
Final Report: [***]
|
|
[***]
|
|
First Patient First Visit: [***] 2007
Final Report for PHASE III CLINICAL TRIAL(S): [***]
|
[***]
|
||||||||||||||
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|||||||
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|||||||
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
||||||||
[***]
|
Description:
|
[***]
|
Identification:
|
|
[***]
|
|
Assay:
|
|
[***]
|
|
Impurities:
|
|
[***]
|
Residual Solvents by GC:
|
|
[***]
|
|
Water Content:
|
|
[***]
|
[***]
|
Inorganic impurities:
|
|
[***]
|
|
|
Depressive Disorder, including but not limited to:
|
|
•
|
Minor Depressive Disorder
|
|
-
|
Recurrent brief depressive disorder
|
|
-
|
Major Depressive Disorder
|
|
-
|
Dysthymic Disorder
|
|
-
|
Adjustment Disorder With Depressed Mood
|
|
-
|
Adjustment Disorder With Mixed Anxiety and Depressed Mood
|
|
-
|
Premenstrual dysphoric disorder
|
|
-
|
Postpsychotic depressive disorder of Schizophrenia
|
|
Anxiety Disorder, including but not limited to:
|
|
-
|
Panic Disorder
|
|
-
|
Agoraphobia
|
|
-
|
Specific Phobia
|
|
-
|
Social Anxiety Disorder
|
|
-
|
Obsessive-Compulsive Disorder
|
|
-
|
Posttraumatic Stress Disorder
|
|
-
|
Acute Stress Disorder
|
|
-
|
Generalized Anxiety Disorder
|
|
Vilazodone Patent Rights (updated [***])
|
Country
|
Publication no.
|
Date of grant
|
||
AU (Australia)
|
AU 679774
|
10.30.97
|
||
BR (Brazil)
|
BR 1100891
|
06.06.00
|
||
CA (Canada)
|
CA 2133152*
|
|||
CL (Chile)
|
CL 040399
|
03.13.00
|
||
CN (China)
|
CN 058268
|
07.07.00
|
||
CZ (Czech republic)
|
CZ 94-2370*
|
04.02.04
|
||
EP (Europe)
|
EP/ES 0648767
|
05.28.97
|
||
HU (Hungary)
|
HU 218918
|
10.04.00
|
||
JP (Japan)
|
JP 95-149762
|
|||
KR (Republic of Korea)
|
KR 341190
|
05.06.02
|
||
MX (Mexico)
|
MX 192651
|
07.15.99
|
||
NO (Norway)
|
NO 306948
|
01.17.00
|
||
PL (Poland)
|
PL 178137
|
09.03.99
|
||
RU (Russian federation)
|
RU 2132848
|
07.10.99
|
||
SE (Sweden)
|
SE 94114798
|
05.28.97
|
||
SK (Slovakia)
|
SK 281793
|
04.26.01
|
||
TW (Taiwan)
|
TW 089183
|
12.26.97
|
||
UA (Ukraine)
|
UA 034449
|
03.15.01
|
||
US (United States of America)
|
US 5532241
|
07.02.96
|
||
ZA (South Africa)
|
ZA 94-7622
|
07.26.95
|
Country
|
Publication no.
|
Date of grant
|
||
AU
|
AU 704495
|
07.29.99
|
||
CA
|
CA 2174494*
|
|||
CL
|
CL 040124
|
09.07.99
|
||
CN
|
CN 1140171
|
|||
CZ
|
CZ 96-1131*
|
|||
EP
|
EP 0738722
|
25.06.03
|
||
HU
|
HU 9601033
|
|||
JP
|
JP 96-291161
|
|||
KR
|
KR 96-37673
|
|||
[***]
|
[***]
|
|||
NO
|
NO 19961579*
|
|||
[***]
|
[***]
|
|||
RU
|
RU 2159238
|
11.20.00
|
||
SK
|
SK PV 0486-1996S*
|
|||
SK (Divisional)
|
SK PV 0117-2003S*
|
|||
TW
|
TW 095622
|
11.03.98
|
||
UA
|
UA 45958
|
15.05.02
|
||
US
|
US 5723614
|
03.03.98
|
||
US
|
US 5977112
|
11.02.99
|
||
ZA
|
ZA 96-3155
|
12.31.96
|
Country
|
filing no.
|
Date of grant
|
||
AR (Argentina)
|
AR 021901*
|
|||
AU
|
19689/00
|
11.06.03
|
||
BR
|
9916187.7
|
|||
CA
|
2355138
|
|||
[***]
|
[***]
|
|||
CN
|
1330635A*
|
|||
CZ
|
PV 2001-2118
|
|||
EP
|
1140824*
|
|||
HK
|
1043363A*
|
05.19.04
|
||
HU
|
P 0104957*
|
|||
ID
|
W00200101416
|
|||
[***]
|
[***]
|
|||
JP
|
P 2002-532469A*
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
NO
|
20012963
|
|||
PH (Philippines)
|
14*
|
|||
[***]
|
[***]
|
|||
PL
|
348060
|
|||
[***]
|
[***]
|
|||
SG
|
81612*
|
31.07.2003
|
||
SK
|
PV 0812-2001S
|
|||
TH (Thailand)
|
TH 042665*
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
US
|
6,509,475*
|
21.01.2003
|
||
WO
|
WO 00-35872*
|
|||
VN
|
1-2001-00677
|
02.06.04
|
||
ZA
|
2001/5841*
|
24.12.2002
|
Country
|
filing no.
|
Date of grant
|
||
AR
|
AR 024112*
|
|||
AU
|
50663/00
|
|||
BR
|
PI 0010948.7
|
|||
CA
|
2,372,668
|
|||
[***]
|
[***]
|
|||
CN
|
1361692A*
|
|||
CZ
|
01-4226
|
|||
EP
|
1185272*
|
04.07.04
|
||
HK
|
1048444A*
|
|||
HU
|
P 0201275*
|
|||
[***]
|
[***]
|
|||
IL
|
146707
|
|||
[***]
|
[***]
|
|||
JP
|
P 2003-500441A*
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
NO
|
20015746
|
|||
PH (Philippines)
|
3*
|
|||
PK (Pakistan)
|
PK 00-0459
|
|||
PL
|
352373
|
|||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
SK
|
PV 1646-2001S
|
|||
TH (Thailand)
|
TH 057853*
|
|||
TR
|
2001/03361
|
|||
TW
|
NI-171358*
|
03.06.2003
|
||
[***]
|
[***]
|
|||
[***]
|
[***]
|
|||
WO
|
WO 00-72832*
|
|||
VN
|
0172*
|
|||
ZA
|
00/7283*
|
09.23.03
|
Country
|
filing no.
|
Date of grant
|
||
AR
|
AR 024691*
|
|||
AU
|
62665/00
|
02.19.04
|
||
BR
|
PI 0012329-3
|
|||
CA
|
2,378,603
|
|||
[***]
|
[***]
|
|||
CN
|
1356996A*
|
|||
CZ
|
PV 2002-0011
|
|||
EP
|
1194426*
|
|||
HK
|
1047275A*
|
|||
HU
|
P 0201903*
|
|||
[***]
|
[***]
|
|||
IL
|
147494
|
|||
[***]
|
[***]
|
|||
JP
|
P 2003-504364A*
|
|||
KR
|
2002-0016815*
|
|||
MX
|
PA/a/2002000316*
|
|||
[***]
|
[***]
|
|||
NO
|
2002 0095
|
|||
PH (Philippines)
|
5*
|
|||
[***]
|
[***]
|
|||
PL
|
353157
|
|||
[***]
|
[***]
|
|||
SG
|
200200186.5
|
01.30.04
|
||
SK
|
PV 0006-2002S
|
|||
TH (Thailand)
|
TH 45895*
|
|||
TR
|
2002/00017
|
|||
UA
|
2002022055/M
|
|||
US
|
6,531,503*
|
11.03.2003
|
||
WO
|
WO 01-04112*
|
|||
VN
|
0173*
|
|||
ZA
|
2002/1085*
|
30.07.2003
|
Country
|
filing no.
|
|
AR
|
AR 031436*
|
|
AU
|
2002221803
|
|
BR
|
1709*
|
|
CA
|
2,429,216
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
CZ
|
PV 2003-1448
|
|
EP
|
1225716*
|
|
HU
|
P0400504*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
JP
|
P2004-513916A*
|
|
KR
|
2003-0048477*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
NO
|
20032248
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
SK
|
PV 0644-2003S
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
US
|
2004-0014771*
|
|
VN
|
8463*
|
|
WO
|
02/39989*
|
|
[***]
|
[***]
|
Country
|
filing no.
|
|
AR
|
AR 031335*
|
|
AU
|
2002215027
|
|
BR
|
1704*
|
|
CA
|
2428511
|
|
[***]
|
[***]
|
|
CN
|
1474091A*
|
|
CZ
|
PV 2003-1433
|
|
EP
|
1333832*
|
|
HU
|
P 0302751*
|
|
JP
|
P2004-513924A*
|
|
KR
|
2003-0059244*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
NO
|
2003 2148
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
PL
|
P 360310*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
SK
|
PV0638-2003S
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
US
|
2004-0082594*
|
|
WO
|
02/40024*
|
|
[***]
|
[***]
|
Country
|
filing no.
|
|
AR
|
AR 026677*
|
|
AU
|
28382/01
|
|
BR
|
1649*
|
|
CA
|
2,393,183
|
|
[***]
|
[***]
|
|
CN
|
1407981A*
|
|
CZ
|
PV 2002-1822
|
|
EP
|
1233961*
|
|
HK
|
1053471A*’
|
|
HU
|
P 0203800*
|
|
[***]
|
[***]
|
|
IL
|
149974
|
|
[***]
|
[***]
|
|
JP
|
P 2003-515605A*
|
|
KR
|
2002-0062313*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
NO
|
20022620
|
|
PH (Philippines)
|
8*
|
|
[***]
|
[***]
|
|
PL
|
P 355227
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
SK
|
PV 0745-2002
|
|
TH (Thailand)
|
TH 50758*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
US
|
2003-0125558*
|
|
WO
|
WO 01-40219*
|
|
[***]
|
[***]
|
|
ZA
|
2002/5326
|
filing no.
|
||
AR
|
AR 034595*
|
|
[***]
|
[***]
|
|
BR
|
PI0210495-4
|
|
CA
|
2,451,028
|
|
CL
|
1333/2002*
|
|
[***]
|
[***]
|
|
CO
|
073*
|
|
CZ
|
PV2004-26
|
|
[***]
|
[***]
|
|
EE
|
P20040019
|
|
EP
|
1397357*
|
|
HU
|
P0400236*
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
SK
|
PV 0016-2004S
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
US
|
10,481,270
|
|
WO
|
02/102794*
|
|
[***]
|
[***]
|
Analysis of outstanding warrants:
|
Genaissance Pharmaceuticals, Inc
|
Common Stock warrants
|
Granted
|
Date
|
Number
|
Exercise
|
Expiration
|
Outstanding
|
Exercised
|
Cancelled
|
Granted
|
Outstanding
|
||||||||||
To
|
Granted
|
Granted
|
Price
|
Date
|
at 12/31/03
|
in 2004
|
in 2004
|
in 2004
|
8/31/2004
|
||||||||||
Transamerica
|
4/30/1999
|
50,000
|
$4.00
|
4/30/2006
|
50,000
|
50,000
|
|||||||||||||
Legg Mason
|
3/8/2000
|
400,000
|
$6.05
|
3/7/2005
|
400,000
|
400,000
|
|||||||||||||
Dresdner Klienwort Benson
|
11/23/1999
|
3,273
|
$5.50
|
11/23/2004
|
3,272
|
3,272
|
|||||||||||||
Merifin
|
11/23/1999
|
1,636
|
$5.50
|
11/23/2004
|
1,636
|
1,636
|
|||||||||||||
International BM Biomedicine
|
|||||||||||||||||||
Reissued in August 2003 to Biomedicine L.P.
|
11/23/1999
|
5,455
|
$5.50
|
11/23/2004
|
5,455
|
5,455
|
|||||||||||||
Winchester Capital
|
11/23/1999
|
545
|
$5.50
|
11/23/2004
|
546
|
546
|
|||||||||||||
Finova
|
2/25/2000
|
7,091
|
$5.50
|
2/25/2005
|
7,091
|
7,091
|
|||||||||||||
Finova
|
3/8/2000
|
14,545
|
$5.50
|
3/8/2005
|
14,545
|
14,545
|
|||||||||||||
Finova (was originally issued for 41,667)
|
5/31/2000
|
18,462
|
$16.25
|
5/31/2005
|
18,462
|
18,462
|
|||||||||||||
Legg Mason
|
5/15/2003
|
65,000
|
$2.00
|
5/15/2008
|
65,000
|
65,000
|
|||||||||||||
Joseph Klein (Gauss Capital)
|
5/15/2003
|
10,000
|
$2.00
|
5/15/2008
|
10,000
|
10,000
|
|||||||||||||
Ritchie Long/ Short Trading LTD
|
6/30/2004
|
261,500
|
$4.17
|
6/30/2009
|
261,500
|
261,500
|
|||||||||||||
TOTAL
|
576,007
|
0
|
0
|
0
|
837,507
|
GENAISSANCE PHARMACEUTICALS, INC.
|
|||
By:
|
/s/ Ben Kaplan
|
||
Name:
|
Ben Kaplan
|
||
Title:
|
CFO
|
||
MERCK KGaA
|
|||
By:
|
/s/ Dr. Inge Lues
|
||
Name:
|
Dr. Inge Lues
|
||
Title:
|
Executive Vice President
Global Preclinical R&D
|
||
By:
|
/s/ Klaus-Peter Brandis
|
||
Name:
|
Klaus-Peter Brandis
|
||
Title:
|
Head Corporate Legal Department
|
|
I, Howard Solomon, certify that:
|
|
1. I have reviewed this quarterly report on Form 10-Q of Forest Laboratories, Inc. ("the Company");
|
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
|
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:
|
|
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d. disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
|
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):
|
|
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
|
|
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
|
|
1. I have reviewed this quarterly report on Form 10-Q of Forest Laboratories, Inc. ("the Company");
|
|
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
|
|
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:
|
|
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d. disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
|
|
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):
|
|
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
|
|
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
|
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Current assets: | ||
Cash equivalent investments | $ 1,140,417 | $ 2,128,006 |
Accounts receivable, allowance for doubtful accounts | 2,270 | 2,298 |
Other assets: | ||
License agreements, product rights and other intangibles, accumulated amortization | $ 576,252 | $ 537,147 |
Stockholders' equity: | ||
Series preferred stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Series preferred stock, shares authorized (in shares) | 1,000 | 1,000 |
Series preferred stock, shares issued (in shares) | 0 | 0 |
Series preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common stock, shares issued (in shares) | 427,533 | 424,982 |
Treasury stock, shares (in shares) | 160,383 | 138,863 |
Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Condensed Consolidated Statements of Income (Unaudited) [Abstract] | ||||
Net sales | $ 1,130,250 | $ 1,037,264 | $ 2,234,385 | $ 2,057,390 |
Contract revenue | 33,579 | 42,402 | 74,218 | 82,206 |
Interest income | 5,086 | 8,493 | 10,665 | 15,506 |
Other income | 164 | 1,742 | ||
Total revenue | 1,169,079 | 1,088,159 | 2,321,010 | 2,155,102 |
Costs and expenses: | ||||
Cost of sales | 263,984 | 246,240 | 517,781 | 477,944 |
Selling, general and administrative | 388,657 | 316,386 | 746,734 | 764,755 |
Research and development | 197,331 | 154,511 | 391,774 | 374,168 |
Total costs and expenses | 849,972 | 717,137 | 1,656,289 | 1,616,867 |
Income before income tax expense | 319,107 | 371,022 | 664,721 | 538,235 |
Income tax expense | 69,294 | 84,912 | 156,771 | 134,648 |
Net income | $ 249,813 | $ 286,110 | $ 507,950 | $ 403,587 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.91 | $ 1.00 | $ 1.82 | $ 1.37 |
Diluted (in dollars per share) | $ 0.91 | $ 1.00 | $ 1.81 | $ 1.37 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 273,196 | 287,401 | 279,449 | 294,139 |
Diluted (in shares) | 273,753 | 287,491 | 280,015 | 294,222 |
Net Income Per Share (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of shares used in calculating basic and diluted net income per share | A reconciliation of shares used in calculating basic and diluted net income per share follows:
|
Document And Entity Information (USD $) | 6 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 08, 2011 | Sep. 30, 2010 | |
Entity Registrant Name | FOREST LABORATORIES INC | ||
Entity Central Index Key | 0000038074 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 8,916,016,005 | ||
Entity Common Stock, Shares Outstanding | 267,153,114 | ||
Document Fiscal Year Focus | 2012 | ||
Document Fiscal Period Focus | Q2 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
Accounts Receivable (Details) (USD $) In Thousands | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Accounts Receivable [Abstract] | ||
Trade | $ 520,881 | $ 482,725 |
Other | 52,412 | 52,761 |
Accounts receivable, net | $ 573,293 | $ 535,486 |
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